FORM 10-QSB

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For Quarter Ended: March 31, 2003

Commission File Number: 001-04026

LIFESTYLE INNOVATIONS, INC.
(Exact name of small business issuer as specified in its charter)

Nevada 82-6008727
(State of Incorporation) (IRS Employer ID No)

3801 William D. Tate Avenue, Suite 100, Grapevine, TX 76051
(Address of principal executive office)

817-421-0010
(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No .

The number of shares outstanding of registrant's common stock, par value $.001
per share, as of March 31, 2003 was 20,352,930 shares.

Transitional Small Business Disclosure Format (Check one): Yes No X .
----- ----

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)

INDEX

Page
No.

Part I. Financial Information (unaudited)

Item 1.Condensed Consolidated Balance Sheet - March 31, 2003 3

Condensed Consolidated Statements of Operations - 4
Three Months Ended March 31, 2003 and 2002

Condensed Consolidated Statements of Operations - 5
Nine Months Ended March 31, 2003 and 2002

Condensed Consolidated Statement of Stockholders' Equity - 6
Nine Months Ended Mach 31, 2003

Condensed Consolidated Statements of Cash Flows - 7
Nine Months Ended March 31, 2003 and 2002

Notes to Condensed Consolidated Financial Statements - 8-22
Nine Months Ended March 31, 2003 and 2002

Item 2.Management's Discussion and Analysis of Financial Condition and 23-26
Results of Operations

Item 3. Controls and Procedures 26

Part II. Other Information 27-32

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)
Condensed Consolidated Balance Sheet
March 31, 2003
(Unaudited)

Assets

Current assets

Cash and cash equivalents .............................................. $ 534,483
Accounts receivable, net of allowance for bad debts of $96,594 ......... 1,165,101
Inventories ............................................................ 816,924
Prepaid expenses and other assets ...................................... 113,997
------------
Total current assets ................................................. 2,630,505
Property and equipment, net .............................................. 616,357
Other assets ............................................................. 44,934
Goodwill, net ............................................................ 11,784,298
------------
Total assets ........................................................... $ 15,076,094
============

Liabilities and Stockholders' Equity

Current liabilities
Current portion of long-term debt, capital leases and notes payable ..... $ 2,289,839
Accounts payable and accrued expenses ................................... 3,724,278
Unearned income ......................................................... 35,822
Due to related parties .................................................. 226,430
Due to RCG and its subsidiaries ......................................... 1,481,146
------------
Total current liabilities ................................................ 7,757,515
Long-term debt and capital leases, less current portion .................. 2,177,619

Stockholders' equity
Series A Convertible Preferred stock, $.10 par value; 1,000,000 shares . 100,000
authorized, issued and outstanding; liquidation preference $2,750,000;
convertible into common stock, currently 1,000,000 shares
Common stock, $.001 par value; authorized 250,000,000 shares; .......... 20,353
issued and outstanding 20,352,930 shares
Additional paid in capital ............................................. 12,316,303
Subscribed, unissued common stock ...................................... 457,515
Common stock warrants .................................................. 206,295
Stock subscription receivable .......................................... (4,000)
Accumulated deficit .................................................... (7,955,506)
------------
Total stockholders' equity ............................................... 5,140,960
------------
Total liabilities and stockholders' equity ............................. $ 15,076,094
============

See accompanying notes to consolidated financial statements.

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)
Condensed Consolidated Statements of Operations
Three months ended March 31, 2003 and 2002

(Unaudited)

2003 2002

Sales and revenues

Products .................................. $ 815,702 $ 393,045
Services and other ........................ 188,266 235,255
------------ ----------
1,003,968 628,300
Cost of sales ............................... 606,582 419,489
------------ ----------
Gross profit .............................. 397,386 208,811

Other expense (income):
Selling, general and administrative expense 867,192 501,113
Stock option and warrant compensation ..... 467,540 7,125
Depreciation and amortization ............. 33,466 21,237

Loss on disposal of fixed assets .......... 10,710 -
Management fee - parent ................... 30,000 50,000
Interest expense .......................... 70,892 38,506
------------ ----------
1,479,800 617,981
------------ ----------
Loss before income taxes .................... (1,082,414) (409,170)

Income taxes................................. - -
------------ ----------
Net loss .................................... $ (1,082,414) $ (409,170)
============ ==========

Net loss per share, basic and diluted ....... $ (0.05) $ (0.03)
============ ==========

Weighted Average Shares Outstanding ......... 20,352,930 16,000,000
============ ==========

See accompanying notes to consolidated financial statements.

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)
Condensed Consolidated Statements of Operations
Nine months ended March 31, 2003 and 2002

(Unaudited)

2003 2002

Sales and revenues

Products .................................. 1,656,569 1,796,962
Services and other ........................ 448,534 577,678
----------- -----------
2,105,103 2,374,640
Cost of sales ............................... 1,302,641 1,524,042
----------- -----------
Gross profit .............................. 802,462 850,598

Other expense (income):
Selling, general and administrative expense 2,085,330 1,525,942
Stock option and warrant compensation ..... 481,790 16,625
Depreciation and amortization ............. 98,604 58,053
Loss (gain) on disposal of fixed assets ... 12,032 (171,600)
Management fee - parent ................... 90,000 147,000
Debt forgiveness by related parties........ - (24,351)
Interest income............................ (506) -
Interest expense .......................... 166,288 106,951
----------- -----------
2,933,538 1,658,620
----------- -----------
Loss before income taxes .................... (2,131,076) (808,022)
Income taxes................................. - -
----------- -----------
Net loss .................................... $(2,131,076) $ (808,022)
=========== ===========

Net loss per share, basic and diluted ....... $ (0.11) $ (0.05)
=========== ===========

Weighted Average Shares Outstanding.......... 19,261,500 16,000,000
=========== ===========

See accompanying notes to consolidated financial statements.

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)
Condensed Consolidated Statement of Stockholders' Equity
Nine Months Ended March 31, 2003
(Unaudited)

Additional
Preferred Stock Common Stock Paid-in
Shares Par Value Shares Par Value Capital
------ --------- ------ --------- -------

Balance, June 30, 2002 - $ - 16,000,000 $ 16,000 $11,602,587
Acquire Lifestyle
Innovations, Inc. .... - - 4,074,530 4,075 84,074
Acquire FutureSmart
Systems, Inc. ........ 1,000,000 100,000 - - -
Notes payable converted
to common stock ...... - - 100,000 100 217,400
Common stock sold for
cash ................. - - 178,400 178 412,242
Net loss .............. - - - - -
----------- ----------- ----------- -----------
Balance, March 31, 2003 1,000,000 $ 100,000 20,352,930 $ 20,353 $12,316,303
=========== =========== =========== ===========

Subscribed
Unissued Common Stock
Common Stock Subscription Retained
Stock Warrants Receivable (Deficit) Total
--------- -------- ---------- -------- -----

Balance, June 30, 2002 $ - $ - $ - $(5,824,430) $ 5,794,157
Acquire Lifestyle
Innovations, Inc. .... - - (4,000) - 84,149
Acquire FutureSmart
Systems, Inc. ........ - 206,295 - - 306,295
Notes payable converted
to common stock ...... - - - - 217,500
Common stock sold for
cash ................. 457,515 - - - 869,935
Net loss .............. - - - (2,131,076) (2,131,076)
----------- ----------- ----------- -----------
Balance, March 31, 2003 $ 457,515 $ 206,295 $ (4,000) $(7,955,506) $ 5,140,960
=========== =========== =========== ===========

See accompanying notes to consolidated financial statements.

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2003 and 2002

(Unaudited)

2003 2002

Cash flows from operating activities

Net loss .......................................... $(2,131,076) $ (808,022)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation .................................... 98,604 58,053
Loss (gain) on sale of assets ................... 12,032 (171,600)
Common stock option expense ..................... 481,790 16,625

Allowance for bad debts ......................... 55,713 -
Acquisition of marketable securities
- (150,000)
Decrease (increase) in assets:
Accounts receivable ........................... (274,474) (92,147)
Inventories ................................... (46,951) (130,975)
Prepaid expenses and other assets ............. (13,394) (45,134)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses ......... 684,445 111,837
Deposits and unearned income .................. (46,726) (374,187)

----------- -----------
Net cash used in operating activities ............. (1,180,037) (1,585,550)
----------- -----------

Cash flows from investing activities
Acquisition of property and equipment ............ (72,170) (171,864)
Acquisition of Lifestyle Tech -Atlanta
- (289,991)

Acquisition of FutureSmart Systems, Inc. ......... (364,107) -
----------- -----------
Net cash used in financing activities ............. (436,277) (461,855)
----------- -----------

Cash flows from financing activities

Common stock issued for cash ...................... 412,420 -

Subscribed, unissued common stock ................. 457,515 -

Cash received in excess of cash paid in acquisition 273,518 -
Loan proceeds ..................................... 725,000 1,566,189

Repayment of notes payable ........................ (114,219) -
Loans from related parties ........................ 379,593 145,000
Advances from parent
4,693 400,508
----------- -----------
Net cash provided by financing activities ......... 2,138,520 2,111,697
----------- -----------
Net increase in cash and cash equivalents ......... 522,206 64,292
Cash and cash equivalents, beginning of period .... 12,277 1,426
----------- -----------
Cash and cash equivalents, end of period .......... $ 534,483 $ 65,718
=========== ===========

See accompanying notes to consolidated financial statements.

Lifestyle Innovations, Inc. and Subsidiaries
(A Majority Owned Subsidiary of eResource Capital Group, Inc.)
Notes to Condensed Consolidated Financial Statements
Nine months ended March 31, 2003 and 2002
(Unaudited)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Principles of Consolidation and Basis of Presentation - The
consolidated financial statements include the accounts of
Lifestyle Innovations, Inc. ("LFSI") and its wholly owned
subsidiaries LST, Inc. ("LST"), LST Integrators, Inc.
("Integrators"), LifeStyle Technologies Franchising Corp.
("Franchising"), FutureSmart Systems, Inc. ("FutureSmart") and
Brittany Enterprises, Inc. ("Brittany") (collectively the
"Company"). All material intercompany accounts and transactions
have been eliminated. Effective July 15, 2002 Princeton Mining
Company changed its name to Lifestyle Innovations, Inc.

At March 31, 2003 the Company has a significant working capital
deficit of $5,127,010. The major components of the working capital
deficit include: $1,481,146 due to RCG and its subsidiaries,
$3,724,278 in accounts payable and accrued expenses and notes
payable in the amount of $2,289,839. The Company does not have
sufficient cash flows to meet its obligations currently due within
the next 12 months. The Company is currently exploring additional
sources of liquidity, including debt and equity financing
alternatives and potential sales of its Common Stock in private
placement transactions. Additionally, the Company plans on
negotiating with its debt holders to extend or convert some or all
of the debt due in August 2003. If the Company is (i) unable to
grow its business or improve its operating cash flows as expected,
(ii) unsuccessful in extending a substantial portion of the debt
repayments scheduled for August 2003, or (iii) unable to raise
additional funds through private placement sales of its Common
Stock, then the Company will need to secure alternative debt or
equity financing to provide it with additional working capital.
There can be no assurance that additional financing will be
available when needed or, if available, that it will be on terms
favorable to the Company and its stockholders. If the Company is
not successful in generating sufficient cash flow from operations,
or in raising additional capital when required in sufficient
amounts and on terms acceptable to the Company, these failures
would have a material adverse effect on the Company's business,
results of operations and financial condition. If additional funds
are raised through the issuance of equity securities, the
percentage ownership of the Company's current shareholders would
be diluted.

(2) Organization - LFSI was organized in September 1950, under the
laws of the State of Idaho.

LFSI completed its acquisition of FutureSmart effective March 7,
2003 after which date the results of operations of FutureSmart are
included in the consolidated financial statements. The acquisition
is discussed in Note C.

On September 5, 2002, LFSI acquired LST, a Delaware corporation,
and its wholly owned subsidiaries, Lifestyle Technologies
Franchising Corp., Lifestyle Security, Inc. and Lifestyle
Technologies Atlanta, all organized in July 2001. LFSI issued
16,000,000 shares of its common stock to eResource Capital Group,
Inc. ("RCG"), to acquire 100% interest in LST. At March 31, 2003
RCG owns 77% of the outstanding common stock of LFSI. On February
20, 2003 LFSI reorganized its corporate structure. LST
Integrators, Inc. became a wholly owned subsidiary of LFSI and the
company-store operations located in Charlotte, NC and Atlanta, GA
were transferred to Integrators. Simultaneously Franchising became
a wholly owned subsidiary of LFSI and LST and LifeStyle Security,
Inc. became inactive. LFSI had only nominal operations prior to
the merger, leasing two condominium units, accordingly for
accounting purposes the transaction has been treated as the
issuance of stock by LST for the net monetary assets of LFSI,
accompanied by a recapitalization of LST. The accounting treatment
is identical to accounting for a reverse acquisition, except that
no goodwill or other intangible asset is recorded. The historical
financial statements prior to September 5, 2002 are those of LST.

On April 24, 2001, LFSI acquired Brittany, a Nevada corporation
organized on October 29, 1998. For accounting purposes, the
acquisition has been treated as the acquisition of Brittany by
LFSI with Brittany as the purchaser (reverse acquisition).
Brittany did not have operations until March 30, 2001, when it
acquired two condominium units that it is leasing.

Princeton Mining Company, an Idaho corporation, merged into its
wholly owned subsidiary, Princeton Mining Company, a Nevada
corporation on May 6, 2002. Princeton Mining Company, a Nevada
corporation, was the survivor.

(3) Nature of Business - LST is a full service home technology
integration company providing builders, homeowners, and commercial
customers with complete installation and equipment for structured
wiring, security, personal computer networking, audio, video, home
theater, central vacuum and accent lighting. LST has also secured
relationships with product manufacturers, distributors and service
providers (cable, Internet service, broadband and security). The
Company launched a national franchising program in the fourth
quarter of fiscal 2001 and, has since sold 17 franchises. LST also
owns and operates locations in the Charlotte, NC and Atlanta, GA
markets.

FutureSmart is a manufacturer and distributor of structured wiring
and home networking systems. FutureSmart develops and distributes
home technology products designed to meet the current and future
needs of homeowners for computer networking, audio/video
distribution and home automation. Their products include,
distribution panels, computer networking components, security
systems, telephone distribution systems and wiring for home
technologies.

Brittany is the owner of two condominium units that are located in
Dallas, Texas which are currently under lease.

(4) General - The financial statements included in this report have
been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission for interim reporting
and include all adjustments (consisting only of normal recurring
adjustments) that are, in the opinion of management, necessary for
a fair presentation. These financial statements have not been
audited.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations for interim reporting. The
Company believes that the disclosures contained herein are
adequate to make the information presented not misleading.
However, these financial statements should be read in conjunction
with the financial statements and notes thereto included in LST's
Annual Report for the period ended June 30, 2002, which is
included in the Company's Form 8-K/A filed on November 18, 2002.

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company classifies as cash equivalents any investments which can be
readily converted to cash and have an original maturity of less than
three months. At times cash and cash equivalent balances at a limited
number of banks and financial institutions may exceed insurable
amounts. The Company believes it mitigates its risks by depositing cash
or investing in cash equivalents in major financial institutions.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

o Cash and cash equivalents: The carrying amount reported in
the balance sheet for cash approximates its fair value.
o Accounts receivable and accounts payable: Due to their short term
nature, the carrying amounts reported in the balance sheet for
accounts receivable and accounts payable approximate their fair
value. The Company provides for any losses through its allowance
for doubtful accounts.
o Notes payable: The carrying amount of the Company's notes payable
approximate their fair value.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash, accounts
receivable, investments, and notes payable. The Company places its cash
with high credit quality financial institutions. The Company performs

periodic credit evaluations of its customers' financial condition and
generally does not require collateral. Although due dates of
receivables vary based on contract terms, credit losses have been
within management's estimates in determining the level of allowance for
doubtful accounts. Overall financial strategies are reviewed
periodically.

Inventories

Inventories for the LifeStyle company owned stores consists of
purchased components, which are recorded at the lower of cost or market
with cost being determined on a first-in, first-out (FIFO) method.
Inventories for FutureSmart include materials, labor and overhead costs
and are stated at the lower of FIFO cost or market.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated
depreciation. Depreciation is calculated by using the straight-line
method over the estimated useful lives of the assets, which is five to
seven years for all categories except for computer software, with is
depreciated over 3 years. Leasehold improvements are amortized over the
life of the lease if it is shorter than the estimated useful life.
Repairs and maintenance are charged to expense as incurred.
Expenditures for betterments and renewals are capitalized. The cost of
property and equipment and the related accumulated depreciation are
removed from the accounts upon retirement or disposal with any
resulting gain or loss being recorded as other income or expenses.
Equipment under capital lease is recorded at the lesser of the fair
value of the asset or the present value of minimum lease payments.

Goodwill and Intangible Assets

The Company records goodwill and intangible assets arising from
business combinations in accordance with FAS No. 141 "Business
Combinations" ("FAS 141") which requires that the purchase method of
accounting be used for all business combinations initiated after June
30, 2001. FAS 141 also specifies the criteria applicable to intangible
assets acquired in a purchase method business combination to be
recognized and reported apart from goodwill.

The Company accounts for goodwill and intangible assets in accordance
with FAS 142. The Company adopted FAS 142 effective July 1, 2001. In
completing the adoption of FAS 142, LST allocated its previously
existing goodwill as of July 1, 2001 to its reporting units, as defined
in FAS 142, and performed an initial test for impairment as of that
date.

In accordance with FAS 142, the Company no longer amortizes goodwill.
FAS 142 requires that goodwill and intangible assets with indefinite
useful lives no longer be amortized, but instead be tested at least
annually for impairment. FAS 142 also requires that intangible assets
with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and be reviewed for
impairment.

Stock Options and Warrants

The Company accounts for stock-based awards to employees using the
intrinsic value method described in Accounting Principles Board Opinion

(APB) No. 25, "Accounting for Stock Issued to Employees" and its
related interpretations. Accordingly, no compensation expense has been
recognized in the accompanying consolidated financial statements for
stock-based awards to employees when the exercise price of the award is
equal to or greater than the quoted market price of the stock on the
date of the grant.

On March 7, 2003, pursuant to her employment agreement, Jacqueline E.
Soechtig, Chief Executive Officer since March 7, 2003, was granted (1)
an incentive stock option to purchase 500,000 shares of Common Stock at
an exercise price equal to the trading price of such stock on the last
trading day prior to Board approval ($5.10), with 166,666 option shares
to vest and become exercisable on the effective date of the agreement
and 166,667 option shares to vest and become exercisable on each of the
first and second anniversaries of the effective date, subject to her
continued employment and (2) a non-qualified stock option to purchase
500,000 shares at an exercise price equal to $2.50, with 166,666 option
shares to vest and become exercisable on the effective date of this
agreement and 166,667 option shares to vest and become exercisable on
each of the first and second anniversaries of the effective date,
subject to her continued employment. Both options will expire ten years
from the effective date.

On September 5, 2002, Paul Johnson, Chief Executive Officer of the
Company until March 7, 2003, was granted an option to acquire 400,000
shares of Common Stock at an exercise price of $2.20, the trading price
on that day. The option will expire three years from the effective
date.

SFAS No. 123, "Accounting for Stock-Based Compensation" and SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and
Disclosure - an amendment of FASB Statement No. 123" require
disclosures as if the Company had applied the fair value method to
employee awards rather than the intrinsic value method. The fair value
of stock-based awards to employees is calculated through the use of
option pricing models, which were developed for use in estimating the
fair value of traded options, which have no vesting restrictions and
are fully transferable. These models also require subjective
assumptions, including future stock price volatility and expected time
to exercise, which greatly affect the calculated values. The Company's
fair value calculations for awards from stock option plans were made
using the Black-Scholes option pricing model with the following
weighted average assumptions: expected term, three and ten years from
the date of grants in fiscal 2003; stock price volatility, 104% to
122%; risk free interest rate, 4.5% to 4.67%; and no dividends during
the expected term as the Company does not have a history of paying cash
dividends.

If the computed fair values of the stock-based awards had been
amortized to expense over the vesting period of the awards, net income
(loss) and net income (loss) per share, basic and diluted, would have
been as follows:

Three Months Ended March 31, 2003 and 2002

2003 2002
---- ----

Net loss, as reported $ (1,082,414) $ (409,170)

Add: Stock-based employee compensation included in reported net loss 460,415 -

Deduct: Total stock-based compensation expense determined under fair
value method for all awards (1,743,152) -
----------------- -----------------

Net loss, proforma $ (2,365,151) $ (409,170)
================= =================

Net loss per share, basic and diluted $ (.12) $ (.03)
================= =================

Nine Months Ended March 31, 2003 and 2002

Net loss, as reported $ (2,131,076) $ (808,022)

Add: Stock-based employee compensation included in reported net loss 460,415 -

Deduct: Total stock-based compensation expense determined under fair
value method for all awards (2,319,152) -
----------------- -----------------

Net loss, proforma $ (3,989,813) (808,022)
================= =================

Net loss per share, basic and diluted $ (.21) $ (.05)
================= =================

Options and warrants issued to non-employees are accounted for under
FAS No. 123, "Accounting for Stock Based Compensation". For the options
and warrants issued to non-employees, the fair value of each award is
calculated using the Black-Scholes Model in accordance with
FAS No. 123.

On May 7, 2002 the Board of Directors adopted and the shareholders
approved by majority consent the Princeton Mining Company 2002 Stock
Option Plan. The Plan provides for the issuance of up to 2 million
shares of the Company's $.001 par value Common Stock in connection with
stock options and other awards under the Plan. The Plan authorizes the
grant of incentive stock options and non-statutory stock options. At
March 31, 2003 there were options granted under the Plan for 1,050,000
shares (716,666 shares vested) and 950,000 shares available for grant.

Revenue Recognition

Integrator's home technology services work is completed in three phases
- pre-wiring, trim-out and hardware installation. Integrator invoices
its customers and records revenue as work is completed on each project.
For alarm monitoring service contracts sold by Integrator, revenue is
recognized only when the contracts are sold to third party finance
companies or as billed if Integrator holds and services the contract.
Integrator sells substantially all of its alarm monitoring contracts
immediately subsequent to the date the contracts are signed by the
customer.

Sales of franchise licenses are recognized as revenue when the
obligations under the franchise agreement are "substantially complete."
Franchising generally defines "substantially complete" as the
completion of training by the franchisee's General Manager and the
approval of the franchise location plan.

Royalties are based on a percentage of the sales recorded by
franchisees and are recorded as earned. Procurement fees charged to
franchisees are recorded in the month that the related product is
shipped to the franchisee.

Revenue from FutureSmart product sales is typically recognized at the
time the product is shipped. Generally, the risks and rewards of the
products, including title, are transferred at this time. FutureSmart
records reserves for sales returns and uncollectible accounts at the
time the product is shipped, which amounts have historically
approximated actual results.

Net Loss Per Common Share

The Company has adopted SFAS No. 128 which establishes standards for
computing and presenting earnings per share (EPS) for entities with
publicly held common stock. The standard requires presentation of two
categories of EPS - basic EPS and diluted EPS. Basic EPS excludes
dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares
outstanding for the year. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the
Company. All potential dilutive securities are antidilutive as a result
of the Company's net loss for the three and nine month periods ended
March 31, 2003 and 2002, respectively. Accordingly, basic and diluted
EPS are the same for each period.

Advertising Costs

Advertising costs are generally charged to operations in the period
incurred and totaled $51,485 and $39,825 for the nine months ended
March 31, 2003 and 2002, respectively and $31,382 and $11,660 for the
three months ended March 31, 2003 and 2002, respectively.

Marketing Fund

Franchising's franchise agreement requires franchisees to pay 1.25% of
their sales into a general marketing fund to be used to promote the
Lifestyle name and home technology concept on a national basis.
Franchising records these receipts into the marketing fund liability,
classified in accounts payable and accrued expenses, which Franchising
administers. The marketing fund is managed by a committee consisting of
management of Franchising and representatives from certain franchises.

Research and Development Costs

Research and development costs are expensed as incurred.

Income Taxes

Income taxes are accounted for in accordance with FAS 109, "Accounting
for Income Taxes", which prescribes the use of the asset/liability
method. Deferred taxes represent the expected future tax consequences
when the reported amounts of assets and liabilities are recovered or
paid. They arise from differences between the financial reporting and
tax basis of assets and liabilities and are adjusted for changes in tax
laws and tax rates when those changes are enacted. The provision for
income taxes represents the total of income taxes paid or payable for
the current year, plus the change in deferred taxes during the year.
Management of the Company elected to provide a reserve against the
potential future income tax benefits from its current net operating
loss, due to the uncertainty of its realization.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

C. ACQUISITIONS AND DISPOSITIONS

FUTURESMART SYSTEMS, INC.
On March 7, 2003 LFSI completed its acquisition of FutureSmart Systems, Inc., a
manufacturer and distributor of structured wiring and home networking
distribution panels. The consolidated financial statements include the results
of FutureSmart from the date of acquisition.

The purchase price of $801,910 consisted of the issuance of 1,000,000 shares of
LFSI's $.10 par value preferred stock, a bridge loan by LFSI to FutureSmart of
$224,830 and $477,080 in direct transaction costs. Total consideration was
allocated as follows:

Current assets .......................... $ 1,244,416
Property and equipment .................. 309,296
Goodwill and other intangible assets .... 2,864,072
Other ................................... 26,280
-----------
Total assets acquired .............. 4,444,064
Current liabilities ..................... (1,616,381)
Non-current liabilities ................. (2,025,773)
-----------
Total liabilities assumed .......... (3,642,154)
-----------
Purchase price ................ 801,910
Preferred stock issued .................. (100,000)
Common stock warrants issued ............ (206,295)
Cash acquired ........................... (131,508)
-----------
Cash paid, net of cash acquired $ (364,107)
===========

The acquisition of FutureSmart was accounted for as a purchase in accordance
with SFAS No. 141, and the Company has accordingly allocated the purchase price
of FutureSmart based upon the fair values of the net assets acquired and
liabilities assumed. The allocation of the purchase price has not been
finalized; however, the Company does not expect material changes.

Pursuant to the acquisition agreement, the shareholders of FutureSmart could
receive "Earn out Consideration" of up to 1,200,000 LFSI common shares if
FutureSmart achieves certain "Performance Milestones."

In connection with LFSI's acquisition of FutureSmart RCG agreed until March 3,
2005, or one year from the registration of the shares of common stock for the
FutureSmart shareholders if sooner, if RCG proposes to transfer 15% or more of
the shares of LFSI owned by RCG (excluding registered offerings, sales to
certain investors and related party sales) then certain of the FutureSmart
shareholders shall have the right to participate in such transfer of stock on
the same terms and conditions for up to 25% of the total sale.

The following table is prepared on a pro forma basis for the three and nine
month periods ended March 31, 2003 and 2002 as though FutureSmart had been
acquired as of the beginning of the period presented (unaudited: in thousands
except per share amounts):

Three Months Nine Months
Ended Ended
March 31, March 31,
2003 2002 2003 2002
---- ---- ---- ----

Revenues $ 1,683 $ 2,605 $ 5,240 $ 7,128
=========== ========== ========== ===========

Net loss $ (1,702) $ (985) $ (4,309) $ (4,131)
=========== ========== ========== ===========

Basic and diluted loss per share $ (.08) $ (.06) $ (.22) $ (.26)
========= ======== ========= ==========

The pro forma results are not necessarily indicative of what would have occurred
if the acquisition had been in effect for the periods presented. In addition,
they are not intended to be a projection of future results and do not reflect
any synergies that might be achieved from combining the operations.

SALE OF BRANCHES
In September 2001, the Company sold its branch locations in Greenville/Columbia,
SC, Raleigh, NC and Hilton Head, SC to entities that are now operating these
locations as franchises. These branches, which had a net equity deficit of
$36,700, were sold for net proceeds of $134,900 resulting in a net gain of $
171,600.

LIFESTYLE TECHNOLOGIES ATLANTA, INC.
On July 10, 2001, the Company acquired certain net assets and the business of a
home technology company in Atlanta, GA, now operated as Lifestyle Technologies
Atlanta, Inc. ("LSTA") for $1,255,000 which was paid in cash ($275,000), RCG
Common Stock (139,365 shares) and a four - year term note ($250,000). Including
direct acquisition costs, the total purchase price aggregated $1,259,857 and the
transaction was accounted for using the purchase method of accounting. The
excess value of the purchase price over the fair value of the net assets on the
acquisition date aggregated $1,207,669 which was allocated to goodwill.

D. INVESTMENTS

The Company's investments, which are included in other assets, are comprised of
a certificate of deposit, including accrued interest, which is pledged as
collateral on a trade credit agreement with a vendor.

E. PROPERTY AND EQUIPMENT

A summary of property and equipment as of March 31, 2003 is as follows:

Real estate ................... $ 46,394
Leasehold improvements ........ 35,031
Showrooms ..................... 184,962
Vehicles ...................... 12,074
Computers and office equipment 333,163
Furniture and fixtures ........ 134,882
Computer software ............. 42,201
---------
788,706
Less: Accumulated depreciation (172,349)
---------
Property and equipment, net ... $ 616,357
=========

F. NOTES PAYABLE

Notes payable at March 31, 2003 consist of the following:

Note payable - due on demand bearing interest at the prime rate plus 1% and
secured by assets pledged by a Related Party; past due; the Company is
currently negotiating with the lender to extend the note, however there can
be no assurance that they will be successful $ 100,000
Note payable - due in August 2003 with interest at 10%; collateralized by certain home
technology assets (2) 300,000
Unsecured note payable - due on demand; with interest at 6% 500,000
Unsecured note payable - due October 1, 2003; with interest at 12% 225,000
Note payable - due on demand; with interest at 10%;
collateralized by real estate 34,919
Note payable to related party - due in August 2003 with interest at 12%; unsecured 351,782
Note payable - due in August 2003 with interest at 12% and collateralized by certain
home technology accounts receivable and inventory (1) 650,000
Capital leases with interest from 10.5% to 21.4%; monthly payments aggregating $3,486;
due between March 2006 and November 2006 103,310
Note payable with interest at 10.75%; monthly payment, including interest, of $6,500;
due October 2004 112,447
Convertible debentures; joint obligation of LFSI and FutureSmart; interest at 7% to be
prepaid until March 5, 2005 with common stock of LFSI; convertible into
common stock at $2.75 per share; collateralized by all assets of FutureSmart;
senior to all other indebtedness of FutureSmart except the $112,447 note
above; due March 5, 2005 1,900,000
Note payable - due in monthly installments of $3,000 and a balloon payment in
July 2005; with interest at 8%; collateralized by home technology accounts
receivable 190,000
-------------
4,467,458
Less current maturities, including demand notes 2,289,839
--------------
Long-term portion $ 2,177,619
==============

(1) At the option of the note holder, this note can be converted into RCG's
Common Stock at a ratio of one share of Common Stock for each $4.55 of
outstanding principal and interest.
(2) The principal and accrued interest on these notes payable are convertible
to shares of RCG Common Stock at the greater of $1.12 per share or a 20%
discount to the average closing price of the Common Stock for the ten days
immediately preceding the conversion date.

RCG's Common Stock closed at $.31 on March 31, 2003.

G. INCOME TAXES

Deferred income taxes at March 31, 2003 consist primarily of net operating loss
carryforwards, which amount to approximately $6,190,000 and expire between 2020
and 2023. A valuation allowance has been recorded for the full amount of the
deferred tax assets. Further, due to substantial limitations placed on the
utilization of net operating losses following a change in control, utilization
of such NOL's could be limited.

H. NON-EMPLOYEE STOCK OPTIONS AND WARRANTS

During the three months ended March 31, 2003, the Company sold 20.5 units of a
private placement and realized net proceeds of $457,515. Each unit consists of
9,000 shares of Common Stock, $.001 par value and a Series A Warrant to purchase
3,000 shares of Common Stock for $3.33 per share. Legend Merchant Group, Inc. is
acting as placement agent for the offering and receives a commission of 10%.

As a part of a private placement offering which was closed in December 2002, the
Company sold 99.6 Units. Each Unit consisted of 4,000 shares of its Common
Stock, 4,000 Series A Warrants and 4,000 Series B Warrants. The Series A Warrant
entitles the holder to acquire the Company's Common Stock for $4.00 per share
until its expiration on August 1, 2004. The Series B Warrant expires on August
1, 2005 and entitles the holder to acquire the Company's Common Stock for $6.00
per share.

As discussed above, on September 5, 2002 RCG completed a transaction with LFSI
to sell 100% of the common stock of LST in exchange for 16 million shares of
LFSI stock. Pursuant to the terms of the Merger Agreement, each outstanding
option or warrant issued to LST employees in connection with RCG's acquisition
of LST will either be converted with the appropriate adjustment into an option
or warrant to purchase LFSI common stock or will be terminated pursuant to their
terms. If options or warrants are terminated pursuant to the terms of
outstanding warrants or stock options agreements, or RCG's stock option plan,
LFSI will grant warrants or options to holders of these securities. Newly
granted options or warrants will be proportionate to the terminated amount and
will have an exercise price equal to the market price of LFSI stock.

During the period ended March 31, 2003, the Company recorded $21,375 in non-cash
expense related to common stock and stock purchase warrants that were granted to
a consultant engaged to assist the Company in developing and implementing its
national franchising program. The fair value of these warrants, $57,000, as
determined in accordance with FAS 123 has been recorded on the Company's
financial statements and is being amortized to expense over the service period
of the related agreement. At March 31, 2003 the unamortized balance in prepaid
expenses was $9,500.

I. CONVERTIBLE SERIES A PREFERRED STOCK

on the original issue price; (iii) each holder of shares shall be entitled to
the number of votes equal to the number of shares of Common Stock into which
each share of Series A Preferred Stock could be converted; (iv) conversion is at
the option of the holder until 51% of the then outstanding shares elect to
convert, at which time all remaining outstanding Series A Preferred Stock shall
automatically be converted into Common Stock; (v) and the initial conversion
price of $2.75 per share is subject to adjustment in the event of certain
occurrences.

J. TRANSACTIONS WITH RELATED PARTIES

At March 31, 2003, notes and advances due to affiliates consisted of the
following:

DUE TO RELATED PARTIES
Due to RCG and its subsidiaries ............................................................. $1,481,146
==========

Note payable to Michael Pruitt, CEO of RCG .................................................. 10,658
Advance from and accrued interest payable to Mr. Pruitt ..................................... 47,870
Advances from and accrued interest payable to G David Gordon, a shareholder and creditor of
LFSI and RCG ................................................................................ 167,907
----------
$ 226,430
==========

The amount due to RCG and its subsidiaries represents net advances to and from
RCG and its subsidiaries. RCG also provides various services to the Company,
including accounting and finance assistance, capital and debt raising, human
resources and other general and administrative services. For the nine months
ended March 31, 2003 and 2002, RCG charged the Company $90,000 and $147,000,
respectively. For the three months ended March 31, 2003 and 2002, RCG charged
the Company $30,000 and $50,000, respectively.

The note payable to Mr. Pruitt, CEO of RCG, indicated in the above table bears
interest at 12% per annum and is due on demand. The advance payable to Mr.
Pruitt bears interest at a variable rate, which approximates the rate of
interest earned on the Company's certificate of deposit investment, and is due
on demand.

Mr. Pruitt has pledged certain of his personal assets to secure a $100,000 bank
credit facility for LST's home technology business. At March 31, 2003, the
balance outstanding on this bank facility was $100,000. As noted above, the
balance is currently past due and we are attempting to extend repayment terms.
There can be no assurance we will be successful in obtaining an extension.

Mr. Pruitt is also a minority investor in a company that has purchased franchise
licenses and business operations of LST's home technology business in three
markets in South Carolina and in another company that has purchased franchise
licenses in three locations in Maryland. At March 31, 2003, the franchise
locations in South Carolina owed the Company and its subsidiaries $47,000 and
the franchise locations in Maryland owed the Company and its subsidiaries
$13,000.

Paul B. Johnson, President of the Company, is an investor in a company, which in
November 2001 became a franchisee of the Company's home technology business in
the Dallas, Texas market and purchased two additional locations in the Dallas,
Texas market during the quarter ended March 31, 2003. The Dallas franchise
location owed the Company and its subsidiaries $88,000 at March 31, 2003.

During fiscal 2002, Glenn Barrett resigned as President of Lifestyle and began
LVA Technologies LLC ("LVA"), a low voltage wiring business that operates as a
Lifestyle franchisee headquartered in Charlotte, NC to service the commercial
market. The Company waived LVA's initial franchise fee for the commercial
franchise. LVA also owns the Greenville and Columbia, SC franchises. LVA's low
voltage wiring business pays royalties on products purchased from the Company at
the same rate as the Company's other franchisees, however, it does not pay
royalties on revenue generated from products purchased elsewhere as required of
the Company's other franchisees, including the Greenville and Columbia, SC
franchises. LVA and its subsidiaries owed the Company and its subsidiaries
$286,000 at March 31, 2003.

At March 31, 2003, total debt outstanding to G. David Gordon and a company in
which he is the president and a shareholder, was $351,782 which is included in
notes payable on the Condensed Consolidated Balance Sheet. The loan, which arose
during fiscal 2002, bears interest at 12%. Mr. Gordon and this company also
loaned RCG an additional $1,144,000 during fiscal 2002 at interest rates of 8%
to 12%. Mr. Gordon also acts as special legal counsel to RCG and the Company
from time to time.

Mr. Gordon has an ownership interest in ten of the Company's franchises,
including two locations that were purchased during fiscal 2002 from the Company
and for which the Company recorded a gain of $119,000. Mr. Gordon has an
ownership interest in the three markets in South Carolina along with Mr. Pruitt,
as discussed above; three locations in the Dallas market along with Mr. Johnson;
and four additional markets in Houston, Texas, Raleigh, North Carolina,
Wilmington, North Carolina and Greensboro, North Carolina. These four markets
owed the Company and its subsidiaries $84,000 at March 31, 2003.

K. BUSINESS SEGMENT INFORMATION

Information related to business segments is as follows (amounts in thousands of
dollars):

Company
Owned Future
Locations Franchise Smart Corporate Total

NINE MONTHS ENDED MARCH 31, 2003

Revenue

External customers $ 1,219 $ 440 $ 440 $ 6 $ 2,105
Intersegment $ - $ 53 $ - $ - $ 53

Net loss from operations $ 1,046 $ 203 $ 213 $ 669 $ 2,131

NINE MONTHS ENDED MARCH 31, 2002

Revenue
External customers $ 1,797 $ 578 $ - $ - $ 2,375
Intersegment $ - $ 31 $ - $ - $ 31

Net loss from operations $ 710 $ 92 $ - $ - $ 802

Corporate includes the real estate investment and the costs associated with the
requirements of a public company.

L. CONTINGENCIES

As a part of the issue of 16,000,000 shares of its Common Stock to RCG, LFSI was
obligated to file a registration statement within 90 days of the September 5,
2002 closing date of the transaction. If LFSI did not meet this deadline, it was
obligated to issue an option to RCG for 1,000,000 shares of LFSI common stock at
20% of the last bid price for the LFSI common stock on the triggering date. As a
result of the acquisition of FutureSmart Systems, Inc. ("FutureSmart") by LFSI
(See Note C), RCG and LFSI have agreed to extend the deadline for filing the
registration statement until May 31, 2003 or a later date consistent with any
registration rights associated with the acquisition of FutureSmart.

During 2001, FutureSmart approved a plan to exit, and subsequently vacated
certain facilities in San Jose, California and Murray, Utah. As of March 31,
2003, FutureSmart has accrued $120,846 for payment of minimum lease payments
under non-cancelable operating leases. The landlord of the San Jose lease has
demanded full payment of amounts due on the lease.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

From time to time, the Company may publish forward-looking statements relative
to such matters as anticipated financial performance, business prospects,
technological developments and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. All statements other than statements of historical fact included in
this section or elsewhere in this report are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important
factors that could cause actual results to differ materially from those
discussed in such forward-looking statements include, but are not limited to,
the following: changes in the economy or in specific customer industry sectors;
changes in customer procurement policies and practices; changes in product
manufacturer sales policies and practices; the availability of product and
labor; changes in operating expenses; the effect of price increases or
decreases; the variability and timing of business opportunities including
acquisitions, alliances, customer agreements and supplier authorizations; the
Company's ability to realize the anticipated benefits of acquisitions and other
business strategies; the incurrence of debt and contingent liabilities in
connection with acquisitions; changes in accounting policies and practices; the
effect of organizational changes within the Company; the emergence of new
competitors, including firms with greater financial resources than the Company;
adverse state and federal regulation and legislation; and the occurrence of
extraordinary events, including natural events and acts of God, fires, floods
and accidents.

On March 7, 2003 LFSI completed its acquisition of FutureSmart Systems, Inc., a
manufacturer and distributor of structured wiring and home networking
distribution panels. The consolidated financial statements include the results
of FutureSmart from the date of acquisition.

Pursuant to the acquisition agreements, the shareholders of FutureSmart could
receive "Earn out Consideration" of up to 1,200,000 LFSI common shares if
FutureSmart achieves certain "Performance Milestones."

On April 24, 2001, LFSI had a change in control and acquired a new subsidiary,
Brittany Enterprises, Inc. LFSI issued 18,000,000 shares (subsequently
reverse-split to 2,571,429 shares) of its $.10 par value common stock to acquire
Brittany. Brittany owns two condominium units in Dallas, Texas, which are
currently under lease.

LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2003 LFSI had a working capital deficit of $5,127,010 as compared
to a working capital deficit of $1,885,664 at June 30, 2002, an increase of
$3,241,346. The largest components of the increase is the FutureSmart working
capital deficit of $2,232,278 at March 31, 2003 and the transfer of $1,381,782
in notes payable, which are due in August 2003, to current from non-current. In
addition, accounts payable and accrued expenses have increased $684,445,
excluding the non-cash accrual of stock option expense of $460,415.

During the nine months ended March 31, 2003, the Company sold 398,400 shares of
its common stock and increased capital, net of transaction costs by $871,420. Of
this amount, $261,000 was sold prior to the merger on September 5, 2002 and
$610,420, including converting $198,000 in notes payable, was sold after the
merger. During the quarter ended March 31, 2003 the Company raised an additional
$457,515 from the sale of its common stock with warrants, which amount is
included in unissued common stock.

As discussed above, at March 31, 2003 the Company has a significant working
capital deficit. The Company does not have sufficient cash flows to meet its
obligations currently due within the next 12 months. The Company is currently
exploring additional sources of liquidity, including debt and equity financing
alternatives and potential sales of its Common Stock in private placement
transactions. Additionally, the Company plans on negotiating with its debt
holders to extend or convert some or all of the debt due in August 2003. If the
Company is (i) unable to grow its business or improve its operating cash flows
as expected, (ii) unsuccessful in extending a substantial portion of the debt
repayments scheduled for August 2003, or (iii) unable to raise additional funds
through private placement sales of its Common Stock, then the Company will need
to secure alternative debt or equity financing to provide it with additional
working capital. There can be no assurance that additional financing will be
available when needed or, if available, that it will be on terms favorable to
the Company and its stockholders. If the Company is not successful in generating
sufficient cash flow from operations, or in raising additional capital when
required in sufficient amounts and on terms acceptable to the Company, these
failures would have a material adverse effect on the Company's business, results
of operations and financial condition. If additional funds are raised through
the issuance of equity securities, the percentage ownership of the Company's
current shareholders would be diluted.

SALES AND REVENUES
During the nine months ended March 31, 2003, sales declined $269,537 (11.4%)
from the year earlier amount. During the year earlier period, $1,796,962 of the
sales were from LST's company owned locations in Charlotte, NC, Greenville, NC,
Hilton Head, SC and Raleigh, NC. During the current year period, sales include
$1,219,350 from LST's company owned locations. The decline in company owned

locations revenue is principally the result of the sale in September 2001 of the
locations in Greenville, NC, Hilton Head, SC and Raleigh, NC. The franchising
revenue is solely from franchise fees, royalties and procurement fees charged to
franchises, which did not commence until the second quarter of last fiscal year.
Franchise revenues amounted to $440,319 in the current year period as compared
to $577,678 in the year earlier period. Of these amounts, $120,000 and $480,000
represent sales of franchises and $320,319 and $97,678 represent revenues from
royalties and procurement fees, respectively. The revenues from the sale of
franchises has declined substantially from the initial sales, however, the
majority of the decline has been offset by increased recurring revenues from
royalties and procurement fees.

Revenues during the three and nine month periods of fiscal 2003 include revenue
from FutureSmart, from the effective date of its acquisition of March 7, 2003 in
the amount of $439,358. On a pro forma comparative basis, FutureSmart revenues
were $3,574,044 and $4,753,419 during the nine month periods ended March 31,
2003 and 2002, respectively, and were $1,118,279 and $1,976,318 during the three
months ended March 31, 2003 and 2002, respectively. The quarter ended March 2002
was the best quarter in FutureSmart's history. Subsequently, sales have declined
from this high point due to slower demand principally as a result of the
downward trend of the economy. FutureSmart is expanding its sales through
distributors and expects this to improve future sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative ("SG&A") expenses have increased $559,388
and $366,079 during the nine and three month periods ended March 31, 2003 as
compared to the year earlier periods. The majority of the increase was a result
of the acquisition of FutureSmart, whose SG&A of $302,406 are included for the
first time since its acquisition.

During the nine month period ended March 31, 2003 the Company incurred new costs
of $199,909 for corporate overhead, which includes $76,500 in payroll costs,
$80,733 in professional fees and $32,960 in travel costs. During the current
year period, SG&A for the franchising group was $603,982 as compared to $668,523
during the prior year period. SG&A for company owned stores was $979,033 as
compared to $857,419 during the prior year period. The Company is continuing to
attempt to reduce its overhead costs while still emphasizing growing the
franchise portion of the business. On a pro forma basis FutureSmart's SG&A was
$2,395,741 and $4,180,584 during the nine month periods ended March 31, 2003 and
2002, respectively and $881,917 and $875,158 during the three month periods
ended March 31, 2003 and 2002, respectively. The decline experienced during the
nine-month period was the result of closing facilities in San Jose, California
and Murray, Utah together with other general staff reductions at the end of
2001.

STOCK OPTION AND WARRANT COMPENSATION
Stock option and warrant compensation amounted to $481,790 and $16,625 during
the nine-month periods ended March 31, 2003 and 2002, respectively. The increase
is the result of the below market option granted to the Company's new Chief
Executive Officer.

GAIN ON DISPOSAL OF FIXED ASSETS
During the nine-month period ended March 31, 2003 the Company sold certain
non-productive assets which resulted in a loss of $12,032. In September 2001,
the Company sold its branch locations in Greenville/Columbia, SC, Raleigh, NC

and Hilton Head, SC to entities that are now operating these locations as
franchises. These branches, which had a net equity deficit of $36,700, were sold
for net proceeds of $134,900 resulting in a net gain of $171,600.

DEBT FORGIVENESS
In August 2001, related parties of LST forgave indebtedness in the amount of
$24,351.

INTEREST EXPENSE
Interest expense increased from $106,951 in the prior year period to $166,288
during the nine months ended March 31, 2003. The increase is due to the higher
average level of debt outstanding during the current year period as compared to
the prior year period. The majority of the Company's current debt, excluding the
FutureSmart debt, was obtained in August 2001 and accordingly would have been
outstanding only approximately 83% of the prior year period. In addition, the
acquisition of FutureSmart added $12,032 in interest for the one-month period it
was owned by the Company.

Item 3. Controls and Procedures

The Company has established and currently maintains controls and other
procedures designed to ensure that material information required to be disclosed
in its reports filed under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time periods specified by the
Securities and Exchange Commission. In conjunction with the close of each fiscal
quarter, the Company conducts an update and a review and evaluation of the
effectiveness of the Company's disclosure controls and procedures. In the
opinion of the Company's principal executive officer, based upon an evaluation
completed within 90 days prior to the filing of this report, the Company's
disclosure controls and procedures are sufficiently effective to ensure that any
material information relating to the Company is recorded, processed, summarized
and reported to its principal officers to allow timely decisions regarding
required disclosures.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, 2003, the Company sold 20.5
units of a private placement and realized net proceeds of $457,515.
Each unit consists of 9,000 shares of Common Stock, $.001 par value and
a Series A Warrant to purchase 3,000 shares of Common Stock for $3.33
per share. Legend Merchant Group, Inc. is acting as placement agent for
the offering and receives a commission of 10%. The small business
issuer claimed exemption from registration based upon Section 4(2) of
the Securities and Exchange Act of 1933 (the "Act").

Effective March 3, 2003 the Company amended their Articles of
Incorporation to authorize the issue of 1,000,000 shares of Series A
Convertible Preferred Stock, par value $.10 per share. The principal
preferences and rights of the Series A Preferred Stock are: (i)
entitled to receive dividends when and if declared; (ii) liquidation
value of $2.75 per share plus an amount equal to 5% per annum on the
original issue price; (iii) each holder of shares shall be entitled to
the number of votes equal to the number of shares of Common Stock into
which each share of Series A Preferred Stock could be converted; (iv)
conversion is at the option of the holder until 51% of the then
outstanding shares elect to convert, at which time all remaining
outstanding Series A Preferred Stock shall automatically be converted
into Common Stock; (v) and the initial conversion price of $2.75 per
share is subject to adjustment in the event of certain occurrences. The
Preferred Stock was issued on March 7, 2003 in conjunction with the
purchase of FutureSmart.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

The Company currently does not employ a Chief Financial Officer.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits -
99.1 Certificate Pursuant to 18 U.S.C. Section 1350 - CEO
99.2 Certificate Pursuant to 18 U.S.C. Section
1350 - Principal Accounting Officer

(b) Reports on Form 8-K
i) On March 24, 2003, the Company filed its Form 8-K dated
March 7, 2003 to report the acquisition of FutureSmart
Systems, Inc. Financial statements will be filed by amendment
no later than 60 days after March 24, 2003.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

LIFESTYLE INNOVATIONS, INC.

Date: May 20, 2003 By: /s/ Jacqueline E. Soechtig
-----------------------------------
Jacqueline E. Soechtig, Chief Executive
Officer

Date: May 20, 2003 By: /s/ Paul Johnson
--------------------------
Paul Johnson, President
and Principal Accounting Officer

CERTIFICATION

I, Jacqueline E. Soechtig, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Lifestyle
Innovations, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as, and for the periods presented in this
quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have: a) designed such disclosure controls and
procedures to ensure that material information relating to the
registrant is made known to me by others within the Company,
particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions): a) all
significant deficiencies in the design or operation of internal
controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls;
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

May 20, 2003 /s/ Jacqueline E. Soechtig
-----------------------------------
Jacqueline E. Soechtig
Chief Executive Officer

CERTIFICATION

I, Paul Johnson, certify that:

May 20, 2003 /s/ Paul Johnson
--------------------------
Paul Johnson, President and
Principal Accounting Officer

Exhibit 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to and solely for purposes of, 18 U.S.C. Section 1350 (Section
906 of the Sarbanes-Oxley Act of 2002), the undersigned hereby
certifies in the capacity and on the date indicated below that:

1. The Quarterly Report of Lifestyle Innovations, Inc.
(the "Registrant") on Form 10-QSB for the period
ended March 31, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the "Report")
fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the
Registrant.

Date: May 20, 2003 By: /s/ Jacqueline E. Soechtig
--------------------------
Jacqueline E. Soechtig
Chief Executive Officer

Exhibit 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to and solely for purposes of, 18 U.S.C. Section 1350 (Section
906 of the Sarbanes-Oxley Act of 2002), the undersigned hereby
certifies in the capacity and on the date indicated below that:

2. The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the
Registrant.

Date: May 20, 2003 By: /s/ Paul Johnson
-----------------
Paul Johnson, President and
Principal Accounting Officer