-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OoONeNU35S6ZMjq+z52qCIbPNYpuvKCmDpZdrL7Uf1ee+T8qVE3y7ZyY99FnfFsD eE1BubHsvdsRRVpOs8jxYw== 0001015402-02-002835.txt : 20020815 0001015402-02-002835.hdr.sgml : 20020815 20020815123352 ACCESSION NUMBER: 0001015402-02-002835 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20020815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMNIS SYSTEMS INC CENTRAL INDEX KEY: 0001069389 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 330821967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-29645 FILM NUMBER: 02739292 BUSINESS ADDRESS: STREET 1: 3450 HILLVIEW AVENUE CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 6508550200 MAIL ADDRESS: STREET 1: 3450 HILLVIEW AVENUE CITY: PALO ALTO STATE: CA ZIP: 94304 FORMER COMPANY: FORMER CONFORMED NAME: GRAFFITI-X INC DATE OF NAME CHANGE: 20000114 10QSB/A 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A Amendment No. 1 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2001 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 000-29645 AMNIS SYSTEMS INC. (Formerly Graffiti-X, Inc.) (Exact name of small business issuer as specified in its charter) Delaware 94-3402831 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 3450 Hillview Avenue, Palo Alto, California 94304 (Address of principal executive offices, including zip code) Issuer's telephone number, including area code: (650) 855-0200 Not applicable (Former name, former address and former fiscal year, if changed since last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares outstanding of each of the issuer's classes of common equity as of August 10, 2001: 11,369,597 shares of Common Stock. Transitional Small Business Disclosure Format (check one): [ ] Yes [X] No 1 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This information is contained on pages F-1 through F-10 of this report and is incorporated into this Item 1 by reference. In our management's opinion, all adjustments necessary for a fair presentation of the statements of the results for the interim period have been included. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Management's discussion and analysis or plan of operation is provided as a supplement to the accompanying consolidated financial statements and footnotes to help provide an understanding of our financial condition, changes in financial condition and results of operations. Accordingly, the following discussion and analysis should be read in conjunction with our financial statements and the related notes included elsewhere in this report. INTRODUCTION Amnis Systems Inc., a Delaware consolidated corporation, makes hardware and software products for the creation, management and transmission of high-quality digital video over computer networks. Our products are distributed worldwide through a network of value added resellers, or VARs, system integrators and original equipment manufacturers, or OEMs. Our products are used in diverse applications such as interactive distance learning, corporate training, video content distribution, video surveillance and telemedicine. On April 16, 2001, we merged with Optivision, Inc., an operating company, in an exchange of common stock accounted for as an acquisition under the purchase method of accounting. As a result of the merger, Optivision became our wholly-owned subsidiary. The accompanying historical consolidated financial statements and notes for the second quarter of 2001 reflect only the financial results of Amnis Systems Inc., until the merger between Amnis Systems and Optivision which took place on April 16, 2001. As a result, Amnis Systems' second quarter 2001 and year to date June 30, 2001 historical operating results and financial condition are not comparable to the same periods in 2000. Accordingly, in order to enhance comparability and make an analysis of the three-month and six-month periods ended June 30, 2001 meaningful, the following discussion of results of operations and changes in financial condition and liquidity is based upon unaudited pro forma financial information for the three-month and six-month periods ended June 30, 2001 as if the merger had occurred on January 1, 2000. In order to maintain comparability and enhance clarity, goodwill amortization has been excluded from the comparison. The unaudited pro forma Consolidated Statements of Operations for each period are inserted at the beginning of "Results of Operations" section as a reference for that discussion. 2 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
RESULTS OF OPERATIONS UNAUDITED PRO FORMA COMPARISON OF THE CONSOLIDATED STATEMENT OF OPERATIONS June 30 June 30 For three months and six months ended, respectively 2001 2000 2001 2000 - ----------------------------------------------------------------------------------------------------------- SALES $ 1,625,051 $ 734,315 $ 2,958,909 $ 1,733,833 COST OF GOODS SOLD 842,226 395,658 1,645,418 1,098,268 - ----------------------------------------------------------------------------------------------------------- Gross margin 782,825 338,657 1,313,491 635,565 OPERATING EXPENSES Research and development 571,720 317,492 1,237,737 674,748 Sales and marketing 735,747 579,497 1,478,312 1,300,035 General and administrative 420,133 410,117 921,463 790,472 - ----------------------------------------------------------------------------------------------------------- 1,727,600 1,307,106 3,637,512 2,765,255 - ----------------------------------------------------------------------------------------------------------- Loss from operations (944,775) (968,449) (2,324,021) (2,129,690) OTHER INCOME (EXPENSE) Interest expense, net (86,418) (64,391) (270,845) (155,314) Other, net (6,470) 51,639 36,019 63,627 - ----------------------------------------------------------------------------------------------------------- Total other (expense) (92,888) (12,752) (234,826) (91,687) - ----------------------------------------------------------------------------------------------------------- Net loss $(1,037,663) $ (981,201) $(2,558,847) $(2,221,377) =========================================================================================================== BASIC AND DILUTIVE LOSS PER COMMON SHARE $ (0.091) $ (0.087) $ (0.225) $ (0.196)
Historical results and comparisons are not commented on since we had no operations in 2000 and in 2001 we had operations beginning April 16, 2001. Please see the attached financial statements for our historical results. Revenues for the three months ended June 30, 2001 were $1,625,051, an increase of approximately 121% over revenues of $734,315 for the three months ended June 30, 2000. Revenues for the six months ended June 30, 2001 were $2,958,909, an increase of approximately 71% over revenues of $1,733,833 for the six months ended June 30, 2000. Research and development expenses were $571,720 for the three months ended June 30, 2001, as compared to $317,492 for the three months ended June 30, 2000. Research and development expenses were $1,237,737 for the six months ended June 30, 2001, as compared to $674,748 for the six months ended June 30, 2000. This increase is in line with our new product development efforts. 4 Sales and marketing expenses for the three months ended June 30, 2001 were $735,747, as compared to $579,497 for the three months ended June 30, 2000. Sales and marketing expenses for the six months ended June 30, 2001 were $1,478,312, as compared to $1,300,035 for the six months ended June 30, 2000. The period-to-period variation is primarily attributable to expenses incurred in connection with the opening of our Hong Kong office. General and administrative costs were $420,133 for the three months ended June 30, 2001, as compared to $410,117 for the three months ended June 30, 2000. General and administrative costs were $921,463 for the six months ended June 30, 2001, as compared to $790,472 for the six months ended June 30, 2000. Interest and other expense, net was $92,888 for the three months ended June 30, 2001, as compared to $12,752 for the three months ended June 30, 2001. Interest and other expense, net was $234,826 for the six months ended June 30, 2001, as compared to $91,687 for the six months ended June 30, 2001. The increase was primarily due to accruing interest on shareholder loans. 5 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 15, 2002 AMNIS SYSTEMS INC. By: /s/ Lawrence L. Bartlett ------------------------------------------ Lawrence L. Bartlett Vice President and Chief Financial Officer 6 INDEX TO FINANCIAL STATEMENTS PAGES Unaudited Condensed Consolidated Balance Sheet as of June 30, 2001 and March 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . F-1 Unaudited Condensed Consolidated Statement of Operations for the three-month and six-month periods ended June 30, 2001 and June 30, 2000 . . . . . . . . . . . . .. . . . . . . . . . . . . F-2 Unaudited Condensed Consolidated Statement of Cash Flows for the six-month periods ended June 30, 2001 and June 30, 2000. . . F-3 Notes to Unaudited Consolidated Financial Statements . . . . . . . . F-4 - F-10 7
AMNIS SYSTEMS INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) ==================================================================================================================== June 30, 2001 March 31, 2001 - -------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash $ 140,666 $ 0 Accounts receivable, net of allowance for doubtful accounts of $300,375 499,290 0 Note receivable - Optivision 0 1,000,000 Inventories 511,483 0 Prepaid expenses and other 25,881 0 - -------------------------------------------------------------------------------------------------------------------- Total current assets 1,177,320 1,000,000 - -------------------------------------------------------------------------------------------------------------------- INVESTMENTS 0 0 GOODWILL 17,132,790 0 PROPERTY AND EQUIPMENT Machinery and equipment 2,106,361 0 Demonstration equipment 487,026 0 Furniture and fixtures 525,293 0 Leasehold improvements 351,111 0 - -------------------------------------------------------------------------------------------------------------------- 3,469,791 0 Less: Accumulated depreciation and amortization (3,193,953) 0 - -------------------------------------------------------------------------------------------------------------------- Property and equipment, net 275,838 0 - -------------------------------------------------------------------------------------------------------------------- OTHER ASSETS 93,270 0 - -------------------------------------------------------------------------------------------------------------------- $ 18,679,218 $ 1,000,000 ==================================================================================================================== LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES: Bank overdraft $ 0 $ 0 Financing obligations collateralized by accounts receivable 1,018,525 0 Stockholders' notes payable 2,694,375 0 Accounts payable - moratorium 1,561,500 Accounts payable - other 510,406 25,100 Deferred rent 199,195 0 Accrued liabilities 1,386,992 0 Other current liabilities 59,442 0 - -------------------------------------------------------------------------------------------------------------------- Total current liabilities 7,430,435 25,100 STOCKHOLDERS' (DEFICIT): Preferred stock, 20,000,000 authorized; none outstanding in June or March 2001 Common stock, $0.0001 par value: Authorized - 100,000,000 shares in June and March, 2001 Issued and outstanding - 11,369,597 shares and 6,897,534 shares in June and March, respectively 1,137 689 Additional Paid-in Capital 13,064,289 1,112,364 Accumulated deficit (1,816,643) (138,153) - -------------------------------------------------------------------------------------------------------------------- Total stockholders' deficit 11,248,783 974,900 - -------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholder's deficit $ 18,679,218 $ 1,000,000 ====================================================================================================================
F-1
AMNIS SYSTEMS INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) ===================================================================================================== June 30 June 30 ----------------------- ---------------------- For three months and six months ended, respectively 2001 2000 2001 2000 ===================================================================================================== SALES $ 1,227,032 $ 0 $ 1,227,032 $ 0 COST OF GOODS SOLD 645,960 0 645,960 0 - ----------------------------------------------------------------------------------------------------- Gross margin 581,072 0 581,072 0 OPERATING EXPENSES Research and development 457,950 0 457,950 0 Sales and marketing 609,469 0 609,469 0 General and administrative 366,391 3,110 366,391 3,296 Goodwill amortization 744,904 0 744,904 0 - ----------------------------------------------------------------------------------------------------- 2,178,714 3,110 2,178,714 3,296 - ----------------------------------------------------------------------------------------------------- Loss from operations (1,597,642) (3,110) (1,597,642) (3,296) OTHER INCOME (EXPENSE) Interest expense, net (75,662) 0 (75,662) 0 Other, net (5,186) 0 (5,186) 0 - ----------------------------------------------------------------------------------------------------- Total other (expense) (80,848) 0 (80,848) 0 - ----------------------------------------------------------------------------------------------------- Net loss $(1,678,490) $ (3,110) $(1,678,490) $(3,296) ===================================================================================================== BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.159) $ - $ (0.090) -
F-2
AMNIS SYSTEMS INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) ========================================================================================================= June 30 ------------------------------ For the six months ended 2001 2000 ========================================================================================================= CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,678,490) $(3,296) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 777,874 0 Provision for doubtful accounts - 0 Provision for excess and obsolete inventories 151,772 0 Issuance of common stock for services 21,000 0 Decrease (increase) in accounts receivable 508,311 0 Decrease (increase) in inventories 350,646 736 Decrease (increase) in prepaid expenses and other assets (5,684) 0 Increase (decrease) in accounts payable (26,579) 0 Increase (decrease) in accrued liabilities (948,131) 0 Increase (decrease) in other current liabilities (14,317) 0 Increase (decrease) in deferred rent - 0 Net cash used in operating activities (863,598) (2,560) - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash acquired from business combination 11,720 Purchases of property and equipment (9,516) 0 - --------------------------------------------------------------------------------------------------------- Net cash provided by investing activities 2,204 0 - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings from stockholders 122,178 0 Payments on financing obligations collateralized by accounts receivable (120,118) 0 Proceeds from issuance of common stock 1,000,000 0 - --------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 1,002,060 0 - --------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash 140,666 (2,560) CASH AND CASH EQUIVALENTS, beginning of period - 3,697 - --------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, end of period $ 140,666 $ 1,137 - --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest $ 59,725 $ 0 - --------------------------------------------------------------------------------------------------------- NON CASH INVESTING AND FINANCING ACTIVITIES Common stock exchanged for acquisition of Optivision, Inc. common stock $ 12,221,884 Issuance of common stock for services at $1.00 per share 5,000 Issuance of common stock for services at $2.00 per share 16,000 Cancellation of shares of common stock 1,974
F-3 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The accompanying unaudited interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods indicated. All adjustments for the second quarter ended June 30, 2001 were of a recurring nature. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions for Form 10-QSB and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, and cash flows for the Company, in conformity with accounting principles generally accepted in the United States of America. The Company has filed audited financial statements that include all information and footnotes necessary for such a presentation of the financial position, results of operations and cash flows for the fiscal years ended December 31, 2000 and 1999, with the Securities and Exchange Commission. It is suggested that the accompanying unaudited interim consolidated financial statements be read in conjunction with the aforementioned audited financial statements. The unaudited interim consolidated financial statements contain all normal and recurring entries. The results of operations for the interim period ended June 30, 2001 are not necessarily indicative of the results to be expected for the full year. NOTE 1 - DESCRIPTION OF COMPANY: Amnis Systems Inc., a Delaware corporation, and its wholly-owned subsidiary, Optivision, Inc. ("Company" combined) makes hardware and software products for the creation, management and transmission of compressed high-quality digital video over broadband computer networks. Our network video products are distributed primarily in the United States of America, Europe, and Pacific Rim countries through a network of value added resellers, or VARs, system integrators and original equipment manufacturers, or OEMs. Our products are used in diverse applications such as distance learning, corporate training, video courier services, surveillance, telemedicine and visual collaboration. We consider our operations to be one segment for reporting purposes. NOTE 2 - GOING CONCERN: We are subject to a number of business risks affecting companies at a similar stage of development, including competition from companies with greater resources and alternative technologies, the ability to obtain financing to fund future operations, dependence on new product introductions in a rapidly changing technological environment, dependence on a limited number of customers, dependence on key employees and the ability to attract and retain additional qualified personnel. F-4 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The stockholders' equity of the Company, after the April 16th business combination with Optivision, has resulted in a substantial deficit that is compounded by its current liabilities exceeding its current assets by $6,253,115 at June 30, 2001 and negative cash flow from operating activities of $863,598 for the six-months ended June 30, 2001. These factors raise substantial doubt about the Company's ability to continue as a going concern. There is no assurance that the Company will be able to achieve successful operations, obtain sufficient financing or obtain a line of credit. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. Principles of Consolidation ----------------------------- The financial statements include the accounts of Amnis Systems Inc. and its wholly-owned subsidiary Optivision, Inc. from the date of acquisition, April 16, 2001. All significant intercompany accounts and transactions have been eliminated in consolidation. b. Risks due to Concentration of Significant Customers --------------------------------------------------------- Historically, a substantial portion of our revenues has come from large purchases by a small number of customers. If we lose one or more of our key customers or experience a delay or cancellation of a significant order or a decrease in the level of purchases from any of our key customers, our net revenues could decline and our operating results and business could be harmed. In addition, our net revenues could decline and our operating results and business could be harmed if we experience any difficulty in collecting amounts due from one or more of our key customers. During the six months ended June 30, 2001, our top four customers accounted for 59% of our net revenues. As of June 30, 2001, approximately 45% of our accounts receivable were concentrated with five of our customers. c. Inventories ----------- Inventories are stated at the lower of cost (first-in, first-out) or market. Provision has been made to reduce obsolete inventories to their net realizable value. Inventories contain components and assemblies in excess of the Company's current estimated requirements and these are reserved for at June 30, 2001. Due to competitive and market pressures, it is reasonably possible that additional provisions could be required in the future. F-5 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Inventories consist of the following at June 30, 2001: Raw Materials $ 253,087 Work-in-process 772,555 Demonstration Inventory 69,539 -------------------------------------------------------- 1,095,181 Reserve for inventory obsolescence and demonstration inventory refurbishing costs (583,698) -------------------------------------------------------- $ 511,483 ======================================================== Certain of the Company's products contain components that are supplied by a limited number of third parties. While the Company has an inventory of these components, any significant prolonged shortage of these components, or the failure of these suppliers to maintain or enhance these components could materially adversely affect the Company's results of operations. NOTE 4 - STOCKHOLDERS' NOTES PAYABLE: Since April 1999, five individuals have loaned Optivision, Inc. and for which the Company accepted liability in merger, funds due in one year and including interest rates of 10%. The carrying value of these notes payable approximates their fair value. NOTE 5 - LOSS PER SHARE: The basic and diluted loss per share was calculated based on a weighted average number of shares outstanding of 10,580,388 and 18,641,437 for the 3 months and 6 months ended June 30, 2001 and 26,254,200 for June 30, 2000, respectively. Since we have a loss for all periods presented, net loss per share on a diluted basis is equivalent to basic net loss per share because the effect of converting stock options, warrants, convertible debt and other common stock equivalents would be anti-dilutive. F-6 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ NOTE 6 - SUBSEQUENT EVENTS: In October 2001, the Company issued to an investor 555,555 shares of our common stock for a total of $200,000 in cash. On December 28, 2001, the Company issued and sold a 12% two-year secured convertible debenture in the principal amount of $500,000, investment options for the purchase of up to $500,000 of common stock, and warrants exercisable for up to 1,100,000 shares of common stock The terms of this financing also provide for the issuance and sale of an additional 12% two-year secured convertible debenture in the principal amount of $500,000 and related investment options for the purchase of up to $500,000 of common stock. The conversion price of the debentures is equal to the lesser of $0.385 per share or a floating average related to stock price fluctuations. Similarly, the exercise price of the warrants is equal to the lesser of $0.385 per share or a floating average related to stock price fluctuations, and is also subject to adjustment for, among other things, stock splits, combination or reclassification of the Company's capital stock and the like. Since there are multiple components of the debenture, value was added to each component (warrants and debenture) based on their respective value. A discount on the debenture was calculated in two parts; first, the beneficial conversion feature on the debenture was valued as the difference between the purchase price of the conversion and the current trading price of the stock. Secondly, the warrants were valued using the Black Scholes Model. The combined total discount is $305,195, and will be amortized over the two year life of the debenture. On January 30, 2002, the Company successfully negotiated a work-out agreement plan with the creditors of Optivision, Inc., under which the Company will pay the creditors of Optivision, Inc. $0.35 for every $1.00 owed on debt listed on the balance sheet as Accounts Payable - moratorium of $1,561,500. In accordance with the work-out agreement, the debt was settled in June 2002. On January 14, 2002, the Company issued a convertible note in the principal amount of $3,547,917 to Mr. Michael A. Liccardo, president, chief executive officer and chairman of the board of directors, in exchange for the cancellation of certain loans aggregating $3,204,375 and related accrued interest of $343,542 that Mr. Liccardo had loaned to Optivision, Inc. to meet current operating expenses. At any time, Mr. Liccardo may elect to convert the note to Common stock of the Company at $ 0.35 per share, subject to adjustment related to the price of subsequent securities issuances by the Company to third parties. The convertible note bears interest at 10% per annum. Since the Company's stock price exceeded the conversion price on the transaction date, there F-7 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ is an embedded beneficial conversion feature present in the convertible note which has been valued separately. As of January 14, 2002, the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible note. On January 14, 2002, the Company recorded a discount of $2,483,542. This discount is being amortized from the date of issuance of the convertible note through the stated redemption date. Between February 14, 2002 and February 21, 2002 the Company entered into financing agreements for the sale of 2,250,000 shares of its common stock. The stock was sold in units, which include ten shares of common stock, subject to adjustment related to stock price fluctuations, and one warrant, for $8.00 each. Each warrant allows the holder to purchase three shares of common stock at $0.90 per share subject to such customary adjustment for stock splits, combinations or reclassifications of the Company's capital stock and the like. The total selling price of these units was $1,800,000. During 2002, the Company settled with its employees for unpaid compensation by issuing additional stock options in lieu of cash in the amount of $1,254,051. In March 2002, the Company issued and sold to a corporate investor 275,890 shares of its common stock at $1.00 per share in exchange for the cancellation of certain loans that the investor had made to the Company (including all accrued interest thereon). In May 2002, the Company issued 250,000 shares of its common stock to a corporate service provider in exchange for certain consulting services to be rendered to the Company over a four month period. On June 18, 2002, two of the financing agreements entered into in February 2002 were amended. The number of shares per unit has increased to 21 and may be further increased by an amount as defined in the agreement. The warrant was amended to reduce the exercise price to $0.13, subject to adjustment for, among other things, capital issuances below $0.13 per share and for stock splits, combinations or reclassifications of the Company's capital stock and the like. No additional proceeds were received. On June 17, 2002, the Company's Board of Directors adopted the 2002 Stock Plan. 20,000,000 shares are authorized for issuances of which none have been granted through June 17, 2002. On June 18, 2002, the Company issued and sold two 12% two-year convertible notes in the aggregate principal of $450,000 and common stock purchase warrants exercisable for up to 135,000 shares of common stock, subject to adjustment for, among other things, capital issuances below $0.13 per share and for stock splits, combinations or reclassifications of the Company's capital stock and the like. Since there are multiple components of the debentures, value was added to each component (warrants and debentures) based on their respective value. A discount on the debenture was calculated in two parts; first, the beneficial conversion feature on the debenture was valued as the difference between the purchase price of the conversion and the current trading price of the stock. Secondly, the warrants were valued using the Black Scholes model. The combined total discount of $249,528 will be amortized over the two-year life of the debentures. On June 18, 2002, Mr. Liccardo converted $2,050,000 in principal of the convertible note issued on January 14, 2002 and, in connection therewith, received 26,623,377 shares of common stock. The remaining principal and accrued interest was transferred to a new convertible note as of this date. The note provides that Mr. Liccardo may, at any time, elect to convert the outstanding principal of $1,612,763 of the convertible note and accrued interest thereon into a number of shares of our common stock determined by dividing the outstanding principal and interest on the note by $0.35. The $0.35 conversion price is subject to adjustment to a lower conversion price through January 14, 2003, and is also subject to customary adjustment in the event of stock splits, dividends, recapitalizations and the like. The convertible note bears interest at 10% per annum. Since the Company's stock price exceeded the conversion price on the transaction date, there is an embedded beneficial conversion feature present in the convertible note which has been valued separately. As of June 18, 2002, the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible note. On June 18, 2002 the Company recorded a discount of $882,276. This discount is being amortized from the date of issuance of the convertible note through the stated redemption date. As a result of the partial conversion $825,645 of the unamortized portion of the discount on convertible note payable was written-off to an additional paid in capital. The exchange of the note resulted in a loss on extinguishment of debt of $73,610, and the remaining unamortized portion of the discount on convertible note payable of $603,292 related to the original note was written-off to additional paid in capital. F-8 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ On June 25, 2002, the Company amended its certificate of incorporation to increase the total number of shares authorized to 420,000,000; 400,000,000 designated as common stock with par value of $0.0001 and 20,000,000 designated as preferred stock with par value of $0.0001. As of the end of July the Company has been unable to pay the Company's lease obligations, due to the departure of its Sublessee, which now total approximately $200,000. The landlord has agreed to meet with the Company to negotiate lease renewal and payment of past due amounts. From January 1 through August 5, 2002, the Company issued 1,254,880 shares of common stock to various corporate service providers in exchange for services valued at $609,534 To be rendered over varying contract lengths. On August 8, 2002 pursuant to the Warrant Agreement with Bristol Investment Fund dated December 28,2001, the Company reduced the exercise price of the warrant shares to $0.0436 per share and increased the number of warrant shares purchasable at such exercise price by 604,969. NOTE 7 - BUSINESS COMBINATION: On April 16, 2001, we effected a business combination with Optivision, Inc. (Optivision) by exchanging 4,459,063 shares of our common stock for all of the common stock of Optivision. The principal business of Optivision is making hardware and software products for the creation, management and transmission of compressed high-quality video over broadband computer networks. The purchase price of $12,221,884 was determined by using a 5 day range of the average of the Company stock price of $2.74 per share. The combination has been accounted for under the purchase method of accounting and accordingly, the accompanying financial statements include the results of operations of Optivision subsequent to April 16, 2001. The following unaudited pro forma information summarizes the year to date results of operations as if the business combination were affected as of January 1, 2000: 2001 2000 Net Sales $ 2,958,909 $ 1,733,833 Amortization of goodwill 1,650,093 1,650,093 Net Loss $ (4,208,940) $ (3,871,470) ---------------------------------------------------------------------- Basic and Dilutive Loss per Share $ (0.37) $ (0.34) ---------------------------------------------------------------------- NOTE 8 - RESTATEMENT OF FINANCIAL STATEMENTS: The unaudited interim consolidated financial statements have been restated as a result of the Company's determination that it did not meet all of the criteria under Accounting Principles Board Opinion No. 16 "Business Combinations" for a pooling of interests. F-9 AMNIS SYSTEMS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The information below shows the results included in these financial statements and those previously reported under the pooling of interests method: Purchase Pooling of Method Interest For the six months ended June 30, 2001: Net Sales $ 1,227,032 $ 2,958,909 Net Loss $ (1,678,490) $ (2,558,847) Basic and Dilutive Loss per Share $ (0.90) $ (0.20) ---------------------------------------------------------------------- For the six months ended June 30, 2000: Net Sales $ - $ 1,733,833 Net Loss $ (3,296) $ (2,221,377) Basic and Dilutive Loss per Share $ 0.00 $ (0.20) ---------------------------------------------------------------------- F-10 EX-99.1 3 doc2.txt Exhibit 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael A. Liccardo, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Quarterly Report of Amnis Systems Inc. on Form 10-QSB/A for the quarterly period ended June 30, 2001 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-QSB/A fairly presents in all material respects the financial condition and results of operations of Amnis Systems Inc. Date: August 15, 2002 /s/ Michael A. Liccardo - -------------------------- Michael A. Liccardo President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) I, Lawrence L. Bartlett, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Quarterly Report of Amnis Systems Inc. on Form 10-QSB/A for the quarterly period ended June 30, 2001 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-QSB/A fairly presents in all material respects the financial condition and results of operations of Amnis Systems Inc. Date: August 15, 2002 /s/ Lawrence L. Bartlett - --------------------------- Lawrence L. Bartlett Chief Financial Officer, Vice President and Secretary (Principal Financial Officer) This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by Amnis Systems Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----