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,  2002

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

     For  the  transition  period  from  _________________  to _________________

Commission  File  Number:  000-29645

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

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

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

                                 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  13,  2002:  48,287,184  shares  of  Common  Stock.

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


                                        1
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM  1.     FINANCIAL  STATEMENTS

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

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

ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  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 2002 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 2002 and year to date June 30,
2002  historical operating results and financial condition are not comparable to
the same periods in 2001. In order to enhance comparability and make an analysis
of  the  three-month  and  six-month periods ended June 30, 2002 meaningful, the
following discussion of results of operations and changes in financial condition
and  liquidity  is  based upon unaudited pro forma financial information for the
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. In
addition,  the  extraordinary item of debt forgiveness of $1,042,177 in 2002 and
the non-cash amortization of discount on note payable of $484,135 and $1,105,020
for  the  three  and  six  months  ended  June 30, 2002, respectively, have 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

Second quarter of 2002 compared to second quarter of 2001


                 UNAUDITED PRO FORMA COMPARISON OF THE CONSOLIDATED STATEMENT OF OPERATIONS

                                                               June 30                     June 30
For three months and six months ended, respectively       2002          2001          2002          2001
----------------------------------------------------  ------------  ------------  ------------  ------------
<S>                                                   <C>           <C>           <C>           <C>
SALES                                                 $   459,209   $ 1,625,051   $   705,280   $ 2,958,909
COST OF GOODS SOLD                                        473,527       842,226       761,023     1,645,418
----------------------------------------------------  ------------  ------------  ------------
    Gross margin                                          (14,318)      782,825       (55,743)    1,313,491
OPERATING EXPENSES
  Research and development                                304,740       571,720       479,829     1,237,737
  Sales and marketing                                     529,739       735,747       970,311     1,478,312
  General and administrative                              647,770       420,133     1,369,083       921,463
----------------------------------------------------  ------------  ------------  ------------  ------------
                                                        1,481,979     1,727,600     2,819,223     3,637,512
----------------------------------------------------  ------------  ------------  ------------  ------------
      Loss from operations                             (1,496,297)     (944,775)   (2,874,966)   (2,324,021)
OTHER INCOME (EXPENSE)
  Interest expense, net                                  (149,656)      (86,418)     (298,228)     (270,845)
  Other, net                                                   30        (6,470)       40,513        36,019
----------------------------------------------------  ------------  ------------  ------------  ------------
       Total other (expense)                             (149,626)      (92,888)     (256,115)     (234,826)
----------------------------------------------------  ------------  ------------  ------------  ------------
      Net loss                                        $(1,645,923)  $(1,037,663)  $(3,132,681)  $(2,558,847)
----------------------------------------------------  ------------  ------------  ------------  ------------

BASIC AND DILUTIVE LOSS PER COMMON SHARE                   (0.083)       (0.091)       (0.162)       (0.225)
</TABLE>


     Revenues for the three months ended June 30, 2002 were $459,209, a decrease
of approximately 71% over revenues of $1,625,051 for the three months ended June
30, 2001.  Revenues for the six months ended June 30, 2002 were $705,280, a
decrease of approximately 76% over revenues of $2,958,909 for the six months
ended June 30, 2001.  Our revenues continue to be impacted by delayed
decision-making late in our sales cycle that postponed several large deals
beyond our first and second quarter.  Our prior two quarters' sales were
$246,071 and $659,492 for the three-month periods ended March 30, 2002 and
December 31, 2001, respectively.  Our pipeline of new business opportunities is
still growing and continues to bring us strong optimism about our long-term
future in spite of the tough short-term macro economic environment. (Historical
revenues were $1,227,032 for the three and six months ended June 30, 2001).

     Research and development expenses were $304,740 for the three months ended
June 30, 2002, as compared to $571,720 for the three months ended June 30, 2001.
Research and development expenses were $479,829 for the six months ended June
30, 2002, as compared to $1,237,737 for the six months ended June 30, 2001.
This decrease is in line with cost reductions necessary as a result of the


                                        4
<PAGE>
economic slowdown and our revenue slowdown. We do expect modest increases in
future quarters to support development of the new network digital video
products.  (Historical  research and development expenses for the three and six
months ended June 30, 2002 were $304,470 and $479,829, respectively, compared to
$457,950 for the three months and six months ended June 30, 2001).

     Sales and marketing expenses for the three months ended June 30, 2002 were
$529,739, due to a stronger emphasis on trade show activity and increases in our
sales organization, as compared to $735,747 for the three months ended June 30,
2001.  Sales and marketing expenses for the six months ended June 30, 2002 were
$970,311, as compared to $1,478,312 for the six months ended June 30, 2001.
Again, this decrease is consistent with cost reductions necessary as a result of
the economic slowdown and our revenue slowdown.  (Historical sales and marketing
expenses for the three and six months ended June 30, 2002 were $529,739 and
$970,311, respectively, compared to $609,469 for the three months and six months
ended June 30, 2001).

     General and administrative costs were $647,770 for the three months ended
June 30, 2002, as compared to $420,133 for the three months ended June 30, 2001.
General and administrative costs were $1,369,083 for the six months ended June
30, 2002, as compared to $921,463 for the six months ended June 30, 2001. During
the second quarter of 2002 we recorded $77,256 of non-cash consulting contracts
for services covering strategic planning, mergers and acquisition activity and
corporate financing bringing the total for the six months to $355,007.  Cash
expenses increased  approximately 10%, compared to 2001, as a result of
increases in legal and audit expense associated with the change in accounting
for the merger in 2001 from pooling to purchase accounting and preparation of
related SEC filings.  (Historical general and administrative expenses for the
three and six months ended June 30, 2002 were $647,770 and $1,369,083,
respectively, compared to $366,391 for the three and six month periods ended
June 30, 2001).

     Interest and other expense, net was $149,626 for the three months ended
June 30, 2002, as compared to $92,888 for the three months ended June 30, 2001.
Interest and other expense, net was $256,115 for the six months ended June 30,
2002, as compared to $234,826 for the six months ended June 30, 2001.  The
increase was primarily due to accruing interest on shareholder loans.
(Historical interest and other expense, net for the three and six months ended
June 30, 2002 were $633,761 and $1,361,135 (which includes the non-cash
amortization of discount on note payable of $1,154,461), respectively, compared
to $80,848 for the three and six months ended June 30, 2001).

LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 2002, we had cash and cash equivalents of $44,593, compared to
$608,890 at March 31, 2002.  During the three months ended June 30, 2002, our
negative working capital position improved by approximately $1.4 million. In
June 2002, we received the proceeds from the issuance of $450,000 in principal
amount of convertible notes. The moratorium creditors debt was reduced by
approximately $1.5 million, of which $1.1 million in debt forgiveness was
recognized with the final payment under the related work out agreement. Mr.


                                        5
<PAGE>
Liccardo, our president, chief executive officer and chairman of the board,
converted $2,050,000 in principal amount of a convertible note into shares of
our common stock. These improvements were offset by a reduction in cash and
current assets of $648,000, an increase in other current liabilities of $430,000
and a reduction in the discount on convertible note payable of $1.031 million.

     In December 2001, pursuant to a financing agreement between us and Bristol
Investment Fund, Ltd. for a total of $1,000,000 of convertible debentures and up
to $1,385,000 of investment options and warrants, we received a first tranche of
financing through the issuance of a $500,000 convertible debenture. Bristol
Investment Fund, Ltd. is committed to provide us with the second tranche of
financing in the amount of $500,000 through the issuance of a convertible
debenture within ten business days after the effective date of a registration
statement covering the resale of the shares issuable upon conversion of the
debentures and exercise of the related warrants and investment options.
Management proposes to file the amended registration statement in August, but
cannot be certain as to how long it will take for SEC approval or whether such
approval will ever be obtained. Receipt of this additional convertible debenture
financing and financing through the exercise of the related investment options
and warrants will be critical for us to continue operations through 2002.

     We had continuing operating losses of $3,307,829, excluding goodwill
amortization of $17,877,694 for the year ended December 31, 2001. Operating
losses were  $1,378,669 for the first quarter of 2002 and $1,496,297 for the
second quarter 2002.  Although we currently expect to break even in 2004, we
expect to incur operating losses over the next two years of between $4 million
and $6 million in total.  So, in order to sustain our operations, finance our
growth and achieve our strategic objectives until then, we currently estimate
that we will need additional funding of between $4 million and $6 million in
total.  Management has implemented measures to increase cash flows through
increases in revenue and cost-cutting measures and is actively pursuing
additional sources of funding.   Financing transactions may include the issuance
of equity or debt securities, obtaining credit facilities, or other financing
mechanisms. However, the trading price of our common stock and the downturn in
the U.S. stock and debt markets could make it more difficult for us to obtain
financing through the issuance of equity or debt securities.  Even if we are
able to raise the funds required, it is possible that we could incur unexpected
costs and expenses, fail to collect significant amounts owed to us, or
experience unexpected cash requirements that would force us to seek alternative
financing. Further, if we issue additional equity or debt securities,
stockholders may experience additional dilution or the new equity securities may
have rights, preferences or privileges senior to those of existing holders of
our common stock.  If additional financing is not available or is not available
on acceptable terms, we will have to curtail our operations.


                                        6
<PAGE>
                           PART II - OTHER INFORMATION


ITEM  2.     CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

RECENT  SALES  OF  UNREGISTERED  SECURITIES

     During  the three months ended June 30, 2002, we issued and sold securities
not  registered  under  the  Securities  Act  of  1933,  as amended, as follows:

     (1)     In  May  2002,  we  issued  to  an  unaffiliated  corporate service
provider  250,000  shares of our common stock for public relations and corporate
communications  services  to  be  rendered  to  us  over  a  four  month period.

     (2)     In June 2002, we issued and  sold  to  two  unaffiliated accredited
investors  two  12% two-year convertible notes in the aggregate principal amount
of  $450,000  convertible at each holder's option at any time into shares of our
common  stock  at  the lesser of 70% of the average of the lowest three intraday
trading  prices  of our common stock during the 20 trading day period ending one
trading  day  prior  to the date of conversion or $0.385 per share, and warrants
exercisable for up to 135,000 shares of our common stock at an exercise price of
approximately  $0.13  per  share,  subject  to  adjustment.

     (3)     In June 2002, in connection with  the  convertible  note  financing
transaction,  we issued to two qualified corporate investors 2,062,500 shares of
our  common  stock  pursuant to the exercise of the reset option included in the
units,  as  amended,  issued  to  these  investors  in  February  2002.

     (4)     In June 2002, we issued to  Michael  A.  Liccardo,  our  president,
chief  executive  officer  and chairman of the board of directors (i) 26,623,377
shares of our common stock pursuant to the conversion of $2,050,000 of principal
of  the convertible note that we had issued to Mr. Liccardo on January 14, 2002,
and  (ii)  a  replacement  note  of  $1,612,763.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     AMENDMENT  TO  CERTIFICATE  OF  INCORPORATION  INCREASING  THE  NUMBER  OF
AUTHORIZED  SHARES  OF  COMMON  STOCK.  By  written consent dated as of June 20,
2002,  stockholders  owning  31,806,463  shares  of  our  common  stock,  or
approximately  66.5% of our then outstanding common stock, approved an amendment
to  our certificate of incorporation to increase the number of authorized shares
of  our  common  stock  from  100,000,000  to  400,000,000.

     APPROVAL OF 2002 STOCK PLAN.  By written consent dated as of June 20, 2002,
a stockholder owning  27,868,677  shares  of  our common stock, or approximately
58.3%  of  our then outstanding common stock, approved our 2002 Stock Plan.  The
Plan  authorizes  our  board  of  directors  to grant options and stock purchase
rights to purchase up to a total of 20,000,000 shares of our common stock to our
employees,  directors  and consultants, and employees, directors and consultants
of  our  subsidiaries.


                                        7
<PAGE>
ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

     (a)      EXHIBITS

     4.1*     Form  of  Convertible Note dated as of June 18, 2002 issued by the
Issuer  to  each  of  Alpha  Capital  Aktiengesellschaft and Stonestreet Limited
Partnership

     4.2*     Form  of  Warrant  issued  pursuant  to  each  Amended  Unit
Subscription  Agreement dated as of June 18, 2002 between the Issuer and each of
Alpha  Capital  Aktiengesellschaft  and  Stonestreet  Limited  Partnership

     4.3*     Form  of  Warrant  issued pursuant to each Convertible Note dated
as  of  June  18,  2002  between  the  Issuer  and  each  of  Alpha  Capital
Aktiengesellschaft  and  Stonestreet  Limited  Partnership

     10.1*     2002  Stock  Plan

     10.2*     Form  of Amended Unit Subscription Agreement dated as of June 18,
2002  between  the  Issuer  and  each  of  Alpha  Capital Aktiengesellschaft and
Stonestreet  Limited  Partnership

     10.3*     Form  of  Subscription  Agreement to Convertible Note dated as of
June  18,  2002  between the Issuer and each of Alpha Capital Aktiengesellschaft
and  Stonestreet  Limited  Partnership

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

     *        Previously  filed  on  Form  8-K  on  June  27,  2002

     (b)      REPORTS  ON  FORM  8-K

     We  filed  the  following  current  reports  on Form 8-K during the quarter
ended  June  30,  2002:

     (1)     On  May  9, 2002, we filed a second amendment to the Current Report
on  Form  8-K  that  we  had  filed  on May 1, 2001, in which we reported Item 7
"Financial  Statements  and  Exhibits"  and  filed  the  following  financial
statements:

          (i)     The  audited  balance  sheet  of Optivision as of December 31,
2000  and statements of operations, stockholders' deficit and cash flows for the
eight  months then ended, together with the report of Hood & Strong LLP thereon,
and  the  unaudited  balance sheets, statements of operations and cash flows for
the  eight  months ended December 31, 1999, together with the report of
Hood  and  Strong thereon;

          (ii)     The audited balance sheets of Optivision as of April 30, 2000
and  1999 and statements of operations, stockholders' deficit and cash flows for
the  fiscal  years  then  ended,  together  with the report of Hood & Strong LLP
thereon;  and


                                        8
<PAGE>
          (iii)     Our  unaudited  pro  forma  condensed  balance  sheet  as of
December 31, 2000 and unaudited pro forma condensed statements of operations for
the  years  ended  December  31,  2000  and  April  30,  2000.

     (2)     On June 27, 2002, we filed a Current Report on Form 8-K in which we
reported  Item  5  "Other  Events".


                                        9
<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, 2002        AMNIS  SYSTEMS  INC.

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



                                       10
<PAGE>
<TABLE>
<CAPTION>
                          INDEX TO FINANCIAL STATEMENTS
<S>                                                                        <C>
Unaudited  Condensed  Consolidated  Balance  Sheet
      as of June 30, 2002 and March 31, 2002 .  . . . . . . . . . . . . . . . . . . F-1
Unaudited  Condensed  Consolidated  Statement  of  Operations
      for the six and three-month periods ended June 30, 2002 and June 30, 2001 . . F-2
Unaudited  Condensed  Consolidated  Statement  of  Cash  Flows
      for the six-month periods ended June 30, 2002 and June 30, 2001 . . . . . . . F-3
Notes to Unaudited Consolidated Financial Statements. . . . . . . . . . .    F-4 to F-9
</TABLE>


                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                                 AMNIS SYSTEMS INC.

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

                                                                   June 30, 2002    March 31, 2002
---------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>
ASSETS

CURRENT ASSETS:
  Cash                                                            $       44,593   $       608,890
  Accounts receivable, net of allowance for doubtful
   accounts of $236,000 for June 30 and March 31, 2002                   118,585            38,879
  Inventories                                                            604,802           656,232
  Prepaid expenses and other                                             196,583           308,315
---------------------------------------------------------------------------------------------------

    Total current assets                                                 964,563         1,612,316
---------------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
  Machinery and equipment                                              1,899,335         1,894,221
  Demonstration equipment                                                456,752           456,648
  Furniture and fixtures                                                 496,433           494,700
  Leasehold improvements                                                 351,111           351,111
---------------------------------------------------------------------------------------------------

                                                                       3,203,631         3,196,680

  Less:  Accumulated depreciation and amortization                    (3,063,884)       (3,052,388)
---------------------------------------------------------------------------------------------------

    Property and equipment, net                                          139,747           144,292
---------------------------------------------------------------------------------------------------

OTHER ASSETS                                                                   0            84,890
---------------------------------------------------------------------------------------------------

                                                                  $    1,104,310   $     1,841,498
===================================================================================================

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES:
  Bank overdraft                                                  $       93,374   $             0
  Financing obligations collateralized by accounts receivable            628,148           576,832
  Stockholders' notes payable                                            105,000           105,000
  Accounts payable - moratorium                                                0         1,461,500
  Accounts payable - other                                               490,213           347,092
  Accrued salaries                                                       170,109           112,220
  Accrued vacation                                                       220,999           200,427
  Accrued interest payable                                                63,644            87,364
  Convertible notes payable                                            1,612,763         3,547,917
  Discount on convertible note payable                                  (831,860)       (1,862,657)
  Deferred rent                                                           52,079            80,486
  Deferred revenue                                                        36,368            39,163
  Other accrued expenses                                                 309,538           256,990
---------------------------------------------------------------------------------------------------

    Total current liabilities                                          2,950,375         4,952,334

LONG-TERM LIABILITIES
  Sublease deposits                                                            0            72,800
  Convertible notes payable                                              950,000           500,000
  Discount on convertible note payable                                  (478,423)         (267,045)
---------------------------------------------------------------------------------------------------

    Total Liabilities                                                  3,421,952         5,258,089
---------------------------------------------------------------------------------------------------

STOCKHOLDERS' (DEFICIT):
  Preferred stock, 20,000,000 authorized; none outstanding
   in June, 2002 and March, 2002
  Common stock, $0.0001 par value:
   Authorized - 400,000,000 and 100,000,000 shares in  Jun. 2002
   and Mar. 2002, respectively
   Issued and outstanding - 47,863,933 and 17,960,414 for
   Jun. 2002 and Mar. 2002, respectively                                   4,787             1,796
  Additional Paid-in Capital                                          22,670,755        20,486,915
  Accumulated deficit                                                (24,993,184)      (23,905,302)
---------------------------------------------------------------------------------------------------

    Total stockholders' deficit                                       (2,317,642)       (3,416,591)
---------------------------------------------------------------------------------------------------

    Total liabilities and stockholder's deficit                   $    1,104,310   $     1,841,498
===================================================================================================
</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        2002             2001             2002             2001
------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>              <C>              <C>
SALES                                                 $      459,209   $    1,227,032   $      705,280   $    1,227,032

COST OF GOODS SOLD                                           473,527          645,960          761,023          645,960
------------------------------------------------------------------------------------------------------------------------

    Gross margin                                             (14,318)         581,072          (55,743)         581,072

OPERATING EXPENSES
  Research and development                                   304,470          457,950          479,829          457,950
  Sales and marketing                                        529,739          609,469          970,311          609,469
  General and administrative                                 647,770          366,391        1,369,083          366,391
  Goodwill amortization                                            0          744,904                0          744,904
------------------------------------------------------------------------------------------------------------------------

                                                           1,481,979        2,178,714        2,819,223        2,178,714
------------------------------------------------------------------------------------------------------------------------

      Loss from operations                                (1,496,297)      (1,597,642)      (2,874,966)      (1,597,642)

OTHER INCOME (EXPENSE)
  Interest expense, net                                     (633,791)         (75,662)      (1,403,248)         (75,662)
  Other, net                                                      30           (5,186)          42,113           (5,186)
------------------------------------------------------------------------------------------------------------------------

       Total other (expense)                                (633,761)         (80,848)      (1,361,135)         (80,848)
------------------------------------------------------------------------------------------------------------------------

Net loss before taxes and extraordinary item              (2,130,058)      (1,678,490)      (4,236,101)      (1,678,490)

  Income Tax                                                                                    (1,600)

Loss before extraordinary item                        $   (2,130,058)  $   (1,678,490)  $   (4,236,101)  $   (1,678,490)
------------------------------------------------------------------------------------------------------------------------

  Net extraordinary item-forgiveness of debt               1,042,177                0        1,042,177                0
------------------------------------------------------------------------------------------------------------------------

NET LOSS                                              $   (1,087,881)  $   (1,678,490)  $   (3,195,524)  $   (1,678,490)
========================================================================================================================

BASIC AND DILUTIVE LOSS PER COMMON SHARE -
  BEFORE EXTRAORDINARY ITEM                           $       (0.095)  $       (0.159)  $       (0.213)  $       (0.090)

BASIC AND DILUTIVE LOSS PER COMMON SHARE ON
  EXRAORDINARY ITEM                                   $        0.046   $        0.000   $        0.052   $        0.000
------------------------------------------------------------------------------------------------------------------------

BASIC AND DILUTIVE LOSS PER COMMON SHARE              $       (0.049)  $       (0.159)  $       (0.161)  $       (0.090)
========================================================================================================================
</TABLE>


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

                                                                   CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                            (UNAUDITED)

=======================================================================================================
                                                                                      June 30
                                                                             --------------------------
For the six months ended                                                         2002          2001
-------------------------------------------------------------------------------------------------------
<S>                                                                          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                   $(3,195,524)  $(1,678,490)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
    Common stock issued for services                                             355,007        21,000
    Interest expense exchanged for common stock                                   25,890
    Interest expense exchanged for debt                                          458,385
    Employee salaries exchanged for stock options                              1,217,473
    Depreciation and amortization                                                 29,937       777,874
    Amortization of discount on note payable                                   1,180,840
    Loss on disposal of property and equipment                                     1,627
    Loss on extinguishment of debt                                                73,610
    Gain on extinguishment of debt                                            (1,115,787)
    Provision for allowance for doubtful accounts                                 64,375
    Provision for excess and obsolete inventories                                 65,546       151,772
  Decrease in accounts receivable                                                188,557       508,311
  (Increase) Decrease in inventories                                             (46,292)      350,646
  Increase in prepaid expenses and other assets                                  (28,774)       (5,684)
  Decrease in accounts payable moratorium                                       (445,713)
  Decrease in accounts payable                                                  (442,653)      (26,579)
  Decrease in accrued salaries                                                  (596,177)      (54,176)
  Increase (decrease) in accrued vacation                                        (53,834)       26,116
  Increase (decrease) in accrued interest                                       (317,460)       27,266
  Decrease in deferred rent                                                      (56,813)
  Decrease in deferred revenue                                                   (22,727)      (14,317)
  Increase (decrease) in other accrued liabilities                                 7,303      (947,337)
  Decrease in sublease deposits                                                  (72,800)
-------------------------------------------------------------------------------------------------------

    Net cash used in operating activities                                     (2,726,004)     (863,598)
-------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash acquired from business combination                                                       11,720
  Purchases of property and equipment                                            (19,518)       (9,516)
-------------------------------------------------------------------------------------------------------

    Net cash used in investing activities                                        (19,518)        2,204
-------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings from stockholders                                                                 122,178
  Proceeds from financing obligations collateralized by accounts receivable      914,431
  Payments on financing obligations collateralized by accounts receivable     (1,315,566)     (120,118)
  Proceeds from issuance of common stock                                       2,281,865     1,000,000
  Costs incurred to secure capital                                              (182,456)
  Proceeds from notes receivable                                                 500,000
  Proceeds from issuance of convertible debt                                     450,000
  Bank Overdraft                                                                  93,374
-------------------------------------------------------------------------------------------------------

    Net cash provided by (used in) financing activities                        2,741,648     1,002,060
-------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                                   (3,874)      140,666

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

CASH AND CASH EQUIVALENTS, end of period                                     $    44,593   $   140,666
=======================================================================================================

NON CASH INVESTING AND FINANCING ACTIVITIES:
  Common stock exchanged for acquisition of Optivision, Inc common stock     $             $12,221,884
  Common stock issued for services                                               355,007        21,000
  Accrued salaries exchanged for common stock                                  1,217,473
  Debt and accrued interest exchanged for common stock                           275,890
  Convertible note payable exchanged for common stock                          2,050,000
  Note payable and interest in exchange for convertible note payable           3,547,917
  Convertible note payable exchanged for convertible note payable              1,612,763
  Discount on convertible note payable                                           755,560
  Cancellation of shares of common stock                                           1,974
=======================================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid for income taxes                                                 $     2,400
  Cash paid for interest                                                     $   195,842   $    59,725
=======================================================================================================
</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,
2002  were  of  a  recurring  nature  except  for  extinguishment  of  debt. The
accompanying  unaudited  interim  consolidated  financial  statements  have been
prepared  in accordance with the instructions for Form 10-QSB and, therefore, do
not  include all information and footnotes necessary for a complete presentation
of  the  financial  position,  results  of  operations,  and  cash flows for the
Company,  in  conformity  with  accounting  principles generally accepted in the
United  States  of  America.  The Company has filed audited financial statements
that  include all information and footnotes necessary for such a presentation of
the  financial  position,  results  of  operations and cash flows for the fiscal
years  ended  December  31,  2001  and  2000,  with  the Securities and Exchange
Commission.

It  is  suggested that the accompanying unaudited interim consolidated financial
statements  be  read in conjunction with the aforementioned audited consolidated
financial  statements.  The  unaudited interim consolidated financial statements
contain  all  normal  and  recurring  entries. The results of operations for the
interim period ended June 30, 2002 are not necessarily indicative of the results
to  be  expected  for  the  full  year.

NOTE 1 -  DESCRIPTION  OF  COMPANY:

          Amnis  Systems  Inc.,  a  Delaware  corporation,  and its 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.


NOTE 2 -  GOING  CONCERN:

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


                                      F-4
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  The stockholders' equity of the
Company,  after  the  April 16th, 2001 business combination with Optivision, has
resulted  in a substantial deficit that is compounded by its current liabilities
exceeding  its  current  assets by $2,186,285 at June 30, 2002 and negative cash
flow  from  operating activities of $2,726,004 for the six months ended June 30,
2002.  These  factors  raise  substantial  doubt  about the Company's ability to
continue  as  a  going  concern.  There is no assurance that the Company will be
able  to  achieve successful operations, obtain sufficient financing or obtain a
line  of  credit.  The  accompanying  financial  statements  do  not include any
adjustments  that  might  result  from  the  outcome  of  these  uncertainties.


NOTE 3 -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

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

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

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

               Historically, a substantial portion of our revenues has come from
               large purchases by a small number of customers. If we lose one or
               more  of  our key customers or experience a delay or cancellation
               of  a  significant  order or a decrease in the level of purchases
               from any of our key customers, our net revenues could decline and
               our  operating results and business could be harmed. In addition,
               our  net  revenues  could  decline  and our operating results and
               business  could  be  harmed  if  we  experience any difficulty in
               collecting  amounts  due  from  one or more of our key customers.
               During  2001, our top four customers accounted for 52% of our net
               revenues.  Additionally,  as  of December 31, 2001, approximately
               44%  of  our  accounts  receivable  were  concentrated  with five
               customers.  During  the  six  months ended June 30, 2002, our top
               five  customers  accounted  for  52%  of  our  net  revenues.

               As of June 30, 2002, approximately 83% of our accounts receivable
               were  concentrated  with  seven  of  our  customers.

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

               Inventories are stated at the lower of cost (first-in, first-out)
               or market. Provision has been made to reduce obsolete inventories
               to their net realizable value. Inventories contain components and
               assemblies  in  excess  of  the  Company's  current  estimated
               requirements  and these are reserved for at June 30, 2002. Due to
               competitive  and market pressures, it is reasonably possible that
               additional  provisions  could  be  required  in  the  future.


                                      F-5
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


               Inventories consist of the following at June 30, 2002:

               Raw Materials                                      $     285,213
               Work-in-process                                          387,366
               Demonstration Inventory                                   78,502
               -----------------------------------------------------------------
                                                                        751,081
               Reserve for inventory obsolescence and
                 demonstration inventory refurbishing costs            (146,279)
               -----------------------------------------------------------------
                                                                  $     604,802
               =================================================================

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


NOTE 4 -  ACCOUNTS  PAYABLE  -  MORATORIUM:

          On  January  30, 2002, we successfully negotiated a work-out agreement
          plan  with  the  creditors of Optivision Inc., under which the Company
          will  pay  the creditors of Optivision Inc. $0.35 for every $1.00 owed
          on debt listed on the balance sheet as Accounts Payable-moratorium. In
          accordance  with  the work-out agreement, the debt was settled in June
          2002  and  an  extraordinary  gain  of $1,115,787 was recorded for the
          portion  of  the  debt  forgiven.


NOTE 5 -  CONVERTIBLE  NOTES  PAYABLE:

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


                                      F-6
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


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

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

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

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

          On  June  18,  2002,  the  Company  issued  and  sold two 12% two-year
          Convertible  Notes  in  the aggregate principal amount of $450,000 and
          Common stock Purchase Warrants exercisable for up to 135,000 shares of
          our  common  stock,  subject  to  adjustment  for, among other things,
          capital  issuances  below  $0.13  per  share  and  for  stock  splits,
          combination or reclassification of the Company's stock and the like to
          Alpha  Capital  Aktiengesellschaft and Stonstreet Limited Partnership,
          in  a  private  financing transaction. Each Note is convertible at the
          holder's  option  at  any  time into shares of our common stock at the
          lesser  of  a 30% discount to the average of the lowest three intraday
          trading  prices  of our common stock during the 20 trading day periods
          ending  on  trading day prior to the date of conversion, or $0.385 per
          share.  Since  there  are multiple components of the debentures, value
          was  added  to  each component (warrants and debenture) based on their
          respective  value.  A  discount  on  the  debenture  was  calculated


                                      F-7
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


          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.


NOTE 6 -  LOSS  PER  SHARE:

          The  basic  loss  per share for the six months ended June 30, 2002 and
          2001  was  calculated  based  on  a  weighted average number of shares
          outstanding of 19,862,250 and 18,641,437, respectively. The basic loss
          per  share  for  the  three  months  ended  June 30, 2002 and 2001 was
          calculated based on a weighted average number of shares outstanding of
          22,422,477  and 10,580,388, respectively. Since we have a loss for all
          periods presented, net loss per share on a diluted basis is equivalent
          to  basic  net  loss  per share because the effect of converting stock
          options, warrants, convertible debt and other common stock equivalents
          would  be  anti-dilutive.


NOTE 7 -  FINANCING:

          In  connection with the Convertible note financing transaction entered
          into  on  February  15, 2002, the Company amended, among other things,
          the terms of the reset option and warrant which were part of the Units
          issued  on  February  15,  2002.  The  amendment  to  the reset option
          provided  that,  among  other  things, the number of shares comprising
          each  Unit  was  automatically increased by 11 shares and, at any time
          and  from time to time but only one time for each Unit, until June 18,
          2005, at the option of each purchaser, the number of shares comprising
          each  Unit  may be increased by the difference (rounded to the nearest
          whole  share)  between  (A) $8.00 divided by 70% of the average of the
          lowest  intraday  trading  prices  for  our common stock during the 20
          trading  day  period  ending  one  trading  day  prior  to the date of
          exercise  of  such  option,  and (B) 21. The amendment to each Warrant
          reduced  the  exercise  price  to  approximately  $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. A total of 2,062,500 shares were
          issued  in connection with this amendment. No additional proceeds were
          received.

          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

          The  Company  settled  with  its  employees for unpaid compensation by
          issuing  additional  stock  options  in  lieu of cash in the amount of
          $237,978.


                                      F-8
<PAGE>
                                                              AMNIS SYSTEMS INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


          On May 22, 2002, the Company issued 250,000 shares of its common stock
          for  certain  consulting services to be rendered to the Company over a
          four  month  period.

          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  August  13,  2002.

NOTE 8 -  SUBSEQUENT EVENTS:

          As  of  the  end  of July 2002, the Company has been unable to pay its
          lease  obligations,  due  to the departure of its sublessee, which now
          totals  approximately  $200,000.  The landlord has agreed to meet with
          the  Company  to  negotiate  lease  renewal  and  payment  of past due
          amounts.

          On  July  31,  2002, the Company settled with its employees for unpaid
          compensation by issuing additional stock in lieu of cash in the amount
          of  $36,578.

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

          On  August  8,  2002  pursuant  to  the Warrant Agreement with Bristol
          Investment  Fund  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 9 -  BUSINESS COMBINATION:

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

Note 10 - RESTATEMENT OF FINANCIAL STATEMENTS:

          The  unaudited  interim  consolidated statement of operations and cash
          flows  for  the  period  ended  June  30, 2001 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
          Combination  for  a  pooling  of  interest."


                                      F-9
<PAGE>