SANTA CLARA, Calif., Nov. 10 /PRNewswire/ --  Applied Imaging Corp.
(Nasdaq: AICX) today announced results for the quarter and nine months ended
September 30, 1998.
    For the quarter, revenues were $2.6 million compared to revenues of
$2.8 million for the quarter ended September 30, 1997.  Net loss for the third
quarter was $2.1 million, or $0.18 per share calculated on 11.4 million
weighted average shares outstanding, compared to a net loss of $2.4 million,
or $0.32 per share calculated on 7.6 million weighted average shares
outstanding, for the third quarter of 1997.
    For the nine-month period, revenues were $8.6 million compared to
$9.6 million for the same period in 1997.  Net loss for the nine month period
ended September 30, 1998 was $6.7 million, or $0.72 per share calculated on
9.3 million weighted average shares outstanding, compared to a net loss of
$5.3 million, or $0.73 per share calculated on 7.2 million weighted average
shares outstanding, for the same period in 1997.
    Jack Goldstein, Ph.D., President and Chief Executive Officer, said, "While
the results for the third quarter continue to reflect our exposure in Japan as
well as slower sales in North America, we have made progress on several
fronts.  We recently announced the introduction of our latest generation of
genetic analysis systems, CytoVision(TM).  With the use of the Windows NT(R)
operating system, the CytoVision systems allow researchers to more easily
perform high quality testing."
    Goldstein continued, "Additionally, we are pleased with the progress of
our research efforts in our fetal cell screening program.  As per our
milestone commitment, we entered into a preclinical research collaboration
agreement with the Harris Birthright Research Center for Fetal Medicine at
Kings College Hospital in London, England.  This collaboration allows us
access to large numbers of pre-invasive maternal blood samples, facilitating
our preclinical studies.  Studies to complete optimization of our fetal cell
isolation and identification method are underway and we intend to begin a
preclinical evaluation over the next few months to determine the sensitivity
and specificity of the current method as well as the optimal gestational age
of the fetus to obtain the largest number of fetal cells from the mothers
blood."
    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.
    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 CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (Unaudited)

                               Three months ended        Nine months ended
                                September 30,                September 30,
                              1998          1997         1998          1997


    Revenues                $2,639        $2,750       $8,608        $9,641
    Cost of revenues         1,340         1,315        4,216         4,466
        Gross profit         1,299         1,435        4,392         5,175

    Operating Expenses
        Research and
         development         1,707         2,267        5,158         5,519
        Sales and marketing  1,171         1,061        3,767         2,767
        General and
         administrative        736           622        2,191         2,408
        Restructuring costs      -             -          353             -
          Total cost
           and expenses      3,614         3,950       11,469        10,694

    Other income
     (expense), net            213            90          371           258

    Net loss               $(2,102)     $ (2,425)     $(6,706)      $(5,261)

    Net loss per share
     - basic and diluted    $(0.18)       $(0.32)      $(0.72)       $(0.73)

    Weighted average
     shares outstanding     11,448         7,634        9,277         7,209

                      Condensed Consolidated Balance Sheets
                                  (In thousands)
                                   (unaudited)
                                       September 30,          December 31,
                                           1998                 1997

    ASSETS

    Cash and marketable securities         $13,040            $8,378
    Other current assets                     4,942             4,475
    Property and equipment, net              1,663             1,793
    Other assets, net                           81                68
    Total assets                           $19,726           $14,714

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:                    $5,664            $5,682
    Other liabilities                           71                89
    Stockholders' equity                    13,991             8,943
    Total Liabilities and
     Stockholders' Equity                  $19,726           $14,714

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