UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                  FORM 10-QSB/A

                                 Amendment No. 2

                                   (Mark One)

[X]  QUARTERLY  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF  1934
               For the quarterly period ended: March 31, 2002

[ ]  TRANSITION  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934

               For the transition period from ______________ to _______________

Commission File Number:  000-29645

                               AMNIS SYSTEMS INC.
        (Exact name of small business issuer as specified in its charter)

               Delaware                                        94-3402831
(State or other jurisdiction of incorporation               (I.R.S. Employer
            or organization)                               Identification No.)

                3450 Hillview Avenue, Palo Alto, California 94304
          (Address of principal executive offices, including zip code)

         Issuer's telephone number, including area code:  (650) 855-0200

                                 Not applicable
    (Former name, former address and former fiscal year, if changed since last
                                     report)

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of each of the issuer's classes of common
equity as of May 3, 2002:  18,464,237 shares of Common Stock.

Transitional Small Business Disclosure Format (check one):   [ ]  Yes   [X]  No


                                        1
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

     This information is contained on pages F-1 through F-9 of this report and
is incorporated into this Item 1 by reference.

     In our management's opinion, all adjustments necessary for a fair
presentation of the statements of the results for the interim period have been
included.

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

     Management's discussion and analysis or plan of operation is provided as a
supplement to the accompanying consolidated financial statements and footnotes
to help provide an understanding of our financial condition, changes in
financial condition and results of operations. Accordingly, the following
discussion and analysis should be read in conjunction with our financial
statements and the related notes included elsewhere in this report.

INTRODUCTION

     Amnis Systems Inc., a Delaware consolidated corporation, makes hardware and
software products for the creation, management and transmission of high-quality
digital video over computer networks. Our products are distributed worldwide
through a network of value added resellers, or VARs, system integrators and
original equipment manufacturers, or OEMs. Our products are used in diverse
applications such as interactive distance learning, corporate training, video
content distribution, video surveillance and telemedicine.

     On April 16, 2001, we merged with Optivision, Inc., an operating company,
in an exchange of common stock accounted for as an acquisition under the
purchase method of accounting.  As a result of the merger, Optivision became our
wholly-owned subsidiary.

     The accompanying historical consolidated financial statements and notes for
the first quarter of 2001 reflect only the financial results of Amnis Systems
Inc., since the merger between Amnis Systems and Optivision did not take place
until April 16, 2001. As a result, Amnis Systems' first quarter 2001 historical
operating results and financial condition are not comparable to the first
quarter 2002 because of the merger. Accordingly, in order to enhance
comparability and make an analysis of the first quarter 2002 meaningful, the
following discussion of results of operations and changes in financial condition
and liquidity is based upon unaudited pro forma financial information for the
first quarter of 2001 as if the merger had occurred on January 1, 2000. In order
to maintain comparability and enhance clarity, goodwill amortization has been
excluded from the comparison.  Unaudited pro forma Consolidated Statements of
Operations for each period are inserted at the beginning of each section as a
reference for that discussion.


                                        2
<PAGE>
     The unaudited pro forma comparisons of the Consolidated Statements of
Operations have been derived from, and should be read in conjunction with, our
historical financial statements, including the notes thereto.  The unaudited pro
forma comparisons of the Consolidated Statements of Operations are presented for
informational purposes only and are not necessarily indicative of our financial
position or results of operations that would have occurred had the merger been
consummated as of the date indicated.  In addition, the unaudited pro forma
comparisons of the Consolidated Statements of Operations are not necessarily
indicative of our future financial condition or operating results.


CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, with respect to future events, the
outcome of which is subject to certain risks, which could cause actual results
to differ from those contained in the forward-looking statements, and which
include those risks set forth herein and those risks identified in our other
filings with the SEC.  Words such as "anticipates," "estimates," "expects,"
"projects," "intends," "plans," "believes" and words and terms of similar
substance used in connection with any discussion of future operating or
financial performance identify such forward-looking statements.

     The SEC encourages companies to disclose forward-looking information so
that investors can better understand a company's future prospects and make
informed investment decisions.  However, the inclusion of forward-looking
statements should not be regarded as a representation by us, or any other
person, that such forward-looking statements will be achieved.  The
forward-looking statements contained in this report are based on management's
present expectations about future events. As with any projection or forecast,
they are inherently susceptible to uncertainty and changes in circumstances, and
we are under no obligation to (and expressly disclaims any such obligation to)
update or alter the forward-looking statements, whether as a result of such
changes, new information, future events or otherwise.  In light of the
foregoing, readers are cautioned not to place undue reliance on the
forward-looking statements contained in this report.


                                        3
<PAGE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS

First Quarter of 2002 Compared to First Quarter 2001

   UNAUDITED PRO FORMA COMPARISON OF THE CONSOLIDATED STATEMENTS OF OPERATIONS


For the First Quarter Ended March 31,       2002          2001
==================================================================
<S>                                     <C>           <C>
SALES                                   $   246,071   $ 1,333,858
COST OF GOODS SOLD                          287,496       803,192
------------------------------------------------------------------
    Gross margin                            (41,425)      530,666
OPERATING EXPENSES
  Research and development                  175,359       666,017
  Sales and marketing                       440,572       742,565
  General and administrative                721,313       526,428
------------------------------------------------------------------
                                          1,337,244     1,935,010
------------------------------------------------------------------

      Loss from operations               (1,378,669)   (1,404,344)
OTHER INCOME (EXPENSE)
  Interest expense, net                    (769,457)     (183,058)
  Other, net                                 40,483        42,489
------------------------------------------------------------------
      Total other (expense)                (728,974)     (140,569)
------------------------------------------------------------------

NET LOSS                                $(2,107,643)  $(1,544,913)
==================================================================

BASIC AND DILUTIVE LOSS PER SHARE       $     (0.14)  $     (0.14)
==================================================================
</TABLE>

     Revenues for the three months ended March 31, 2002 were $246,071, a
decrease of approximately 81.5% over revenues of  $1,333,858 for the three
months ended March 31, 2001.  Revenues for this quarter were impacted by delayed
decision-making late in our sales cycle that postponed several large deals
beyond our first quarter.  Our prior two quarters were $659,492 and $477,354 for
the three-month periods ending December 31, 2001 and September 30, 2001,
respectively.  Our pipeline of new business opportunities is now growing and
bringing us strong optimism about our long-term future in spite of the tough
short-term macro economic environment. (Historical revenues were $0.0 for the
three months ended March 31, 2001).

     As a result of strong cost controls, the net loss for the three months
ended March 31, 2002 of $2,107,643, after excluding the non cash amortization of
the discount on a note payable of $659,036, is a decrease of 6.2% over the prior
year first quarter loss of $1,544,913 in spite of a 81% drop in revenue. (The
historical net loss of $25,100 for the prior year first quarter was from general
and administrative expenses).


                                        4
<PAGE>
     Cost of goods sold decreased $515,696, from $803,192 to $287,496 for the
three months ended March 31, 2002, yet we experienced a negative gross margin
since revenues, were not sufficient to cover our manufacturing overhead.
(Historical prior year first quarter cost of goods sold was $0.0).

     Research and development expenses were $175,359 for the three months ended
March 31, 2002, as compared to $666,017 for the three months ended March 31,
2001, a decrease of 73.7%. This decrease is in line with cost reductions
necessary as a result of the economic slowdown and our revenue slowdown. We do
expect modest increases in future quarters to support development of the new
network digital video products. (Historical research and development expenses
for the first quarter 2001 were $0.0).

     Sales and marketing expenses for the three months ended March 31, 2002 were
$440,572, as compared to $742,565 for the three months ended March 31, 2001, a
decrease of 40.7%. Again, this decrease is consistent with cost reductions
necessary as a result of the economic slowdown and our revenue slowdown.
However, we do expect quarterly expenses to increase in light of our stronger
emphasis on trade show activity and increases in our sales organization.
(Historical sales and marketing expenses for the first quarter 2001 were $0.0).

     General and administrative costs were $721,313 for the three months ended
March 31, 2002, as compared to $526,428 for the three months ended March 31,
2001, an increase of $194,885. During the quarter we recorded $277,751 of
non-cash consulting contracts for services covering strategic planning, mergers
and acquisition activity and corporate financing. Cash expenses decreased
$82,866, or 15%, as a result of decreased expenditures necessitated by the
economic and revenue slowdown. (Historical general and administrative expenses
for the three months ended March 31, 2001 were $25,100).

     Interest and other expense, net was $769,457 for the three months ended
March 31, 2002 as compared to $183,058 for the three months ended March 31,
2001. This increase includes the non cash amortization of the discount on a note
payable of $659,036.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2002, we had cash and cash equivalents of $608,890 compared to
$48,467 at December 31, 2001.  During the three months ended March 31, 2002, our
negative working capital position improved by over $3 million primarily due to
the receipt of proceeds from the issuance of the first tranche of $500,000 in
principal amount of convertible debentures from Bristol Investment Fund, Ltd.,
the receipt of proceeds from a $1.8 million unit financing in February 2002, the
reduction of past due and accrued salary due employees of approximately $980,000
through the issuance of stock options, and the conversion of a $250,000 note
payable together with accrued interest thereon into shares of our common stock.
In June 2002, our balance sheet was further strengthened with the receipt of
proceeds from the issuance of $450,000 in principal amount of convertible notes
and the elimination of approximately $3.2 million in debt with the final payment
under a work out agreement with the creditors of Optivision which resulted in
the forgiveness of approximately $1.1 million of debt, the conversion of
$2,050,000 in principal amount of a convertible note by Mr. Liccardo, our
president, chief executive officer and chairman of the board, into shares of our
common stock.


                                        5
<PAGE>
     In December 2001, pursuant to a financing agreement between us and Bristol
Investment Fund, Ltd. for a total of $1,000,000 of convertible debentures and up
to $1,385,000 of investment options and warrants, we received a first tranche of
financing through the issuance of a $500,000 convertible debenture. Bristol
Investment Fund, Ltd. is committed to provide us with the second tranche of
financing in the amount of $500,000 through the issuance of a convertible
debenture within ten business days after the effective date of a registration
statement covering the resale of the shares issuable upon conversion of the
debentures and exercise of the related warrants and investment options. Receipt
of this additional convertible debenture financing and financing through the
exercise of the related investment options and warrants will be critical for us
to continue operations through 2002.

     We had continuing operating losses of $3,307,829, excluding goodwill
amortization, and $1,378,669 for the year ended December 31, 2001 and the first
quarter of 2002, respectively. Although we currently expect to break even in
2004, we expect to incur operating losses over the next two years of between $4
million and $6 million in total. So, in order to sustain our operations, finance
our growth and achieve our strategic objectives until then, we currently
estimate that we will need additional funding of between $4 million and $6
million in total. Management has implemented measures to increase cash flows
through increases in revenue and cost-cutting measures and is actively pursuing
additional sources of funding. Financing transactions may include the issuance
of equity or debt securities, obtaining credit facilities, or other financing
mechanisms. However, the trading price of our common stock and the downturn in
the U.S. stock and debt markets could make it more difficult for us to obtain
financing through the issuance of equity or debt securities. Even if we are able
to raise the funds required, it is possible that we could incur unexpected costs
and expenses, fail to collect significant amounts owed to us, or experience
unexpected cash requirements that would force us to seek alternative financing.
Further, if we issue additional equity or debt securities, stockholders may
experience additional dilution or the new equity securities may have rights,
preferences or privileges senior to those of existing holders of our common
stock. If additional financing is not available or is not available on
acceptable terms, we will have to curtail our operations.


                                        6
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          99.1      Certification pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002.


                                   SIGNATURES


     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  August 15, 2002          AMNIS SYSTEMS INC.


                                By:  /s/  Lawrence L. Bartlett
                                   ------------------------------------------
                                   Lawrence L. Bartlett
                                   Vice President, Secretary and Chief Financial
                                   Officer


                                        7
<PAGE>
                          INDEX TO FINANCIAL STATEMENTS


Unaudited Condensed Consolidated Balance Sheet
    as of March 31, 2002 and December 31, 2001  . . . . . . . . . . . . . .  F-1
Unaudited  Condensed  Consolidated  Statement  of  Operations
    for the three-month periods ended March 31, 2002 and March 31, 2001 . .  F-2
Unaudited  Condensed  Consolidated  Statement  of  Cash  Flows
    for the three-month periods ended March 31, 2002 and March 31, 2001 . .  F-3
  Notes to Unaudited Consolidated Financial Statements . . . . . . .  F-4 to F-9


                                        8
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                AMNIS SYSTEMS INC.

                                                                                                        CONSOLIDATED BALANCE SHEET
                                                                                                                       (UNAUDITED)
==================================================================================================================================

                                                                                                   March 31, 2002    Dec 31, 2001
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>               <C>
ASSETS

CURRENT ASSETS:
  Cash                                                                                            $       608,890   $      48,467
  Accounts receivable, net of allowance for doubtful accounts
  of $236,000 for 2002 and 2001, respectively                                                              38,879         371,517
  Note Receivable                                                                                                         500,000
  Inventories                                                                                             656,232         624,056
  Prepaid expenses and other                                                                              308,315          82,919
----------------------------------------------------------------------------------------------------------------------------------

    Total current assets                                                                                1,612,316       1,626,959
----------------------------------------------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
  Machinery and equipment                                                                               1,894,221       1,919,634
  Demonstration equipment                                                                                 456,648         452,188
  Furniture and fixtures                                                                                  494,700         498,796
  Leasehold improvements                                                                                  351,111         351,111
----------------------------------------------------------------------------------------------------------------------------------

                                                                                                        3,196,680       3,221,729

  Less:  Accumulated depreciation and amortization                                                     (3,052,388)     (3,069,937)
----------------------------------------------------------------------------------------------------------------------------------

    Property and equipment, net                                                                           144,292         151,792
----------------------------------------------------------------------------------------------------------------------------------

OTHER ASSETS                                                                                               84,890          84,890
----------------------------------------------------------------------------------------------------------------------------------

                                                                                                  $     1,841,498   $   1,863,641
==================================================================================================================================

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES:
  Financing obligations collateralized by accounts receivable                                     $       576,832   $   1,029,283
  Accounts payable - moratorium                                                                         1,461,500       1,561,500
  Accounts payable - other                                                                                347,092         932,866
  Accrued Salaries                                                                                        112,220         766,286
  Accrued Vacation                                                                                        200,427         274,833
  Accrued Interest Payable                                                                                 87,364         381,104
  Notes Payable                                                                                                           250,000
  Shareholders' notes Payable                                                                             105,000       3,309,375
  Convertible notes payable                                                                             3,547,917
  Discount on convertible note payable                                                                 (1,862,657)
  Deferred rent                                                                                            80,486         108,892
  Deferred revenue                                                                                         39,163          59,095
  Other Accrued Expenses                                                                                  256,990         302,237
----------------------------------------------------------------------------------------------------------------------------------

    Total current liabilities                                                                           4,952,334       8,975,471

LONG-TERM LIABILITIES:
  Sublease deposits                                                                                        72,800          72,800
  Convertible note payable                                                                                500,000         500,000
  Discount on convertible note payable                                                                   (267,045)       (305,195)
----------------------------------------------------------------------------------------------------------------------------------

    Total Liabilities                                                                                   5,258,089       9,243,076
----------------------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' (DEFICIT):
  Preferred stock, 20,000,000 authorized; none outstanding in March, 2002 and December, 2001
  Common stock, $0.0001 par value:
    Authorized - 100,000,000 shares in Mar. 2002 and Dec. 2001, respectively
    Issued and outstanding - 17,960,414 and 12,947,082 for Mar 2002 and Dec 2001, respectively              1,796           1,295
  Additional Paid-in Capital                                                                           20,486,915      14,416,929
  Accumulated deficit                                                                                 (23,905,302)    (21,797,659)

        Total stockholders' deficit                                                                    (3,416,591)     (7,379,435)
----------------------------------------------------------------------------------------------------------------------------------

        Total liabilities and stockholder's deficit                                               $     1,841,498   $   1,863,641
==================================================================================================================================
</TABLE>


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                                             AMNIS SYSTEMS INC.

                           CONSOLIDATED STATEMENT OF OPERATIONS
                                                    (UNAUDITED)
===============================================================

For the First Quarter Ended March 31,       2002        2001
---------------------------------------------------------------
<S>                                     <C>           <C>
SALES                                   $   246,071   $

COST OF GOODS SOLD                          287,496
---------------------------------------------------------------

    Gross margin                            (41,425)

OPERATING EXPENSES
  Research and development                  175,359
  Sales and marketing                       440,572
  General and administrative                721,313     25,100
---------------------------------------------------------------

                                          1,337,244     25,100
---------------------------------------------------------------

      Loss from operations               (1,378,669)   (25,100)

OTHER INCOME (EXPENSE)
  Interest expense, net                    (769,457)
  Other, net                                 42,083
---------------------------------------------------------------

       Total other (expense)               (727,374)
---------------------------------------------------------------

  Income Tax                                 (1,600)

NET LOSS                                $(2,107,643)  $(25,100)
===============================================================


BASIC AND DILUTIVE LOSS PER SHARE       $     (0.14)  $   0.00
===============================================================
</TABLE>


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                                                                  AMNIS SYSTEMS INC.

                                                                CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                         (UNAUDITED)
====================================================================================================

For the Quarter Ended March 31,                                                  2002        2001
----------------------------------------------------------------------------------------------------
<S>                                                                          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                   $(2,107,643)  $(25,100)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
    Stock options for services                                                   277,751
    Interest expense exchanged for stock                                          25,890
    Interest expense exchanged for debt                                          343,542
    Employee salaries exchanged for stock                                        325,429
    Depreciation and amortization                                                 14,599
    Amortization of discount on note payable                                     659,036
    Loss on disposal of property and equipment                                     1,627
    Provision for doubtful accounts
    Provision for excess and obsolete inventories                                 12,254
  Decrease (increase) in accounts receivable                                     332,638
  Increase in inventories                                                        (44,430)
  Decrease (increase) in prepaid expenses and other assets                      (225,396)
  Decrease in debt issue costs
  Decrease in accounts payable moratorium                                       (100,000)
  Increase (decrease) in accounts payable                                       (585,775)    25,100
  Increase (decrease) in accrued salaries
  Decrease in accrued vacation                                                   (74,406)
  Increase (decrease) in accrued interest                                       (293,740)
  Increase in reserve for sales adjustment
  Decrease in deferred rent                                                      (28,406)
  Decrease in deferred revenue                                                   (19,932)
  Decrease in other accrued liabilities                                          (45,247)

    Net cash used in operating activities                                     (1,532,209)
----------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                             (8,726)
----------------------------------------------------------------------------------------------------

    Net cash used in investing activities                                         (8,726)
----------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings from stockholders
  Proceeds from financing obligations collateralized by accounts receivable      763,280
  Payments on financing obligations collateralized by accounts receivable     (1,215,731)
  Proceeds from issuance of common stock                                       2,236,265
  Costs incurred to secure capital                                              (182,456)
  Proceeds from notes receivable                                                 500,000

----------------------------------------------------------------------------------------------------
    Net cash provided by (used in) financing activities                        2,101,358
----------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                                  560,423

CASH AND CASH EQUIVALENTS, beginning of year                                      48,467
----------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, end of period                                     $   608,890   $      -
====================================================================================================


NON CASH INVESTING AND FINANCING ACTIVITIES:
  Stock options issued for services                                          $   277,751
  Accrued salaries exchanged for common stock                                $   979,495
  Debt and accrued interest exchanged for common stock                       $   275,890
  Convertible note payable and interest in exchange for note payable         $ 3,547,917
  Discount on convertible note payable                                       $ 2,483,542
====================================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid for income taxes                                                 $     2,400
  Cash paid for interest                                                     $   101,147
====================================================================================================
</TABLE>


                                      F-3
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

The accompanying unaudited interim consolidated financial statements reflect all
adjustments  that are, in the opinion of management, necessary to present fairly
the financial position, results of operations, and cash flows of the Company for
the  periods  indicated.  All  adjustments for the first quarter ended March 31,
2002  were  of  a  recurring  nature.  The  accompanying  unaudited  interim
consolidated  financial  statements  have  been  prepared in accordance with the
instructions  for Form 10-QSB and, therefore, do not include all information and
footnotes  necessary  for  a  complete  presentation  of the financial position,
results  of  operations,  and  cash  flows  for  the Company, in conformity with
accounting  principles  generally  accepted in the United States of America. The
Company  has filed audited financial statements that include all information and
footnotes  necessary  for such a presentation of the financial position, results
of  operations  and  cash flows for the fiscal years ended December 31, 2001 and
2000,  with  the  Securities  and  Exchange  Commission.

It  is  suggested that the accompanying unaudited interim consolidated financial
statements  be  read in conjunction with the aforementioned audited consolidated
financial  statements.  The  unaudited interim consolidated financial statements
contain  all  normal  and  recurring  entries. The results of operations for the
interim  period  ended  March  31,  2002  are  not necessarily indicative of the
results  to  be  expected  for  the  full  year.

NOTE 1 -  DESCRIPTION  OF  COMPANY:

          Amnis  Systems  Inc.,  a  Delaware  corporation,  and  its whole owned
          subsidiary,  Optivision,  Inc. ("Company" combined) makes hardware and
          software  products  for  the  creation, management and transmission of
          compressed  high-quality  digital  video  over  broadband  computer
          networks.  Our network video products are distributed primarily in the
          United  States of America, Europe, and Pacific Rim countries through a
          network  of  value  added  resellers,  or VARs, system integrators and
          original  equipment  manufacturers,  or OEMs. Our products are used in
          diverse  applications  such  as distance learning, corporate training,
          video  courier  services,  surveillance,  telemedicine  and  visual
          collaboration.


NOTE 2 -  GOING  CONCERN:

          We  are subject to a number of business risks affecting companies at a
          similar  stage  of  development,  including competition from companies
          with  greater  resources  and alternative technologies, the ability to
          obtain  financing to fund future operations, dependence on new product
          introductions  in  a  rapidly  changing  technological  environment,
          dependence  on  a  limited  number  of  customers,  dependence  on key
          employees  and  the ability to attract and retain additional qualified
          personnel.


                                      F-4
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

          The accompanying financial statements have been prepared assuming that
          the Company will continue as a going concern. The stockholders' equity
          of  the  Company, after the April 16th, 2001 business combination with
          Optivision,  has  resulted in a substantial deficit that is compounded
          by  its current liabilities exceeding its current assets by $3,340,018
          at  March 31, 2002 and negative cash flow from operating activities of
          $1,532,209  for  the quarter ended March 31, 2002. These factors raise
          substantial  doubt  about the Company's ability to continue as a going
          concern.  There  is  no  assurance  that  the  Company will be able to
          achieve successful operations, obtain sufficient financing or obtain a
          line  of  credit. The accompanying financial statements do not include
          any  adjustments  that  might  result  from  the  outcome  of  these
          uncertainties.


NOTE 3 -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

          a.   Principles of Consolidation
               ---------------------------

               The  financial  statements  include the accounts of Amnis Systems
               Inc.  and  its  wholly-owned subsidiary Optivision, Inc. from the
               date of acquisition, April 16, 2001. All significant intercompany
               accounts  and transactions have been eliminated in consolidation.

          b.   Risks due to Concentration of Significant Customers
               ---------------------------------------------------

               Historically, a substantial portion of our revenues has come from
               large purchases by a small number of customers. If we lose one or
               more  of  our key customers or experience a delay or cancellation
               of  a  significant  order or a decrease in the level of purchases
               from any of our key customers, our net revenues could decline and
               our  operating results and business could be harmed. In addition,
               our  net  revenues  could  decline  and our operating results and
               business  could  be  harmed  if  we  experience any difficulty in
               collecting  amounts  due  from  one or more of our key customers.
               During  2001, our top four customers accounted for 52% of our net
               revenues.  Additionally,  as  of December 31, 2001, approximately
               44%  of  our  accounts  receivable  were  concentrated  with five
               customers.  During the three months ended March 31, 2002, our top
               five  customers  accounted  for  58%  of  our  net  revenues.

               As  of  March  31,  2002,  approximately  71%  of  our  accounts
               receivable  were  concentrated  with  seven  of  our  customers.

          c.   Inventories
               -----------

               Inventories are stated at the lower of cost (first-in, first-out)
               or market. Provision has been made to reduce obsolete inventories
               to their net realizable value. Inventories contain components and
               assemblies  in  excess  of  the  Company's  current  estimated
               requirements and these are reserved for at March 31, 2002. Due to
               competitive  and market pressures, it is reasonably possible that
               additional  provisions  could  be  required  in  the  future.


                                      F-5
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

               Inventories consist of the following at March 31, 2002:

               Raw Materials                                         $ 262,067
               Work-in-process                                         499,339
               Demonstration Inventory                                 118,905
               ----------------------------------------------------------------

                                                                       880,311
               Reserve for inventory obsolescence and
                 demonstration inventory refurbishing costs           (224,079)
               ----------------------------------------------------------------

                                                                      $656,232
               ================================================================

               Certain  of  the  Company's  products contain components that are
               supplied  by a limited number of third parties. While the Company
               has  an  inventory of these components, any significant prolonged
               shortage  of  these components, or the failure of these suppliers
               to  maintain  or  enhance  these  components  could  materially
               adversely  affect  the  Company's  results  of  operations.

NOTE 4 -  ACCOUNTS  PAYABLE  -  MORATORIUM:

          On  January  30, 2002, we successfully negotiated a work-out agreement
          plan  with  the  creditors of Optivision Inc., under which the Company
          will  pay  the creditors of Optivision Inc. $0.35 for every $1.00 owed
          on debt listed on the balance sheet as Accounts Payable-moratorium. In
          accordance  with  the work-out agreement, the debt was settled in June
          2002.


NOTE 5 -  CONVERTIBLE  NOTES  PAYABLE:

          On  January  14  2002,  the  Company  issued a convertible note in the
          principal  amount of $3,547,917 to Mr. Michael A. Liccardo, president,
          chief  executive  officer,  and chairman of the board of directors, in
          exchange  for the cancellation of certain loans aggregating $3,204,375
          and  related accrued interest of $343,542 that Mr. Liccardo had loaned
          to  Optivision  Inc.  to  meet  operating  expenses.  At any time, Mr.
          Liccardo  may elect to convert the note to common stock of the Company
          at  $0.35  per  share,  subject  to adjustment related to the price of
          subsequent  securities  issuances  by  the  Company  to third parties.


                                      F-6
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

          The  convertible  note  bears  interest  at  10%  per annum. Since the
          Company's stock price exceeded the conversion price on the transaction
          date,  there  is  an embedded beneficial conversion feature present in
          the  convertible  note which has been valued separately. As of January
          14,  2002, the intrinsic value of the beneficial conversion feature is
          greater  than  the  proceeds  allocated  to  the  convertible note. On
          January  14, 2002, the Company recorded a discount of $2,483,542. This
          discount  is  being  amortized  from  the  date  of  issuance  of  the
          convertible  note  through  the  stated  redemption date. The carrying
          value  of  this  debenture  approximates  its  fair  value.


NOTE 6 -  LOSS  PER  SHARE:

          The  basic  loss  per share was calculated based on a weighted average
          number of shares outstanding of 15,397,123 and 13,566,602 at March 31,
          2002  and  2001,  respectively.  Since  we have a loss for all periods
          presented,  net  loss  per  share  on a diluted basis is equivalent to
          basic  net  loss  per  share  because  the  effect of converting stock
          options, warrants, convertible debt and other common stock equivalents
          would  be  anti-dilutive.


NOTE 7 -  FINANCING:

          Between  February  14,  2002 and February 21, 2002 the Company entered
          into  financing  agreements  for  the  sale of 2,250,000 shares of its
          common stock. The stock was sold in units, which include ten shares of
          common  stock,  subject  to  adjustment  related  to  stock  price
          fluctuations, and one warrant, for $8.00 each. Each warrant allows the
          holder  to  purchase  three  shares of common stock at $0.90 per share
          subject  to such customary adjustment for stock splits, combination or
          reclassification  of  the  Company's  capital  stock and the like. The
          total  selling  price  of  these  units  was  $1,800,000.

          In  March  2002,  the  Company issued and sold to a corporate investor
          275,890  shares of its common stock at $1.00 per share in exchange for
          the  cancellation  of  certain loans that the investor had made to the
          Company  (including  all  accrued  interest  thereon).


NOTE 8 -  OTHER  CAPITAL  TRANSACTIONS:

          In  March  2002,  the  Company  settled  with its employees for unpaid
          compensation  by  issuing  additional stock options in lieu of cash in
          the  amount  of  $979,495.


                                      F-7
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

          In February 2002, the Company issued 10,000 shares of its common stock
          to a corporate service provider in exchange for certain services to be
          rendered  to  the  Company  over  a  three  month  period.


NOTE 9 -  SUBSEQUENT  EVENTS:

          In  May 2002, the Company issued 250,000 shares of its common stock to
          a  corporate  service  provider  in  exchange  for  certain consulting
          services  to  be  rendered  to  the  Company over a four month period.

          On  June 17, 2002, our Board of Directors adopted the 2002 Stock Plan.
          20,000,000  shares are authorized for issuance of which none have been
          granted  through  June  17,  2002.

          On  June  18,  2002,  two  of the financing agreements entered into in
          February  2002  were  amended.  The  number  of  shares  per  unit has
          increased  to  21 and may be further increased by an amount as defined
          in the agreement. The warrant was amended to reduce the exercise price
          to  $0.13,  subject  to  adjustment  for,  among other things, capital
          issuances  below  $0.13 per share and for stock splits, combination or
          reclassification  of  the  Company's  capital  stock  and the like. No
          additional  proceeds  were  received.

          On  June  18,  2002, Mr. Liccardo converted $2,050,000 in principal of
          the  convertible  note  issued  on January 14, 2002 and, in connection
          therewith,  received  26,623,377 shares of common stock. The remaining
          principal  and  accrued  interest was transferred to a new convertible
          note  as of this date. The note provides that Mr. Liccardo may, at any
          time,  elect to convert the outstanding principal of $1,612,763 of the
          convertible  note and accrued interest thereon into a number of shares
          of  our  common stock determined by dividing the outstanding principal
          and  interest  on  the  note  by  $0.35. The $0.35 conversion price is
          subject  to adjustment to a lower conversion price through January 14,
          2003,  and  is  also  subject  to customary adjustment in the event of
          stock  splits,  dividends,  recapitalizations  and  the  like.

          The  convertible  note  bears  interest  at  10%  per annum. Since the
          Company's stock price exceeded the conversion price on the transaction
          date,  there  is  an embedded beneficial conversion feature present in
          the  convertible  note  which  has  been valued separately. As of June
          18,2002,  the  intrinsic value of the beneficial conversion feature is
          greater  than  the proceeds allocated to the convertible note. On June
          18,2002  the Company recorded a discount of $882,276. This discount is
          being  amortized  from  the  date  of issuance of the convertible note
          through  the  stated  redemption  date.

          As  a  result  of  the  partial conversion $825,645 of the unamortized
          portion of the discount on convertible note payable was written-off to
          additional  paid  in  capital.  The exchange of the note resulted in a
          loss  on  extinguishment  of  debt  of  $73,610,  and  the  remaining
          unamortized  portion  of  the  discount on convertible note payable of
          $603,292  related  to  the original note was written-off to additional
          paid  in  capital.

          On  June  18,  2002,  the  Company  issued  and  sold two 12% two-year
          convertible  notes  in  the aggregate principal amount of $450,000 and
          common stock purchase warrants exercisable for up to 135,000 shares of
          common  stock,  subject to adjustment for, among other things, capital
          issuances  below  $0.13 per share and for stock splits, combination or
          reclassification  of  the  Company's  capital  stock  and  the  like.

          Since there are multiple components of the debentures, value was added
          to  each  component (warrants and debenture) based on their respective
          value. A discount on the debenture was calculated in two parts; first,
          the  beneficial  conversion feature on the debenture was valued as the
          difference  between  the  purchase  price  of  the  conversion and the
          current trading price of the stock. Secondly, the warrants were valued
          using the Black Scholes Model. The combined total discount of $249,528
          will  be  amortized  over  the  two-year  life  of  the  debentures.

          On June 25, 2002, the Company amended its certificate of incorporation
          to  increase  the  total  number  of shares authorized to 420,000,000;
          400,000,000  designated  as common stock with par value of $0.0001 and
          20,000,000  designated  as  preferred stock with par value of $0.0001.

          As  of  the  end of July, the Company has been unable to pay its lease
          obligations,  due  to the departure of its sublessee, which now totals
          approximately  $200,000.  The  landlord  has  agreed  to meet with the
          Company  to  negotiate  lease renewal and payment of past due amounts.

          Subsequent  to  March 2002, the Company settled with its employees for
          unpaid  compensation  by  issuing  additional stock options in lieu of
          cash  in  the  amount  of  $274,556.

          From  April  1, 2002 through August 5, 2002 the Company issued 179,879
          shares  of  common stock  to various service providers in exchange for
          services  valued  at  $32,756  to  be  rendered  over varying contract
          lengths.

          In  July  2002,  the  Company  issued 100,000 of its common stock to a
          corporate service provider in exchange for certain consulting services
          to  be  rendered  to  the  Company.

          On  August  8,  2002,  pursuant  to the Warrant Agreement with Bristol
          Investment Fund, Ltd. dated December 28, 2001, the Company reduced the
          exercise  price  of  the  warrant  shares  to  $0.03436  per share and
          increased  the  number  of warrant shares purchasable at such exercise
          price  by  604,969.


                                      F-8
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

================================================================================

NOTE 10 - BUSINESS  COMBINATION:

          On April 16, 2001, we effected a business combination with Optivision,
          Inc.  (Optivision)  by exchanging 4,459,063 shares of our common stock
          for  all  of the common stock of Optivision. The principal business of
          Optivision  is making hardware and software products for the creation,
          management  and  transmission  of  compressed  high-quality video over
          broadband  computer  networks.  The  purchase price of $12,221,884 was
          determined  by using a 5 day range of the average of the Company stock
          price of $2.74 per share. The combination has been accounted for under
          the  purchase  method  of accounting and accordingly, the accompanying
          financial  statements  include the results of operations of Optivision
          subsequent  to  April  16,  2001.


NOTE 11 - RESTATEMENT OF FINANCIAL STATEMENTS:

          The  unaudited  interim  consolidated  financial  statements have been
          restated  as  a  result of the Company's determination that it did not
          meet all of the criteria under Accounting Principles Board Opinion No.
          16  "Business  Combinations"  for  a  pooling  of  interests.

          The  information  below  shows the results included in these financial
          statements  and  those  previously  reported  under  the  pooling  of
          interests  method:

<TABLE>
<CAPTION>
                                                   Purchase     Pooling of
                                                    Method       Interest
<S>                                              <C>           <C>
For the quarter ended March 31, 2002:

   Net Sales                                     $   246,071   $   246,071
   Net Loss                                      $(2,107,643)  $(2,107,643)

   Basic and Dilutive Loss per Share             $     (0.14)  $     (0.14)
   ========================================================================

For the quarter ended March 31, 2001:

   Net Sales                                     $         -   $ 1,333,858
   Net Loss                                      $   (25,100)  $(1,544,913)

   Basic and Dilutive Loss per Share             $      0.00   $     (0.23)
   ========================================================================
</TABLE>


                                      F-9
<PAGE>