SANTA CLARA, Calif., Aug. 11 /PRNewswire/ -- Applied Imaging Corp.
(Nasdaq: AICX) today announced results for the quarter and six months ended
June 30, 1998.
    For the quarter, revenues were $3.3 million compared to revenues of
$3.2 million for the quarter ended June 30, 1997.  Net loss for the second
quarter was $2.1 million, or $0.24 per share calculated on 8.7 million
weighted average shares outstanding, compared to a net loss of $1.9 million,
or $0.26 per share, calculated on 7.2 million weighted average shares
outstanding for the second quarter of 1997.  The $2.1 million loss for the
quarter included a one time restructuring charge of $353,000, or $0.04 per
share.
    For the six-month period, revenues were $6.0 million compared to
$6.9 million for the same period in 1997.  Net loss for the first half of 1998
was $4.6 million, or $0.56 per share calculated on 8.2 million weighted
average shares outstanding, compared to a net loss of $2.8 million, or $0.41
per share calculated on 7.0 million weighted average shares outstanding, for
the first half of 1997.
    During the second quarter, the Company received 510(k) clearance for its
WINSCAN(TM) Automated Imaging System for the identification and enumeration of
nucleated red blood cells from peripheral blood.  The Company intends to
incorporate WINSCAN into the upcoming clinical trials of its proprietary
method for the isolation and identification of fetal cells in the blood of
pregnant women.  Additionally during the quarter, Applied Imaging announced an
$11.5 million private placement financing from accredited investors and
adopted a Rights Plan as a mechanism to assure shareholders fair and equal
treatment in the event of any takeover of the Company.
    Jack Goldstein, Ph.D., President and Chief Executive Officer, said, "We
are pleased with the success of our private financing and our continued
regulatory progress.  We have also made additional progress in isolating fetal
cells from pre-invasive blood samples taken from pregnant women.  Utilizing
our latest prototype, we successfully isolated fetal cells and correctly
analyzed them for genetic abnormalities in 85 percent of the samples tested.
This method for fetal cell isolation was also successfully transferred to one
of our outside research collaborators who has confirmed our results.  Our
current focus is on continuing to optimize the method for improved sensitivity
and higher throughput, ultimately leading to the commencement of clinical
trials."
    The foregoing statement is a forward-looking statement within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act.  Actual results could differ materially from those projected in
the forward-looking statement as a result of a number of factors, including
the failure of the Company to successfully develop or commercialize its
prenatal screening system, lack of regulatory approval, and other such factors
as set forth in the Company's form 10K for the year ended December 31, 1997,
as filed with the Securities and Exchange Commission.
    Applied Imaging Corporation, based in Santa Clara, Calif., develops,
manufactures, and markets automated clinical analysis systems used by
laboratories for prenatal and other genetic diseases.  The Company markets its
products worldwide and has more than 600 customer sites in over 35 countries.
Applied Imaging is a publicly traded company listed on the Nasdaq Stock Market
under the symbol AICX.

                    APPLIED IMAGING CORP. AND SUBSIDIARIES
               Condensed Consolidated Statements of Operations
                    (In thousands, except per share data)
                                 (Unaudited)

                             Three months ended           Six months ended
                                  June 30,                    June 30,
                              1998          1997         1998          1997

    Revenues                $3,295        $3,169       $5,969        $6,891
    Cost of revenues         1,636         1,508        2,876         3,151
    Gross profit             1,659         1,661        3,093         3,740

    Research and
      development            1,529         1,668        3,451         3,252
    Sales and marketing      1,267           874        2,596         1,706
    General and
      administrative           727         1,098        1,455         1,786
    Restructuring costs        353            --          353            --
    Total operating
      expenses               3,876         3,640        7,855         6,744

    Other income (expense),
      net                       91            87          158           168

    Net loss               $(2,126)      $(1,892)     $(4,604)      $(2,836)

    Net loss per share -
      basic and diluted     $(0.24)       $(0.26)      $(0.56)       $(0.41)

    Weighted average shares
      outstanding            8,716         7,164        8,192         6,995

                    Condensed Consolidated Balance Sheets
                                (In thousands)

                                  June 30,             December 31,
                                    1998                    1997
    ASSETS

    Cash and marketable
      securities                  $13,785                  $8,378
    Other current assets            5,245                   4,475
    Property and equipment, net     1,698                   1,793
    Other assets, net                  82                      68
    Total assets                  $20,810                 $14,714

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:           $6,265                  $5,682
    Other liabilities                  77                      89
    Stockholders' equity           14,468                   8,943
    Total Liabilities and
      Stockholders' Equity        $20,810                 $14,714

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