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 September 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, Washington 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 October 31, 1997
(Common stock, $.01 par value) 14,379,385
<PAGE>
NEOPATH, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION
Page
Item 1. Financial Statements 1
Balance Sheets - September 30, 1997 (unaudited) and
December 31, 1996
Statements of Operations (unaudited) - for the
three months and nine months ended September 30, 1997 and 1996
Statements of Cash Flows (unaudited) - for the nine
months ended September 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 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
NEOPATH, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,589,079 $ 7,871,401
Securities available-for-sale 31,688,125 50,616,477
Accounts receivable, net 3,543,529 840,256
Inventories 8,368,379 5,641,914
Other current assets 446,865 197,726
------------ ------------
Total current assets 46,635,977 65,167,774
Fee-per-use systems, net 8,082,222 5,994,137
Property and equipment, net 5,580,194 4,813,745
Intangible assets, net 3,571,921 -
Deposits and other assets 386,853 155,899
------------ ------------
Total assets $ 64,257,167 $ 76,131,555
============ ============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 2,358,452 $ 1,496,630
Salaries and wages payable 2,133,482 2,208,454
Other accrued liabilities 1,190,278 565,939
Note payable 500,000 -
Current portion of obligations under capital leases 78,699 75,861
------------ ------------
Total current liabilities 6,260,911 4,346,884
Obligations under capital leases, less current portion 121,606 182,535
Shareholders' equity:
Common stock 141,007,347 136,255,746
Deferred compensation - (74,246)
Accumulated deficit (83,132,697) (64,579,364)
------------ ------------
Total shareholders' equity 57,874,650 71,602,136
------------ ------------
Total liabilities and shareholders' equity $ 64,257,167 $ 76,131,555
============ ============
See accompanying notes.
</TABLE>
Page 1
<PAGE>
NEOPATH, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------------- --------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 3,109,044 $ 877,424 $ 7,584,101 $ 1,504,051
Cost of revenues 1,230,849 414,017 3,276,289 979,725
------------- ------------- ------------- ------------
Gross margin 1,878,195 463,407 4,307,812 524,326
Operating expenses:
Research and development 3,109,225 2,916,124 11,418,727 8,200,000
Selling, general and administrative 5,231,003 3,100,200 13,635,188 7,943,604
------------- ------------- ------------- ------------
8,340,228 6,016,324 25,053,915 16,143,604
------------- ------------- ------------- ------------
Loss from operations (6,462,033) (5,552,917) (20,746,103) (15,619,278)
Interest income 537,724 940,323 1,956,999 2,884,637
Interest expense (14,540) (10,889) (29,150) (38,465)
------------- ------------- ------------- ------------
Net loss $ (5,938,849) $ (4,623,483) $ (18,818,254) $ (12,773,106)
============== ============== ============== ==============
Net loss per share $ (0.41) $ (0.35) $ (1.33) $ (1.00)
============== ============== ============== ==============
Shares used in computation of
net loss per share 14,358,144 13,284,449 14,135,615 12,823,190
============== ============== ============== ==============
See accompanying notes.
</TABLE>
Page 2
<PAGE>
NEOPATH, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1997 1996
------------- ------------
<S> <C> <C>
Operating activities
Net loss $(18,818,254) $(12,773,106)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,901,103 1,261,065
Deferred compensation 74,246 72,154
Stock issued for services/donation - 18,278
Accrued interest on securities available-for-sale 917,863 427,535
Net change in operating accounts:
Accounts receivable (2,703,273) (800,468)
Inventories and fee-per-use systems (7,151,457) (8,464,786)
Accounts payable and accrued liabilities 1,361,189 1,484,085
Deferred revenue - 500,000
Other (523,703) (558,063)
-------------- -------------
Net cash used in operating activities (23,942,286) (18,833,306)
Investing activities
Purchases of securities available-for-sale (5,349,511) (75,750,434)
Maturities of securities available-for-sale 23,624,921 31,094,630
Purchase of Pathfinder System product line (2,696,114) -
Additions to property and equipment (758,679) (3,175,989)
Other (4,163) 66,997
------------ ------------
Net cash provided by (used in) investing activities 14,816,454 (47,764,796)
Financing activities
Issuance of common stock, net - 61,740,351
Exercise of stock options/warrants 3,901,601 2,835,984
Principal payments on obligations under capital leases (58,091) (163,219)
------------ ------------
Net cash provided by financing activities 3,843,510 64,413,116
------------ ------------
Net decrease in cash and cash equivalents (5,282,322) (2,184,986)
Cash and cash equivalents:
Beginning of period 7,871,401 4,150,923
------------ -----------
End of period $ 2,589,079 $ 1,965,937
============ ============
Noncash transactions and supplemental disclosures
Inventories transferred to fee-per-use systems 3,083,867 3,556,896
Inventories transferred to property and equipment 1,579,191 -
Short-term note payable issued in purchase of Pathfinder System product line 500,000 -
The purchase of the Pathfinder System product line included 97,127 shares of NeoPath common stock (see Note 5).
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 nine-month periods
ended September 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(R)
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 Standards
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings per Share," which is required
to be adopted for periods ending after December 15, 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.
In June 1997, the Financial Accounting Standards Board
issued Statement No. 130, "Reporting Comprehensive Income," which
is required to be adopted for fiscal years beginning after
December 15, 1997. The new Statement requires that companies
report and display comprehensive income and its components, as
defined in the Statement, for all periods presented. Under the
new requirements, comprehensive income must be displayed with the
same prominence as other financial statements. The Company plans
to adopt the new Statement in 1998.
In June 1997, The Financial Accounting Standards Board
issued Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which is required to be
adopted for periods beginning after December 15, 1997. The new
Statement supersedes Financial Accounting Standards Board
Statement No. 14, "Financial Reporting for Segments of a Business
Enterprise." Companies will be required to report each operating
segment and related information, as defined in the Statement, in
the Company's notes to financial statements. The Company plans
to adopt the new Statement in 1998.
Page 4
<PAGE>
Note 4 - Inventories
Inventories consist of the following:
September 30, December 31,
1997 1996
------------ ------------
Raw materials $ 4,235,802 $ 2,725,725
Work-in-process 1,935,066 166,437
Finished goods 2,197,511 2,749,752
------------ ------------
$ 8,368,379 $ 5,641,914
============ ============
Note 5 - Purchase of Pathfinder System Product Line
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 common
stock. The initial purchase price included cash of $2.7 million
(including transaction-related expenses), a $500,000 short-term
note paid in October 1997, and 48,564 shares of Company common
stock. In addition, 48,563 shares of Company common stock were
issued and are held in escrow 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 approximated
$5.1 million.
As a result of the acquisition, the Company recorded
approximately $240,000 in inventories, $100,000 in property and
equipment, and recognized $3.8 million in acquired intangible
assets. The intangible assets are 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. In late September 1997, a motion for preliminary
injunction against the Company was heard by a judge in the United
States District Court for the Southern District of New York. No
decision has yet been rendered. The Company believes it has a
strong position in this action and continues to defend 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(R) System product line acquired from
CompuCyte Corporation ("CompuCyte") in June 1997.
NeoPath's first product, the AutoPap(R) 300 QC Automatic Pap
Screener System (the "AutoPap QC"), received approval from the
United States Food and Drug Administration (the "FDA") in
September 1995 and approval from the Health Care Financing
Administration in March 1996. The AutoPap QC is currently used
by clinical laboratories to rescreen Pap smears classified by a
cytotechnologist as normal in order to improve detection of
abnormal smears.
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"). During 1997 the
Company completed a prospective intended-use clinical study which
included more than 31,500 Pap smear slides at five clinical
laboratories in the United States and Canada to evaluate the
performance of the AutoPap Screener as a primary screening
device. Based on the results of the study, in August 1997
NeoPath submitted an amendment to its PreMarket Approval ("PMA")
to the FDA for use of the AutoPap System as a primary screener of
Pap smear slides.
Currently, the Company recognizes revenue 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.
To date, 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 both fee-per-use
and sale contracts; however, the mix could vary as product
features and markets mature, and as reimbursement changes.
Acquisition of Pathfinder System
In June 1997, the Company acquired the Pathfinder System
product line from CompuCyte for an initial purchase price of $4.1
million in cash and Company common 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. During the third quarter, NeoPath began
selling the Pathfinder System as a stand-alone product and
continues to evaluate a potential integration of the technology
into the AutoPap System.
The initial purchase price included cash of $2.7 million
(including transaction-related expenses), a $500,000 short-term
note paid in October 1997, and 48,564 shares of Company common
stock. In addition, 48,563 shares of Company common stock were
issued and are held in escrow 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 approximated
$5.1 million.
Page 6
<PAGE>
As a result of the acquisition, the Company recorded
approximately $240,000 in inventories, $100,000 in property and
equipment, and recognized $3.8 million in acquired intangible
assets. The intangible assets are amortized over five years.
Results of Operations
NeoPath's revenues for the third quarter were $3.1 million,
representing an increase of over 250 percent compared to third
quarter 1996 revenues of $877,000 and an increase of 39 percent
over revenues for the second quarter of 1997. Domestic fee-per-
use revenues increased over 220 percent from the third quarter of
1996 and increased approximately 20 percent over similar revenues
for the second quarter of 1997. More than 65 percent of third
quarter revenues resulted from AutoPap System sales worldwide and
other revenues associated with upgrades to previous international
product placements. The remaining revenues consisted of domestic
fee-per-use revenues and limited revenues from initial sales of
Pathfinder Systems. The Company anticipates that revenues for
the next several quarters will continue to consist of greater
sales of AutoPap Systems than revenues generated from NeoPath's
fee-per-use program.
During the third quarter of 1997, the Company signed a
distribution agreement with a firm in Hong Kong and shipped its
first AutoPap System to Hong Kong. Third quarter and year-to-
date revenues include amounts from Nikon Corporation, NeoPath's
distributor in Japan, for upgrading AutoPap Systems previously
shipped. Approximately 40 percent of total revenues in the third
quarter were attributable to international product placements.
The Company recognized revenues of $7.6 million in the nine
months ended September 30, 1997, compared to $1.5 million in the
comparable period in 1996. NeoPath began recognizing product
revenues in early 1996.
Earlier in 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. 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 shipped AutoPap QC Systems under this agreement
during the second and third quarters. Fee-per-use agreements
generally begin to generate revenues in the quarter following
placement.
Gross margin increased to 60 percent in the quarter ended
September 30, 1997, compared to a gross margin of 54 percent in
the first six months of 1997 and a 38 percent gross margin for
all of 1996. NeoPath's gross margin for the nine months ended
September 30, 1997 was 57 percent, compared to a gross margin of
35 percent in the comparable period in 1996. The primary
components of cost of revenues for fee-per-use systems include
depreciation and allocated service and support costs. For
AutoPap Systems sold, cost of revenues includes the related
manufacturing cost and estimated one-year warranty expense.
Gross margin is expected to continue to fluctuate depending on
the mix of fee-per-use revenues, AutoPap System sales, and other
revenues, which include revenues to be recognized under the
agreement with Nikon Corporation for upgrading AutoPap Systems
previously shipped. The continued development of the
manufacturing, service and support functions, as well as overall
production levels, are also expected to contribute to
fluctuations in gross margin.
Research and development expenses were $3.1 million in the
quarter ended September 30, 1997, compared to $2.9 million in the
comparable quarter of 1996 and an average of $4.2 million in the
first two quarters of 1997. The decrease from expense levels for
the first half of 1997 is primarily a result of the Company's
completion of the clinical study to support the amendment to
NeoPath's PMA to the FDA for use of the AutoPap System as a
primary screener of Pap smears.
Research and development expenses were $11.4 million in the
nine months ended September 30, 1997, compared to $8.2 million in
the comparable period in 1996. The increase from 1996 is due
primarily to expenditures from the primary screener clinical
study, as well as other expenses relating to the August 1997
submission to the FDA. Research and development expenses are
expected to remain stable over the near team, but are expected to
Page 7
<PAGE>
increase over time due to expenditures for product improvements
and new product development, as well as expenditures relating to
future submissions to the FDA.
Selling, general and administrative expenses were $5.2
million in the quarter ended September 30, 1997, compared to $3.1
million in the comparable quarter in 1996 and an average of $4.2
million in the first two quarters of 1997. Selling, general and
administrative expenses were $13.6 million in the nine months
ended September 30, 1997, compared to $7.9 million in the
comparable period in 1996. These increases are primarily a
result of the Company's investment in significant new marketing
and sales initiatives and costs related to the integration of the
Pathfinder System product line. The increase from the prior
year also reflects higher staffing, legal, and overall
infrastructure expenses.
Interest income for the third quarter of 1997 decreased to
$538,000, compared to $940,000 for the comparable quarter in
1996. For the nine months ended September 30, 1997, interest
income was $2.0 million, compared to $2.9 million in the nine
months ended September 30, 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.
Liquidity and Capital Resources
The Company's cash, cash equivalents and securities
available-for-sale totaled $34.3 million as of September 30,
1997, compared to $58.5 million at December 31, 1996. The
decrease is a result of cash used in the Company's operations for
the nine months ended September 30, 1997 and the $2.7 million in
cash paid for the Pathfinder System product line, offset by the
receipt of $3.9 million from the exercise of stock warrants and
options.
During the nine months ended September 30, 1997, excluding
the Pathfinder System product line acquisition, the Company used
$24.7 million to fund operating activities, including $4.7
million for inventories subsequently classified as either fee-per-
use systems or transferred to property and equipment and
$760,000 to purchase other property and equipment. During the
comparable nine-month period in 1996, the Company used $22.0
million to fund its operating activities, including $3.6 million
for inventories subsequently classified as fee-per-use systems
and $3.2 million for 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 cash resources
and interest income will enable it to sustain operations for at
least the next 12 months. There can be no assurance, however,
that the Company will not be required to seek additional cash in
the form of either debt or equity 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 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,"
Page 8
<PAGE>
"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 9
<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. In late September 1997, a motion for preliminary
injunction against the Company was heard by a judge in the United
States District Court for the Southern District of New York. No
decision has yet been rendered. The Company believes it has
a strong position in this action and continues to defend 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 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report.
Exhibit No. Description
------------------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1997.
Page 10
<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: November 13, 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 11
<PAGE>
NEOPATH, INC.
INDEX TO EXHIBITS
Exhibit No. Description
------------------------------------
27 Financial Data Schedule
Page 12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q as of September 30, 1997 and for the nine months then ended, and is
qualified in its entirety by reference to such financial statements and
footnotes.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,589,079
<SECURITIES> 31,688,125
<RECEIVABLES> 3,543,529
<ALLOWANCES> 0
<INVENTORY> 8,368,379
<CURRENT-ASSETS> 46,635,977
<PP&E> 5,580,194
<DEPRECIATION> 0
<TOTAL-ASSETS> 64,257,167
<CURRENT-LIABILITIES> 6,260,911
<BONDS> 0
0
0
<COMMON> 141,007,347
<OTHER-SE> (83,132,697)
<TOTAL-LIABILITY-AND-EQUITY> 64,257,167
<SALES> 0
<TOTAL-REVENUES> 7,584,101
<CGS> 0
<TOTAL-COSTS> 3,276,289
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