SecProbe.io

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Mail Stop 03-06

      June 21, 2005

VIA U.S. MAIL AND FACSIMILE (408) 719-6401

Terence Griffin
Chief Financial Officer
Applied Imaging Corp.
120 Baytech Drive
San Jose, California  95134

      Re:	Applied Imaging Corp.
		Form 10-K for the year ended December 31, 2004
      Filed April 27, 2005
      Form 10-Q for the quarter ended March 31, 2005
		File No. 000-21371

Dear Mr. Griffin:

      We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. Where indicated, we think you should
revise your document in response to these comments.  If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.  In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure.  After reviewing this information, we may raise
additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-K for the year ended December 31, 2004

Item 7.  Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 24

Liquidity and Capital Resources, page 28
1. We note your disclosure that your current cash balances may not
be
sufficient to fund planned expenditures, which raises doubts about
your ability to continue as a going concern.  Please revise future
filings to provide more details of your specific plan of
operations,
including, plans to generate sufficient liquidity, financing needs
and expected sources of this financing. The discussion should also
contain appropriate and prominent disclosure of your financial
difficulties and viable plans to overcome these difficulties and
resolve the doubts about your continued existence.  Refer to FRC
607.02.

Consolidated Financial Statements

Note 1.  Summary of the Company and Significant Accounting
Policies,
page 39

Goodwill, page 41
2. We see that you have goodwill of approximately $2.4 million at
December 31, 2004.  We also see that you have experienced
continually
increasing losses over the past three years.  Tell us how you
determined that goodwill was not impaired at December 31, 2004.

Revenue Recognition, page 42
3. We note from your disclosure on page 55 that you incorrectly
recorded revenue upon shipment when customer acceptance criteria
had
not been met.  Please tell us and revise future filings to
describe
the specific customer acceptance criteria that must be met to
recognize revenue.  For example, discuss how the participation of
a
third party financing company might impact the timing of revenue
recognition.

Note 3.  Property and Equipment, net, page 45
4. We note that you currently carry $1.9 million of demonstration
equipment within property and equipment. Please explain in detail
your policy with respect to the demonstration equipment.  Tell us
whether you ever loan or sell the demonstration equipment to
customers.  Explain to us the basis for the three year useful life
of
this equipment.  Please also tell us and revise to disclose in
future
filings where the amortization expense is recorded in your
statement
of operations and why you believe the classification is
appropriate.
We may have additional comments after reviewing your response.

Note 11.  Segment and Foreign Operations, page 52
5. Tell us why you do not need to make product line disclosures as
required by paragraph 37 of SFAS 131.

For 10-Q for the quarter ended March 31, 2005

Liquidity and Capital Resources, page 11
6. Tell us more details of the terms of the waiver obtain for the
covenant violation, including the period covered by the waiver and
whether the Company is currently in compliance with the covenants
in
the amended loan agreement. More details should also be disclosed
in
future filings.

      As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review.  Please
understand that we may have additional comments after reviewing
your
responses to our comments.

	 We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision.  Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

	You may contact Kristin Lochhead at (202) 551-3664 or me at
(202) 551-3676 if you have questions.  In this regard, do not
hesitate to contact Martin James, Senior Assistant Chief
Accountant
at (202) 551-3671 with any other questions.

      Sincerely,

      Brian Cascio
      Accounting Branch Chief

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Mr. Griffin
Applied Imaging Corp.
June 21, 2005
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