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

                                  FORM 10-QSB/A

                                 Amendment No. 1
(Mark One)
[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
              For the quarterly period ended:  June 30, 2001

[ ]  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.
                           (Formerly Graffiti-X, Inc.)
        (Exact name of small business issuer as specified in its charter)

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

                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 August 10, 2001:  11,369,597 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-10 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 OPERATION

     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 second quarter of 2001 reflect only the financial results of Amnis Systems
Inc., until the merger between Amnis Systems and Optivision which took place on
April 16, 2001.

     As a result, Amnis Systems' second quarter 2001 and year to date June 30,
2001 historical operating results and financial condition are not comparable to
the same periods in 2000. Accordingly, in order to enhance comparability and
make an analysis of the three-month and six-month periods ended June 30, 2001
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 three-month and six-month periods ended June 30, 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. The unaudited pro forma Consolidated Statements of Operations for
each period are inserted at the beginning of "Results of Operations" 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

             UNAUDITED PRO FORMA COMPARISON OF THE CONSOLIDATED STATEMENT OF OPERATIONS

                                                               June 30                    June 30
For three months and six months ended, respectively       2001         2000          2001          2000
-----------------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>          <C>           <C>
SALES                                                 $ 1,625,051   $  734,315   $ 2,958,909   $ 1,733,833
COST OF GOODS SOLD                                        842,226      395,658     1,645,418     1,098,268
-----------------------------------------------------------------------------------------------------------
    Gross margin                                          782,825      338,657     1,313,491       635,565
OPERATING EXPENSES
  Research and development                                571,720      317,492     1,237,737       674,748
  Sales and marketing                                     735,747      579,497     1,478,312     1,300,035
  General and administrative                              420,133      410,117       921,463       790,472
-----------------------------------------------------------------------------------------------------------
                                                        1,727,600    1,307,106     3,637,512     2,765,255
-----------------------------------------------------------------------------------------------------------
      Loss from operations                               (944,775)    (968,449)   (2,324,021)   (2,129,690)
OTHER INCOME (EXPENSE)
  Interest expense, net                                   (86,418)     (64,391)     (270,845)     (155,314)
  Other, net                                               (6,470)      51,639        36,019        63,627
-----------------------------------------------------------------------------------------------------------
       Total other (expense)                              (92,888)     (12,752)     (234,826)      (91,687)
-----------------------------------------------------------------------------------------------------------
      Net loss                                        $(1,037,663)  $ (981,201)  $(2,558,847)  $(2,221,377)
===========================================================================================================

BASIC AND DILUTIVE LOSS PER COMMON
SHARE                                                 $    (0.091)  $   (0.087)  $    (0.225)  $    (0.196)
</TABLE>



     Historical results and comparisons are not commented on since we had no
operations in 2000 and in 2001 we had operations beginning April 16, 2001.
Please see the attached financial statements for our historical results.

     Revenues for the three months ended June 30, 2001 were $1,625,051, an
increase of approximately 121% over revenues of $734,315 for the three months
ended June 30, 2000.  Revenues for the six months ended June 30, 2001 were
$2,958,909, an increase of approximately 71% over revenues of $1,733,833 for the
six months ended June 30, 2000.

     Research and development expenses were $571,720 for the three months ended
June 30, 2001, as compared to $317,492 for the three months ended June 30, 2000.
Research and development expenses were $1,237,737 for the six months ended June
30, 2001, as compared to $674,748 for the six months ended June 30, 2000.  This
increase is in line with our new product development efforts.


                                        4
<PAGE>
     Sales and marketing expenses for the three months ended June 30, 2001 were
$735,747, as compared to $579,497 for the three months ended June 30, 2000.
Sales and marketing expenses for the six months ended June 30, 2001 were
$1,478,312, as compared to $1,300,035 for the six months ended June 30, 2000.
The period-to-period variation is primarily attributable to expenses incurred in
connection with the opening of our Hong Kong office.

     General and administrative costs were $420,133 for the three months ended
June 30, 2001, as compared to $410,117 for the three months ended June 30, 2000.
General and administrative costs were $921,463 for the six months ended June 30,
2001, as compared to $790,472 for the six months ended June 30, 2000.

     Interest and other expense, net was $92,888 for the three months ended June
30, 2001, as compared to $12,752 for the three months ended June 30, 2001.
Interest and other expense, net was $234,826 for the six months ended June 30,
2001, as compared to $91,687 for the six months ended June 30, 2001.  The
increase was primarily due to accruing interest on shareholder loans.


                                        5
<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 and Chief Financial Officer


                                        6
<PAGE>
                          INDEX TO FINANCIAL STATEMENTS

                                                                      PAGES
Unaudited Condensed Consolidated Balance Sheet as of June 30, 2001
and March 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . . .  F-1
Unaudited Condensed Consolidated Statement of Operations
for the three-month and six-month periods ended June 30, 2001
and June 30, 2000 . . . . . . . . . . . . .. . . . . . . . . . . . .  F-2
Unaudited Condensed Consolidated Statement of Cash Flows
for the six-month periods ended June 30, 2001 and June 30, 2000. . .  F-3
Notes to Unaudited Consolidated Financial Statements . . . . . . . .  F-4 - F-10


                                        7
<PAGE>
<TABLE>
<CAPTION>
                                                                                                  AMNIS SYSTEMS INC.

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

                                                                                    June 30, 2001    March 31, 2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>              <C>
ASSETS

CURRENT ASSETS:
  Cash                                                                             $      140,666   $             0
  Accounts receivable, net of allowance for doubtful
   accounts of $300,375                                                                   499,290                 0
  Note receivable - Optivision                                                                  0         1,000,000
  Inventories                                                                             511,483                 0
  Prepaid expenses and other                                                               25,881                 0
--------------------------------------------------------------------------------------------------------------------

                Total current assets                                                    1,177,320         1,000,000
--------------------------------------------------------------------------------------------------------------------

INVESTMENTS                                                                                     0                 0
GOODWILL                                                                               17,132,790                 0
PROPERTY AND EQUIPMENT
  Machinery and equipment                                                               2,106,361                 0
  Demonstration equipment                                                                 487,026                 0
  Furniture and fixtures                                                                  525,293                 0
  Leasehold improvements                                                                  351,111                 0
--------------------------------------------------------------------------------------------------------------------

                                                                                        3,469,791                 0

  Less:  Accumulated depreciation and amortization                                     (3,193,953)                0
--------------------------------------------------------------------------------------------------------------------

                Property and equipment, net                                               275,838                 0
--------------------------------------------------------------------------------------------------------------------

OTHER ASSETS                                                                               93,270                 0
--------------------------------------------------------------------------------------------------------------------

                                                                                   $   18,679,218   $     1,000,000
====================================================================================================================

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES:
  Bank overdraft                                                                   $            0   $             0
  Financing obligations collateralized by accounts receivable                           1,018,525                 0
  Stockholders' notes payable                                                           2,694,375                 0
  Accounts payable - moratorium                                                         1,561,500
  Accounts payable - other                                                                510,406            25,100
  Deferred rent                                                                           199,195                 0
  Accrued liabilities                                                                   1,386,992                 0
  Other current liabilities                                                                59,442                 0
--------------------------------------------------------------------------------------------------------------------

                Total current liabilities                                               7,430,435            25,100


STOCKHOLDERS' (DEFICIT):
  Preferred stock, 20,000,000 authorized; none outstanding in June or March 2001
  Common stock, $0.0001 par value:
    Authorized - 100,000,000 shares in June and March, 2001
    Issued and outstanding - 11,369,597 shares and 6,897,534 shares
    in June and March, respectively                                                         1,137               689
  Additional Paid-in Capital                                                           13,064,289         1,112,364
  Accumulated deficit                                                                  (1,816,643)         (138,153)
--------------------------------------------------------------------------------------------------------------------

                Total stockholders' deficit                                            11,248,783           974,900
--------------------------------------------------------------------------------------------------------------------

                Total liabilities and stockholder's deficit                        $   18,679,218   $     1,000,000
====================================================================================================================
</TABLE>


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

                                                                 CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                          (UNAUDITED)
=====================================================================================================
                                                              June 30                  June 30
                                                      -----------------------  ----------------------
For three months and six months ended, respectively       2001        2000         2001        2000
=====================================================================================================
<S>                                                   <C>           <C>        <C>           <C>
SALES                                                 $ 1,227,032   $      0   $ 1,227,032   $     0

COST OF GOODS SOLD                                        645,960          0       645,960         0
-----------------------------------------------------------------------------------------------------

    Gross margin                                          581,072          0       581,072         0

OPERATING EXPENSES
  Research and development                                457,950          0       457,950         0
  Sales and marketing                                     609,469          0       609,469         0
  General and administrative                              366,391      3,110       366,391     3,296
  Goodwill amortization                                   744,904          0       744,904         0
-----------------------------------------------------------------------------------------------------

                                                        2,178,714      3,110     2,178,714     3,296
-----------------------------------------------------------------------------------------------------

      Loss from operations                             (1,597,642)    (3,110)   (1,597,642)   (3,296)

OTHER INCOME (EXPENSE)
  Interest expense, net                                   (75,662)         0       (75,662)        0
  Other, net                                               (5,186)         0        (5,186)        0
-----------------------------------------------------------------------------------------------------

       Total other (expense)                              (80,848)         0       (80,848)        0
-----------------------------------------------------------------------------------------------------

       Net loss                                       $(1,678,490)  $ (3,110)  $(1,678,490)  $(3,296)
=====================================================================================================

BASIC AND DILUTED LOSS PER COMMON SHARE               $    (0.159)  $      -   $    (0.090)        -
</TABLE>


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

                                                                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                              (UNAUDITED)
=========================================================================================================
                                                                                         June 30
                                                                           ------------------------------
For the six months ended                                                          2001            2000
=========================================================================================================
<S>                                                                        <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                 $        (1,678,490)  $(3,296)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
      Depreciation and amortization                                                    777,874         0
      Provision for doubtful accounts                                                        -         0
      Provision for excess and obsolete inventories                                    151,772         0
      Issuance of common stock for services                                             21,000         0
  Decrease (increase) in accounts receivable                                           508,311         0
  Decrease (increase) in inventories                                                   350,646       736
  Decrease (increase) in prepaid expenses and other assets                              (5,684)        0
  Increase (decrease) in accounts payable                                              (26,579)        0
  Increase (decrease) in accrued liabilities                                          (948,131)        0
  Increase (decrease) in other current liabilities                                     (14,317)        0
  Increase (decrease) in deferred rent                                                       -         0

          Net cash used in operating activities                                       (863,598)   (2,560)
---------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash acquired from business combination                                               11,720
  Purchases of property and equipment                                                   (9,516)        0
---------------------------------------------------------------------------------------------------------

          Net cash provided by investing activities                                      2,204         0
---------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings from stockholders                                                         122,178         0
  Payments on financing obligations collateralized by accounts receivable             (120,118)        0
  Proceeds from issuance of common stock                                             1,000,000         0
---------------------------------------------------------------------------------------------------------

          Net cash provided by (used in) financing activities                        1,002,060         0
---------------------------------------------------------------------------------------------------------

          Net increase (decrease) in cash                                              140,666    (2,560)

CASH AND CASH EQUIVALENTS, beginning of period                                               -     3,697
---------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, end of period                                   $           140,666   $ 1,137
---------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid for interest                                                   $            59,725   $     0
---------------------------------------------------------------------------------------------------------

NON CASH INVESTING AND FINANCING ACTIVITIES
  Common stock exchanged for acquisition of Optivision, Inc. common stock  $        12,221,884
  Issuance of common stock for services at $1.00 per share                               5,000
  Issuance of common stock for services at $2.00 per share                              16,000
  Cancellation of shares of common stock                                                 1,974
</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 second quarter ended June 30,
2001  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, 2000 and
1999,  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 financial
statements.  The unaudited interim consolidated financial statements contain all
normal  and  recurring entries. The results of operations for the interim period
ended June 30, 2001 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 wholly-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.  We  consider  our  operations  to  be  one segment for
          reporting  purposes.

          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  business  combination with
          Optivision,  has  resulted in a substantial deficit that is compounded
          by  its current liabilities exceeding its current assets by $6,253,115
          at  June  30, 2001 and negative cash flow from operating activities of
          $863,598  for  the six-months ended June 30, 2001. 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 the six months ended June 30, 2001, our top four customers
               accounted  for  59%  of  our  net  revenues. As of June 30, 2001,
               approximately  45%  of  our accounts receivable were concentrated
               with  five  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 June 30, 2001. 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 June 30, 2001:

               Raw  Materials                            $     253,087
               Work-in-process                                 772,555
               Demonstration  Inventory                         69,539
               --------------------------------------------------------
                                                             1,095,181

               Reserve for inventory obsolescence and
                 demonstration inventory refurbishing costs   (583,698)
               --------------------------------------------------------

                                                         $     511,483
               ========================================================

               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 -  STOCKHOLDERS'  NOTES  PAYABLE:

               Since  April  1999, five individuals have loaned Optivision, Inc.
               and for which the Company accepted liability in merger, funds due
               in  one  year  and  including interest rates of 10%. The carrying
               value  of  these  notes  payable  approximates  their fair value.



     NOTE 5 -  LOSS  PER  SHARE:

               The  basic  and  diluted loss per share was calculated based on a
               weighted  average  number of shares outstanding of 10,580,388 and
               18,641,437  for the 3 months and 6 months ended June 30, 2001 and
               26,254,200  for June 30, 2000, 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.


                                      F-6
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     NOTE 6 - SUBSEQUENT EVENTS:

     In  October  2001,  the Company issued to an investor 555,555 shares of our
     common  stock  for  a  total  of  $200,000  in  cash.

     On  December  28,  2001, the Company issued and sold a 12% two-year secured
     convertible  debenture  in  the  principal  amount  of $500,000, investment
     options  for  the  purchase of up to $500,000 of common stock, and warrants
     exercisable  for  up  to 1,100,000 shares of common stock The terms of this
     financing  also  provide  for  the  issuance  and sale of an additional 12%
     two-year  secured convertible debenture in the principal amount of $500,000
     and related investment options for the purchase of up to $500,000 of common
     stock.  The  conversion  price  of the debentures is equal to the lesser of
     $0.385 per share or a floating average related to stock price fluctuations.
     Similarly,  the  exercise  price  of the warrants is equal to the lesser of
     $0.385 per share or a floating average related to stock price fluctuations,
     and  is  also  subject to adjustment for, among other things, stock splits,
     combination  or  reclassification  of  the  Company's capital stock and the
     like.

     Since  there  are  multiple components of the debenture, 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 is $305,195, and will be amortized over
     the  two  year  life  of  the  debenture.

     On  January  30,  2002,  the  Company  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
     of  $1,561,500.  In  accordance  with  the work-out agreement, the debt was
     settled  in  June  2002.

     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  current  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. The convertible note bears
     interest  at  10%  per  annum. Since the Company's stock price exceeded the
     conversion  price  on  the  transaction  date,  there


                                      F-7
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     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.

     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,  combinations  or reclassifications of the Company's capital
     stock  and the like. The total selling price of these units was $1,800,000.

     During 2002, the Company settled with its employees for unpaid compensation
     by  issuing  additional  stock  options  in  lieu  of cash in the amount of
     $1,254,051.

     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).

     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 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, combinations or reclassifications of the Company's
     capital  stock  and  the  like.  No additional proceeds were received.

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

     On  June 18, 2002, the Company issued and sold two 12% two-year convertible
     notes  in  the  aggregate  principal  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, combinations or reclassifications 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 debentures)
     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  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  an
     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.


                                      F-8
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     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 the Company's
     lease  obligations,  due to the departure of its Sublessee, which now total
     approximately $200,000. The landlord has agreed to meet with the Company to
     negotiate  lease  renewal  and  payment  of  past  due  amounts.

     From  January 1 through August 5, 2002, the Company issued 1,254,880 shares
     of  common  stock  to  various  corporate service providers in exchange for
     services  valued  at $609,534 To be rendered over varying contract lengths.

     On August 8, 2002 pursuant to the Warrant Agreement with Bristol Investment
     Fund  dated December 28,2001, the Company reduced the exercise price of the
     warrant  shares  to  $0.0436  per share and increased the number of warrant
     shares  purchasable  at  such  exercise  price  by  604,969.

     NOTE 7  -  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.

     The  following  unaudited pro forma information summarizes the year to date
     results  of  operations  as if the business combination were affected as of
     January  1,  2000:


                                                      2001              2000

Net  Sales                                      $   2,958,909     $   1,733,833
          Amortization  of  goodwill                1,650,093         1,650,093
          Net  Loss                             $  (4,208,940)    $  (3,871,470)
          ----------------------------------------------------------------------
          Basic and Dilutive Loss per Share     $   (0.37)        $     (0.34)
          ----------------------------------------------------------------------

     NOTE 8  -  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.


                                      F-9
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

                                                Purchase           Pooling  of
                                                 Method             Interest

     For the six months ended June 30, 2001:

          Net  Sales                         $   1,227,032       $    2,958,909
          Net  Loss                          $  (1,678,490)      $   (2,558,847)

          Basic and Dilutive Loss per Share  $       (0.90)      $        (0.20)
          ----------------------------------------------------------------------


     For the six months ended June 30, 2000:

          Net  Sales                         $      -            $    1,733,833
          Net  Loss                          $     (3,296)       $   (2,221,377)

          Basic and Dilutive Loss per Share  $       0.00        $        (0.20)
          ----------------------------------------------------------------------


                                      F-10
<PAGE>