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                                                                    EXHIBIT 99.1

                             TRIPATH IMAGING, INC.

                   FACTORS AFFECTING FUTURE OPERATING RESULTS
                                   APRIL 2002

     From time to time, TriPath Imaging, through its management, may make
forward-looking public statements, such as statements concerning then expected
future revenues or earnings or concerning projected plans, performance, product
development and commercialization as well as other estimates relating to future
operations. Forward-looking statements may be in reports filed under the
Securities Exchange Act of 1934, as amended, in press releases or in oral
statements made with the approval of an authorized executive officer. The words
or phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933,
as enacted by the Private Securities Litigation Reform Act of 1995.

     We caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. In addition,
we advise you that the factors listed below, as well as other factors we have
not currently identified, could affect our financial or other performance and
could cause our actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods or events in any
forward-looking statement.

     We will not undertake and specifically decline any obligation to publicly
release revisions to these forward-looking statements to reflect either
circumstances after the date of the statements or the occurrence of events which
may cause us to re-evaluate our forward-looking statements, except as required
by law.

     In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, we are hereby filing cautionary statements
identifying important factors that could cause our actual results to differ
materially from those projected in forward-looking statements made by us or on
our behalf.

                         RISKS RELATED TO OUR BUSINESS

OUR ONCOLOGY PRODUCTS ARE AT AN EARLY STAGE OF DEVELOPMENT AND WE CANNOT ASSURE
THE COMMERCIAL SUCCESS OF THESE PRODUCTS.

     Our oncology products are in the early stages of development and
significant additional research, and development, financial resources and
personnel will be required to develop them into commercially viable products and
obtain regulatory approvals. We are developing and commercializing molecular
diagnostic and pharmacogenomic tests for a variety of cancers through our
collaboration with Becton, Dickinson and Company, or BD, as part of the ongoing
strategic alliance between BD and Millennium Pharmaceuticals, Inc. Our
collaboration with BD has not yet produced a viable product. We may fail to
successfully develop and commercialize our oncology products if:

     - pre-clinical research shows our products to be ineffective;

     - they do not receive necessary regulatory approvals or otherwise meet
       regulatory requirements; and

     - are less effective than current or alternative oncology diagnostic
       methods.

     If we fail to develop and commercialize our oncology products, our revenues
could be adversely affected.
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OUR ONCOLOGY PRODUCTS BUSINESS WILL BE NEGATIVELY AFFECTED IF BD OR MILLENNIUM
FAILS TO DELIVER REQUIRED CERTAIN TEST MARKERS UNDER OUR COLLABORATIVE
ARRANGEMENT, OR IF BD FAILS TO SUPPORT, OR TERMINATES ITS COLLABORATION WITH US.

     We conduct all of our oncology-related discovery and development activities
through our collaboration with BD. TriPath Oncology is developing and
commercializing molecular diagnostics and pharmacogenomic tests for cancer as
part of the ongoing strategic alliance of BD and Millennium. The success of our
oncology products business depends, in large part, on the fulfillment of the
contractual obligations by BD and Millennium, including the delivery of
validated genomic and proteomic markers discovered by Millennium under its
arrangement with BD. Both BD and Millennium have significant discretion in
determining the efforts and resources that they will apply to the collaboration.
Our collaboration with BD may not be scientifically or commercially successful.
The risks that we face in connection with this collaboration include:

     - Millennium may fail to deliver validated markers under its strategic
       partnership with BD, which TriPath Oncology needs to develop diagnostic
       oncology products;

     - if the collaboration between BD or Millennium is terminated, we may lose
       rights to certain intellectual property necessary to develop our oncology
       products; and

     - BD or Millennium may choose to develop and commercialize, either alone or
       with others, products and services that are similar to or competitive
       with the non-exclusive or co-exclusive products and services that are the
       subject of the collaboration with us.

     If BD or Millennium fail to fulfill their obligations under our
collaborative arrangement or if BD terminates the collaboration with us, the
future of our oncology products business would be adversely affected.

OUR PRODUCTS ARE SUBJECT TO REGULATORY REVIEW, APPROVAL AND REGULATION AND WE
MAY BE UNABLE TO COMMERCIALIZE ANY OF OUR PRODUCTS CURRENTLY IN DEVELOPMENT.

     The FDA and foreign regulatory agencies extensively regulate the
manufacture and sale of medical diagnostic devices for commercial use. We must
comply with applicable FDA regulations, including obtaining FDA approval of
products before we can market and sell them for their principal intended uses in
the United States.

     To obtain FDA approval for our products, we must submit a premarket
approval application to the FDA. This process can be expensive and
time-consuming and can take several years. Several factors may affect our
ability to successfully obtain FDA approval for the commercialization of our
products, including the following:

     - failure of the product in preclinical studies;

     - insufficient clinical trial data to support the safety or effectiveness
       of the product; or

     - unanticipated delays or significant unanticipated costs in our efforts to
       secure FDA approval.

     If we fail to obtain and maintain FDA approval for any of our future
products, if FDA approval is delayed, or if we receive FDA approval for our
products but labeling restrictions make the use of the products uneconomical to
our customers, our future product sales will be far less than we anticipate and
may be insufficient to sustain our operations. We have no assurance that the FDA
will ever approve our future products for their principal intended use. In
addition to the premarket approval application process, we may face further
difficulties in connection with FDA approval of our products for the following
reasons:

     - FDA regulations require submission and approval of a premarket approval
       application supplement for certain changes to a product if the changes
       affect the safety and effectiveness of the product;

     - even if we obtain FDA approval of our premarket approval applications,
       that approval may still not allow us to make some of the specific claims
       for which we sought FDA approval; and

     - any FDA approval may include significant limitations on the indicated
       uses for which we may market our products, such as warnings, precautions
       or contraindications, requests for post-market studies, or additional
       regulatory requirements.
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     The FDA may not approve our future products or commercial enhancements to
our existing products on a timely basis, if at all. Our regulatory applications
also may be delayed or rejected based on changes in regulatory policies or
regulations.

GOVERNMENT REGULATION IMPOSES SIGNIFICANT RESTRICTIONS AND COSTS ON THE
DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS.

     Any products approved by the FDA are still subject to continual government
review and regulation, so long as the product is being marketed. Of our
principal products, PrepStain, FocalPoint and the use of PrepStain with
FocalPoint, have received FDA approval. Although we have received FDA approvals,
we are still subject to continual FDA review and regulation regarding the
ongoing marketing, sale and use of our cervical screening products. During this
continual review process, any subsequent discovery of previously unknown or
unrecognized problems with the product or a failure of the product to comply
with any applicable regulatory requirements can result in, among other things:

     - fines or other civil penalties;

     - the refusal of the FDA to approve further premarket approval
       applications;

     - suspension or withdrawal of our FDA approvals;

     - product recalls;

     - operating restrictions, including total or partial suspension of
       production, distribution, sales and marketing of our products;

     - injunctions; or

     - product seizures and criminal prosecution of us, our officers or our
       employees.

     If we fail to maintain FDA approval for the use of our FocalPoint product
with PrepStain, we will be unable to sell this joint product and our overall
future sales will be far less than we anticipate and may be insufficient to
sustain our operations.

WE DEPEND ON A LIMITED NUMBER OF PRODUCTS AND THESE PRODUCTS MAY NEVER GAIN
MARKET ACCEPTANCE.

     Sales and rentals of PrepStain and FocalPoint for cervical cancer screening
currently account for the substantial majority of our revenues. Market
acceptance of PrepStain and FocalPoint, as well as their combined use, will
depend on our ability to convince clinical laboratories, physicians, third party
payors and other health care providers and consumers that our products can
address the limitations of the conventional Pap smear process. We may not be
able to successfully establish that our products are better and more cost
competitive compared to the conventional Pap smear process. In addition, the
market may not accept our cervical cancer products as a replacement to the
conventional Pap smear collection process. Even if PrepStain, FocalPoint, and
the utilization of PrepStain with FocalPoint and other products do gain market
acceptance, their level of sales will still largely depend on the availability
and level of reimbursement from third-party payors, such as private insurance
plans, managed care organizations and Medicare and Medicaid. There can be no
assurance that we will achieve market acceptance for PrepStain, FocalPoint, or
their combined use, and the failure to do so would have a material adverse
effect on our business, financial condition and results of operations.

     In addition, the market may not accept any of the oncology products that we
develop. While various diagnostic and pharmacological oncology tests are
currently available, few tests offer an integrated solution for diagnosing
cancer at the earliest possible stage, providing individualized predictive and
prognostic information, guiding treatment selection for patients with cancer,
and predicting disease recurrence. Market demand for

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our oncology products will depend primarily on acceptance by clinical
laboratories, physicians and third party payers. Commercial acceptance of our
oncology tests will depend upon several factors, including:

     - their potential advantage, including their cost-effectiveness over
       alternative diagnostic methods;

     - our ability to compete with similar or superior products developed by our
       competitors;

     - our ability to build and maintain, or access through third parties, a
       capable sales force; and

     - qualification of our products for third party medical insurance coverage
       and reimbursement.

     If our oncology products do not achieve significant market acceptance, our
revenues could be adversely affected.

WE HAVE A HISTORY OF OPERATING LOSSES AND AN ACCUMULATED DEFICIT AND WE MAY
NEVER BECOME PROFITABLE.

     We have a history of operating losses and we expect losses to continue for
the next several years as we continue to market our products, develop new
products and perform additional clinical studies. As of December 31, 2001, we
had cumulative net losses of approximately $206.4 million. While our products
have grown in acceptance as measured by our revenues, we still operate in a very
competitive environment. These losses resulted principally from the costs of our
research and development activities and expenses in excess of revenues. Our
operating expenses have been concentrated in the following areas:

     - research and development activities;

     - sales and marketing activities, including the cost and effect of
       promotional discounts, sales, and marketing programs and strategies; and

     - regulatory issues, including activities in connection with premarket
       approval applications to the FDA;

     We expect marketing and sales expenses associated with our products to
either continue at the rate of 2001 or increase in the future, which could
contribute to financial losses for us. These expenses are a result of our
expanded marketing and sales efforts to continue the commercial rollout of our
products. Our profitability is subject to uncertainty and will depend on a
number of factors including:

     - receipt of regulatory approvals for future products in a timely manner;

     - successful marketing of our products in the United States;

     - the extent to which our products gain market acceptance;

     - ability to manufacture our products at an acceptable cost and with
       acceptable quality;

     - introduction of alternative technologies by our competitors;

     - the timing and volume of system placements;

     - availability of reimbursement from third-party payors, and the extent of
       coverage; and

     - ability to establish internal financial controls and other infrastructure
       necessary to support large-scale commercial operations.

     We expect to continue incurring overall net operating losses until product
sales and service revenues sufficiently fund our operations and while our
oncology business is developing products that can be commercially introduced
into the market. We cannot be certain that we will ever become profitable.

WE CANNOT BE CERTAIN OF OUR FUTURE CAPITAL NEEDS AND ADDITIONAL FINANCING MAY
NOT BE AVAILABLE WHEN WE NEED IT.

     Since beginning operations in November 1996, we have financed our
operations through the private placement and public sales of equity securities,
debt facilities and limited product sales. We have had negative cash flow from
operations since inception, and we expect negative cash flow from operations to
continue at least through the next 12 to 24 months. At December 31, 2001, we had
approximately $56.0 million in cash,
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cash equivalents and short-term investments. We believe that our existing cash
and existing debt and lease financing will be sufficient to enable us to meet
our future cash obligations through, at least, 2002.

     We may be unable to obtain adequate funds, either through financial markets
or from collaborative or other arrangements with corporate partners or other
sources, when we need them, or we may be unable to find adequate funding on
favorable terms, if at all. If we are unable to fund our future capital
requirements, it would significantly limit our ability to continue our
operations.

     The extent of our future capital requirements depends on several factors,
including:

     - the timing of achieving profitability;

     - the timing and costs of product introductions;

     - the extent of our ongoing research and development programs, including
       that at TriPath Oncology;

     - the progress and scope of clinical trials;

     - the timing and costs required to receive both United States and foreign
       governmental approvals for new products in development;

     - the extent to which our products gain market acceptance;

     - demand for and sales of our combined PrepStain and FocalPoint systems for
       cervical cancer screening and of FocalPoint GS in the United States, if
       and when it gains FDA approval;

     - the resources required to further develop our marketing and sales
       capabilities domestically and internationally, and the success of those
       efforts;

     - the resources required to expand manufacturing capacity;

     - the costs of training laboratory personnel to become proficient with the
       use of our products; and

     - the cost of filing, prosecuting, defending and enforcing patent claims
       and other intellectual property rights;

     Many of these factors may be out of our control. There is no guarantee that
the assumptions underlying our estimates about our needs for future capital will
prove to be accurate.

OUR FUTURE FINANCING ARRANGEMENTS MAY IMPACT THE VALUE OF YOUR INVESTMENT OR MAY
IMPACT OUR RIGHTS TO OUR INTELLECTUAL PROPERTY.

     We may choose to raise additional funding to meet our future capital
requirements through a variety of financing methods, including lease
arrangements, debt or equity financings, or strategic alliances. If we were to
raise additional funding through the sale of equity or securities convertible
into equity, your proportionate ownership in TriPath Imaging may be diluted. In
addition, if we obtain additional funds through arrangements with collaborative
partners, we may have to relinquish rights to certain of our technologies or
potential products that we would otherwise seek to develop or commercialize
ourselves. Additional funding may not be available when needed or on terms
acceptable to us, which would have a material adverse effect on our liquidity
and capital resources, business, financial condition and results of operations.

IF OUR STRATEGIC PARTNERSHIPS ARE UNSUCCESSFUL, OUR EARNINGS GROWTH WILL BE
LIMITED.

     An important element of our strategy is to enter into strategic
partnerships for the research and development of alternative applications for
our extensive body of intellectual property. We currently have a strategic
arrangement with BD for the development of diagnostic and pharmacogenomic
oncology tests and we may enter into additional partnerships in the future. We
believe that recent advances in genomics, biology, and informatics are providing
new opportunities to leverage our proprietary technology. The success of these
arrangements is largely dependent on technology and other intellectual property
contributed by our partners, as well as their efforts, resources and skills. Our
existing and future strategic partnerships are also dependent upon our partners'
continued willingness to collaborate with us, as opposed to our competitors.
There can be
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no assurance that we will succeed in implementing and finalizing any new
strategic partnerships to facilitate the exploitation of our intellectual
property estate. The failure to do so could have a material adverse effect on
our future prospects inside and outside of the cervical cytology or diagnostic
oncology markets and could impact our financial condition and results of
operations.

WE HAVE LIMITED MANUFACTURING EXPERIENCE AND CAPACITY AND WE MAY NOT BE ABLE TO
ESTABLISH SUFFICIENT MANUFACTURING CAPABILITY AND CAPACITY, EITHER OF WHICH
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

     We manufacture PrepStain and FocalPoint, and related products either at our
Burlington, North Carolina, or at our Redmond, Washington facilities. Currently,
we have limited manufacturing experience and capabilities for high volume test
kit manufacturing. While we believe we have sufficient capacity to meet near
term customer demand for our cervical cytology products, we may have to
substantially increase our manufacturing capabilities in the future if our
products gain wider market acceptance. We may not be able to recruit and retain
skilled manufacturing personnel to establish sufficient manufacturing capability
and capacity. Even if we are able to establish sufficient manufacturing
capability and capacity, we still may be unable to manufacture our products:

     - in a timely manner;

     - at a cost or in quantities necessary to make them commercially viable;

     - in conformance with quality system requirements; or

     - in a manner which otherwise insures our products' quality.

     If we cannot successfully increase our manufacturing capability and
capacity, or successfully contract with third parties to manufacture our
products, our profitability will suffer.

WE MAY NOT BE ABLE TO MANUFACTURE OUR PRODUCTS IN A TIMELY OR COST EFFECTIVE
MANNER BECAUSE WE DEPEND ON SINGLE AND LIMITED SOURCE SUPPLIERS FOR OUR
PRODUCTS' COMPONENTS.

     We currently obtain certain components for our products on a single source
basis from certain suppliers. If any of these sole-source suppliers are unable
to provide an adequate and constant supply of components, we will need to modify
any components provided by additional or replacement suppliers. If we are unable
to establish additional or replacement sources of supply on a cost-competitive
and timely basis from these suppliers, we may need to delay or halt our
manufacturing process. If any of the components of our products were no longer
available in the marketplace, we could be forced to further develop our
technology to incorporate alternate components. We also may try to establish
relationships with additional suppliers or vendors for components for our
products, so long as we are not prohibited from doing so by any existing
contractual obligations. We may not be able to further develop our technology to
incorporate new components or establish relationships with additional suppliers
or vendors for the necessary components of our products.

     In addition, use of any new components or replacement components from
alternative suppliers into our products may require us to submit PMA supplements
to the FDA. We would then need FDA approval on any PMA supplements we have filed
before we could market our products with new or replacement components.
Ultimately, we may not be able to successfully develop, obtain, or incorporate
replacement components into our products. Even if we were able to successfully
incorporate new components into our products, the FDA may not approve these new
components quickly, if at all.

WE HAVE LIMITED MARKETING AND SALES RESOURCES WHICH COULD HURT OUR ABILITY TO
BECOME PROFITABLE.

     During the last quarter of 2000 and throughout 2001, we have added to our
marketing and sales forces to more effectively market our products. Even with
the increased size of our sales force, we may not be able to successfully
promote our products to clinical laboratories, health care providers, including
physicians, and third-party payors. In addition, we must educate health care
providers and third-party payors regarding the clinical benefits and
cost-effectiveness of our products because of the market's limited awareness. We
may not

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be able to recruit and retain additional skilled marketing, sales, service or
support personnel to help in our achievement these goals when needed.

     Our marketing success in the United States and abroad will depend on
whether we can:

     - obtain required regulatory approvals;

     - successfully demonstrate the cost-effectiveness and
       clinical-effectiveness of our products;

     - further develop our direct sales capabilities; and

     - establish arrangements with contract sales organizations, distributors
       and marketing partners.

     If we cannot successfully expand our marketing and sales capabilities in
the United States and in international markets, we may never become profitable.

WE MAY HAVE DIFFICULTY MANAGING THE EXPANSION OF OUR OPERATIONS, AND FAILURE TO
DO SO WILL HARM OUR BUSINESS.

     We are experiencing growth in our employee base and in the scope of our
operations, and we anticipate that further expansion will be required to achieve
growth in our customer base and to develop and seize market opportunities. This
expansion could place a significant strain on our senior management team and on
our operational and financial resources.

     To manage the expected growth of our operations and personnel, we will need
to improve existing, and implement new operational and financial systems,
procedures, and controls. We also will need to expand, train, and manage our
growing employee base as well as expand and maintain close coordination among
our sales and marketing, finance, administrative, and operations staff. Further,
we may be required to enter into additional relationships with various suppliers
and other third parties necessary to our business. A successful continued
expansion may also require us to further develop expertise in complex joint
venture negotiations. We cannot guarantee that our current and planned systems,
procedures, and controls will be adequate to support our future operations, that
we will be able to hire, train, retain, motivate, and manage the required
personnel or that we will be able to identify, manage, and benefit from existing
and potential strategic relationships and market opportunities. If we do not
effectively manage the budgeting, forecasting, and other process-control issues
presented by such expansion, our business will suffer. If we are unable to
undertake new business due to a shortage of staff or resources, our growth will
be impeded. Therefore, there may be times when our opportunities for revenue
growth may be limited by the capacity of our internal and external resources
rather than by the absence of market demand.

     In 2001, we made some significant changes to our management team. Although
we believe that the new members of our management team are currently integrated
with the other members of our management team, we cannot assure you that our
management team will be able to continue to work together effectively or manage
our growth successfully. We believe that the successful integration of our
management team is critical to our ability to manage its our operations
effectively and support our anticipated future growth.

WE DEPEND ON PATENTS, COPYRIGHTS, LICENSES AND OTHER PROPRIETARY RIGHTS TO GROW
OUR BUSINESS AND WE MAY NOT BE ABLE TO ADEQUATELY PROTECT ALL OF OUR PROPRIETARY
RIGHTS.

     Our long-term success largely depends on our ability to market products
that are technologically competitive. If we fail to obtain or maintain these
protections, we may not be able to prevent third parties from using our
proprietary rights. To protect our proprietary technology, rights and know-how,
we rely on a combination of patents, trade secrets, copyrights; and
confidentiality agreements.

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     We currently hold over 100 over foreign patents, over 110 over U.S. patents
and have six additional U.S. patents pending. These patents will expire from
2003 through 2019. Our reliance on patents poses the following risks:

     - our pending patent applications may not ultimately issue as patents;

     - patents we obtain may not be broad enough to protect our proprietary
       rights;

     - the claims allowed in any of our existing or future patents may not
       provide competitive advantages for our products;

     - competitors may challenge or circumvent our patents or pending
       applications; and

     - in certain foreign countries, protection of our patent and other
       intellectual property may be unavailable or very limited.

     This may make the possibility of piracy of our technology and products more
likely. We cannot guarantee that the steps we have taken to protect our
intellectual property will be adequate to prevent infringement or
misappropriation of our technology. In addition, detection of infringement or
misappropriation is difficult. Even if we do detect infringement or
misappropriation of our technology, we may be unable to enforce our proprietary
rights, which could result in harm to our business. We may engage in litigation
to attempt to:

     - enforce our patents;

     - protect our trade secrets or know-how;

     - defend ourselves against claims that we infringe the rights of others; or

     - determine the scope and validity of the patents or intellectual property
       rights of others.

     Any litigation could be unsuccessful, result in substantial cost to us, and
divert our management's attention, which could harm our business.

THE RISK OF THIRD-PARTY CLAIMS OF INFRINGEMENT AGAINST US IS HIGH BECAUSE OUR
INDUSTRY DEPENDS ON PATENTS AND OTHER PROPRIETARY RIGHTS.

     The large role that patents play in our industry in general may pose the
following risks for us:

     - we cannot be sure that our products or technologies do not infringe
       patents of competitors that may be granted in the future pursuant to
       pending patent applications;

     - we cannot be sure that our products do not infringe any existing patents
       or proprietary rights of third parties; and

     - we cannot be sure that a court would rule that our products do not
       infringe any existing third-party patents or that a court would
       invalidate any existing patents in our favor.

     If a court were to uphold any claims of infringement made by existing
patent holders against us, we could then be:

     - prevented from selling our products;

     - required to pay damages;

     - required to obtain licenses from the owners of the patents; or

     - required to redesign our products.

     In the event that a court was to uphold a claim of patent infringement
against us, we may not be able to obtain licenses from the owners of the patents
or be able to successfully redesign our products to avoid patent infringement.
If we were unable to obtain the necessary licenses or successfully redesign our
products, it could seriously harm our ability to become a profitable company.

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     The cost to us of any litigation or other proceeding relating to
intellectual property rights, even if resolved in our favor, could be
substantial. Such litigation may also cause a diversion of our management's time
and attention from our business. Some of our competitors may be able to sustain
the financial and other costs of complex patent litigation more effectively than
we can because they have substantially greater resources. Uncertainties
resulting from the initiation and continuation of any litigation could have a
material adverse effect on our ability to continue our operations.

WE FACE SPECIAL RISKS RELATED TO INTERNATIONAL SALES AND OPERATIONS BECAUSE WE
HAVE LIMITED EXPERIENCE IN CONDUCTING OUR BUSINESS IN OTHER COUNTRIES.

     We are currently selling our products to customers in Australia, Asia,
Canada, Europe, and South America. While we are evaluating marketing and sales
channels abroad, including contract sales organizations, distributors and
marketing partners, we have very limited foreign sales channels in place. There
can be no assurance that we will successfully develop significant international
sales capabilities or that, if we establish such capabilities, we will be
successful in obtaining reimbursement or any regulatory approvals required in
foreign countries. Our international sales and operations may be limited or
disrupted by the imposition of government controls, export license requirements,
political instability, trade restrictions, changes in tariffs, difficulties in
staffing and managing international operations, changes in applicable laws, less
favorable intellectual property laws, longer payment cycles, difficulties in
collecting accounts receivable, fluctuations in currency exchange rates and
potential adverse tax consequences. Foreign regulatory agencies often establish
product standards different from those in the United States and any inability to
obtain foreign regulatory approvals on a timely basis, if at all, could have a
material adverse effect on our international business operations. Additionally,
if significant international sales occur, our business, financial condition and
results of operations could be adversely affected by fluctuations in currency
exchange rates as well as increases in duty rates. There can be no assurance
that we will be able to successfully commercialize our products or any future
products in any foreign market.

OUR STOCK PRICE IS HIGHLY VOLATILE AND THE VALUE OF YOUR INVESTMENT WILL LIKELY
FLUCTUATE.

     Our stock price has, from time to time, experienced extreme price and
volume fluctuations. Often these fluctuations are unrelated or disproportionate
to our actual operating performance. Many factors could cause the market price
of our stock to decline, including:

     - failure to successfully implement aspects of our growth strategy;

     - failure to achieve revenue and profitability results expected among those
       in the investment community;

     - failure to meet research and development goals related to our products
       and services;

     - technological innovations by our competitors or introductions of
       competing technologies;

     - investor perception of the biotechnology and medical device industry; and

     - general technology or biotechnology trends.

     Occasionally, when the market price of a stock has been volatile, holders
of that stock have instituted securities class action litigation against the
company that issued the stock. If any of our stockholders brought such a lawsuit
against us, even if the lawsuit was without merit, we could incur substantial
costs defending the lawsuit. The lawsuit would also divert the time and
attention of our management from our business.

OUR CONTROLLING STOCKHOLDERS HAVE THE ABILITY TO INFLUENCE SIGNIFICANT DECISIONS
REGARDING OUR FUTURE.

     Roche is our single largest stockholder. As of March 25, 2002, Roche
beneficially owned approximately 21% of our outstanding common stock. Roche also
has the right to purchase 5,000,000 additional shares of our common stock
through the exercise of warrants and has certain anti-dilution rights with
respect to these warrants in order maintain its existing level of ownership.
Roche also has the right to designate one member of our Board of Directors.

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     As of March 25, 2002, BD beneficially owned approximately 7% of our
outstanding common stock. As a result, our controlling stockholders are able to
significantly influence all matters requiring stockholder approval, including
the election of directors and the approval of significant corporate
transactions. This concentration of ownership could also delay or prevent a
change in control of us that may be favored by other stockholders.

                         RISKS RELATED TO OUR INDUSTRY

WE MAY BE UNABLE TO ATTAIN OR MAINTAIN THE REQUIRED COMPLIANCE WITH REGULATIONS
GOVERNING MANUFACTURING OF MEDICAL DIAGNOSTIC DEVICES.

     Manufacturers of medical diagnostic devices face strict federal regulations
regarding the quality of manufacturing. For example, the FDA periodically
inspects the manufacturing facilities of diagnostic device manufacturers to
determine compliance with regulations. Our current and future manufacturing and
design operations must comply with these and all other applicable regulations,
including regulations imposed by other governments. If we fail to comply with
quality systems regulations we could face civil or criminal penalties or
enforcement proceedings. These proceedings may require us to recall a product,
to stop placing our products in service or to stop selling our products. Similar
results could occur if we violate equivalent foreign regulations. We may not be
able to attain or maintain compliance with quality systems requirements. Any
failure to comply with the applicable manufacturing regulations would have a
material adverse effect on our business.

IF WE ARE UNABLE TO KEEP UP WITH TECHNOLOGICAL CHANGE, OUR PRODUCTS OR SERVICES
MAY BECOME OBSOLETE.

     Competition in the medical device industry is intense. The diagnostic
market for cervical cancer currently consists of both the conventional Pap smear
procedure and new and developing technologies. Some of these newly-developed
technologies have already received FDA approval with product labeling that has
been marketed as more effective than the conventional Pap smear for the
detection of disease in certain patient populations. Within the diagnostic
market for cervical cancer, we face direct competition from companies that
manufacture thin-layer slide preparation or automated screening systems. Our
products could be rendered obsolete or uneconomical because of:

     - technological advances by current or future competitors;

     - the introduction and market acceptance of competitors' products; or

     - the introduction and market acceptance of new cervical cancer detection
       methods.

     We may not be able to successfully compete against companies marketing
products based on competing technologies. Certain of our existing and potential
competitors may have several competitive advantages over us because they:

     - possess greater financial, marketing, sales, distribution and
       technological resources;

     - have more experience in research and development, clinical trials,
       regulatory matters, customer support, manufacturing and marketing;

     - have received third-party payor reimbursement for their products; or

     - they may collaborate or merge with other competitors in our industry and
       leverage their combined intellectual property and resources against us.

     These competitors may manufacture, market and sell their products or
services more successfully than us, which could adversely affect our product
sales.

     In February 2002, one of our main competitors, Cytyc Corporation, announced
its intention to merge with Digene Corporation, one of our collaborators with
whom we are working to develop HPV tests. The proposed transaction is subject to
review by the Federal Trade Commission under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. The Federal Trade Commission has extended its
investigation beyond the initial

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30-day waiting period and has requested additional information from Cytyc
pertaining to the proposed merger. There can be no assurance that the Federal
Trade Commission will not permit the proposed merger to take place. The
successful completion of the Cytyc-Digene merger could prevent us from
incorporating HPV testing into our existing products which could have a material
adverse effect on our business.

     Our products must remain competitive in accuracy and effectiveness, cost,
including both charges by us to the laboratory and the laboratory's labor and
overhead costs, convenience, perception among influential opinion leaders,
including cytopathologists, other physician groups, and laboratories, and
processing speed and reliability. To effectively compete, we must keep pace with
the product development and technological change in our industry. Our products
must demonstrate accuracy and cost effectiveness that equals or exceeds
conventional preparation and review of Pap smears and the technology that may be
offered by our competitors. We cannot guarantee that our products will be
competitive in any of these areas.

IF WE FAIL TO OBTAIN ADEQUATE LEVELS OF THIRD-PARTY REIMBURSEMENT FOR OUR
PRODUCTS, THE COMMERCIAL SUCCESS OF OUR PRODUCTS WILL BE SIGNIFICANTLY LIMITED.

     Our ability to successfully sell our products for cervical cancer screening
in the United States and other countries depends on the availability of adequate
reimbursement from third-party payors such as private insurance plans, managed
care organizations and Medicare and Medicaid. Virtually all of our revenues will
be dependent on customers who rely on third party reimbursement. Third-party
healthcare payors in the United States are increasingly sensitive to containing
healthcare costs and heavily scrutinize new technology as a primary factor in
increased healthcare costs. Third-party payors may influence the pricing or
perceived attractiveness of our products and services by regulating the maximum
amount of reimbursement they provide or by not providing any reimbursement.
Medical community or third-party healthcare payors may deny or delay acceptance
of our products or may provide reimbursement at levels that are inadequate to
support adoption of our technologies.

     If these third-party payors do not reimburse for our preparation and
screening products, or only provide reimbursement significantly below the amount
laboratories charge patients to perform screening with our products, our
potential market and revenues will be significantly limited. Use of our products
may never become widely reimbursed, and the level of reimbursement we obtain may
never be sufficient to permit us to generate substantial revenue.

     A significant part of our strategy is to market PrepStain and FocalPoint
together. To successfully market FocalPoint and PrepStain together, a Common
Procedural Terminology Code, or a CPT code, will need to be established covering
the combined use of these products. The CPT Editorial Board meets infrequently
to review and establish new CPT codes. Any delay in having a CPT code
established for the use of FocalPoint with PrepStain, if a CPT code is
established at all, could hamper the marketing of the combined product and have
a material effect on our business.

     Convincing third-party payors to provide reimbursement is a costly and time
consuming process because reimbursement approval is required from each payor
individually; and obtaining this approval from the third-party payor typically
requires the presentation of scientific and clinical data to support the use of
the products. Whether a third-party payor is willing to provide reimbursement
for the use of our products at a level that can allow our company to succeed
depends on several unpredictable factors, including:

     - the level of demand for our products by physicians;

     - the payor's determination that our products are an improvement over the
       conventional Pap smear process; and

     - the payor's determination that our products are safe and effective,
       medically necessary, appropriate for specific patient populations, and
       cost effective.

     We may face particular difficulties convincing third-party payors that our
products are cost effective because the up-front, direct costs of using the
products will initially be greater than the cost of the

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conventional Pap smear. As a result, we will need to convince third-party payors
that the use of our products will result in a net overall cost savings to the
health care system.

WE CAN ONLY SELL OUR PRODUCTS TO A LIMITED NUMBER OF CUSTOMERS.

     A significant portion of our product sales will be concentrated among a
relatively small number of large, and medium-sized, clinical laboratories.
Moreover, due to consolidation in the clinical laboratory industry, we expect
that the number of potential domestic customers for our products may decrease.
These factors increase our dependence on sales to the largest clinical
laboratories and the bargaining power of those potential customers. Our market
research indicates that nearly 40% of all U.S. Pap smears are processed by the
two largest laboratories. Each of these companies operates multiple laboratory
facilities nationwide.

     We will have to make this number of potential customers aware of our
products and then convince them to accept and use our products. To gain
acceptance of our products within this small customer base, we will have to
successfully demonstrate the benefits of our products over the conventional Pap
smear process and other alternative methods of sample collection, slide
preparation and cervical cancer screening. In addition, to generate demand for
our products among these clinical laboratories, we believe that we must:

     - educate doctors and health care providers on, and convince them of, the
       clinical benefits and cost-effectiveness of our products; and

     - demonstrate to doctors and health care providers that adequate levels of
       third-party payor reimbursement will be available for our products.

     Ultimately, we may not be able to successfully sell our products to large
clinical laboratories. Even if we do successfully sell our products to large
clinical laboratories, those sales may not generate enough revenue to make us a
profitable company.

WE ARE AT RISK OF PRODUCT LIABILITY CLAIMS AND MAY NOT MAINTAIN ADEQUATE
INSURANCE AGAINST SUCH LIABILITIES.

     The commercial screening of Pap smears has historically generated
significant malpractice litigation. As a result, we face product liability,
errors and omissions or other claims if our products are alleged to have caused
a false- negative diagnosis. Although we have product liability insurance, it
could become increasingly difficult for us to obtain and maintain product
liability coverage at a reasonable cost or in amounts sufficient to protect us
against potential losses. If we are able to obtain adequate product liability
insurance at a reasonable cost a successful product liability claim or a series
of claims brought against us could require us to pay substantial amounts that
would decrease our profitability, if any.

OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR KEY PERSONNEL.

     We will depend heavily on the principal members of our management and
scientific staff. The loss of their services might impede achievement of our
strategic objectives or research and development. Our success depends on our
ability to retain key employees and to attract additional qualified employees,
which may be particularly difficult to do in the future. Competition for highly
skilled scientific and management personnel is intense, particularly in the
geographic areas in which we currently are located, and these resources are
scarce relative to the needs of a growing high technology business sector. The
failure to recruit such personnel or the loss of existing personnel could
adversely affect our business.

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