<PAGE>


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
    Act of 1934 For the Quarterly Period ended June 30, 2001

                                       OR

[_] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
    Act of 1934 for the Transition Period From ___________ To ___________.

                         Commission File Number: 0-21371

                              APPLIED IMAGING CORP.
             (Exact name of registrant as specified in its charter)

                Delaware                                   77-0120490
    (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                     Identification No.)

                         2380 Walsh Avenue, Building B,
                          Santa Clara, California 95051
           (Address of principal executive offices including zip code)

                                 (408) 562-0250

              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 90 days. Yes [X] No [_]


As of August 6, 2001 15,202,843 shares of the Registrant's Common Stock were
outstanding.

<PAGE>


                              APPLIED IMAGING CORP.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                Page
                                                                                ----

                          PART I. FINANCIAL INFORMATION
                          -----------------------------

<S>                                                                             <C>
Item 1.  Financial Statements (Unaudited)
         Condensed Consolidated Balance Sheets
         June 30, 2001 and December 31, 2000  .................................   3

         Condensed Consolidated Statements of Operations and Comprehensive Loss
         Three and six months ended June 30, 2001 and 2000  ...................   4

         Condensed Consolidated Statements of Cash Flows
         Six months ended June 30, 2001 and 2000 ..............................   5

         Notes to Condensed Consolidated Financial Statements ................. 6-7

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations ........................ 8-11

Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         Derivatives and Financial Instruments ................................   12


                           PART II. OTHER INFORMATION
                           --------------------------


Item 4.  Submission of Matters to a Vote of Security Holders ..................   13

Item 6.  Exhibits and Reports on Form 8-K .....................................   13

         Signatures ...........................................................   14
</TABLE>


                                       2

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                     APPLIED IMAGING CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                June 30,      December 31,
                                                                  2001            2000
                                                              -------------   -------------
                                                              (Unaudited)
<S>                                                                <C>             <C>
ASSETS

Current assets:
       Cash and cash equivalents                                   $ 1,431         $ 4,447
       Restricted cash                                               2,097           1,667
       Short term investments                                        1,284             898
       Trade accounts receivable, net                                5,784           6,732
       Inventories                                                   1,465           1,627
       Prepaid expenses and other assets                               139             239
                                                              -------------   -------------
           Total current assets                                     12,200          15,610
Property and equipment, net                                          1,110           1,127
Intangibles, net                                                     2,497           2,650
Other assets, net                                                       76              55
                                                              -------------   -------------
           Total assets                                           $ 15,883        $ 19,442
                                                              =============   =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
       Current portion of bank debt                                $ 1,930         $ 1,929
       Current portion of related party notes payable                    -             250
       Current portion of capital lease obligation                      29              34
       Accounts payable                                              1,795           1,829
       Accrued expenses                                              1,769           2,646
       Deferred revenue, current                                     2,665           2,417
                                                              -------------   -------------
           Total current liabilities                                 8,188           9,105

Bank debt, less current portion                                        167             500
Deferred revenue, non-current                                          606             345
Capital lease obligations, less current portion                          -               9
                                                              -------------   -------------
           Total liabilities                                         8,961           9,959
                                                              -------------   -------------

Stockholders' equity:

       Common stock                                                     15              15
       Additional paid-in capital                                   48,113          48,070
       Deferred stock compensation                                     (10)            (30)
       Accumulated other comprehensive loss                           (360)           (366)
       Accumulated deficit                                         (40,836)        (38,206)
                                                              -------------   -------------
           Total stockholders' equity                                6,922           9,483
                                                              -------------   -------------

           Total liabilities and stockholders' equity             $ 15,883        $ 19,442
                                                              =============   =============
</TABLE>

         The accompanying notes are an integral part of these unaudited
                  condensed consolidated financial statements.


                                       3

<PAGE>

                     APPLIED IMAGING CORP. AND SUBSIDIARIES

     Condensed Consolidated Statements of Operations and Comprehensive Loss
                      (in thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Three months ended                Six months ended
                                                            June 30,                          June 30,
                                                  ----------------------------    ------------------------------
                                                      2001           2000              2001            2000
                                                  -------------   ------------    ---------------  -------------
<S>                                                    <C>            <C>                <C>            <C>
Revenues                                               $ 4,528        $ 4,343            $ 8,458        $ 8,036
Cost of revenues                                         1,793          1,664              3,736          3,450
                                                  -------------   ------------    ---------------  -------------

    Gross profit                                         2,735          2,679              4,722          4,586
                                                  -------------   ------------    ---------------  -------------

Operating expenses:
    Research and development                             1,029            976              1,964          1,856
    Sales and marketing                                  1,812          1,519              3,838          2,988
    General and administrative                             692            689              1,451          1,368
    Amortization of intangibles                             77             63                155            126
                                                  -------------   ------------    ---------------  -------------
         Total operating expenses                        3,610          3,247              7,408          6,338
                                                  -------------   ------------    ---------------  -------------

         Operating loss                                   (875)          (568)            (2,686)        (1,752)

Other income/(expense), net                                  7             24                 56            (73)
                                                  -------------   ------------    ---------------  -------------

    Net loss                                              (868)          (544)            (2,630)      $ (1,825)

Other comprehensive income (loss)
    Change in unrealized loss on
         short-term investments                              2              4                  6              1
    Other unrealized loss                                    -              -                  -             (2)
                                                  -------------   ------------    ---------------  -------------

    Comprehensive loss                                  $ (866)        $ (540)          $ (2,624)      $ (1,826)
                                                  =============   ============    ===============  =============

Net loss per share - basic and diluted                 $ (0.06)       $ (0.04)           $ (0.17)       $ (0.14)
                                                  =============   ============    ===============  =============

Weighted average shares outstanding
    - basic and diluted                                 15,184         13,379             15,167         13,261
                                                  =============   ============    ===============  =============
</TABLE>

         The accompanying notes are an integral part of these unaudited
                  condensed consolidated financial statements.


                                        4

<PAGE>

                  APPLIED IMAGING CORP. AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                              Six months ended June 30,
                                                                           ---------------------------------
                                                                               2001               2000
                                                                           --------------    ---------------
<S>                                                                             <C>                <C>
Cash flows from operating activities:

     Net loss                                                                   $ (2,630)          $ (1,825)
     Adjustments to reconcile net loss to net cash
        used in operating activities:
        Depreciation and amortization                                                434                451
        Provision for doubtful accounts                                               50                  -
        Amortization related to employee deferred
           stock compensation                                                          2                 43
        Changes in operating assets and liabilities:
           Trade accounts and related party receivable                               898                397
           Inventories                                                               162               (160)
           Prepaid expenses and other assets                                         100               (328)
           Accounts payable                                                          (34)              (367)
           Accrued expenses                                                         (877)              (546)
           Deferred revenue                                                          509                340
                                                                           --------------    ---------------
           Net cash used in operating activities:                                 (1,386)            (1,995)
                                                                           --------------    ---------------
Cash flows from investing activities:

     Purchase of short-term investments                                           (9,082)           (11,905)
     Proceeds from sale and maturities of investments                              8,702             14,054
     Purchases of equipment                                                         (264)              (300)
     Other assets                                                                    (21)                26
                                                                           --------------    ---------------
        Net cash provided by/(used in) investing activities:                        (665)             1,875
                                                                           --------------    ---------------
Cash flows from financing activities:

     Net proceeds from issuance of common stock                                       61                703
     Restricted cash                                                                (430)                 -
     Bank and other loan proceeds                                                      -                500
     Bank and other loan payments                                                   (596)            (1,389)
                                                                           --------------    ---------------
        Net cash used in financing activities:                                      (965)              (186)
                                                                           --------------    ---------------

Net decrease in cash and cash equivalents                                         (3,016)              (306)

Cash and cash equivalents at beginning of period                                   4,447              2,832
                                                                           --------------    ---------------
Cash and cash equivalents at end of period                                       $ 1,431            $ 2,526
                                                                           ==============    ===============
Supplemental disclosure of cash flow information:

        Cash paid for interest during the period                                   $ 122              $ 161
                                                                           ==============    ===============
        Cash paid for taxes during the period                                       $ 18                $ -
                                                                           ==============    ===============

Supplemental disclosure of non-cash investing and financing activities:

        Deferred stock compensation                                                $ (18)               $ -
                                                                           ==============    ===============
</TABLE>

         The accompanying notes are an integral part of these unaudited
                  condensed consolidated financial statements.



                                       5

<PAGE>

                     APPLIED IMAGING CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE I - Basis of Presentation

     The accompanying condensed consolidated financial statements include the
accounts of Applied Imaging Corp. and subsidiaries (the "Company") for the three
and six months ended June 30, 2001 and 2000. These financial statements are
unaudited and reflect all adjustments, consisting only of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
presentation of the Company's financial position, operating results and cash
flows for those interim periods presented. The results of operations for the
three and six months ended June 30, 2001 are not necessarily indicative of
results to be expected for the fiscal year ending December 31, 2001. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto, for the year ended
December 31, 2000, contained in the Company's 2000 annual report on Form 10-K.

Liquidity: Management believes that its existing capital resources will be
sufficient to meet the Company's capital and operating requirements through at
least 2001. If expenditures required to achieve the Company's plans are greater
than projected, or if the Company is unable to generate adequate cash flow from
sales of its products, the Company may need to seek additional sources of
capital. There can be no assurance that the Company will be able to obtain
additional debt or equity financing when needed or on terms acceptable to the
Company. If adequate funds are not available, the Company could be required to
delay development or commercialization of certain products, to license to third
parties the rights to commercialize certain products or technologies that the
Company would otherwise seek to commercialize internally, or to reduce the
marketing, customer support, or other resources devoted to product development.
Accordingly, the failure of the Company to obtain sufficient funds on acceptable
terms when needed could have a material adverse effect on the Company's
business, results of operations and financial condition.

NOTE 2 - Inventories (in thousands)

Balance as of                           June 30, 2001      December 31, 2000
                                        --------------     ------------------
Raw materials                                 $ 1,360                $ 1,443
Work in process                                    47                    122
Finished goods                                     58                     62
                                        --------------     ------------------
Total                                         $ 1,465                $ 1,627
                                        ==============     ==================

NOTE  3 - Loss per share

         There were no reconciling items of the numerators and denominators of
the basic and diluted EPS computations. Securities excluded from the computation
of EPS because their effect on EPS was antidilutive, but could dilute basic EPS
in future periods are as follows:



Balance as of                           June 30, 2001          June 30, 2000
                                       ---------------       ----------------
Options                                     2,456,328              1,764,573
Warrants                                      650,800                140,000
                                       ---------------       ----------------
Total                                       3,107,128              1,904,573
                                       ===============       ================


                                        6

<PAGE>

NOTE  4 - Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations," which establishes financial accounting and reporting
for business combinations and supersedes APB Opinion No. 16, Business
Combinations, and FASB Statement No. 38, Accounting for Preacquisition
Contingencies of Purchased Enterprises. It requires that all business
combinations in the scope of this Statement are to be accounted for using one
method, the purchase method. The provisions of this Statement apply to all
business combinations initiated after June 30, 2001, and also applies to all
business combinations accounted for using the purchase method for which the date
of acquisition is July 1, 2001, or later. The Company adopted SFAS No. 141
during the second quarter of fiscal 2001, and the adoption of SFAS No. 141 had
no material impact on financial reporting and related disclosures of the
Company.

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 142
"Goodwill and Other Intangible Assets," which establishes financial accounting
and reporting for acquired goodwill and other intangible assets and supersedes
APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition, and after they have been initially recognized
in the financial statements. The provisions of this Statement are effective
starting with fiscal years beginning after December 15, 2001. The Company will
adopt SFAS No. 142 during the first quarter of fiscal 2002, and is in the
process of evaluating the impact of implementation on the financial position and
results of operations of the Company.

                                        7

<PAGE>

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

     The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the fiscal year
ended December 31, 2000.

     This quarterly report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements relating to the adequacy of our
current capital resources and the timing of future capital requirements. The
Company's actual results could differ materially from those predicted as a
result of risks and uncertainties discussed in this quarterly report and those
set forth under "Item One - Risk Factors," and under "Item Seven - Management's
Discussion And Analysis Of Financial Condition And Results Of Operations;
Factors that May Affect Future Results," commencing on pages 8 and 24,
respectively, in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000. These risks and uncertainties include, but are not
limited to, competition, continued adverse changes in general economic
conditions in the United States and internationally, adverse changes in the
specific markets for our products, adverse changes in customer order patterns,
pricing pressures, risks associated with foreign operations, and failure to
reduce costs or improve operating efficiencies.

Results of Operations

Revenues. The Company's revenues are derived primarily from the sale of
products, instrument service contracts and grant revenues. Revenues for the
three and six months ended June 30, 2001 were $4.5 million and $8.5 million,
respectively, compared to $4.3 million and $8.0 million for the corresponding
periods in 2000. The 4% increase in revenues in the quarter and 5% in the first
six months was due primarily to increased sales of service contracts reflecting
the Company's focus on developing service and other recurring revenue streams.
In the first six months, revenues increased by 17% in North America and
decreased by 7% in overseas markets, reflecting continued weakness in overseas
markets and the strength of the U.S. dollar versus the pound sterling and the
Euro. On a comparable exchange rate basis, revenues in the first half increased
by 8% for the Company and decreased by 2% in overseas markets.

Cost of revenues. Cost of revenues includes direct material and labor costs,
manufacturing overhead, installation costs, warranty-related expenses and
post-warranty service and application support expenses. Costs of revenues, as a
percentage of total revenues, for the three and six months ended June 30, 2001
were 40% and 44%, respectively, compared to 38% and 43% for the corresponding
prior year periods. The increases were primarily due to the impact of the
reversal of a manufacturing-related accrual, in the second quarter of 2000,
which was no longer deemed necessary, offsetting the favorable impact of lower
material costs in 2001. Excluding the effect of this accrual reversal, cost of
revenues as a percentage of total revenues amounted to 44% and 46% in the three
and six months ended June 30, 2000, respectively.

Research and development expenses. Research and development expenses for the
three and six months ended June 30, 2001 were $1.0 million and $2.0 million,
respectively, compared to $1.0 million and $1.9 million for the comparative
prior year periods. The increases over the prior year period were primarily due
to increased spending for new applications for the Company's new MDS(TM)
product.

                                        8

<PAGE>

Sales and marketing expenses. Sales and marketing expenses for the three and six
months ended June 30, 2001 were $1.8 million and $3.8 million, respectively,
compared to $1.5 million and $3.0 million in the comparative prior year periods.
The increases were primarily related to increased sales and support personnel
for the Company's new MDS/(TM)/ product. As a percentage of revenues, sales and
marketing expenses were 40% and 45% of total revenues for the three and six
months ended June 30, 2001, respectively, compared to 35% and 37% for the
corresponding prior year periods.

General and administrative expenses. General and administrative expenses for the
three and six months ended June 30, 2001 were $0.7 million and $1.5 million
respectively, compared to $0.7 million and $1.4 million in the comparative prior
year periods. The increase in the first half of 2001 versus the first half of
2000 was due primarily to one-time expenses in the first quarter of 2001 for the
Company's investor relations program ($50,000). As a percentage of revenue,
general and administrative costs were 15% and 17% of total revenues for the
three and six months ended June 30, 2001, respectively, compared to 16% and 17%
for the corresponding prior year periods.

Amortization of Intangibles. Amortization of intangibles amounted to $77,000 and
$155,000, respectively, for the first quarter and first half of 2001 compared to
$63,000 and $126,000 in the corresponding prior year periods. This represents
the amortization of the intangible assets (including goodwill, and intellectual
and software property) resulting from the acquisition of the cytogenetic imaging
business of Vysis, Inc. in July 1999 and the purchase of the United States-based
PowerGene/(R)/ business of Perceptive Scientific Instruments, LLC in July, 2000.

Other income (expense) net. The favorable change in Other income (expense) of
$129,000 for the six months ended June 30, 2001 when compared to the
corresponding prior year period was primarily related to reduced foreign
currency exchange losses due to the strengthening of the U.S. dollar versus the
pound sterling and other foreign currencies. The reduction in Other income for
the second quarter was due primarily to reduced interest income as a result of
lower cash balances compared to the second quarter of 2000.

Factors That May Affect Future Results

     The Company's operating results may vary significantly depending on certain
factors, including the effect of delays in its research and development program,
adverse results in its clinical studies, delays in the introduction or shipment
of new products, increased competition, adverse changes in the economic
conditions in any of the several countries in which the Company does business, a
slower growth rate in the Company's target markets, order deferrals in
anticipation of new product releases, lack of market acceptance of new products,
the uncertainty of FDA or other domestic and international regulatory clearances
or approvals, and the factors set forth in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000.

     Due to the factors noted above, the Company's future earnings and stock
price may be subject to significant volatility, particularly on a quarterly
basis. Any shortfall in revenues or earnings from levels expected by security
analysts could have an immediate and significant adverse effect on the trading
price of the Company's common stock.

                                        9

<PAGE>

Liquidity and Capital Resources

     At June 30, 2001, the Company had cash, restricted cash, cash equivalents
and securities available for sale of $4.8 million and working capital of $4.0
million compared to $6.0 million and $5.8 million respectively at June 30, 2000.
Restricted cash, which secures all outstanding bank debt, amounted to $2.1
million at June 30, 2001. There was no restricted cash at June 30, 2000. Cash
used by operations for the six months ended June 30, 2001 was $1.4 million
compared to $2.0 million for the corresponding prior year period. The decrease
in cash used in operations was primarily due to reduced requirements for
accounts receivable and inventories, totaling $0.8 million, as well as an
increase of $0.2 million in deferred revenue. These decreases were offset, in
part, by increased losses as explained above and lower accrued expenses.
Financing activities affecting liquidity included the use of $0.6 million in the
first half of 2001 to reduce bank and other loans compared to $0.9 million in
the first half of 2000. The Company also received $0.7 million from the issuance
of common stock from the exercise of employee stock options in the first half of
2000 compared to $61,000 in the first half of this year.

     The Company had a (pound)750,000 gross and (pound)500,000 net unsecured
revolving line of credit with an international bank that was guaranteed by the
Company. The line of credit expired on March 31, 2001. The international bank
subsequently provided the Company with a (pound)750,000 gross and net zero
borrowing facility that expired on June 30, 2001. At June 30, 2001, AIIL had
drawn down (pound)541,000 of this facility that was collateralized by cash
deposits shown on the Balance Sheet as "Restricted Cash."

     The Company has a three-year term loan and a $500,000 revolving line of
credit with Silicon Valley Bank (SVB) with outstanding balances of $0.8 million
and $500,000 respectively at June 30, 2001. In accordance with the "cash cure"
provisions of the amended loan agreement with SVB, the Company has
collateralized these loans with cash deposits shown on the Balance Sheet as
"Restricted Cash." The revolving line of credit expired on June 21, 2001 and was
extended by SVB to September 21, 2001.

     The Company expects negative cash flow from operations to continue through
at least 2001, as it continues the research and development of its MDS/(TM)/
System, expands its marketing, sales and customer support capabilities and adds
administrative infrastructure. The Company currently estimates that its existing
capital resources will enable it to meet its short-term capital needs through
2001. There can be no assurance, however, that the Company will not be required
to seek capital at an earlier date. The Company's long-term capital needs may
require it to seek to obtain additional funds through equity or debt financing,
collaborative or other arrangements with other companies, bank financing and
other sources. If the Company raises funds by issuing equity securities, there
will be dilution of existing shareholder's holdings in the Company's common
stock. There can be no assurance that additional financing will be available
when needed or on terms acceptable to the Company. If adequate funds are not
available, the Company could be required to delay development or
commercialization of certain products, to license to third parties the rights to
commercialize certain products or technologies that it would otherwise seek to
commercialize itself, or to reduce the marketing, customer support, or other
resources devoted to product development. Accordingly, the Company's failure to
obtain sufficient funds on acceptable terms when needed could have a material
adverse effect on its business, results of operations, and financial condition.
The timing and amount of spending of such capital resources cannot be accurately
determined at this time and will depend on several factors, including but not
limited to, the progress of the Company's research and development efforts and
clinical investigations, the timing of regulatory approvals or clearances,
competing technological and market developments, commercialization of products
currently under development and market acceptance and demand for the Company's

                                       10

<PAGE>

products. In addition, as opportunities arise, capital may also be used to
acquire businesses, technologies or products.

Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations," which establishes financial accounting and reporting
for business combinations and supersedes APB Opinion No. 16, Business
Combinations, and FASB Statement No. 38, Accounting for Preacquisition
Contingencies of Purchased Enterprises. It requires that all business
combinations in the scope of this Statement are to be accounted for using one
method, the purchase method. The provisions of this Statement apply to all
business combinations initiated after June 30, 2001, and also applies to all
business combinations accounted for using the purchase method for which the date
of acquisition is July 1, 2001, or later. The Company adopted SFAS No. 141
during the second quarter of fiscal 2001, and the adoption of SFAS No. 141 had
no material impact on financial reporting and related disclosures of the
Company.

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 142
"Goodwill and Other Intangible Assets," which establishes financial accounting
and reporting for acquired goodwill and other intangible assets and supersedes
APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition, and after they have been initially recognized
in the financial statements. The provisions of this Statement are effective
starting with fiscal years beginning after December 15, 2001. The Company will
adopt SFAS No. 142 during the first quarter of fiscal 2002, and is in the
process of evaluating the impact of implementation on the financial position and
results of operations of the Company.

                                       11

<PAGE>

Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         Derivatives and Financial Instruments.

     For the six months ended June 30, 2001, there were no material changes from
the disclosures made in the Company's Form 10-K for the year ended December 31,
2000.

                                       12

<PAGE>

PART II - OTHER INFORMATION

Item 4: Submission of matters to a vote of security holders

     The Company solicited proxies for an annual meeting of stockholders on May
16, 2001 to all of the Company's stockholders.

     The election of directors was conducted and the following nominees were
elected: John F. Blakemore, Jr. and G. Kirk Raab. The vote with respect to each
nominee was as follows:

<TABLE>
<CAPTION>
                                       Votes
                               ---------------------
              Name                For        Against
      ---------------------    ----------    -------
     <S>                       <C>           <C>
     John F. Blakemore, Jr.    13,199,138       0
     G. Kirk Raab              13,199,138       0
</TABLE>

     Continuing directors whose terms of office extended beyond the Annual
Meeting were: Jack Goldstein, Carl Hull, Andre F. Marion and Pablo Valenzuela.

     PricewaterhouseCoopers LLP was ratified as the independent auditors of the
company for the fiscal year ending December 31, 2001 with 13,357,891 votes in
favor and 101,459 votes against.

     An amendment to the Company's Certificate of Incorporation was approved to
increase the number of authorized shares of the Company's Common Stock from 20
million to 50 million shares. The amendment was approved with 13,210,212 votes
in favor and 234,812 votes against.

     An amendment of the Company's 1998 Incentive Stock Option Plan (the Plan)
was approved to increase the total number of shares reserved for issuance under
the Plan from 950,000 shares to 2,850,000 shares. The amendment was approved
with 8,314,647 votes in favor and 1,123,384 votes against.

Item 6. Exhibits and Reports on Form 8-K.

     (a) Exhibits.

<TABLE>
<CAPTION>
Exhibit No.                             Description
-----------                             -----------
<S>          <C>
10.34        Lease renewal to the Registrant's headquarters in Santa Clara, CA
             dated April 10, 2001.

10.35        Loan Modification Agreement dated June 21, 2001 between Registrant,
             Applied Imaging International Limited and Silicon Valley Bank.
</TABLE>

     (b) Reports on Form 8-K. - There were no reports on Form 8-K during the
quarter ended June 30, 2001



                                       13

<PAGE>

                              APPLIED IMAGING CORP.

                                   SIGNATURES

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.

                                       APPLIED IMAGING CORP.
                                       (Registrant)


Date: August 10, 2001                  By: /S/ Carl Hull
                                           ---------------------
                                               Carl Hull
                                               President and
                                               Chief Executive Officer

                                       By: /S/ BARRY HOTCHKIES
                                           ---------------------
                                               Barry Hotchkies
                                               Vice President,
                                               Chief Financial Officer

                                       14