<PAGE>

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

                                   FORM 10-QSB

                                   (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, 2003

[ ]      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        (I.R.S. Employer Identification No.)
  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 CORPORATE ISSUERS

The number of shares outstanding of each of the issuer's classes of common
equity as of July 22, 2003: 121,051,670 shares of Common Stock.

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




                                       1
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

         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.

                                                              Amnis Systems Inc.

                                                      Consolidated Balance Sheet
                                                                     (unaudited)
================================================================================


<TABLE>
<CAPTION>
                                                                                                  June 30, 2003
---------------------------------------------------------------------------------------------------------------

Assets

Current Assets:
<S>                                                                                                <C>
     Cash                                                                                          $    192,468
     Accounts receivable, net of allowance for
     doubtful accounts of $28,580                                                                       194,371
     Inventories, net of reserve of $ 250,259                                                           623,482
     Prepaid expenses and other                                                                          99,410
---------------------------------------------------------------------------------------------------------------

                   Total current assets                                                               1,109,731
---------------------------------------------------------------------------------------------------------------

Property and Equipment
     Machinery and equipment                                                                          1,881,966
     Demonstration equipment                                                                            456,752
     Furniture and fixtures                                                                             498,301
     Leasehold improvements                                                                             351,111
---------------------------------------------------------------------------------------------------------------
                                                                                                      3,188,130

     Less:  Accumulated depreciation and amortization                                                (3,105,569)
---------------------------------------------------------------------------------------------------------------

                   Property and equipment, net                                                           82,561
---------------------------------------------------------------------------------------------------------------

Debt issuance costs                                                                                     131,407
Deposits                                                                                                 10,739
---------------------------------------------------------------------------------------------------------------

                                                                                                   $  1,334,438
===============================================================================================================

Liabilities and Stockholders' (Deficit)

Current Liabilities:
     Financing obligations collateralized by accounts receivable                                   $     35,597
     Stockholders' notes payable                                                                        756,188
     Accounts payable                                                                                 1,737,999
     Accrued Salaries                                                                                 1,502,932
     Accrued Vacation                                                                                   237,578
     Accrued Interest Payable                                                                           378,524
     Convertible notes payable, current portion (net of discount of $310,316)                         1,560,747
     Deferred revenue                                                                                   159,156
     Accrued warrant liability                                                                          618,679
     Other Accrued Expenses                                                                           1,706,806
---------------------------------------------------------------------------------------------------------------

                   Total current liabilities                                                          8,694,206

Long-Term Liabilities:
     Convertible note payable, long-term portion (net of discount of $1,131,586)                        778,534
---------------------------------------------------------------------------------------------------------------

                   Total Liabilities                                                                  9,472,740
---------------------------------------------------------------------------------------------------------------

Stockholders' (Deficit):
     Preferred stock, $0.0001 par value; 20,000,000 authorized: none issued or outstanding
     Common stock, $0.0001 par value:
        Authorized - 400,000,000 shares
        Issued and outstanding - 114,152,172                                                             11,415
     Additional Paid-in Capital                                                                      24,027,260
     Accumulated deficit                                                                            (32,176,977)

                   Total stockholders' deficit                                                       (8,138,302)
---------------------------------------------------------------------------------------------------------------

                   Total liabilities and stockholder's deficit                                     $  1,334,438
===============================================================================================================
</TABLE>



                                      F-1
<PAGE>

                                               Amnis Systems Inc. and Subsidiary

                                           Consolidated Statements of Operations
================================================================================


<TABLE>
<CAPTION>
                                                                            June 30                            June 30
                                                              -------------------------------------------------------------------
For three months and six months ended, respectively                 2003             2002               2003             2002
---------------------------------------------------------------------------------------------------------------------------------
                                                                                (as restated)                       (as restated)
<S>                                                           <C>               <C>               <C>               <C>
Sales                                                         $     269,103     $     459,209     $     701,488     $     705,280

Cost of Goods Sold                                                  175,677           473,527           503,877           761,023
---------------------------------------------------------------------------------------------------------------------------------

        Gross profit                                                 93,426           (14,318)          197,611           (55,743)
---------------------------------------------------------------------------------------------------------------------------------

Operating Expenses
     Research and development                                       164,014           304,470           486,116           479,829
     Sales and marketing                                            136,948           529,739           439,485           970,311
     General and administrative                                     569,913           647,770           979,269         1,384,955
---------------------------------------------------------------------------------------------------------------------------------

           Total operating exenses                                  870,875         1,481,979         1,904,870         2,835,095
---------------------------------------------------------------------------------------------------------------------------------

           Loss from operations                                    (777,449)       (1,496,297)       (1,707,259)       (2,890,838)

Other Income (Expense)
     Interest expense, net                                         (151,873)          (81,195)         (205,202)         (189,561)
     Amortization of discount on convertible notes payable         (206,148)       (2,004,019)         (415,492)       (2,806,462)
     Financing costs                                               (764,881)         (448,355)         (890,990)         (458,355)
     Gain on extinguishment of accounts payable                          --         1,042,177                --         1,042,177
     Change in fair value of detachable warrants                   (351,189)          686,357          (346,820)          767,670
     Other, net                                                        (426)               30              (385)           42,113
---------------------------------------------------------------------------------------------------------------------------------

            Total other income (expense)                         (1,474,517)         (805,005)       (1,858,889)       (1,602,418)
---------------------------------------------------------------------------------------------------------------------------------

Net loss before taxes                                            (2,251,966)       (2,301,302)       (3,566,148)       (4,493,256)
---------------------------------------------------------------------------------------------------------------------------------

     Income Tax                                                          --                --                --                --
---------------------------------------------------------------------------------------------------------------------------------

Net loss                                                      $  (2,251,966)    $  (2,301,302)    $  (3,566,148)    $  (4,493,256)
---------------------------------------------------------------------------------------------------------------------------------

Basic and Diluted Loss per Common Share                       $       (0.02)    $       (0.10)    $       (0.04)    $       (0.24)
---------------------------------------------------------------------------------------------------------------------------------

Weighted average shares outstanding - basic & diluted           100,317,803        22,429,167        84,922,487        18,932,583
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-2
<PAGE>


                                               Amnis Systems Inc. and Subsidiary

                                 Consolidated Statement of Stockholders' Deficit
================================================================================


<TABLE>
<CAPTION>
                                                                                            Additional                     Total
                                                              Common Stock                    Paid-In     Accumulated  Stockholders'
                                                                 Shares        Amount         Capital       Deficit       Deficit
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>            <C>           <C>           <C>
Balance, December 31, 2002                                     66,294,203   $      6,629   $ 22,459,213  $(28,610,829) $ (6,144,987)

  Issuance of common stock for converstion of notes payable
    and related accrued interest and penalties                 42,382,690          4,238        382,095                     386,333

  Issuance of common stock for services                         4,867,522            488        134,979                     135,467

  Issuance of common stock for exercise of options                 75,000              7          2,993                       3,000

  Issuance of common stock for compensation                       532,757             53         29,545                      29,598

  Beneficial conversion feature of convertible note payable                                   1,018,435                   1,018,435

  Net loss                                                                                                 (3,566,148)   (3,566,148)
------------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2003                                        114,152,172         11,415     24,027,260   (32,176,977)   (8,138,302)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements



                                      F-3
<PAGE>





                                               Amnis Systems Inc. and Subsidiary

                                           Consolidated Statements of Cash Flows
================================================================================


<TABLE>
<CAPTION>
                                                                                            June 30
                                                                                  ------------------------
For the six months ended                                                              2003         2002
----------------------------------------------------------------------------------------------------------
                                                                                              (as restated)
Cash Flows from Operating Activities:
<S>                                                                              <C>           <C>
      Net loss                                                                   $(3,566,148)  $(4,493,256)
      Adjustments to reconcile net loss to
        net cash used in operating activities:
          Common stock and options issued for services                               135,467       338,233
          Common stock issued for financing costs                                         --       288,750
          Warrants issued for financing costs                                             --       107,005
          Employee salaries exchanged for stock                                       29,598     1,235,703
          Depreciation and amortization                                               30,259        26,094
          Amortization of discount on convertible notes payable                      415,492     2,806,462
          Amortization of debt issuance costs                                         10,064            --
          Loss on disposal of property and equipment                                      --         1,627
          Change in fair value of warrant liability                                  346,820      (767,670)
          Gain on extinguishment of debt                                                  --    (1,042,177)
      Decrease in accounts receivable                                                137,926       237,932
      Decrease (increase) in inventories                                             (62,482)       19,254
      (Increase) in prepaid expenses and other assets                                (47,823)      (28,773)
      (Decrease) Increase in accounts payable                                        120,184      (961,976)
      Increase (decrease) in accrued salaries                                        926,039      (596,177)
      Increase (decrease) in accrued vacation                                         24,743       (53,834)
      Increase in accrued interest payable                                           174,231       209,638
      Decrease in deferred rent                                                           --       (71,578)
      Increase (decrease) in deferred revenue                                          2,434       (22,727)
      Increase (decrease) in other accrued expenses                                  916,607        39,437
      Increase (decrease) in sublease deposit                                             --       (72,800)
----------------------------------------------------------------------------------------------------------

          Net cash used in operating activities                                     (406,589)   (2,800,833)
----------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities:
      Purchases of property and equipment                                             (4,047)      (15,677)
 ---------------------------------------------------------------------------------------------------------

          Net cash used in investing activities                                       (4,047)      (15,677)
 ---------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities:
      Bank overdraft                                                                      --        93,374
      Proceeds from financing obligations collateralized by accounts receivable      792,806       914,431
      Payments on financing obligations collateralized by accounts receivable     (1,163,672)   (1,315,566)
      Payment of debt issuance costs                                                (116,500)           --
      Proceeds from issuance of common stock                                           3,000     2,170,397
      Proceeds from convertible debentures                                         1,000,000       950,000
 ---------------------------------------------------------------------------------------------------------

          Net cash provided by financing activities                                  515,634     2,812,636
----------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                                 104,998        (3,874)

Cash and cash equivalents, beginning of period                                        87,470        48,467
----------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                         $   192,468   $    44,593
----------------------------------------------------------------------------------------------------------


Non Cash Investing and Financing Activities:
      Accrued interest and penalties exchanged for common stock                  $   194,633   $   140,736
      Note payable exchanged for common stock                                             --       250,000
      Convertible note payable exchanged for common stock                            191,700     1,935,154
      Note payable and interest in exchange for convertible note payable                  --     3,547,917
      Discount on convertible note payable                                         1,218,247       450,000
 ---------------------------------------------------------------------------------------------------------

Supplemental Disclosures of Cash Flow Information:
      Cash paid for income taxes                                                 $        --   $        --
      Cash paid for interest                                                     $        --   $        --
----------------------------------------------------------------------------------------------------------
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements


                                      F-4
<PAGE>




                       AMNIS SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

NOTE 1 - BASIS OF PRESENTATION

         The unaudited consolidated financial statements have been prepared by
         Amnis Systems, Inc. (the "Company"), pursuant to the rules and
         regulations of the Securities and Exchange Commission. The information
         furnished herein reflects all adjustments (consisting of normal
         recurring accruals and adjustments) which are, in the opinion of
         management, necessary to fairly present the operating results for the
         respective periods. Certain information and footnote disclosures
         normally present in annual consolidated financial statements prepared
         in accordance with accounting principles generally accepted in the
         United States of America have been omitted pursuant to such rules and
         regulations. These consolidated financial statements should be read in
         conjunction with the audited consolidated financial statements and
         footnotes for the year ended December 31, 2002 included in the
         Company's Annual Report on Form 10-KSB. The results of the six months
         ended June 30, 2003 are not necessarily indicative of the results to be
         expected for the full year ending December 31, 2003.

         The accompanying consolidated financial statements have been prepared
         in conformity with accounting principles generally accepted in the
         United States of America, which contemplate continuation of the Company
         as a going concern. The Company incurred net losses for the six months
         ended June 30, 2003 of $3,566,148 and at June 30, 2003, had a an
         accumulated deficit of $32,176,977 and a working capital deficit of
         $7,584,476. These conditions raise substantial doubt as to the
         Company's ability to continue as a going concern.. These consolidated
         financial statements do not include any adjustments relating to the
         recoverability and classification of recorded asset amounts, or amounts
         and classification of liabilities that might be necessary should the
         Company be unable to continue as a going concern.

         The Company plans to take the following steps that it believes will be
         sufficient to provide the Company with the ability to continue in
         existence. The Company has recently hired a new Chief Executive Officer
         and has obtained additional funding from a group put together by
         existing investors and a commitment for additional funds from this and
         other new investors. The Company believes that with a new CEO and
         sufficient capital to fund operations that the Company will be able to
         achieve profitable operations, but there can be no assurance that the
         Company will generate positive cash flows from operations sufficient to
         sustain operations in the near term.

NOTE 2 - STOCK OPTIONS

         The Company has adopted only the disclosure provisions of SFAS No. 148
         and 123, "Accounting for Stock-Based Compensation." It applies
         Accounting Principles Bulletin ("APB") Opinion No. 25, "Accounting for
         Stock Issued to Employees," and related interpretations in accounting
         for its Stock Option Plan and does not recognize compensation expense
         for its Stock Option Plan other than for restricted stock and options
         issued to outside third parties. If the Company had elected to
         recognize compensation expense based upon the fair value at the grant
         date for awards under the Stock Option Plan consistent with the
         methodology prescribed by SFAS No. 123, the Company's net loss and loss
         per share would be reduced to the pro forma amounts indicated below for
         the six months ended June 30, 2003 and 2002:


<TABLE>
<CAPTION>
                                                                    2003              2002
                                                                -----------       -----------
<S>                                                             <C>               <C>
                  Net loss as reported                          $(3,566,148)      $(4,493,206)
         Expense recognized                                              --                --
                  Pro forma expense                                (546,941)         (285,348)
                                                                -----------       -----------
</TABLE>



                                      F-5
<PAGE>


                       AMNIS SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


<TABLE>
<S>                                                             <C>               <C>
                  Pro forma net loss                            $(4,113,089)      $(4,778,604)
                                                                ===========       ===========
                  Basic and diluted loss per common share:
                      As reported                               $     (0.04)      $     (0.24)
         Pro forma                                              $     (0.04)      $     (0.25)
</TABLE>


         The fair value for these options was estimated at the date of grant
         using a Black-Scholes option pricing model with the following
         weighted-average assumptions for the six months ended June 30, 2003 and
         the years ended December 31, 2002 and 2001, respectively: risk-free
         interest rate of 4.0% 3.0% and 3.5%; dividend yields of 0%, 0% and 0%;
         volatility factors of the expected market price of the Company's common
         stock of 242.2% 139.1% and 137.4%; and a weighted average expected life
         of the option of 2, 3 and 4 years. There were 888,000 options granted
         during the six months ended June 30, 2003.

         The Black-Scholes option valuation model was developed for use in
         estimating the fair value of traded options which have no vesting
         restrictions and are fully transferable. In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected stock price volatility. Because the Company's employee stock
         options have characteristics significantly different from those of
         traded options, and because changes in the subjective input assumptions
         can materially affect the fair value estimate, in management's opinion,
         the existing models do not necessarily provide a reliable single
         measure of the fair value of employee stock options.

NOTE 3 - EARNINGS PER SHARE

         In accordance with SFAS No. 128, "Earnings Per Share," the basic loss
         per common share is computed by dividing net loss available to common
         stockholders by the weighted average number of common shares
         outstanding. Diluted loss per common share is computed similar to basic
         loss per common share except that the denominator is increased to
         include the number of additional common shares that would have been
         outstanding if the potential common shares had been issued and if the
         additional common shares were dilutive. At June 30, 2003, the Company
         had outstanding warrants and options to purchase shares of common stock
         of 24,924,935, which were antidilutive and at June 30, 2002.


NOTE 4 - CONVERTIBLE NOTES PAYABLE

          On December 28, 2001, the Company entered into an agreement to issue a
          one year debenture, bearing interest at 12% per annum, in the amount
          of $500,000, with the right to convert the debt into common stock upon
          demand at a rate equal to the lesser of $0.385 per share or 70% of the
          three lowest trading prices over the previous 20 days trading. On
          January 3, 2002, the Company received $500,000 pursuant to this
          debenture. In addition to the debenture, the lender was issued
          investment options to purchase, at the applicable conversion price,
          one additional share of common stock for each share of common stock
          owned upon conversion of the debenture and warrants to purchase up to
          1,000,000 shares of common stock at an exercise price equal to the
          lesser of $0.385 or the average of the lowest trading prices over the
          previous 20 days trading. The debenture limits the ownership that can
          be acquired through this transaction to be no greater than 4.9% on a
          fully diluted basis. Additional warrants to purchase up to a total of
          100,000 shares of common stock, at the same exercise price as the
          warrants issued to the lender, were issued as a finders fee. In
          accordance with EITF 00-27, the Company first determined the value of
          the note and the fair value of the detachable warrants issued in
          connection with this convertible debenture. The estimated value of the
          warrants of $509,194 was determined using the Black-Scholes option
          pricing model and the following assumptions: term of 2 years, a risk
          free interest rate of 4.00%, a



                                      F-6
<PAGE>

                       AMNIS SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


          dividend yield of 0% and volatility of 212%. The face amount of the
          note payable of $500,000 was proportionately allocated to the note
          payable and the warrants is the amount of $247,722 and $252,278,
          respectively. The amount allocated to the warrants of $252,278 was
          recorded as a discount on the note payable and as accrued warrant
          liability as these warrants contain registration rights. The value of
          the note payable was then allocated between the note and the
          preferential conversion feature, which amounted to $0 and $247,722,
          respectively. The combined total discount is $500,000, and is being
          amortized over the year life of the debenture. Of the $500,000
          discount, as of June 30, 2003, $383,391 has been amortized to expense,
          including $131,337 during the six months ended June 30, 2003, due to
          the passage of time and conversions into common stock. During the six
          months ended June 30, 2003, principal and penalties of $29,700 and
          $7,000 were converted into 5,242,857 shares of common stock. The
          Company did not register the shares underlying this convertible
          debenture per the terms of the agreement and has accrued a penalty for
          this non-registration event. See Note 5.

          On January 14, 2002, the Company issued a two year convertible note in
          the principal amount of $3,547,917 to Mr. Michael A. Liccardo, former
          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 to meet current operating
          expenses. At any time, Mr. Liccardo may elect to convert the note to
          shares of the Company's common stock 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 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 $3,547,917. This discount is being amortized over the life
          of the convertible note. Of the $3,547,917 discount, as of June 30,
          2003, $3,547,917 has been amortized to expense, including $61,859
          during the six months ended June 30, 2003, due to the passage of time
          and conversions into common stock. During the year ended December 31,
          2002, principal and accrued interest in the amount of $2,435,154 and
          $114,846, respectively, were converted into 39,123,377 shares of the
          Company's common stock. During the six months ended June 30, 2003,
          principal in the amount of $112,000 was converted into 14,000,000
          shares of the Company's common stock.

          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 to Alpha Capital Aktiengesellschaft and Stonestreet
          Limited Partnership, in a private financing transaction. Pricing is
          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 stock. Each note is convertible at the holder's
          option at any time into shares of the Company's common stock at the
          lesser of a 30% discount to the average of the lowest three intraday
          trading prices of the Company's common stock during the 20 trading day
          periods ending on trading day prior to the date of conversion, or
          $0.385 per share. In accordance with EITF 00-27, the Company first
          determined the value of the note and the fair value of the detachable
          warrants issued in connection with this convertible debenture. The
          estimated value of the warrants of $21,282 was determined using the
          Black-Scholes option pricing model and the following assumptions: term
          of 2 years, a risk free interest rate of 4.00%, a dividend yield of 0%
          and volatility of 242%. The face amount of the note payable of
          $450,000 was proportionately allocated to the note payable and the
          warrants is the amount of $429,679 and $20,321, respectively. The
          amount allocated to the warrants of $20,321 was recorded as a discount
          on the note payable and as accrued warrant liability as these warrants
          contain registration rights. The value of the note was then allocated
          between the note and the preferential conversion feature, which
          amounted to $0 and $429,679,



                                      F-7
<PAGE>

                       AMNIS SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


          respectively. The combined total discount is $450,000, and will be
          amortized over the life of the debenture. Of the $450,000 discount, as
          of June 30, 2003, $256,273 has been amortized to expense, including
          $135,636 during the six months ended June 30, 2003, due to the passage
          of time and conversions into common stock. During the six months ended
          June 30, 2003, principal and accrued interest in the amount of $50,000
          and $27,953, respectively, were converted into 5,196,857 shares of the
          Company's common stock. The Company did not register the shares
          underlying this convertible debenture per the terms of the agreement
          and has accrued a penalty for this non-registration event. See Note 5.

          On May 9, 2003, the Company issued a 12% two-year Convertible Note in
          the principal amount of $910,120 in exchange for the reduction of the
          penalties accrued for the reset provision contained in the June 18,
          2002 agreement (See Note 5) in the same amount to Alpha Capital
          Aktiengesellschaft. The note is convertible at the holder's option at
          any time into shares of the Company's common stock at the lesser of a
          30% discount to the average of the lowest three intraday trading
          prices of the Company's common stock during the 20 trading day periods
          ending on trading day prior to the date of conversion, or $0.385 per
          share. In accordance with EITF 00-27, the value of the note was
          allocated between the note and the preferential conversion feature,
          which amounted to $520,069 and $390,051, respectively. The discount of
          $390,051 will be amortized over the life of the debenture. Of the
          $390,051 discount, as of June 30, 2003, $27,746 has been amortized to
          expense due to the passage of time.

          On May 9, 2003, the Company issued and sold three 12% two-year
          Convertible Notes in the aggregate principal amount of $1,000,000 and
          common stock purchase warrants exercisable for up to 5,000,000 shares
          of common stock to Alpha Capital Aktiengesellschaft, SDS Merchant Fund
          and Bristol Capital, in a private financing transaction. Each note is
          convertible at the holder's option at any time into shares of the
          Company's common stock at the lesser of a 35% discount to the average
          of the lowest three intraday trading prices of the Company's common
          stock during the 30 trading day periods ending on trading day prior to
          the date of conversion, or $0.05 per share. In accordance with EITF
          00-27, the Company first determined the value of the note and the fair
          value of the detachable warrants issued in connection with this
          convertible debenture. The estimated value of the warrants of $249,705
          was determined using the Black-Scholes option pricing model and the
          following assumptions: term of 7 years, a risk free interest rate of
          4.00%, a dividend yield of 0% and volatility of 242%. The face amount
          of the notes payable of $1,000,000 was proportionately allocated to
          the note payable and the warrants is the amount of $800,188 and
          $199,812, respectively. The amount allocated to the warrants of
          $199,812 was recorded as a discount on the note payable and as accrued
          warrant liability as these warrants contain registration rights. The
          value of the note was then allocated between the note and the
          preferential conversion feature, which amounted to $171,804 and
          $628,384, respectively. The combined total discount is $828,196, and
          will be amortized over the life of the debenture. Of the $828,196
          discount, as of June 30, 2003, $58,914 has been amortized to expense
          due to the passage of time.


NOTE 5 - OTHER ACCRUED EXPENSES

<TABLE>
          Other accrued expenses at June 30, 2003 consisted of the following:
<S>                                                                                          <C>
                  Penalty for not registering shares issued in February 2002                 $     290,520
                  Penalty for not registering shares underlying
                     convertible debentures                                                        275,400
                  Value of reset option provision in June 18, 2002 agreement                       953,857
                  Other                                                                            187,029
                                                                                             -------------
                                                                                             $   1,706,806
</TABLE>


                                      F-8
<PAGE>

                       AMNIS SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


NOTE 6  - ACCRUED WARRANT LIABILITY

         Under the terms the convertible debentures issued on December 28, 2001,
         June 18, 2002 and May 9, 2003 (see Note 4), and the terms of the
         private placement in February 2002, the Company issued detachable
         warrants to purchase shares of common stock that had registration
         rights. As a result, in accordance with the guidelines of EITF 00-19,
         the fair value of the warrants was initially recorded as accrued
         warrant liability. Furthermore, the classification of the warrants as a
         liability require variable accounting, with remeasurement of the fair
         value of the warrants at each balance sheet, with any adjustments
         reflected in earnings.

         These outstanding warrants were remeasured at June 30, 2003 using the
         Black-Scholes option pricing model and the following assumptions: term
         of 2 years, a risk-free interest rate of 4.00%, a dividend yield of 0%
         and volatility of ranging from 212% to 242%. The allocated liability
         related to the warrants was $618,679 at June 30, 2003 and the Company
         has recorded $346,820 as other expense for the six months ended June
         30, 2003 related to the change in the fair value of the warrants.


NOTE 7 - STOCKHOLDERS' DEFICIT

         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.

         During the six months ended June 30, 2003, the Company settled with its
         employees for unpaid compensation by issuing 532,757 shares of common
         stock in lieu of cash in the amount of $29,598. In addition the company
         issued 4,867,522 shares of common stock in lieu of cash in the amount
         of $135,467 for consulting services. The number of shares issued
         equaled the amount of unpaid compensation and consulting services
         divided by the market value of the Company's stock on the settlement
         date.

         In February 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 a 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 of
         which $970,019 was allocated to the common stock and the remaining
         $829,981 was allocated to the detachable warrants. The allocation
         between the common stock and the warrants was based on the fair value
         of the Company's stock at the closing date ($0.71) and the estimated
         fair value of the warrants ($0.6075). The estimated value of the
         warrants was determined using the Black-Scholes option pricing model
         and the following assumptions: term of 2 years, a risk free interest
         rate of 4.00%, a dividend yield of 0% and volatility of 212%. The
         amount allocated to the warrants of $829,981 was recorded as accrued
         warrant liability as these warrants contain registration rights. On
         June 18, 2002, the financing agreements entered into in February 2002
         were amended in connection with the June 18, 2002 convertible
         debenture, whereby the Company issued an additional 2,062,500 to the
         investor in connection with a reset option feature in the February 2002
         agreement. The Company has recorded as financing costs, $288,750 in
         connection with the issuance of these additional shares. The June 18,
         2002 agreement also contained a reset option provision and the Company


                                      F-9
<PAGE>

                       AMNIS SYSTEMS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002


         has recorded a liability of $953,857 at June 30, 2003 related to the
         additional shares that could be issued in accordance with this
         provision (See Note 5). The Company did not register the shares that
         were issued in the February 2002 private placement offering per the
         terms of the private placement agreement and has accrued a penalty for
         this non-registration event. See Note 5.

NOTE 8 - RESTATEMENT OF 2002 FINANCIAL STATEMENTS

         The Company has restated its financial statements for the six months
         ended June 30, 2002 to account for the transaction with Optivision as a
         recapitalization of Optivision, rather than a purchase in accordance
         with APB No. 16 as had previously been reported, and to properly
         account for the warrants issued in connection with the convertible
         debentures and private placement offering in February 2002.

         The effects of the restatement are as follows:

<TABLE>
<CAPTION>
                                                                                    as previously
                                                                                       filed          as restated
                                                                                  ---------------  ----------------
<S>                                                                               <C>              <C>
                      Accumulated deficit at January 1, 2002(1)                   $  (21,797,659)  $   (19,666,955)
                      Net loss six months ended June 30, 2002 (2)                 $   (3,195,524)  $    (4,493,256)
</TABLE>



         (1) The beginning accumulated deficit reported at January 1, 2002 has
         been restated to reflect the accumulated deficit balance of Optivision
         at that date, and;


         (2) The difference in net loss is principally attributed to the
         amortization of the discounts associated with the convertible
         debentures and using variable accounting to account for the warrants
         issued in connection with the convertible debentures and the private
         placement offering in February 2002.


NOTE 9 - SUBSEQUENT EVENTS

         On July 1, 2003, the Company by Written Consent to Action with out a
         Meeting of the Board of Directors approved certain consulting
         agreements for 10 million shares and authorized the filing of an S-8
         for the underlying shares. On July 11, 2003, the Company filed a Form
         S-8 that registered the 10,000,000 shares underlying the exercise of
         certain warrants issued in connection with four consulting agreements.
         As of July 22, 2003 the Company had issued a total of 6,500,000
         warrants with an exercise price of $0.05 to certain consultants and
         expects to issue the remaining 3,500,000 in the next few weeks. In the
         quarter ended September 30, 2003, the Company will take a charge to
         earnings for $451,706 for the fair value of these options. The
         estimated value of the options was determined using the Black-Scholes
         option pricing model and the following assumptions: term of 0.083
         years, a risk free interest rate of 4.00%, a dividend yield of 0% and
         volatility of 242%.


         On July 2, 2003, the Company filed with the Securities and Exchange
         Commission a 14C preliminary statement to increase the authorized
         common shares from 400,000,000 to 800,000,000 as approved by Written
         Consent to Action with out a meeting of the Majority stockholders of
         the Company on June 17, 2003. After we have fully answered any comments
         from the Securities and Exchange Commission we file and mail a
         definitive information statement and then file a certificate of
         amendment to the certificate of incorporation with the state of
         Delaware at which time the increase in authorized shares will become
         effective.


                                      F-10
<PAGE>


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

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.

General

         We are a Delaware corporation formed in July 1998. We make 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.


                                       2
<PAGE>

Amnis was  formed  on July 29,  1998.  On April  16,  2001,  Amnis  merged  with
Optivision,  an operating company,  in an exchange of common stock accounted for
as a recapitalization of Optivision.  Under the terms of the merger, each issued
and outstanding share of Optivision common stock was converted into the right to
receive 0.10 shares of Amnis common  stock;  each  outstanding  but  unexercised
option or warrant to purchase  common stock of Optivision  was converted into an
option or warrant to acquire the number of shares of Amnis common stock equal to
the  product of 0.10  multiplied  by the number of shares of  Optivision  common
stock that would have been obtained  before the merger.  In accounting  for this
transaction:


o    Optivision  is  deemed  to be  the  purchaser  and  surviving  company  for
     accounting  purposes.  Accordingly,  its net  assets  are  included  in the
     balance sheet at their historical book values and the results of operations
     of Optivision have been presented for the comparative prior period;

o    Control of the net  assets and  business  of Amnis was  acquired  effective
     April 16, 2001.  This  transaction  has been accounted for as a purchase of
     the assets and  liabilities of Amnis by Optivision.  The historical cost of
     the net assets assumed was $0.

         The Company previously applied incorrectly the guidance in EITF 00-27
in calculating the discount corresponding to convertible notes payable. Per the
guidance in EITF 00-27, the Company has now first determined the value of
warrants issued in connection with the convertible notes payable, then it
determined the amount of the beneficial conversion feature. The resulting
discount is being amortized over the term varying between one and two years of
the respective convertible notes. The effect of the prior period adjustment is
shown in the attached financial statement in foot note 8.

Recent Developments

         In the fourth quarter of 2002 due to lack of funding and our inability
to pay employees, our operations began to wind down. This decrease in business
activity continued through April of 2003, at which time there were only three
employees.

        On May 9, 2003, the Company entered into a Securities Purchase Agreement
whereby it issued convertible debentures in exchange for funding of $1,000,000.
On May 12, 2003, in anticipation of the additional funding, the Company rehired
ten employees and commenced rebuilding the Company's operations.

         On July 1, 2003, the Board of Directors, by written consent, approved
certain consulting agreements for the issuance of an aggregate of warrants to
purchase 10,000,000 shares and authorized the filing of a Form S-8 Registration
Statement registering the shares underlying the warrants.

         On July 2, 2003, the Company filed with the Securities and Exchange
Commission a 14C preliminary information statement to increase the authorized
common shares from 400,000,000 to 800,000,000, as approved by the written
consent of a majority of the stockholders of the Company on June 17, 2003.

         On July 11, 2003, the Company filed a Form S-8 that registered
10,000,000 shares underlying the exercise of certain warrants issued in
connection with consulting agreements approved on July 1, 2003.

On July 14, 2003, the Company issued warrants to certain consultants to purchase
6,500,000 shares of common stock that were registered pursuant to the Form S-8
filed on July 11, 2003. The warrants have an exercise price of $0.05.



                                       3
<PAGE>

Results of Operations -

<TABLE>
<CAPTION>
Summary of Operations:         (Expense number are from the Financial Statements attached hereto)
----------------------         ------------------------------------------------------------------

                                                 Three months ending June 30, 2003
                                                 ---------------------------------
                                     2003             2002           Inc/ (dec)          %
<S>                                <C>              <C>              <C>                <C>
Revenue                            $269,103         $459,209         (190,106)         -41.4%
Cost of Goods Sold                  175,677          473,527         (297,850)         -62.9%
Research and development            164,014          304,470         (140,456)         -46.1%
Sales and marketing                 136,948          529,739         (392,791)         -74.1%
General and administrative          569,913          647,770          (77,857)         -12.0%
Interest expense                    151,873           81,195           70,678           87.0%


                                                  Six months ending June 30, 2003
                                                  -------------------------------

Revenue                              701,488           705,280            (3,792)          -0.5%
Cost of Goods Sold                   503,877           761,023          (257,146)         -33.8%
Research and development             486,116           479,829             6,287            1.3%
Sales and marketing                  439,485           970,311          (530,826)         -54.7%
General and administrative           979,269         1,384,955          (405,686)         -29.3%
Interest expense                     205,202           189,561            15,641            8.3%
</TABLE>

         We have included the above tables to more effectively show the period
to period changes and percentages associated with the change.

Revenue:

         Revenues generated during the three months ended June 30, 2003,
aggregated $269,103, as compared to $459,209 for the three months ended June 30,
2002. This decrease of $190,106 in revenues is a result of the cessation of
operations that began in the fourth quarter of 2002 due to lack of funds to
support operations. Furthermore, in the second quarter of 2002 revenue was
beginning to grow as a result of substantial funding that occurred in the first
quarter of 2002. The increase in revenue during the second quarter of 2002 was
from the result of domestic and international government and defense
subcontractors increased interest in video surveillance for the six month period
ending June 30 revenue decreased $3,792 from $705,280 in 2002 to $701,488 in
2003. This decrease in revenue was a result of the factors explained above.

            Our prior three quarters' revenues were $432,385, $645,197 and
$889,658, for the three-month periods ended March 31, 2003, December 31 and
September 30, 2002, respectively. Revenues in the second quarter of 2003
continued to decline when compared to the revenues for the quarters ending March
31, 2003 and December 31, 2002 This is a result of the lack of funds to support
operations from December 2002 through May of 2003. In May 2003, the Company
entered into a Securities Purchase Agreement whereby it issued secured
convertible debentures in exchange for $1,000,000.





                                       4
<PAGE>

Cost of goods sold

            Cost of goods sold decreased $297,850 to $175,677 for the three
months ended June 30, 2003 from $473,527 for the three months ended June 30,
2002, which is a 63% decrease. Revenue decreased 41% for the same period. This
substantial decrease in costs resulted from employee reductions and other cost
efficiencies in 2003 compared to 2002.

            Cost of goods sold for the six months June 30, 2003 decreased
$257,146 from $761,023 in 2002 to $503,877 in 2003 due to employee reductions
and other cost efficiencies, as well as in 2002 material cost included a
$119,000 write off of obsolete materials.

Research and development

            Research and development dropped by $140,456 to $164,014 for the
three months ended June 30, 2003 from $304,470 for the three months ended June
30, 2002 as a result of reduced employee and other expenses in 2003. For the six
months ended June 30, 2003 Research and development expenses increased $6,287 to
$486,116 from $479,829

Sales and marketing

            Costs associated with sales and marketing during the three months
ended June 30, 2003, aggregated $136,948, as compared to $529,739 for the three
months ended June 30, 2002. This decrease of $392,791 in sales and marketing
expenses from the same period in the prior year is primarily the result of the
Company not attending trade shows and a virtual curtailment of sales efforts in
the first and second quarters of 2003 due to the lack of funds. The comparison
for the six months reflect the same with a total decrease of $530,826 down from
$970,311 in 2002 to $439,485 in 2003.

General and administrative

         Costs associated with general and administrative expenses during the
three months ended June 30, 2003, decreased $477,857 to $77,857, as compared to
$647,770 for the three months ended June 30, 2002 primarily due to $277,751
non-cash consulting contracts for services covering strategic planning, mergers
and acquisition activity and corporate financing and legal expenses in 2002.
This decrease was offset by $400,000 in termination compensation expense
associated with executive resignations in the second quarter of 2003. The
comparison for the six months reflects the same with a total decrease of
$405,686 down from $1,384,955 in 2002 to $979,269 in 2003.

Other income (Expense)

         Interest expense increased by $70,678 from $81,195 for the three months
ended June 30, 2002 to $151,873 for the three months ended June 30, 2003 due to
the increase in outstanding interest bearing debt from year to year.
Amortization on discount of convertible note payable decreased due to the
discount on the largest convertible debenture being fully amortized at the end
of 2002. Financing costs are penalties for not filing and obtaining
effectiveness of a



                                       5
<PAGE>

registration statement registering the shares of common stock underlying the
February 2002 private placement and the two June 2002 convertible debentures.

Liquidity and Capital Resources

         At June 30, 2003, we had cash and cash equivalents of $192,468 compared
to $31,312 at March 31, 2003. During 2002 our negative working capital position
increased by nearly $1,204,700. This increase was due to the lack of funds to
pay expenses and compensation and the resulting increase in payables and drop in
inventory. In addition decreases in accounts receivable occurred due to lower
revenue than prior quarters. In the three months ending March 31, 2003 our
negative working capital increased by $933,000 and for the six months ended June
30 2003 the negative working capital increase totaled $1,440,632. The reasons
for the decreases in 2002 have carried on through the first half of 2003. In
addition the accrued warrant liability associated with the investment of
$1,000,000 in May 2003 of $405,000 accounted for a significant portion of the
increase.

         We had continuing losses from operations in the second quarter 2003 of
$(777,449) in addition to our first quarter loss of ($929,810) and $(4,985,278)
for year ended December 31, 2002. We are currently unable to project when the
business may no longer generate a loss since we do not know what the cost and
time requirements will be to recover and build our revenue to the momentum
achieved in the third quarter of 2002. Throughout the fourth quarter of 2002 and
first and second quarters of 2003, we have taken actions to increase cash flows
through cost-cutting measures and actively pursuing additional sources of
funding.

         On May 9, 2003, we entered into a securities purchase agreement with
three investors for the sale of (i) $1,000,000 in convertible debentures and
(ii) a warrants to buy 5,000,000 shares of our common stock. In addition, in
exchange for cancellation of a reset option by one investor, the Company issued
an investor a convertible debenture in the amount of $910,120. Each of these
debentures bear interest at 12%, mature two-years from the date of issuance, and
are convertible into our common stock, at the investors' option, at the lower
of:

         o        $0.05; or

         o        65% of the average of the three lowest intraday trading prices
                  for the common stock on a principal market for the 30 trading
                  days before but not including the conversion date.

         The full principal amounts of the convertible debentures are due upon
default under the terms of convertible debentures. In addition, we have granted
the investors a security interest in substantially all of our assets and
intellectual property and registration rights. The warrants are exercisable
until seven years from the date of issuance at a purchase price of $0.05 per
share. In addition, the exercise price of the warrants will be adjusted in the
event we issue common stock at a price below market, with the exception of any
securities issued as of the date of this warrant. The conversion price of the
debentures and the exercise price of the warrants may be adjusted in certain
circumstances such as if we pay a stock dividend, subdivide or combine
outstanding shares of common stock into a greater or lesser number of shares, or
take such other actions as would otherwise result in dilution of the selling
stockholder's position. The selling stockholders have contractually agreed to
restrict their ability to convert their convertible debentures or



                                       6
<PAGE>

exercise their warrants and receive shares of our common stock such that the
number of shares of common stock held by them in the aggregate and their
affiliates after such conversion or exercise does not exceed 9.9% of the then
issued and outstanding shares of common stock.

         We will need additional investment in order to continue operations. At
this time the company has received an additional $325,000 and identified an
additional$300,000 that may be received over the next 60 days. Additional
investment is being sought and is needed to continue operations.

         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 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 again.

Critical Accounting Policies and Estimates

         This Management's Discussion and Analysis of Financial Condition and
Results of Operations discusses our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. On an
on-going basis, management evaluates its estimates and judgments, including
those related to revenue recognition, intangible assets, financing operations,
and contingencies and litigation. Management bases its estimates and judgments
on historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The most significant
accounting estimates inherent in the preparation of our financial statements
include estimates as to the appropriate carrying value of certain assets and
liabilities which are not readily apparent from other sources, primarily
allowance for doubtful accounts and the recognition and classification of net
operating loss carry forwards between current and long-term assets. These
accounting policies are described in the notes to the consolidated financial
statements included in our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2002 and in the notes to the consolidated financial
statements included with this Form 10-QSB.



                                       7
<PAGE>


ITEM 3. CONTROLS AND PROCEDURES

         As of June 30, 2003, an evaluation was performed under the supervision
and with the participation of the Company's management, including the Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the Chief Executive
Officer and the Chief Financial Officer, concluded that the Company's disclosure
controls and procedures were effective as of June 30, 2003. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to June 30, 2003.




                                       8
<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         From time to time, we are a party to litigation or other legal
proceedings that we consider to be a part of the ordinary course of our
business. We are not involved currently in legal proceedings that could
reasonably be expected to have a material adverse effect on our business,
prospects, financial condition or results of operations. We may become involved
in material legal proceedings in the future.

Item 2. Changes in Securities And Use of Proceeds

         On May 9, 2003, we entered into a securities purchase agreement with
three investors for the sale of (i) $1,000,000 in convertible debentures and
(ii) a warrants to buy 5,000,000 shares of our common stock. In addition, in
exchange for cancellation of a reset option by one investor, the Company issued
an investor a convertible debenture in the amount of $910,120. Each of these
debentures bear interest at 12%, mature two-years from the date of issuance, and
are convertible into our common stock, at the investors' option, at the lower
of:

         o        $0.05; or

         o        65% of the average of the three lowest intraday trading prices
                  for the common stock on a principal market for the 30 trading
                  days before but not including the conversion date.

         The full principal amounts of the convertible debentures are due upon
default under the terms of convertible debentures. In addition, we have granted
the investors a security interest in substantially all of our assets and
intellectual property and registration rights. The warrants are exercisable
until seven years from the date of issuance at a purchase price of $0.05 per
share. In addition, the exercise price of the warrants will be adjusted in the
event we issue common stock at a price below market, with the exception of any
securities issued as of the date of this warrant. The conversion price of the
debentures and the exercise price of the warrants may be adjusted in certain
circumstances such as if we pay a stock dividend, subdivide or combine
outstanding shares of common stock into a greater or lesser number of shares, or
take such other actions as would otherwise result in dilution of the selling
stockholder's position. The selling stockholders have contractually agreed to
restrict their ability to convert their convertible debentures or exercise their
warrants and receive shares of our common stock such that the number of shares
of common stock held by them in the aggregate and their affiliates after such
conversion or exercise does not exceed 9.9% of the then issued and outstanding
shares of common stock.


Item 3. Defaults Upon Senior Securities

         Amnis is in default on its three convertible notes issued in June 2002
and in default of the terms of the purchase agreement associated with the equity
investments in February 2002. The



                                       9
<PAGE>

nature of the default arises from Amnis's failure to file a registration
statement that became effective within a specified time period as specified in
the agreements.

Convertible Notes payable     $1,910,120   penalty and accrued interest $434,160
Investment in Common shares   $1,800,000   penalty                      $290,520

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

         31.1     Certification by Scott MacCaughern, Chief Executive Officer,
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification by Lawrence A. Bartlett, Chief Financial
                  Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.


         32.1     Certification by Scott MacCaughern, Chief Executive Officer,
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

         32.2     Certification by Lawrence A. Bartlett, Chief Financial
                  Officer, pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         (b)      Reports on Form 8-K

                  None.




                                       10
<PAGE>

                                   SIGNATURES

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

Date: August 14, 2003                  AMNIS SYSTEMS INC.

                                       By: /S/ SCOTT MAC CAUGHERN
                                           -----------------------------------
                                           Scott Mac Caughern
                                           President, Chief Executive Officer
                                           and Chairman of the Board

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




                                       11