SCHEDULE 14C
(RULE 14C-101)
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
AMNIS SYSTEMS INC.
(Name of Registrant As Specified In Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which the transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
AMNIS SYSTEMS INC.
3450 HILLVIEW AVENUE, PALO ALTO, CALIFORNIA 94304
INFORMATION STATEMENT
PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE NOT REQUESTED TO SEND US A PROXY
Palo Alto, California
*, 2003
This information statement has been mailed on or about *, 2003 to
the stockholders of record on *, 2003 (the "Record Date") of Amnis Systems Inc.,
a Delaware corporation (the "Company") in connection with certain actions to be
taken by the written consent by the majority stockholders of the Company, dated
as of July 1, 2003. The actions to be taken pursuant to the written consent
shall be taken on or about *, 2003, 20 days after the mailing of this
information statement.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER
MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED HEREIN.
By Order of the Board of Directors,
/s/ Lawrence L. Bartlett
Secretary
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NOTICE OF ACTION TO BE TAKEN PURSUANT THE WRITTEN CONSENT OF MAJORITY
STOCKHOLDERS IN LIEU OF A SPECIAL MEETING OF THE STOCKHOLDERS, DATED JULY 1,
2003
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the following action will be taken pursuant
to the written consent of a majority of stockholders dated July 1, 2003, in lieu
of a special meeting of the stockholders. Such action will be taken on or about
*, 2003:
1. The Company's Certificate of Incorporation, as amended, will be
amended to increase the number of authorized shares of common stock, par value
$.001 per share (the "Common Stock"), of the Company from 400,000,000 shares to
800,000,000 shares and authorize the creation of 20,000,000 shares of blank
check preferred stock.
OUTSTANDING SHARES AND VOTING RIGHTS
As of the Record Date, the Company's authorized capitalization
consisted of 400,000,000 shares of Common Stock, of which * shares were issued
and outstanding as of the Record Date. Holders of Common Stock of the Company
have no preemptive rights to acquire or subscribe to any of the additional
shares of Common Stock.
Each share of Common Stock entitles its holder to one vote on each
matter submitted to the stockholders. However, because stockholders holding at
least a majority of the voting rights of all outstanding shares of capital stock
as at the Record Date have voted in favor of the foregoing proposals by
resolution dated July 1, 2003; and having sufficient voting power to approve
such proposals through their ownership of capital stock, no other stockholder
consents will be solicited in connection with this Information Statement.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, the proposals will not be adopted until a date at least 20 days after
the date on which this Information Statement has been mailed to the
stockholders. The Company anticipates that the actions contemplated herein will
be effected on or about the close of business on *, 2003.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
This Information Statement will serve as written notice to stockholders
pursuant to Section 222 of the General Corporation Law of the State of Delaware.
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AMENDMENT TO THE CERTIFICATE OF INCORPORATION
On July 1, 2003, the majority stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation, as amended, to replace
Article IV in its entirety, which will result in an increase to the number of
authorized shares of Common Stock as well as the creation of 20,000,000 blank
check preferred stock. The Company's Certificate of Incorporation, as amended,
currently authorizes for issuance of 420,000,000 shares consisting of
400,000,000 of common stock and 20,000,000 shares of preferred stock. The
approval of this amendment to the Certificate of Incorporation will increase the
Company's authorized shares of common stock to 800,000,000 and authorize the
creation of 20,000,000 blank check preferred stock. The Company currently has
authorized common stock of 400,000,000 shares and approximately * shares of
Common Stock are outstanding as of the Record Date and authorized preferred
stock of 20,000,000 and no shares of preferred stock outstanding. The Board
believes that the increase in authorized common shares would provide the Company
greater flexibility with respect to the Company's capital structure for such
purposes as additional equity financing, and stock based acquisitions. The
Company anticipates that the "blank check" preferred stock will be designated
into classes as deemed appropriate by the Company in the future.
Article IV of the Company's Certificate of Incorporation currently is
as follows:
"The corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares which the corporation is authorized to issue is
four hundred twenty million (420,000,000) shares. Four hundred million
(400,000,000) shares shall be Common Stock, each having a par value of
$.0001. Twenty million (20,000,000) shares shall be Preferred Stock,
each having a par value of $.0001."
Upon approval of the amendment to increase the Company's authorized
shares of common stock from 400,000,000 to 800,000,000, the Company Certificate
of Incorporation will be as follows:
"FOURTH: The Corporation is authorized to issue two classes of stock.
One class of stock shall be Common Stock, par value $0.0001. The second
class of stock shall be Preferred Stock, par value $0.0001. The
Preferred Stock, or any series thereof, shall have such designations,
preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof as shall
be expressed in the resolution or resolutions providing for the issue
of such stock adopted by the board of directors and may be made
dependent upon facts ascertainable outside such resolution or
resolutions of the board of directors, provided that the matter in
which such facts shall operate upon such designations, preferences,
rights and qualifications; limitations or restrictions of such class or
series of stock is clearly and expressly set forth in the resolution or
resolutions providing for the issuance of such stock by the board of
directors.
The total number of shares of stock of each class which the Corporation
shall have authority to issue and the par value of each share of each
class of stock are as follows:
Class Par Value Authorized Shares
Common $0.0001 800,000,000
Preferred $0.0001 20,000,000
Totals: 820,000,000"
INCREASE IN AUTHORIZED COMMON STOCK
The terms of the additional shares of Common Stock will be identical to
those of the currently outstanding shares of Common Stock. However, because
holders of Common Stock have no preemptive rights to purchase or subscribe for
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any unissued stock of the Company, the issuance of additional shares of Common
Stock will reduce the current stockholders' percentage ownership interest in the
total outstanding shares of Common Stock. This amendment and the creation of
additional shares of authorized common stock will not alter the current number
of issued shares. The relative rights and limitations of the shares of Common
Stock will remain unchanged under this amendment.
As of the Record Date, a total of * shares of the Company's currently
authorized 400,000,000 shares of Common Stock are issued and outstanding. The
increase in the number of authorized but unissued shares of Common Stock would
enable the Company, without further stockholder approval, to issue shares from
time to time as may be required for proper business purposes, such as raising
additional capital for ongoing operations, business and asset acquisitions,
stock splits and dividends, present and future employee benefit programs and
other corporate purposes.
The proposed increase in the authorized number of shares of Common
Stock could have a number of effects on the Company's stockholders depending
upon the exact nature and circumstances of any actual issuances of authorized
but unissued shares. The increase could have an anti-takeover effect, in that
additional shares could be issued (within the limits imposed by applicable law)
in one or more transactions that could make a change in control or takeover of
the Company more difficult. For example, additional shares could be issued by
the Company so as to dilute the stock ownership or voting rights of persons
seeking to obtain control of the Company. Similarly, the issuance of additional
shares to certain persons allied with the Company's management could have the
effect of making it more difficult to remove the Company's current management by
diluting the stock ownership or voting rights of persons seeking to cause such
removal. The Board of Directors is not aware of any attempt, or contemplated
attempt, to acquire control of the Company, and this proposal is not being
presented with the intent that it be utilized as a type of anti- takeover
device.
Except for the following, there are currently no plans, arrangements,
commitments or understandings for the issuance of the additional shares of
Common Stock which are proposed to be authorized:
o In December 2001, we entered into a financing agreement with Bristol
Investment Fund, Ltd., pursuant to which we issued and sold to Bristol
Investment Fund, Ltd. a 12% two-year secured convertible debenture in
the principal amount of $500,000, investment options for the purchase
up to $500,000 of our common stock, and 1,000,000 warrants to purchase
shares of our common stock, subject to antidilution adjustment. The
exercise price of each warrant, as amended, is equal to $0.05 per
share, subject to antidilution adjustment. The debenture is
convertible at the holder's option at any time into shares of our
common stock at the lesser of (i) $0.385 or (ii) 70% of the average of
the three lowest intraday trading prices for the common stock on a
principal market for the 20 trading days before but not including the
conversion date. At the market price of $.09 as of August 1, 2003, the
convertible debenture is convertible into approximately 7,936,508
shares of common stock.
o In February 2002, we sold a total of 225,000 units at a purchase price
of $8.00 per unit to three accredited investors for an aggregate
purchase price of $1,800,000. Each unit consisted of ten shares of our
common stock, subject to adjustment, and one warrant to purchase three
shares of our common stock at an exercise price of $0.90 per share,
subject to adjustment. In connection with the transaction, we agreed
to register the shares of common stock sold in the transaction,
including the shares of common stock underlying the warrants. In June
2002, we amended, among other things, the terms of the reset option
and warrants which were included in 187,500 units that were sold to
Alpha Capital Aktiengesellschaft and Stonestreet Limited Partnership
in February 2002. The amendment to the reset option provides that,
among other things, the number of shares comprising each unit was
automatically increased by 11 shares and, at any time but only one
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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 between (A) $8.00 divided by 70% of the average of
the lowest three 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, less (B) 21. The amendment to each warrant
reduced the exercise price to approximately $0.13, subject to
adjustment. Stonestreet has also agreed not sell any portion of its
shares received in connection with this financing until such time as
Alpha and Bristol have each converted 80% of the principal amount of
their convertible debentures. At the market price of $.09 as of August
1, 2003, the remaining 100,000 reset options are exercisable into
approximately 10,600,000 shares of common stock. In May 2003, we
agreed to modify Alpha's unit investment whereby, in consideration of
the cancellation of the reset option, we issued a secured convertible
debenture in the amount $910,120. This debenture bears interest at
12%, matures two years from the date of issuance, and is convertible
into our common stock, at the selling stockholders' option, at the
lower of (i) $0.385 or (ii) 70% of the average of the three lowest
intraday trading prices for the common stock on a principal market for
the 20 trading days before but not including the conversion date. At
the market price of $.09 as of August 1, 2003, the convertible
debenture is convertible into approximately 14,446,349 shares of
common stock.
o In June 2002, we issued and sold two convertible notes in the
aggregate principal amount of $450,000 and warrants exercisable for up
to 135,000 shares of our common stock, subject to adjustment, to two
accredited investors. The debentures bear interest at 12%, mature two
years from the date of issuance, and are convertible into our common
stock, at the selling stockholders' option, at the lower of (i) $0.385
or (ii) 70% of the average of the three lowest intraday trading prices
for the common stock on a principal market for the 20 trading days
before but not including the conversion date. In May 2003, one of the
investors holding a secured convertible debenture in the amount of
$200,000 agreed not convert its investment for a per share price of
less than $.05 per share. In addition, the investor may not sell any
portion of its shares received in connection with this financing until
such time as Alpha and Bristol have each converted 80% of the
principal amount of their convertible debentures. At the market price
of $.09 as of August 1, 2003, the convertible debenture is convertible
into approximately 7,142,857 shares of common stock.
o In May 2003, we entered into a Securities Purchase Agreement with
three accredited investors for the sale of (i) $1,000,000 in
convertible debentures and (ii) warrants to buy 5,000,000 shares of
our common stock. The debentures bear interest at 12%, mature two
years from the date of issuance, and are convertible into our common
stock, at the selling stockholders' option, at the lower of (i) $0.05
or (ii) 65% of the average of the three lowest intraday trading prices
for the common stock on a principal market for the 30 trading days
before but not including the conversion date. The Securities Purchase
Agreement entered in May 2003 requires that we file an information
statement or proxy and use our best efforts to obtain stockholder
approval to increase the Company authorized shares of common stock to
enable the Company to issue all of the shares of common stock issuable
in connection with the warrants and secured convertible debentures
issued in connection with the May 2003 Securities Purchase Agreement.
At the market price of $.09 as of August 1, 2003, the convertible
debenture is convertible into approximately 17,094,017 shares of
common stock.
Stockholders do not have any preemptive or similar rights to subscribe
for or purchase any additional shares of Common Stock that may be issued in the
future, and therefore, future issuances of Common Stock may, depending on the
circumstances, have a dilutive effect on the earnings per share, voting power
and other interests of the existing stockholders.
CREATION OF BLANK CHECK PREFERRED STOCK
The amendment to the Certificate of Incorporation will create
20,000,000 authorized shares of "blank check" preferred stock. The proposed
Amendment to the Certificate of Incorporation attached as Exhibit "A" to this
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information statement contains provisions related to the "blank check" preferred
stock. The following summary does not purport to be complete and is qualified in
its entirety by reference to the proposed Amendment to the Certificate of
Incorporation as set forth in Exhibit "A."
The term "blank check" refers to preferred stock, the creation and
issuance of which is authorized in advance by the stockholders and the terms,
rights and features of which are determined by the board of directors of the
Company upon issuance. The authorization of such blank check preferred stock
would permit the board of directors to authorize and issue preferred stock from
time to time in one or more series.
Subject to the provisions of the Company's Amended and Restated
Articles of Incorporation and the limitations prescribed by law, the board of
directors would be expressly authorized, at its discretion, to adopt resolutions
to issue shares, to fix the number of shares and to change the number of shares
constituting any series and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether the dividends are cumulative), dividend rates, terms
of redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any series of the
preferred stock, in each case without any further action or vote by the
stockholders. The board of directors would be required to make any determination
to issue shares of preferred stock based on its judgment as to the best
interests of the Company and its stockholders. The board of directors is seeking
stockholder approval of an amendment to the Articles of Incorporation which
would give the board of directors flexibility, without further stockholder
action, to issue preferred stock on such terms and conditions as the board of
directors deems to be in the best interests of the Company and its stockholders.
The amendment will provide the Company with increased financial
flexibility in meeting future capital requirements by providing another type of
security in addition to its Common Stock, as it will allow preferred stock to be
available for issuance from time to time and with such features as determined by
the board of directors for any proper corporate purpose. It is anticipated that
such purposes may include exchanging preferred stock for Common Stock and,
without limitation, may include the issuance for cash as a means of obtaining
capital for use by the Company, or issuance as part or all of the consideration
required to be paid by the Company for acquisitions of other businesses or
assets.
Any issuance of preferred stock with voting rights could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control of the
Company. Shares of voting or convertible preferred stock could be issued, or
rights to purchase such shares could be issued, to render more difficult or
discourage an attempt to obtain control of the Company by means of a tender
offer, proxy contest, merger or otherwise. The ability of the board of directors
to issue such additional shares of preferred stock, with the rights and
preferences it deems advisable, could discourage an attempt by a party to
acquire control of the Company by tender offer or other means. Such issuances
could therefore deprive stockholders of benefits that could result from such an
attempt, such as the realization of a premium over the market price that such an
attempt could cause. Moreover, the issuance of such additional shares of
preferred stock to persons friendly to the board of directors could make it more
difficult to remove incumbent managers and directors from office even if such
change were to be favorable to stockholders generally.
While the amendment may have anti-takeover ramifications, the board of directors
believes that the financial flexibility offered by the amendment outweighs any
disadvantages. To the extent that the amendment may have anti-takeover effects,
the amendment may encourage persons seeking to acquire the Company to negotiate
directly with the board of directors enabling the board of directors to consider
the proposed transaction in a manner that best serves the stockholders'
interests.
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RISKS RELATING TO OUR CURRENT FINANCING ARRANGEMENTS:
THERE ARE A LARGE NUMBER OF SHARES UNDERLYING OUR CONVERTIBLE DEBENTURES, RESET
OPTIONS AND WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE
SHARES MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
As of August 1, 2003, we had 133,101,672 shares of common stock issued and
outstanding and convertible debentures in the aggregate principal amount of
$3,860,903 outstanding that may be converted into an estimated 61,284,175 shares
of common stock at current market prices, a reset option that the holders are
entitled to exercise into approximately 10,600,000 shares of common stock at the
price of $.06 and outstanding warrants to purchase 8,715,994 shares of common
stock. Furthermore, there are currently outstanding 19,743,295 options to
purchase shares of our common stock. In addition, the number of shares of common
stock issuable upon conversion of the outstanding convertible debentures and
exercise of the reset option may increase if the market price of our stock
declines. All of the shares, including all of the shares issuable upon
conversion of the debentures, exercise of the reset option and upon exercise of
our warrants, may be sold without restriction. The sale of these shares may
adversely affect the market price of our common stock.
THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE
DEBENTURES COULD REQUIRE US TO ISSUE A SUBSTANTIALLY GREATER NUMBER OF SHARES,
WHICH WILL CAUSE DILUTION TO OUR EXISTING STOCKHOLDERS.
Our obligation to issue shares upon conversion of our convertible
debentures is essentially limitless. The following is an example of the amount
of shares of our common stock that are issuable, upon conversion of all of our
convertible debentures in the amount of $3,860,903 (excluding accrued interest
and penalties), based on market prices 25%, 50% and 75% below the market price
of $0.09 as of August 1, 2003:
Number % of
% Below Price Per With Discount of Shares Outstanding
Market Share at 30% Issuable Stock
25% $.0675 $.04725 87,712,233 38.04%
50% $.045 $.0315 122,568,349 47.94%
75% $.0225 $.01575 245,136,698 64.81%
As illustrated, the number of shares of common stock issuable upon
conversion of our convertible debentures will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders. In
the event that the market price of our shares substantially decreases below the
current market price, we may not have an adequate number of shares of common
stock to support the conversion of all of our convertible debentures. For
example, as of August 1, 2003, we had 133,101,672 shares of common stock
outstanding. If the price of our common stock were to decrease to $.0225 or 75%
below our current market price of $.09, then we would be obligated to issue
245,136,698 shares of common stock upon conversion of all of our outstanding
convertible debentures, which may require the issuance of shares of common stock
in excess of our authorized shares of common stock of 400,000,000. We will be in
default under the convertible debentures if we are not able to fully satisfy the
conversion due to the unavailability of shares of common stock.
THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE
DEBENTURES MAY ENCOURAGE INVESTORS TO MAKE SHORT SALES IN OUR COMMON STOCK,
WHICH COULD HAVE A DEPRESSIVE EFFECT ON THE PRICE OF OUR COMMON STOCK.
The convertible debentures are convertible into shares of our common
stock at a 65% or 70% discount to the trading price of the common stock prior to
the conversion. The significant downward pressure on the price of the common
stock as the selling stockholder converts and sells material amounts of common
stock could encourage short sales by investors. This could place further
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downward pressure on the price of the common stock. The selling stockholder
could sell common stock into the market in anticipation of covering the short
sale by converting their securities, which could cause the further downward
pressure on the stock price. In addition, not only the sale of shares issued
upon conversion or exercise of debentures, warrants and options, but also the
mere perception that these sales could occur, may adversely affect the market
price of the common stock.
THE ISSUANCE OF SHARES UPON CONVERSION OF THE CONVERTIBLE DEBENTURES, EXERCISE
OF THE RESET OPTION AND EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE AND
SUBSTANTIAL DILUTION TO OUR EXISTING STOCKHOLDERS.
The issuance of shares upon conversion of the convertible debentures,
exercise of the reset option and exercise of warrants may result in substantial
dilution to the interests of other stockholders since the selling stockholders
may ultimately convert and sell the full amount issuable on conversion. Although
the selling stockholders may not convert their convertible debentures and/or
exercise their warrants if such conversion or exercise would cause them to own
more than 9.99%, and 4.99% with respect to Bristol Investment Fund, Ltd.'s
December 2001 secured convertible debenture, of our outstanding common stock,
this restriction does not prevent the selling stockholders from converting
and/or exercising some of their holdings and then converting the rest of their
holdings. In this way, the selling stockholders could sell more than this limit
while never holding more than this limit. There is no upper limit on the number
of shares that may be issued which will have the effect of further diluting the
proportionate equity interest and voting power of holders of our common stock,
including investors in this offering.
IN THE EVENT THAT OUR STOCK PRICE DECLINES, THE SHARES OF COMMON STOCK ALLOCATED
FOR CONVERSION OF THE CONVERTIBLE DEBENTURES MAY NOT BE ADEQUATE IF THE SHARES
WE HAVE ALLOCATED ARE NOT ADEQUATE AND WE ARE REQUIRED TO FILE AN ADDITIONAL
REGISTRATION STATEMENT, WE MAY INCUR SUBSTANTIAL COSTS IN CONNECTION THEREWITH.
Based on our current market price and the potential decrease in our market price
as a result of the issuance of shares upon conversion of the convertible
debentures, we have made a good faith estimate as to the amount of shares of
common stock that we are required to register and allocate for conversion of the
convertible debentures. Accordingly, we have allocated and registered
145,954,348 shares to cover the conversion of the convertible debentures. In the
event that our stock price decreases, the shares of common stock we have
allocated for conversion of the convertible debentures and are registering may
not be adequate. If the shares we have allocated to the registration statement
are not adequate and we are required to file an additional registration
statement, we may incur substantial costs in connection with the preparation and
filing of such registration statement.
IF WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING CONVERTIBLE
DEBENTURES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF AVAILABLE,
OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CONVERTIBLE DEBENTURES, IF
REQUIRED, COULD RESULT IN LEGAL ACTION AGAINST US, WHICH COULD REQUIRE THE SALE
OF SUBSTANTIAL ASSETS.
Since December 2001, we have sold of an aggregate of $3,860,903 principal amount
of convertible debentures. The convertible debentures are due and payable, with
12% interest, two-years from the date of issuance, unless sooner converted into
shares of our common stock. In addition, any event of default such as our
failure to repay the principal or interest when due, our failure to issue shares
of common stock upon conversion by the holder, our failure to timely file a
registration statement or have such registration statement declared effective,
breach of any covenant, representation or warranty in the related Securities
Purchase Agreements, the assignment or appointment of a receiver to control a
substantial part of our property or business, the filing of a money judgment,
writ or similar process against our company in excess of $50,000, the
commencement of a bankruptcy, insolvency, reorganization or liquidation
proceeding against our company or the delisting of our common stock could
require the early repayment of the convertible debentures, including a default
interest rate of 15% on the outstanding principal balance of the debentures if
the default is not cured with the specified grace period. We anticipate that the
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full amount of the convertible debentures, together with accrued interest, will
be converted into shares of our common stock, in accordance with the terms of
the convertible debentures. If we are required to repay the convertible
debentures, we would be required to use our limited working capital and raise
additional funds. If we were unable to repay the debentures when required, the
debenture holders could commence legal action against us and foreclose on all of
our assets to recover the amounts due. Any such action would require us to
curtail or cease operations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our common stock as of August 1, 2003
o by each person who is known by us to beneficially own more than 5% of
our common stock;
o by each of our officers and directors; and
o by all of our officers and directors as a group.
Name and Address of Number of Percentage of
Beneficial Owner Number of Shares Owned(1) Class (2)
Alpha Capital Aktiengesellschaft
Pradafant
79490 Furstentums, Vaduz
Liechtenstein 15,167,976 11.40%
Bristol Investment Fund Ltd.
Caledonian House
Jennett Street, George Town
Grand Cayman, Cayman Islands 9,782,857 7.35%
Executive Officers and Directors
- ------------------------------------
Michael A. Liccardo(3) 54,018,677 40.58%
Lawrence L. Bartlett (4) 3,598,805 2.70%
Scott Mac Caughern 0 **
All directors and executive
officers as a group (3 persons) 57,617,482 43.29%
* Unless otherwise indicated, the address of each of the persons or entities
listed in the table is c/o Amnis Systems Inc., 3450 Hillview Avenue, Palo Alto,
California 94304 ** Less than 1%.
(1) Beneficial Ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock subject to options or
warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of June 16, 2003 are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person.
(2) Percentage based on 133,101,672 shares of common stock outstanding.
(3) Mr. Liccardo's beneficial ownership does not include shares of common stock
that are issuable upon conversion of the convertible debenture held by Mr.
Liccardo as he has agreed to not convert the convertible debenture until such
time as (i) the conversion, exercise or reset of each of the instruments issued
pursuant to the various financing arrangements; (ii) the repayment in full of
the obligations due under the existing financing arrangements; or (iii)
obtaining of the stockholder approval to increase our authorized number of
common stock and has filed such Certificate of Amendment amending the Company's
Certificate of Incorporation with the Secretary of State of the State of
Delaware.
9
(4) Includes 3,598,805 shares that may be acquired through the exercise of
options currently or within 60 days of August 1, 2003.
ADDITIONAL INFORMATION
The Company's annual report on Form 10-KSB/A for the fiscal year ended
December 31, 2002 and quarterly report on Form 10-QSB for the quarter ended
March 31, 2003 are being delivered to you with this Information Statement. The
Company will furnish a copy of any exhibit thereto or other information upon
request by a stockholder to Lawrence L. Bartlett, Secretary, Amnis Systems Inc.,
3450 Hillview Avenue, Palo Alto, California 94304; (650) 855-0200.
By Order of the Board of Directors,
/s/ Scott Mac Caughern
Scott Mac Caughern
Chief Executive Offer
Palo Alto, California
*, 2003
10
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
AMNIS SYSTEMS INC.
The undersigned, being the Chief Executive Officer and Secretary of
AMNIS SYSTEMS INC., a corporation existing under the laws of the State of
Delaware, does hereby certify under the seal of the said corporation as follows:
1. The name of the Corporation (hereinafter referred to as the
"Corporation") is Amnis Systems, Inc. The date of filing the original
Certificate of Incorporation with the Secretary of State of Delaware was July
28, 1998. The date of the filing of the First Certificate of Amendment to the
Certificate of Incorporation with the Secretary of the State of Delaware was
August 24, 2000. The date of the filing of the Second Certificate of Amendment
to the Certificate of Incorporation with the Secretary of the State of Delaware
was September 13, 2000. The date of the filing of the Third Certificate of
Amendment to the Certificate of Incorporation with the Secretary of the State of
Delaware was June 21, 2002.
2. The certificate of incorporation of the Corporation is hereby
amended by replacing Article Fourth, in its entirety, with the following:
"FOURTH: The Corporation is authorized to issue two classes of stock.
One class of stock shall be Common Stock, par value $0.0001. The second
class of stock shall be Preferred Stock, par value $0.0001. The
Preferred Stock, or any series thereof, shall have such designations,
preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof as shall
be expressed in the resolution or resolutions providing for the issue
of such stock adopted by the board of directors and may be made
dependent upon facts ascertainable outside such resolution or
resolutions of the board of directors, provided that the matter in
which such facts shall operate upon such designations, preferences,
rights and qualifications; limitations or restrictions of such class or
series of stock is clearly and expressly set forth in the resolution or
resolutions providing for the issuance of such stock by the board of
directors.
The total number of shares of stock of each class which the Corporation
shall have authority to issue and the par value of each share of each
class of stock are as follows:
Class Par Value Authorized Shares
Common $0.0001 800,000,000
Preferred $0.0001 20,000,000
Totals: 820,000,000"
3. The amendment of the certificate of incorporation herein certified
has been duly adopted by the unanimous written consent of the Corporation's
Board of Directors and a majority of the Corporation's stockholders in
accordance with the provisions of Sections 141(f), 228 and 242 of the General
Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment of the Corporation's
Certificate of Incorporation, as amended, to be signed by Scott Mac Caughern,
its Chief Executive Officer, and Lawrence L. Bartlett, its Secretary, this ___
day of _____, 2003.
AMNIS SYSTEMS INC.
By:_______________________________
Scott Mac Caughern, Chief Executive Officer
By:_______________________________
Lawrence L. Bartlett, Secretary