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, 1997
                         or
  [  ] Transition Report Pursuant to Section 13 or
         15(d) of the Securities Exchange Act of 1934
                 
   Commission File Number:  0-25210
                   
                   
             NEOPATH, INC.
    (Exact name of registrant as specified in its charter)
                      
                      
Washington                             91-1436093
(State or other jurisdiction of     (I.R.S. Employer
incorporation or organization)      Identification No.)


8271 - 154th Avenue NE, Redmond, Washingtonn           98052
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code: (425) 869-7284


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 past 90 days.

                     Yes [X]        No [ ]


Indicate  the  number  of shares
outstanding  of each  of  the issuer's
classes of common stock, as of the
latest practicable date.

            Class                     Outstanding at July 25, 1997
 (Common stock, $.01 par value)               14,344,072



<PAGE>




                          NEOPATH, INC.
                 QUARTERLY REPORT ON FORM 10-Q

                        TABLE OF CONTENTS






     Part I FINANCIAL INFORMATION                                         Page

     Item 1.  Financial Statements                                          1

              Balance  Sheets  - June 30, 1997  (unaudited)  and
               December 31, 1996
            
              Statements  of Operations (unaudited)  -  for  the
               three months and six months ended June 30, 1997 and
               1996
             
              Statements of Cash Flows (unaudited) - for the six
               months ended June 30, 1997 and 1996
              
              Notes to Financial Statements

     Item  2. Management's Discussion and Analysis of Financial
               Condition and Results of Operations                          6

     Part II OTHER  INFORMATION

     Item  1. Legal Proceedings                                             9

     Item  4. Submission of Matters to a Vote of Security Holders           9

     Item  6. Exhibits  and  Reports on  Form  8-K                          9

     Signatures                                                            10



<PAGE>

   Part I  FINANCIAL INFORMATION                                  
                                                          
   Item 1.  Financial Statements                                  
                                                                  
         NEOPATH, INC.
                                                                  
         BALANCE SHEETS
                                                                  
                                                                  
                                                                  
                                                                  
                                       June 30,        December 31,
                                        1997              1996
                                    ------------     -------------
Assets                               (Unaudited)            
Current assets:                                                   
  Cash and cash equivalents         $  6,488,219      $  7,871,401
  Securities available-for-sale       36,650,323        50,616,477
  Accounts receivable, net             1,522,144           840,256
  Inventories                          8,806,045         5,641,914
  Other current assets                   431,895           197,726
                                    ------------       -----------
Total current assets                  53,898,626        65,167,774
                                                                  
Fee-per-use systems, net               6,773,628         5,994,137
Property and equipment, net            5,564,904         4,813,745
Intangible assets                      3,759,917                 -
Deposits and other assets                158,445           155,899
                                    ------------      ------------
Total assets                        $ 70,155,520      $ 76,131,555
                                    ============      ============

Liabilities and shareholders' equity
Current liabilities:                                              
  Accounts payable                  $  2,193,580      $  1,496,630
  Salaries and wages payable           2,075,976         2,208,454
  Other accrued liabilities            1,721,451           565,939
  Note payable                           500,000                 -
  Current portion of obligations
   under capital leases                   76,502            75,861
                                       ---------         ---------
Total current liabilities              6,567,509         4,346,884
                                                                  
Obligations under capital       
 leases, less current portion            142,126           182,535
                                                                  
                                                                  
Shareholders' equity:                                             
  Common stock                       140,840,584       136,255,746
  Deferred compensation                        -           (74,246)
  Accumulated deficit                (77,394,699)      (64,579,364)
                                    ------------      ------------
Total shareholders' equity            63,445,885        71,602,136
                                  
Total liabilities and   
 shareholders' equity               $ 70,155,520      $ 76,131,555
                                    ============      ============
See accompanying notes.                                           
Page 1

<PAGE>

<TABLE>
<CAPTION>

              NEOPATH, INC.
                                                                                                      
        STATEMENTS OF OPERATIONS
              (Unaudited)
                                                                                                              
                                                                                                                 
                                                   Three months ended                  Six months ended
                                                        June 30,                            June 30,
                                             ----------------------------       ------------------------------
                                                  1997            1996               1997               1996
                                              ----------      -----------       -----------        -----------
<S>                                        <C>              <C>               <C>                <C> 
Revenues                                    $  2,240,505     $    253,008      $  4,475,057       $    626,627
Cost of revenues                                 967,928          228,868         2,045,440            565,708
                                              ----------      -----------       -----------        -----------
   Gross margin                                1,272,577           24,140         2,429,617             60,919
                                                                                                      
                                                                                                              
Operating expenses:                                                                                           
   Research and development                    3,922,646        2,591,642         8,309,502          5,283,876
   Selling, general and administrative         4,708,514        2,805,228         8,404,185          4,843,404
                                              ----------        ---------        ----------        -----------
                                               8,631,160        5,396,870        16,713,687         10,127,280
                                                                                                              
Loss from operations                          (7,358,583)      (5,372,730)      (14,284,070)       (10,066,361)
                                                                                                              
Interest income                                  673,609          836,261         1,419,275          1,944,314
Interest expense                                  (8,125)         (11,080)          (14,610)           (27,576)
                                            -------------     ------------      ------------        -----------
Net loss                                    $ (6,693,099)    $ (4,547,549)     $(12,879,405)      $ (8,149,623)
                                            =============     ============      ============        ===========
                                                                                                 
Net loss per share                          $      (0.47)    $      (0.35)     $      (0.92)      $      (0.65)
                                               ==========     ============      ============       ============
                                                                                                              
Shares used in computation of                                                                                 
  net loss per share                          14,277,067       13,063,029        14,024,351         12,592,560
                                              ==========       ==========        ==========         ==========
                                                                                                              
See accompanying notes. 
</TABLE>

Page 2

<PAGE>


<TABLE>
<CAPTION>

                                                                                         
                     NEOPATH, INC.
                                                                                  
                STATEMENTS OF CASH FLOWS
                      (Unaudited)
                                                                                         
                                                                                         
                                                                                         
                                                                 Six months ended
                                                                      June 30,              
                                                           -----------------------------
                                                              1997              1996
                                                           ------------      -----------
<S>                                                       <C>               <C> 
Operating activities                                                                     
Net loss                                                   $(12,879,405)     $ (8,149,623)
Adjustments to reconcile net loss to net cash                                            
 used in operating activities:                                                         
  Depreciation and amortization                               1,623,844           685,323
  Deferred compensation                                          74,246            66,517
  Accrued interest on securities available-for-sale             756,975           220,550
  Net change in operating accounts:                                                      
    Accounts receivable                                        (681,888)         (358,515)
    Inventories and fee-per-use systems                      (5,358,568)       (5,314,999)
    Accounts payable and accrued liabilities                  1,482,984         1,354,316
    Deferred revenue                                                  -           500,000
    Other                                                      (234,169)         (315,525)
                                                           ------------      ------------
Net cash used in operating activities                       (15,215,981)      (11,311,956)
                                                                                         
                                                                                         
Investing activities                                                                     
Purchases of securities available-for-sale                   (5,349,511)      (74,248,408)
Maturities of securities available-for-sale                  18,622,760        21,076,766
Purchase of Pathfinder System                                (2,542,917)                -
Additions to property and equipment                            (590,057)       (2,041,992)
Other                                                            (2,546)           70,242
                                                              ----------      ------------
Net cash provided by (used in) investing activities          10,137,729       (55,143,392)
                                                                                         
Financing activities                                                                     
Issuance of common stock, net                                         -        61,740,351
Exercise of stock options/warrants                            3,734,838         1,532,321
Principal payments on obligations under capital leases          (39,768)         (112,244)
                                                            -----------       -----------
Net cash provided by financing activities                     3,695,070        63,160,428
Net decrease in cash and cash                                                            
 equivalents                                                 (1,383,182)       (3,294,920)
Cash and cash equivalents:                                                               
  Beginning of period                                         7,871,401         4,150,923
                                                            -----------       -----------
  End of period                                            $  6,488,219      $    856,003
                                                            ===========       ===========
                                                                                         
Noncash transactions and supplemental disclosures                                          
Cash paid for interest                                           14,610            27,576
Inventories transferred to fee-per-use systems, net           1,342,619         2,953,149
Inventories transferred to property and equipment             1,101,818                 -
                                                                                         
See accompanying notes.                                                                  

</TABLE>
Page 3

<PAGE>



               NEOPATH, INC.

      NOTES TO FINANCIAL STATEMENTS
               (Unaudited)



Note 1 - Basis of Presentation

      The  accompanying unaudited financial statements have been

prepared  by NeoPath,   Inc.  (the  "Company")  in  accordance

with  generally   accepted accounting principles for interim

financial information and according to  the rules   and

regulations   of  the  Securities  and   Exchange   Commission.

Accordingly,  they  do  not  include all of  the  information

and  footnotes required  by generally accepted accounting

principles for complete  financial statements. In the opinion of

management, all adjustments (which include only normal  recurring

adjustments) considered necessary for a fair  presentation have

been included.  The balance sheet at December 31, 1996 has been

derived from the audited financial statements at that date, but

does not include  all of  the  information and footnotes required

by generally accepted  accounting principles for complete

financial statements.  The results of operations  for the

three-month  and  six-month  periods  ended  June  30,  1997,

are  not necessarily  indicative of results to be expected for the entire

year  ending December  31,  1997 or for any other fiscal period.

For further information, refer  to  the  financial  statements

and footnotes thereto  incorporated  by reference in the

Company's Form 10-K for the year ended December 31, 1996.



Note 2 - Revenue Recognition

      The  Company  recognizes fee-per-use revenues based on  the

number  of customer slides processed, subject to agreed-upon

minimum processing  levels, beginning  in  the month an AutoPap

System is initially placed in  commercial use  at  the customer

site and is accepted by the customer.  Sales of AutoPap Systems

are recognized as revenues at date of shipment.



Note 3 - Recently Issued Accounting Standard

      In  February  1997,   the Financial Accounting Standards

Board  issued Statement  No. 128, "Earnings per Share," which is

required to be adopted  on December  31,  1997.   The new

Statement requires that companies  change  the method  currently

used to compute earnings per share and restate  all  prior

periods,  if  necessary.  Under the new requirements for

calculating  primary earnings  per  share, the dilutive effect of

stock options will be  excluded. Because the Company's stock

options are not dilutive (due to net losses), the impact  of

Statement No. 128 on the Company's calculation of  net  loss  per

share is not expected to be material.



Note 4 - Inventories

     Inventories consist of the following:

                           June 30,1997   December 31, 1996

 Raw materials              $ 2,739,483      $ 2,725,725
 Work-in-process              2,461,469          166,437
 Finished goods               3,605,093        2,749,752
                            -----------      -----------
                            $ 8,806,045      $ 5,641,914
                            ===========      =========== 
                             
                             
Page 4

<PAGE>



Note 5 - Purchase of Pathfinder System

     In  June 1997, the Company acquired the Pathfinder(r) System

product  line from  CompuCyte  Corporation ("CompuCyte") for an

initial purchase  price  of $4.1  million in cash and Company

stock.  The initial purchase price included cash  of  $2.5

million, a $500,000 short-term note payable, 48,564 shares  of

Company  common  stock,  and approximately $200,000 in  accrued

transaction-related  expenses.  In addition, 48,563 shares of

Company common  stock  were issued  contingent  upon certain

specific technology  decisions  to  be  made within  one year of

closing.  In accordance with accounting rules, the  value of  the

contingent  shares  is  excluded from  the  initial  purchase

price allocation,  and  the  48,563  contingent  shares  are

excluded from   the calculation  of weighted average shares

outstanding. Including the  value  of contingent  shares at

the closing date, which value the Company expects to recognize 

as  an intangible asset if the contingency is removed, the total

purchase price approximates $5.1 million.



     As  a  result  of  the  acquisition, the Company recorded

approximately $250,000  in  inventory, $120,000 in property and

equipment,  and  recognized $3.8  million  in  acquired

intangible assets,  which  are  expected  to  be amortized over

five years.



Note 6 -  Litigation

      On  July  15, 1996, Neuromedical Systems, Inc. filed a

lawsuit  against NeoPath,  Inc. in the United States District

Court for the Southern  District of  New York.  The complaint

alleges patent infringement, unfair competition, false

advertising,  and related claims. On September 5,  1996,  the

Company filed  its  answer and counter claims. The Company

believes it has  a  strong position in this action and is

defending itself vigorously.



      On  March  31,  1997,  the Company filed a patent

infringement  lawsuit against  Neuromedical Systems, Inc. in the

United States District Court for the Western District of Washington.

The  complaint alleges   patent infringement and seeks preliminary

and  permanent injunctions   against Neuromedical Systems, Inc.



Page 5

<PAGE>



Item  2.   Management's  Discussion and Analysis of Financial

Condition  and Results of Operations



Overview



     NeoPath, Inc. (the "Company" or "NeoPath") develops and

markets products that  automate  the interpretation of medical

images.  The Company's  initial products  include two automated

screening systems that integrate  proprietary high-speed   image

processing  computers,  video  imaging   technology   and

sophisticated  visual intelligence software to capture and

analyze  thousands of microscopic images from a Papanicolaou

("Pap") smear slide, as well as the Pathfinder System recently

acquired from CompuCyte Corporation ("CompuCyte"). In September

1995, the United States Food and Drug Administration (the "FDA")

cleared  for commercial use the Company's first product, the

AutoPap  300  QC Automatic Pap Screener System (the "AutoPap

QC").  In early 1996, the  Health Care Financing Administration

officially allowed clinical laboratories to use the  AutoPap QC

in the quality control review of Pap smear slides  that  have

been  initially  screened  by  cytologists as normal.   The

decision  allows AutoPap  QC  Systems to be used in meeting the

federally mandated rescreening requirement.



     NeoPath  is seeking FDA approval for the AutoPap Automatic

Pap  Screener System  (the "AutoPap Screener" and, in combination

with the AutoPap QC,  the "AutoPap System").  The Company is in

the process of reviewing the results of the  clinical  studies

that support an amendment to the Company's  Pre-Market Approval

("PMA") supplement for the use of the AutoPap System as a 

primary screener  of  Pap smear slides.  The Company plans to

submit the amended  PMA supplement  to  the  FDA  in 1997.

During the first  quarter  of  1997,  the Ministry of Health and

Welfare in Japan approved the AutoPap System for  sale as a Pap

smear screening system.



     The  Company  is  compensated  on either a  sale  or  fee-

per-use  basis (subject to certain license agreements and minimum

payments).  Under its fee-per-use  program, the Company retains

ownership of AutoPap Systems placed  at customer  sites  and

assesses customers a charge for each  Pap  smear  slide analyzed.

The fee-per-use program entails a significant capital  commitment

since the Company retains ownership of the AutoPap Systems.  The

cost of each AutoPap System is reclassified from inventories to

depreciable equipment upon shipment  to a fee-per-use customer

site.  Such equipment, reflected  on  the balance sheet under

"fee-per-use systems, net," is depreciated on a straight-line

basis  over  a four-year period, commencing upon commercial

operation. The  Company's  product  placements have primarily

consisted  of  fee-per-use contracts  in  the  United  States and

sale contracts  internationally.  The Company  anticipates that

future product placements will continue to consist of a mixture

of fee-per-use and sale contracts.



Acquisition of Pathfinder System



     In  June 1997, the Company acquired the Pathfinder(r) System

product  line from  CompuCyte  for an initial purchase price of

$4.1 million  in  cash  and Company stock. The Pathfinder System

is used to provide improved productivity and  quality  assurance

in the clinical cytology laboratory by  computerizing the

cytotechnologists' microscopes, thereby helping to  eliminate

screening errors and facilitating critical cell identification in

applications such  as Pap  smear  screening  for the early

detection of cervical  cancer.  NeoPath intends to sell the

Pathfinder System as a  stand-alone product and to evaluate a

potential integration of the technology into the AutoPap System.



     The  initial  purchase price included cash of $2.5 million,

a  $500,000 short-term  note  payable,  48,564  shares  of

Company  common  stock,   and approximately $200,000 in accrued

transaction-related expenses.  In addition, 48,563  shares  of

Company common stock were issued contingent  upon  certain

specific  technology  decisions to be made within one year  of

closing.  In accordance  with  accounting rules, the value of 

the contingent shares is excluded from the initial purchase price

allocation,  and  the   48,563 contingent  shares  are  excluded

from the calculation  of  weighted  average shares  outstanding.

Including the value of contingent shares at the  closing date,

which value the Company expects to recognize as an intangible

asset  if the  contingency  is  removed,  the total purchase

price  approximates  $5.1 million.



     As  a  result  of  the  acquisition, the Company recorded

approximately $250,000  in  inventory, $120,000 in property and

equipment,  and  recognized $3.8  million  in  acquired

intangible assets,  which  are  expected  to  be amortized over

five years.





Page 6

<PAGE>




Results of Operations



     NeoPath's   revenues   for  the  second  quarter  were

$2.2   million, representing a significant increase over second

quarter 1996 revenues of $253,000.  Revenues were level with the first

quarter  of  1997;  however, domestic  fee-per-use revenues

increased more than 20 percent over the  first quarter  of 1997,

and have grown at a compounded quarterly rate of growth  of more

than 30 percent from the quarter ended September 30, 1996.  More

than 50 percent of second quarter revenues resulted from AutoPap System

sales  and other revenues associated with international product

placements.



     During  the  second quarter of 1997, the Company signed  a

distribution agreement  with a Korean firm and shipped its first

AutoPap System to  Korea; in  addition,  NeoPath  obtained  CE

mark  approval  and  shipped  its  first commercial  AutoPap

System to Europe at a customer site  in  Italy.  Second quarter

revenues   included  amounts  from  Nikon  Corporation, NeoPath's

distributor in Japan, for AutoPap Systems previously shipped.  In

June  1997, the Company announced that it had signed a national

agreement with SmithKline Beecham  Clinical Laboratories to place

AutoPap QC Systems at ten  additional sites  in the United

States.  NeoPath began shipping AutoPap QC Systems under this

agreement by the end of the second quarter.  Revenues from  fee-

per-use agreements  generally  begin to generate revenues in  the

quarter  following placement.



      The Company recognized revenues of $4.5 million in the six

months ended June  30,  1997,  compared  to  $627,000 in the

comparable  period  in  1996. NeoPath began recognizing product

revenues in early 1996.



     Gross margin increased to 57 percent in the quarter ended

June 30, 1997, compared to a gross margin of 52 percent in the

first quarter of 1997  and  a 38  percent gross margin for all of

1996.  The primary components of cost  of revenues for fee-per-

use systems include depreciation, allocated service  and support

costs,  and,  with  regard  to AutoPap  Systems  sold,  the

related manufacturing cost and estimated one-year warranty

expense.  Quarterly  gross margin  is expected to continue to

fluctuate depending on the mix of fee-per-use revenues, System

sales, and other revenues, which include revenues to be

recognized  under the agreement with Nikon Corporation for

Systems previously shipped.  The continued development of the

manufacturing, service and support functions is also expected to

contribute to fluctuations in gross margin.



     Research and development expenses were $3.9 million in the

quarter ended June 30, 1997, compared to $2.6 million in the

comparable quarter of 1996 and $4.4  million  in  the  first

quarter of 1997.   In  addition  to  continued

expenditures  for  product  improvements and  new  product

development,  the Company  continued  to  incur incremental third-

party expenses  for  clinical studies  that  support  using  the

AutoPap System  as  a  Pap  smear  primary screener, although

expenditures relating to clinical studies were at a  lower rate

than  in  the  first  quarter of the year.   Research  and

development expenses  are expected to increase over time due to

expenditures for  product development  and  additional FDA

submissions for future enhancements  to  the AutoPap System.



      Selling, general and administrative expenses for the second

quarter  of 1997  increased $1.9 million to $4.7 million from the

second quarter of 1996, and  increased $1.0 million from the

first quarter of 1997.  These  increases are  primarily a result

of  the Company's continued investment in significant new

marketing and sales initiatives.  The increase from the prior

year  also reflects higher staffing and overall infrastructure

expenses.



      Interest  income for the second quarter of 1997 decreased

to  $674,000, compared  to  $836,000 for the comparable quarter

in 1996.  The  decrease  in interest income is due primarily to

decreased cash equivalents and securities available-for-sale

resulting from NeoPath's negative operating cash flow.







Page 7

<PAGE>



 Liquidity and Capital Resources



      The  Company's cash, cash equivalents and securities

available-for-sale totaled  $43.1  million as of June 30, 1997,

which represents a  decrease  of $15.3 million from December 31,

1996.  The decrease is a result of cash  used in  the  Company's

operations for the six months ended June 30, 1997 and  the $2.5

million in cash paid to CompuCyte for the Pathfinder System,

offset  by the receipt of $3.7 million from the exercise of stock

warrants and options.



      During  the  six months ended June 30, 1997, excluding  the

Pathfinder System  acquisition,  the  Company  used  $15.2

million  to  fund  operating activities, including $2.4 million

for inventories subsequently classified as either fee-per-use

systems or transferred to property and equipment, and used

$590,000 to purchase other property and equipment.  During the

comparable six-month  period  in 1996, the Company used $11.3

million to fund its  operating activities, including $3.0 million

for inventories subsequently classified as fee-per-use  systems,

and the Company purchased $2.0 million of property  and equipment.

The investment in fee-per-use systems is expected to increase  as

the  Company continues to place AutoPap Systems into commercial

service under fee-per-use service contracts.



      The  Company expects negative cash flow from operations to

continue  at least  through  the  majority of 1998 as it

manufactures AutoPap  Systems  to support  fee-per-use product

placements, continues to expand  its  marketing, sales,  and

customer service and support capabilities, continues its research

and  development  activities, and conducts and analyzes  data

from  clinical studies.  The Company currently estimates that its

existing capital resources and  interest  income will enable it to

sustain operations for  approximately the  next  18  months.

There can be no assurance, however, that the  Company will  not

be  required to seek additional capital at an earlier  date.  The

Company's  future capital requirements will depend on many

factors, including the  extent  and  rate  of  adoption of use of

the AutoPap  QC  and,  if  the requisite  regulatory  approvals

are obtained,  the  AutoPap  Screener;  the increase  in  the

Company's fee-per-use program; the mix of fee-per-use  and sale

placements;  the  extent  and  rate of  development  of  the

Company's marketing,  sales,  and  customer service and support

capabilities;  and  the status  of  competing products.  The

Company may, from  time  to  time,  seek additional  funding

through  public or private financing,  including  equity

financing.  There can be no assurance that adequate funding will

be available as  needed  or on terms acceptable to the Company.

If additional  funds  are raised  by  issuing equity securities,

existing shareholders will  experience dilution.  Insufficient

funds may require the Company to delay, scale back or

eliminate  some  or  all of its manufacturing, research  and

development  or clinical programs.



Factors Affecting Future Results and Forward-Looking Statements



      The   preceding  Management's  Discussion  and  Analysis

of  Financial Condition  and  Results  of Operations contains

"forward-looking  statements" which  reflect the Company's

current views with respect to future events  and financial

performance.   These forward-looking  statements  are  subject

to certain  risks  and uncertainties that could cause actual

results  to  differ materially  from historical results or those

anticipated.  The words  "plan," "expect,"  "anticipate,"  and

similar expressions  identify  forward-looking statements.

Readers  are  cautioned not to place undue  reliance  on  these

forward-looking statements.  The Company undertakes no obligation

to publicly update  or revise any forward-looking statements,

whether as a result of  new information,  future events, or

otherwise.  Factors that could  cause  actual results  to  differ

materially from historical results or those  anticipated include,

without limitation, the following:  the Company's limited

operating history  and history of losses; market acceptance of

the Company's  products; the  acceptance  of the Company's fee-

per-use or sale programs;  product  and manufacturing  regulatory

approvals; the Company's limited marketing,  sales, customer

service  and  support  capabilities;  uncertainties  relating to

international transactions; the Company's sole or limited source

of supply of certain   components;  the  status  of  competing

products;  dependence on reimbursement; dependence on single product

line;  product liability; dependence on patents and property rights;

the risk of third-party claims  of infringement;  and  dependence  on  key

personnel.   For  a  more   detailed discussion  of  these

factors,  see "Factors Affecting  Future  Results  and Forward-

Looking  Statements" of the Company's Form 10-K for the  fiscal

year ended December 31, 1996.



Page 8

<PAGE>

Part II   OTHER INFORMATION



Item 1. Legal Proceedings



      On  July  15, 1996, Neuromedical Systems, Inc. filed a

lawsuit  against NeoPath,  Inc. in the United States District

Court for the Southern  District of  New York.  The complaint

alleges patent infringement, unfair competition, false

advertising,  and related claims. On September 5,  1996,  the

Company filed  its  answer and counter claims. The Company

believes it has  a  strong position in this action and is

defending itself vigorously.



      On  March  31,  1997,  the Company filed a patent

infringement  lawsuit against  Neuromedical Systems, Inc. in the

United States District  Court  for the Western   District

of  Washington.   The  complaint   alleges   patent

infringement   and  seeks  preliminary  and  permanent

injunctions against Neuromedical Systems, Inc.



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



      At  the  Company's Annual Meeting of Shareholders held on

May 22,  1997 (the  "Annual Meeting"), the following individuals

were elected to the  Board of Directors:



                                     For                Withheld Authority

  Class 3 Directors

     Walter L. Robb               9,974,278                     42,683

     Cristina H. Kepner           9,975,278                     41,683

     William L. Scott             9,975,278                     41,683


  Class 1 Director

     Alan D. Frazier              9,975,278                     41,683



     The following proposal was approved at the Company's Annual Meeting:


                                                 For       Against    Abstained

 Adoption of the NeoPath, Inc. 1997 Employee
 Stock Purchase Plan providing for the
 purchase of up to 150,000 shares of Common
 Stock by eligible employees                   9,650,957    49,668     14,503


 Total shares represented but unvoted on the above proposal: 301,833
                              

Item 6.  Exhibits and Reports on Form 8-K



(a)  The following exhibits are filed as part of this report.

     Exhibit No.        Description

     10.1*      Purchase and Sale Agreement between CompuCyte Corporation
                and NeoPath, Inc., Dated as of June 23, 1997

     10.2       NeoPath, Inc. Registration Rights Agreement,Dated as of
                June 23, 1997

     27         Financial Data Schedule
    ------------------------------------------------------
     * Confidential treatment requested



(b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter
ended June 30, 1997.


Page 9

<PAGE>





                           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.





                                      NeoPath, Inc.

Date:   August 12, 1997               By:  /s/ ALAN C. NELSON
                                          -------------------
                                      Alan C. Nelson
                                      President and Chief Executive Officer



                                      By: /s/ WILLIAM L. SCOTT
                                          --------------------
                                      William L. Scott
                                      Vice President and Chief Financial Officer



                                      By:  /s/ ROBERT C. BATEMAN
                                           ---------------------
                                      Robert C. Bateman
                                      Corporate Controller and Treasurer





Page 10

<PAGE>





                            NEOPATH, INC.



                          INDEX TO EXHIBITS



Exhibit No.         Description

10.1*      Purchase and Sale Agreement between CompuCyte Corporation
           and NeoPath, Inc., Dated as of June 23, 1997

10.2       NeoPath, Inc. Registration Rights Agreement, Dated as of
           June 23, 1997

27         Financial Data Schedule
---------------------------------------------------------------------
* Confidential treatment requested





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<PAGE>