According to Lab Industry Strategic Outlook 2000, published by Washington G-2 Reports, the entire clinical laboratory

industry in the United States had revenues exceeding $30 billion in 1999, which represented 3.6% of the nation\'s total healthcare expenditures. Laboratory tests are generally used by physicians to assist in the detection, diagnosis, evaluation, monitoring and treatment decisions for diseases and other medical conditions, through the measurement and analysis of chemical and cellular

components in blood and other bodily fluids and tissues.

A securities research analyst estimates that approximately 23 million individuals in the United States, or approximately eight percent of the total population, suffer from some form of neurological disease or disorder. There are approximately 9,000 clinical neurologists in the United States. According to a survey in the American Academy of Neurology, full-time neurologists have an average of over 16 new patient events per week, which includes first time patients and patients seeking treatment or diagnosis for a particular condition

for the first time. The National Institute of Neurological Disorders and Stroke has requested funding of $1.3 billion from National Institutes of Health (NIH) for the year 2002. This would represent an increase of 12% from 2001.

The Company currently offers testing services utilizing more than 70 assays that are offered individually and in various combinations. Over the last five years the Company has introduced five to seven new assays per year.

Neurogenetic Diagnosis Service accounted for approximately 44.8% of the Company’s net revenues for the six months ended June 30, 2001. These assays assist in detecting mutations in the genetic code that are responsible for causing specific disorders, such as Huntington\'s disease, spinocerebellar ataxia and certain forms of mental retardation. These assays can identify a diagnosis with molecular precision and can provide valuable information about prognosis, as well as the inheritance patterns for family members.

Peripheral Neuropathy and Paraneoplastic Diagnosis Service accounted for approximately 44.6% of its net revenues for the six months ended June 30, 2001. Peripheral neuropathy refers to nerve disorders affecting the arms and legs. Peripheral neuropathy assays assist in detecting the presence of autoantibodies that, by attacking a person\'s nerves, may cause weakness, numbness and impairment of reflexes in the upper and lower extremities.

Alzheimer\'s Disease Diagnostics accounted for approximately 5.7% of its net revenues for the six months ended June 30, 2001. These assays are used to diagnose Alzheimer\'s disease, a progressive neurodegenerativedisease characterized by memory loss, language deterioration and impaired visuospatial skills estimated to affect approximately four million people in the United States.

Neutralizing Antibody Detection accounted for approximately 2.9% of its net revenues for the six months ended June 30, 2001. These assays assist in detecting the presence of antibodies to one of the most common therapies for relapsing-remitting multiple sclerosis. It is believed that the presence of these antibodies may reduce the effectiveness of this therapy and therefore, their presence may indicate a need to consider therapeutic alternatives.

Through its specialized laboratory information system the Company is able to provide neurologists and their patients with single

or integrated assay results in a concise, easy to read form, that contains its conclusions regarding the assay, an explanation and the technical results of the assay and references to resources containing specific information about the diagnostic condition at issue. The Company also provides follow up calls from its genetic counselor to neurologists to discuss the result reports with them when a patient

tests positive for any condition.

Cost of services increased $0.9 million, or 26.2%, to $4.6 million for the six months ended June 30, 2001 from $3.7 million for the comparable prior year period.

Selling, general and administrative expenses increased $0.1 million, or 2.0%, to $6.1 million for the six months ended June 30, 2001 from $6.0 million for the comparable prior year period.

Depreciation and amortization increased $0.1 million to $1.0 million for the six months ended June 30, 2001 from $0.9 million for the comparable prior year period.

As a result of the foregoing, net income increased by $1.1 million, or 52.6%, to $3.1 million for the six months ended June 30, 2001 from $2.0 million for the comparable prior year period.