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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]               Annual  report  under  section 13 or 15(d) of the  Securities
                  Exchange  Act of 1934 for the  fiscal  year ended  September
                  30, 2000

[   ]             Transition  report under section 13 or 15(d) of the Securities
                  Exchange Act of 1934 for transition period from      to      .
                                                                 ------  ------

Commission file number 0-23153

                                 VOLU-SOL, INC.
                 (Name of small business issuer in its charter)

      UTAH                                                     87-0543981
(State or other jurisdiction of                              (IRS Employer
incorporation or organization)                            Identification No.)

5095 West 2100 South
Salt Lake City, Utah                                                    84120
(Address of principal executive offices)                              (Zip Code)

Issuer's telephone number: (801) 974-9474

Securities registered under Section          Name of  each  exchange  on  which
12(b) of the Act:                                  registered:

     None                                                 None

Securities registered under Section 12(g) of the Act:   Common Stock, $.0001
par value

Check whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes X No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,  to
the best of the  registrant's  knowledge,  in definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]

Issuer's revenues for the fiscal year ended September 30, 2000 were $496,211.

Registrant's  common  stock  has not  traded  and  there  is no  market  for the
registrant's  common  stock at this  time.  On April 28,  2000,  the  registrant
declared a one-for-five  stock split of its common stock that reduced the number
of issued and outstanding shares as of that date.  Outstanding common stock data
in this report have been adjusted to reflect the reverse stock split.

There were 3,091,246 shares of common stock of the registrant outstanding as of
December 31, 2000.

Transitional Small Business Disclosure
Format (Check one):
 Yes ___ No  X
            ---

                                       1

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                                     Part I

 Item 1.    Business

 Introduction

     Volu-Sol,  Inc. (the "Company" or "Volu-Sol")  was  incorporated in Utah on
July 27, 1995, as a wholly owned subsidiary of Biomune  Systems,  Inc., a Nevada
corporation  ("Biomune").  Volu-Sol  was  organized to engage in the business of
manufacturing and marketing medical  diagnostic stains and solutions and related
equipment,  which  business  operations  were  conducted  before that time as an
unincorporated division of Biomune called the Volu-Sol Medical Division. Biomune
purchased the assets  comprising the Volu-Sol  Medical Division in December 1991
from Logos  Scientific,  Inc.  Biomune  transferred all of the net assets of the
Volu-Sol  Medical  Division  to the  Company.  Through  the  fiscal  year  ended
September  30, 1995,  Volu-Sol  operated out of leased  facilities in Henderson,
Nevada.  In October 1995, the Company relocated to West Valley City, Utah, where
its manufacturing facility and corporate offices are presently located.

     A total of 422,244  shares of the Company's  common stock were  distributed
pro rata as a stock  dividend to the  holders of the common  stock of Biomune in
1997 (the "Distribution"). As a consequence of the Distribution, Volu-Sol ceased
to  be  a  subsidiary  of  Biomune  and  commenced  operations  as  a  separate,
independent  company.  Volu-Sol continues to conduct the operations it conducted
as a subsidiary of Biomune.  The Company's  management has recently  developed a
new  business  plan to broaden the  business  emphasis of the Company to include
remote medical diagnostics and medical alert technologies and services.

 Special Note Regarding Forward-looking Information

     Certain   statements  in  this  Item  1  -  "Business"  and  in  Item  6  -
"Management's Discussion and Analysis or Plan of Operation" are "forward-looking
statements"  within the  meaning of the  Exchange  Act.  For this  purpose,  any
statements  contained or  incorporated in this report that are not statements of
historical  fact may be  deemed  to be  forward-looking  statements.  The  words
"believes,"  "plans,"  "anticipates,"  "expects"  and  similar  expressions  are
intended to identify  forward-looking  statements. A number of important factors
could cause the actual  results of the Company to differ  materially  from those
anticipated by forward-looking statements. These factors include those set forth
under the  caption  "Risk  Factors"  in Item 6 -  "Management's  Discussion  and
Analysis or Plan of Operation."

 Business Strategy

     Until recently, Volu-Sol's primary business strategy has been to capitalize
on the global medical diagnostic  industry by providing  "building block" stains
and reagents  and to grow through the  selective  acquisition  of  complimentary
businesses,  devices and product lines. Management recently determined to pursue
a more  expanded  role in the  medical  diagnostic  industry.  The new  business
strategy of the Company is outlined in greater detail below

New Business Direction

     Volu-Sol's  management  has determined to expand the scope of the Company's
operations  to develop  products  that provide a powerful way to manage  patient
medical  information  and to link patients,  physicians and payors.  The Company
will  continue to conduct its medical  stains and solutions  business  under the
Volu-Sol(TM)  name and will operate its remote health  monitoring and diagnostic
business under the name RemoteMDx(TM).

     The Company  believes that its management  team has a breadth of experience
and knowledge in the medical  diagnostic  arena needed to pursue  development of
new  technologies  in the  medical  device  and  electronics  fields.  Under the
RemoteMDx  brand the Company will introduce the "ROSE  System(TM)"-- a family of
healthcare  monitoring and remote diagnostic  products and services,  which will
position the Company in a market with high growth and  profitability  potential.
The Company is developing the ROSE System to compete in the home  healthcare and
telemedicine markets. The Company estimates this market to be approximately $100


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billion  annually,  based on industry  publications.  The ROSE  System  combines
innovative  hardware  and  software  technologies  with a powerful  medical data
capture and communication network.

     The new business model is based on providing  solutions to some of the most
substantial  problems  in  healthcare  today.  This new  product is  intended to
provide the patient power to decide when and where they have their "examination"
while  providing the physician  with  increased  flexibility  and  efficiency in
diagnosis.

     The healthcare market provides a significant opportunity for the Company to
create new  products  and  services  that  improve  the quality and cost of care
given.  According to industry  reports,  total  healthcare  expenditures  in the
United States for 1998 were in excess of $1 trillion (14% of the gross  domestic
product).  Expenditures are projected to grow to $2 trillion by 2007 (17% of the
gross domestic product).

     The  Company  has  formed  a  strategic  alliance  with  Battelle  Memorial
Institute  ("Battelle"),  a not-for-profit  research organization to collaborate
with the Company to develop the ROSE  System.  The Company  anticipates  that it
will continue to use Battelle to collaborate  on development  and design for the
foreseeable  future.  The Company  anticipates that after its products have been
introduced it will continue to refine and develop  enhancements to the products,
as well as look for opportunities for future product offerings.

     Battelle has  completed a  demonstration  unit with core  components of the
ROSE  Acute  Diagnostic   system.  The  Company  will  continue  to  revise  the
demonstration model as product development continues.

The ROSE System

     The Company is  developing  the ROSE System to  effectively  compete in the
greater than $100 billion home  healthcare and  telemedicine  markets.  The ROSE
System combines  innovative  hardware and software  technologies with a powerful
medical data capture and communication network.

     The Company  currently has under  development  intellectual  property based
hardware and software solutions that enable the remote monitoring and capture of
patient condition data. The Company is  simultaneously  developing a strategy to
acquire and build a world-class data management network to capture, organize and
distribute this patient information to care providers and other authorized third
parties.

         As currently planned, the ROSE System is expected to:

>> Incorporate a Personal Emergency Response System (PERS) product and service.

>> Permit increased independence through a mobile emergency response option.

>> Allow remote monitoring and diagnosis of patient conditions.

>> Increase  patient access to healthcare  while lowering costs of physician and
   patient interaction.

>> Reduce  healthcare  costs through timely capture of patient  condition data
   leading to earlier and more cost effective treatments.

>> Improve  patient  satisfaction  and  outcomes  through  more  consistent  and
   convenient access to healthcare.

>> Create a portable  and  efficient  electronic  trail to a  patient's  medical
   history.

         The Company expects to launch the ROSE System in stages as follows.

Stage 1 - ROSEBUD(TM) (Mobile PERS)

     Existing Personal  Emergency Response System (PERS) devices provide a range
of use of approximately 150 - 250 feet and are intended for in-home use. ROSEBUD
is a mobile PERS service  providing a virtually  unlimited range to the user and
expanding the potential market for users from a few million to over 35


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million.  ROSEBUD offers greater freedom and mobility to the user who will carry
or wear the small wireless,  waterproof pendant, key-chain or watch transmitter.
ROSEBUD will have the ability to be manually  activated  like  traditional  PERS
devices.  Therefore, at the push of a button from anywhere, at anytime, the user
is in contact with emergency services.

     ROSEBUD will be enabled with Global Positioning  Satellite (GPS) technology
to allow  the user to be  located  within a matter  of meters in the event of an
emergency. In addition,  ROSEBUD will have an automated feature such that in the
event of a sudden  shock--produced  by a fall--a signal will be activated within
the device  requiring a response.  In the event the response is not received the
predetermined response sequence will be initiated. ROSEBUD will be introduced in
successive  generations  offering more features and user options such as two-way
voice communication and vital sign monitoring.

     The  mobility  afforded by ROSEBUD  will allow users to retain  freedom and
carry on with normal daily  activities.  Users will appreciate  their ability to
maintain  dignity and a higher quality of life while being  monitored and having
access to an emergency response option--thus providing a safety net at all times
for them or their loved ones.

     ROSEBUD  is easy to use and is  designed  to signal a friend,  relative  or
emergency  service from anywhere,  whenever help is needed.  The system operates
using a small  wireless,  waterproof  pendant,  key-chain or watch  transmitter,
carried or worn by the user.  This component links the user to a 24/7 monitoring
center attendant, to neighbors and to loved ones or caregivers.

>> In the event of an emergency,  (an  intruder,  a medical  condition,  a
   fall) at any time,  for any purpose,  the user  presses the  activation
   button on the console or the wireless  pendant.  This  activates a call
   immediately to the Emergency Response Center.

>> Within  seconds,  a two-way,  hands free  conversation  is  established
   between the user and the emergency  attendant,  via a highly  sensitive
   two-way speakerphone, and the attendant will determine the type of help
   needed.

>> The caring  attendant  will dispatch a neighbor,  relative or emergency
   service depending on the user's needs.

>> The  emergency  attendant  has the user's  pre-programmed  information,
   including  medical  history,  prescribed  medications,  user  location,
   preferred  hospital  and  information  on who else should be  contacted
   (family, neighbors, doctors).

>> If the  emergency  attendant  is  unable  to make  voice  contact,  the
   attendant will contact emergency personnel.

>> The caring attendant will close the loop and call back to the user's home or
   stay in voice contact to make sure help has arrived.

>> Caregivers are then contacted to indicate the nature of the incident.  The
   family is always advised of any incident.

 Stage 2 - ROSE Chronic Monitoring(TM)

     The ROSE  Chronic  Monitoring  service is designed  to be a  cost-effective
solution that  monitors  chronic  conditions  utilizing  home-based  and mobile,
monitoring  devices.  Chronic  diseases  are  those  of a  longer  or  permanent
duration. Examples of more prevalent chronic diseases include:

>> Congestive heart failure

>> Coronary heart disease

>> Diabetes


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>> Asthma

>> AIDS/HIV

>> Cancer

     The service will be targeted to specific disease monitoring and will obtain
large  volumes of  extremely  precise  patient  related  data which is processed
through the  RemoteMDx  data  management  network and then is  transmitted  in a
real-time fashion to healthcare providers and other authorized third parties.

     Initially,  the Company will provide patients and healthcare providers with
personalized  disease  management  information and certain diagnostic tests that
allow for home-based monitoring and communication of patient-specific data, such
as blood glucose levels, blood pressure, heart and respiration rates, weight and
other selected criteria. As additional  home-based and point-of-care  diagnostic
products  are  approved  by the FDA and  become  more  advanced,  its  RemoteMDx
offerings  will expand to allow both the  physician  and the patient to test for
and to monitor a wider  range of chronic  conditions  through  the  addition  of
modular device  connections on the ROSE Chronic  Monitoring  base unit. The ROSE
Chronic  Monitoring  service  will  provide  test  results  and  feedback to its
customers and to authorized  third  parties while storing the  information  in a
patient  medical  history  database;   thereby  empowering  patients  and  their
physicians to manage better their health.

Stage 3 - ROSE Acute DiagnosticTM

     The ROSE Acute  Diagnostic  service is  designed  to  simulate a  physician
"house  call" by allowing  the patient to stay at home and have  personal  vital
signs and  diagnostic  data  acquired,  processed  through  the  RemoteMDx  data
management network and then sent to a physician.  The physician will then make a
diagnosis  based on the remotely  recorded data,  or, if the physician  believes
there may be a  problem,  contact  the  patient  for  additional  testing in the
physician's  office.  The  end  result  is  intended  to be the  development  of
significantly  improved  efficiencies  for care providers and the convenience of
"24/7" healthcare.

     This product is targeted at acute medical events. An acute medical event is
one in which the  symptoms or wound come on suddenly  and may or may not be life
threatening.  Examples of acute  medical  events  include the onset of strep,  a
cold, or the flu,  receiving a laceration or other wound or displaying  specific
conditions such as vomiting, coughing, or a rash.

     The ROSE Acute Diagnostic service will accommodate a proactive or on demand
acute medical  condition.  This service differs from the ROSE Chronic Monitoring
service in that the ROSE Acute service is focused on diagnosing  "acute" medical
conditions rather than monitoring chronic, ongoing medical conditions.  The ROSE
Acute  Diagnostic  product  will be on a  similar  platform  to that of the ROSE
Chronic  Monitoring  product with multiple ports for medical  diagnostic devices
such as blood pressure cuffs, thermometers,  scales and other instruments.  This
platform  will  encompass  the  ability to perform  blood  tests,  strep  tests,
urinalysis, blood pressure checks and other commonly performed procedures at the
physician's office.

     ROSE Acute will  incorporate  state-of-the-art  technology to create a user
interface and to transfer  data.  ROSE Acute will  interface with the patient by
asking  relevant  medical  questions based on a medical triage decision tree and
prompts the patient to use appropriate  diagnostic medical tools to gather data.
When the appropriate data is gathered,  the patient will be prompted to send the
data.  The  information  is processed  through and stored in the RemoteMDx  data
management network and forwarded to the physician. The physician,  when the data
is received, can respond through ROSE Acute's e-mail system or by telephone.

     The Company anticipates that as technology progresses,  so will ROSE Acute.
Eventually  ROSE  Acute  will  have a voice  interface  and  human-like  manner.
Additionally,  on the physician's side of the ROSE Acute  transaction,  the data
gathered  by  ROSE  Acute  and  sent  to the  physician  will  integrate  with a
comprehensive   electronic   medical   record   system,   increasing   physician
productivity and providing unparalleled access to patient information.


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Collaborative Relationships

     In addition  to its  relationship  with  Battelle,  the Company  intends to
continue  to form  strategic  alliances  with  industry  leaders to achieve  and
fulfill its business  plan.  The Company has two  additional  areas in which the
Company believes  strategic  alliances will better serve its needs.  These areas
include product  marketing,  distribution and access to patient markets and data
transfer and processing.

     Product  Marketing  and  Distribution  - In order to enhance its  marketing
strength and augment its distribution channels, the Company is in the process of
developing  marketing and  distribution  alliance  partners for its products and
services. The Company is currently in contact with Veterans Affairs and regional
HMO/PPO organizations with significant networks of physicians and patients.  The
Company  is  exploring  an  alliance  with  HMO/PPO   organizations   and  other
organizations  for testing and receiving input on final technology design of its
products.

The Company anticipates that these additional  strategic alliance partners would
provide the following:

>> A consortium of providers,  specific to chronically ill care, to act as
   a focus group on product definition matched to specific care areas.

>> The opportunity to conduct  prototype  review and gain  decision-making
   input into final technology design for test markets.

>> Sites to conduct trials, to establish protocols,  to track outcomes and
   to act as early-adopter organizations for acquiring the technology.

>> Access to significant channels of distribution.

     Data  Transfer and  Processing.  In order to enhance its data  transfer and
processing capabilities,  the Company intends to forge a strategic alliance with
an industry  leader in this arena.  The Company is in the process of identifying
potential  data transfer and processing  alliance  partners for its products and
services. The Company believes that the Company may be able to forge an alliance
with a partner that has  expertise in both  product  marketing/distribution  and
data transfer and processing.

     Product Manufacturing.  The Company has no manufacturing facilities for its
new products.  As part of the process of identifying  and  developing  these new
products,  the Company  anticipates  that it may be required to manufacture,  or
have  third  parties  manufacture,   certain  products  and  devices,  including
prototypes of the products. To the extent possible, the Company will require any
such  manufacturing  to be conducted by third parties,  including  those parties
with which it has collaborative relationships.

Competition

     The  Company's  research  has  revealed  several  companies  working in the
healthcare arena that have products overlapping  different  anticipated elements
and aspects of its ROSEBUD product and service.  Primary competitors include SOS
Wireless,  Magnavox 911 Phone,  Digital Angel,  Sensatix Smart Shirt, Body Media
and Stay Healthy.com.

     The Company has not as yet identified  any companies that compete  directly
with the planned ROSEBUD mobile PERS service.  The companies  identified  above,
however,  have products or services  that deliver one or more  components of the
ROSEBUD service.

     The Company  believes  that the current  competition  has targeted  chronic
disease monitoring with their products,  and has no proprietary  position in the
acute diagnostics market. There can be no assurance, however, that they will not
expand their product offerings into those areas that the Company has targeted.

     The  industry  has not  embraced  the  chronic  monitoring  products of the
Company's current competitors.  These current competitors are attempting to sell
hardware units to healthcare  providers.  The Company's  research indicates that


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care  providers  prefer not to  inventory,  maintain or carry  hardware on their
balance  sheets--particularly  the majority of home healthcare providers who are
small and who experience cash constraints.

     After  interviewing   several  home  healthcare  agencies  and  gaining  an
understanding of their needs, the Company is approaching the chronic  monitoring
market with a  direct-to-consumer  weekly service fee model. The Company expects
that it will be successful with this strategy due to its combined business model
comprising  control  over  both  product  hardware  and the  monitoring  service
network.

     The  Company  believes  that,  because  of the  nature  of  the  healthcare
industry, competition will likely arise and intensify. The Company also believes
that it will maintain several  advantages over its competition,  in part because
of its alliance with Battelle and other strategic alliances,  as well as because
of  its  business  model  combining  both  technology  development  and  a  data
management network. In addition, the Company believes that several components in
the ROSE System will enjoy  significant  intellectual  property  protection from
competition.  By establishing a basis for real,  substantial cost savings and by
providing  broad  practical  solutions to the crisis in healthcare,  the Company
believes the ROSE System will flourish in current and future market  conditions.
There is no assurance, however, that the Company will be successful in competing
with larger and better-capitalized competitors.

Potential Markets

Market Opportunity--Healthcare Industry Challenges

     Pressure from consumers, physicians and insurance groups is mounting on the
healthcare  system.  This pressure is driving changes in the methods,  costs and
availability of healthcare  delivery.  Healthcare costs in the United States are
spiraling  upward and cost  containment  is a primary issue facing the industry.
Several  factors  contributing  to  this  situation  include,  in the  Company's
opinion, the following:

>> Errors in transcription of medical data.

>> Lack of patient compliance to prescribed healthcare.

>> Delayed detection and diagnosis of medical needs.

>> Lack of consistent monitoring of "at-risk" patients.

>> Shortage of qualified care providers.

>> Increased prevalence of chronic diseases.  (Chronic diseases are those of a
   longer or permanent duration.

>> The  percentage  of  the  population  afflicted  with  chronic  diseases  is
   substantial.

>> Chronic illnesses account for 60% - 70% ($700 + billion) of total healthcare
   costs.

>> Heart disease, cancer and diabetes all account for more than $100 billion in
   annual healthcare costs.

     The Company  believes  that routine  clinical  monitoring  of patients with
chronic  conditions  will prevent a  substantial  portion of these  costs.  This
monitoring will lead to earlier intervention, thus often precluding the need for
more expensive in-hospital care.

     Factors  that  evidence  the  increased  economic  pressures on the medical
industry, in the Company's view, include the following:

>> Insurance   companies  are  struggling  to  maintain  service  levels  while
   controlling costs.

>> Patient access to timely healthcare is being limited.


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>> Physicians are having their incomes reduced significantly.

>> Federal government is implementing a "Prospective Payment System" which
   is a flat fee payment that  capitates and limits the costs Medicare and
   Medicaid will pay for home healthcare services.

     The Company has identified the following industry trends as a direct result
of the factors and effects of rising healthcare costs:

>> Increasing use of home healthcare.

>> Increasing  implementation of capitated  payment  programs.  (Capitated
   payment programs are flat fee payment programs that limit the amount of
   costs that payors will reimburse.)

>> Growing acceptance of new technologies.

     In addition to economic  pressures  there are  significant  demographic and
life style pressures on the healthcare  system.  The baby boomers are now aging.
As a population we are living  longer and becoming  more  proactive and informed
with our  healthcare  issues and  choices.  Average  life  expectancy  is moving
upward.  This coupled  with the aging of the  baby-boom  generation  presents an
opportunity for companies providing healthcare to this large population segment.

>> Seventy-five million babies were born in the United States from 1946 to 1964

>> From  1990 to  2020,  the  elderly  population  (65+) is  projected  to
   increase to 54 million persons.  The growth rate of the elderly will be
   more than  double  that of the total  population  during  this  period.
   Beginning  in 2011,  the first  members of the baby boom will reach age
   65.

>> In 2020,  about 1 in 6 Americans will be elderly.  By the middle of the
   next century,  the number of elderly  could reach 79 million.  In 2050,
   the final phase of the gerontological explosion will occur. The elderly
   population  as a whole will number about 79 million  people,  more than
   double its present size.

     A "window of  opportunity"  now exists for  planners,  policy  makers,  and
businesses to prepare for the aging of the baby-boom generation.

     Currently 35 million Americans are 65 years of age or older and the size of
the over-85 population is also increasing.  These population  segments and their
accompanying health status, which clearly declines with increasing age, suggests
that a larger  number of  individuals  will seek  long-term  care as part of the
continuum from independent  living, to assisted living at home, to institutional
care.  Additionally,  with longer life  expectancy and more persons 85 years old
and over,  it is likely  that more and more  people  will have  surviving  older
relatives  and be concerned  with the daily  monitoring  of the health status of
these loved ones. In 1959,  there were 3 persons 85 years old and over for every
100  persons  age 50 to 64. In 2050,  there  will be 27 persons 85 years old and
over for every 100 persons age 50 to 64.

     About half of the over-85  population who live in their homes are frail and
need assistance with everyday activities.  Their relatives, in their fifties and
sixties,  face the difficulties of providing this care. With an aging population
and the fact that reports  indicate  that 80% of  healthcare  costs occur in the
last two years of life, viable cost saving options are needed.

     As a person  ages,  the  number of office  visits  per year to a  physician
increases  (National  Ambulatory  1997 Medical Care Survey).  When this trend is
coupled  with the fact that the fastest  growing  segment of the  population  is
those 65 years of age and older,  an explosion of office visits is  anticipated.
The  Company  believes  that  through its ROSE  System  family of  products  and
services,  the  Company  is poised to take  advantage  of the  coming  growth in
patients  seeking  medical  office  visits  or other  healthcare  services.  The
Company's  new  products  offer a solution  for  dealing  with this  growth in a
cost-effective manner.

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Proactive Consumerism

     As a result of these several factors, many consumers are becoming much more
proactive  in their  decisions  regarding  healthcare.  They have been  somewhat
victimized  by the current chaos in the  healthcare  system and feel the need to
have more  control  over this most  critical  area of their  lives.  The Company
believes that with its new products and  services,  the Company is positioned to
take  advantage  of this chaos by  providing a single  solution  that  addresses
multiple consumer and industry issues.  Among others,  the Company believes that
the major issues  affecting  consumerism in the healthcare  industry include the
following:

>> Consumers feel isolated from healthcare and frustrated with paying high
   costs for a system that is placing limits and barriers on their ability
   to have timely access to their doctor.

>> Consumers are seeking alternatives to traditional healthcare as a means
   of taking more control over their health.

>> In  the  last  ten  years,   complementary  and  alternative   medicine
   expenditures  have  increased  dramatically  and  it has  become  a $50
   billion per year industry.

>> More money is now spent on alternative and complementary  medicine than
   on primary care services  ("Consumerism in Managed Care," MedPro Month,
   June-July 2000, Medical Data International).

     The healthcare industry is being forced to revolutionize its practices. The
Company  believes that its products would position the Company  strategically to
ride the wave of this revolution.  The Company's RemoteMDx solutions in the ROSE
System of health monitoring,  diagnosis,  and data management services will have
the following impact on the industry:

>> Improved efficiencies resulting in over $1 billion in cost savings.

>> Improved accuracy, portability and communication of patient data.

>> 50 - 100% improvement in physician office efficiency.

>>  Fast,  efficient  and  staged  implementation  of home  healthcare  delivery
options.

>> 50% reduction in home healthcare delivery costs.

Market Size

>> National expenditures in the healthcare industry are increasing:

>> Total healthcare industry expenditures are in excess of $1 trillion

>> Home healthcare market is $42 billion (approximately 50% of these costs are
   associated with the cost of labor)

>> Telemedicine market is $65 billion

     Pressures  are  mounting on the  healthcare  industry to gain  control over
costs,  to meet the  demands  of a growing  patient  population  and to  improve
patient outcomes from the healthcare  system. The industry is realizing that the
productivity  gains that have occurred via technology in other  industries  must
also be leveraged to solve some of its own challenges.

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<PAGE>

Research and Development

     With the change in emphasis to remote medical diagnostics,  the Company has
made a significant commitment to research and development. Prior to this change,
Volu-Sol has not invested  material amounts in research and development  because
of the extent of the product line  acquired  when Biomune  purchased  the assets
comprising the Volu-Sol business.

Dependence on Major Customers

     During the fiscal  years ended  September  30, 1999 and 2000,  Volu-Sol had
sales to a company that accounted for approximately 19% and 15%, respectively of
the Company's total revenues.  Another customer  accounted for approximately 11%
of the Company's total revenues during fiscal year 1999.

Employees

     At September 30, 2000  Volu-Sol had 4 full time  employees and no part-time
employees.  Volu-Sol will, as needed, hire additional  employees or sub-contract
the  balance of its  personnel  requirements  through  independent  contractors.
Volu-Sol's  current  manufacturing  operations do not require  specially skilled
employees  and  Volu-Sol  believes  that it will be able to  satisfy  its  labor
requirements  for  the  foreseeable  future.  The  Company's  employees  are not
represented by a collective  bargaining  arrangement,  and Volu-Sol believes its
relationship with its employees is good. As the Company pursues its new business
plan, it is anticipated that additional employees will be required, particularly
employees with specialized experience in marketing to the medical industry.

Item 2.  Properties

     Volu-Sol leases approximately  11,500 square feet of laboratory  facilities
at 5095 West 2100 South,  West Valley City, Utah from a third party.  The leased
premises serve as the Company's manufacturing, warehouse and shipping facilities
as well as its corporate  headquarters and offices. The lease was extended after
September  30, 2000  through  November  2005 with  monthly  base rent of $5,550,
subject to annual adjustments according to changes in the Consumer Price Index.

Item 3.  Legal Proceedings

     Volu-Sol  is not a party to, and none of its  property  is subject  to, any
pending or threatened legal proceedings which, in the opinion of management, are
likely to have a material adverse impact on the financial condition,  results of
operations or cash flows of the Company.

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

     No matter was submitted to a vote of shareholders during the fourth quarter
of fiscal year 2000.

                                     Part II

Item 5.  Market For Registrant's Common Equity and Related Stockholder Matters

     Market.  Prior to the  Distribution,  Biomune  owned  all of the  Company's
common stock and  consequently  there has never been a public trading market for
the Company's securities. Although Volu-Sol anticipates that a public market for
over-the-counter  trading of the Company's securities may develop in the future,
there can be no  assurance  that such a market will ever develop or that it will
be sustained.  At such time, if any, as Volu-Sol  satisfies  applicable entry or
listing  criteria,  Volu-Sol  may seek to include or list its common  stock on a
securities   market  or  exchange.   Volu-Sol   does  not  meet  those   listing
qualifications  at this time.  There is  presently  no market for the  Company's
common stock and there is no assurance  that a market will ever  develop.  There


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<PAGE>

can be no assurance  that Volu-Sol will ever be able to satisfy such criteria or
that its  application  for  inclusion  or listing on the Nasdaq  Stock Market or
securities exchange would be accepted.

     Holders.  As of December 31, 2000,  there were  approximately  1,300 record
holders of the Company's common stock and approximately  3,091,246 shares issued
and outstanding.  The Company had  approximately  17,500  outstanding  shares of
preferred  stock at December 31, 2000, held by 26 record holders and convertible
into a total of 6,500,000 shares of common stock.

     Dividends. Since its incorporation,  Volu-Sol has not declared any dividend
on its common stock.  Volu-Sol does not  anticipate  declaring a dividend on its
common stock for the  foreseeable  future.  The Series A Preferred Stock accrues
dividends at the rate of 10%  annually,  which may be paid in cash or additional
shares  of  preferred  stock  at the  option  of the  Company.  To date all such
dividends have been paid by issuance of preferred stock.

     During the fiscal year ended  September  30, 2000 the Company  declared and
paid a 10%  dividend by issuing  1,293  additional  shares of Series A Preferred
Stock on the outstanding shares of Series A Preferred Stock.

     Dilution.  Volu-Sol has a large number of shares of common stock authorized
in  comparison  to the  number of shares  issued and  outstanding.  The Board of
Directors  determines when and under what conditions and at what prices to issue
the stock of the Company. In addition,  a significant number of shares of common
stock of the Company are  reserved  for  issuance  upon  exercise of purchase or
conversion  rights.  Volu-Sol agreed with Nasdaq to issue  additional  shares of
common stock in connection the distribution. The issuance of any shares, whether
in connection with the Distribution, new equity offerings,  acquisitions, or the
exercise  of option or  conversion  rights will result in dilution of the equity
and voting interests of existing shareholders.

     Transfer  Agent and  Registrar.  The transfer  agent and  registrar for the
Company's  common  stock is American  Stock  Transfer & Trust  Company,  40 Wall
Street, New York City, NY 10005.

Recent Sales of Unregistered Securities

     The following information sets forth certain information for all securities
sold by the Company during the past three years without  registration  under the
Securities Act of 1933 (the "Securities Act").

Fiscal Year 1998

     During  fiscal year 1998,  Volu-Sol sold 1,835 shares of Series A Preferred
to accredited  investors  for cash of $312,000.  Volu-Sol also issued a total of
800 shares of Series A Preferred,  valued at $160,000  for services  provided to
the  Company by  employees  and  consultants,  including  commissions  earned in
connection  with the sale of the Series A Preferred to the accredited  investors
described above. The Company also issued 15 shares as settlement of a lawsuit.

Fiscal Year 1999

     During  fiscal year 1999,  Volu-Sol sold 797.5 shares of Series A Preferred
Stock  for  cash  proceeds  totaling  $159,500.  All  sales  were to  accredited
investors.  In addition,  Volu-Sol issued 848 shares of Series A Preferred Stock
as a stock  dividend  to its  Series A  holders  and  2,460  shares  of Series A
Preferred Stock to certain employees,  officers,  directors,  and consultants as
compensation  for services  rendered to the Company.  Volu-Sol also  satisfied a
subscription  receivable  of $402,200  for Series A Preferred  Stock with a note
payable to Biomune in the principal amount of $372,411,  and accrued interest of
$29,789.

     With respect to all of the  foregoing  offers and sales of  restricted  and
unregistered  securities by the Company,  Volu-Sol  relied on the  provisions of
Sections  3(b)  and  4(2)  of the  Securities  Act  and  rules  and  regulations
promulgated  thereunder,  including,  but not  limited  to Rules  505 and 506 of
Regulation D, in that such  transactions  did not involve any public offering of
securities and were exempt from registration under the Securities Act. The offer
and sale of the securities in each instance was not made by any means of general
solicitation,  the  securities  were  acquired by the  investors  without a view
toward  distribution,  and all  purchasers  represented to the Company that they
were sophisticated and experienced in such transactions and investments and able


                                       11

<PAGE>

to bear the  economic  risk of their  investment.  A legend  was  placed  on the
certificates  and instruments  representing  these  securities  stating that the
securities  evidenced by such  certificates or instruments,  as the case may be,
have  not been  registered  under  the  Securities  Act and  setting  forth  the
restrictions  on their  transfer and sale.  Each  investor also signed a written
agreement that the securities would not be sold without  registration  under the
Securities act or pursuant to an applicable exemption from such registration.

Fiscal Year 2000

     During the year ended September 30, 2000, the Company sold 1,900,000 shares
of common  stock for  $1,500,000.  The  Company  also  issued a total of 425,000
shares of common stock for services. The offer and sale of these securities were
exempt from registration  under the federal securities and state "blue sky" laws
and regulations pursuant to exemptions  promulgated under those laws relating to
offers and sales made to  accredited  investors.  These  shares were  restricted
shares and their sale or transfer by these investors are subject to restrictions
under applicable  federal and state securities laws,  including the registration
requirements  of those laws.  In addition,  during the year ended  September 30,
2000,  the Company  issued 72,000 shares of common stock upon  conversion of 288
shares of Series A preferred stock.

Item 6.  Management's Discussion and Analysis or Plan of Operation

     The following  discussion and analysis  should be read in conjunction  with
the Company's financial  statements and the notes thereto contained elsewhere in
this report.  The  discussion of these results  should not be construed to imply
any  conclusion  that  any  condition  or  circumstance  discussed  herein  will
necessarily continue in the future.

     When used in this report, the words "believes,"  "anticipates,"  "expects,"
and similar  expressions  are intended to identify  forward-looking  statements.
Those statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected.  Readers are cautioned
not to place undue  reliance on these  forward-looking  statements,  which speak
only as of the date  hereof.  Volu-Sol  undertakes  no  obligation  to  publicly
release the results of any revisions to these  forward-looking  statements  that
may be made to reflect events or circumstances after the date of this report, or
to reflect the occurrence of unanticipated events.

Results of Operations

Fiscal Year Ended September 30, 2000 Compared to Fiscal Year Ended September 30,
1999

     In the fiscal year ended September 30, 2000, Volu-Sol had revenues totaling
$496,211 compared to $528,904 for fiscal year ended September 30, 1999.

     Cost of goods sold in the fiscal  year ended  September  30,  2000  totaled
$291,213  compared to $364,646 for the fiscal year ended September 30, 1999. The
overall  gross  margin  for  the  fiscal  year  ended  September  30,  2000  was
approximately 41% compared to 31% of revenues in fiscal year 1999.

     Selling,  general and administrative  expenses totaled  $1,596,601in fiscal
year 2000, compared to $938,898 in 1999, an overall increase of $657,503.

     Volu-Sol incurred a net loss of $3,445,352 in 2000,  compared to a net loss
of  $906,500  in fiscal  year  1999.  This net loss is the  result of  increased
selling,  general and  administrative  and research and development  expenses in
2000.

Liquidity and Capital Resources

     Volu-Sol currently is unable to finance its operations solely from its cash
flows from operating  activities.  During the year ended September 30, 2000, the
Volu-Sol financed its operations  primarily through the sale of 1,900,000 shares
of common stock for gross  proceeds of  $1,500,000.  These proceeds were used to
supplement cash from operations as working capital.

                                       12

<PAGE>

     As of September  30,  2000,  the Company had cash and cash  equivalents  of
$278,421  and  working  capital of  $177,697,  compared  to cash of $44,123  and
working capital of $13,340 as of September 30, 1999.

     Interest  expense  decreased  from $18,864 in fiscal year 1999 to $0 in the
fiscal year ended September 30, 2000.

     During fiscal year 2000, the Company's  operating  activities  used cash of
$1,492,509 compared to $277,449 in 1999. This cash was primarily provided by the
sale of common stock in 2000 and Series A Preferred Stock in 1999.

     Volu-Sol  presently  has no credit  facility  with any  commercial  lending
institution.  In the past,  Volu-Sol  borrowed and received capital from time to
time from Biomune, but Volu-Sol has no formal financing  arrangement,  agreement
or  understanding  with Biomune or any other party to provide debt  financing in
the future. It is anticipated that Volu-Sol will obtain funding through the sale
of its securities to provide cash to meet its operating  needs.  There can be no
assurance  that its efforts to sell its  securities  will be  successful or that
additional financing will not be needed in the future.

Recent Accounting Pronouncements

     During January 1998, the American Institute of Certified Public Accountants
("AICPA")  issued Statement of Position 98-5 "Reporting on the Costs of Start-up
Activities"  ("SOP  98-5").  SOP 98-5  became  effective  for all  fiscal  years
beginning after December 15, 1998.  Volu-Sol adopted SOP 98-5 in the fiscal year
ended September 30, 2000.

     In December  1999,  The  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  "Revenue  Recognition  in Financial
Statements."  SAB 101 is to be adopted for fiscal years beginning after December
15, 1999,  which for the Company would be the fiscal year  beginning  October 1,
2000. SAB 101 addresses  various topics in revenue  recognition.  The Company is
currently analyzing SAB 101, however based on management's current understanding
and  interpretation,  SAB 101 is not  expected to have a material  impact on the
Company's financial statements.

     In  March  2000,   the   Financial   Accounting   Standards   Board  issued
Interpretation No. 44 ("FIN 44"), "Accounting for certain Transactions Involving
Stock  Compensation - An Interpretative  of Accounting  Principals Board Opinion
("APB") No. 25". FIN 44 clarifies the application of APB 25 and became effective
July 1, 2000. The Company believes that its current  accounting  policies are in
conformity with this interpretation,  and does not believe that FIN 44 will have
a material effect on the Company's financial statements.

Risk Factors

     This Report contains forward-looking  statements,  which may be affected by
risks and uncertainties  including many that are outside the Company's  control.
The Company's  actual operating  results could differ  materially as a result of
certain factors, including those set forth below and elsewhere in this Report.

     Absence of  Profitable  Operations.  From its  inception,  Volu-Sol has not
achieved  profitable  operations and continues to operate at a loss. The present
business  strategy is to improve  profitability  and cash flows by adding to its
existing  product  line.  While  management   believes  the  cash  generated  by
operations  together with the proceeds from the sale of Series A Preferred  will
satisfy its ordinary cash  requirements for at least 12 months,  there can be no
assurance  that Volu-Sol will ever be able to achieve  profitable  operations or
that it will not require additional  financing to achieve its business plan. See
"Management's Discussion and Analysis or Plan of Operation."

     "Going Concern" Issues.  The financial  statements of the Company have been
prepared  on the  assumption  that it will  continue  as a  going  concern.  The
Company's  product line is limited and it has been  necessary to rely upon loans
and  capital  contributions  to  sustain  operations.  Additional  financing  is
required if the Company is to continue as a going concern. If additional funding
is not obtained,  the Company will be required to scale back or discontinue  its
operations.

                                       13

<PAGE>

     Uncertainty of Future Financial  Results.  Profitability  depends upon many
factors, including the success of its marketing program, its ability to identify
and obtain the rights to  additional  products  to add to its  existing  product
line, expansion of its distribution and customer base,  maintenance or reduction
of expense levels and the success of the its business  activities.  Volu-Sol has
an  accumulated  deficit  as of  September  30,  2000  of  $7,767,375.  Volu-Sol
anticipates  that it will  continue  to incur  operating  losses in the  future.
Volu-Sol's  ability to achieve  profitable  operations  will also  depend on its
ability to develop and maintain an adequate  marketing and distribution  system.
There can be no assurance  that the Company will be able to develop and maintain
adequate  marketing  and  distribution  resources.  If  adequate  funds  are not
available,  Volu-Sol  may  be  required  to  materially  curtail  or  cease  its
operations. See "Management's Discussion and Analysis or Plan of Operation."

     Transition  to a new business  model  requires  devotion of  resources  and
energies to a business that is unfamiliar to current management.  The Company is
now in the  process  of  transitioning  from its  laboratory  stain and  reagent
business  to a  new  business  that  is  focused  on  providing  remote  medical
monitoring  and  diagnostic  tools  to  physicians,  consumers  and  payors.  In
transitioning to this new business model, the Company is substantially  changing
its business operations,  sales and implementation  practices,  customer service
and support operations and management focus. The Company is facing new risks and
challenges,  including a lack of meaningful historical financial data upon which
to plan future budgets,  competition from a wider range of sources,  the need to
develop  strategic  relationships  and other risks associated with a significant
change of business plans. Failure to successfully address these issues and risks
would materially  adversely affect the Company's  business,  financial condition
and results of operations. In addition, because the Company is moving out of its
current business model,  the available  historical  information  relating to its
operations is not  indicative of the operating  results the Company might expect
under  the newly  adopted  business  plan.  Consequently,  you have very  little
historical financial  information to assist you in making an investment decision
in connection with this Offering.

     Changing the business model and adopting a new business plan means that the
Company  may be  regarded  as a  "start-up"  venture,  subject  to the risks and
uncertainties   usually  associated  with  startups.   You  should  consider  an
investment  in  the  Debentures  in  light  of  the  risks,   uncertainties  and
difficulties  frequently  encountered  by  companies  in their  early  stages of
development.  If the Company is to be  successful  in this new  market,  it must
accomplish the following, among other things:

       o Develop and introduce functional and attractive product and service
         offerings;
       o Increase awareness of the Company's brand and develop consumer loyalty;
       o Respond to competitive and  technological  developments;
       o Build an operationalstructure to support the Company's business; and
       o Attract,  retain and motivate qualified personnel.

If the Company fails to achieve these goals,  that failure would have a material
adverse effect on the Company's  business,  prospects,  financial  condition and
operating results.  Because the market for the Company's new product and service
offerings is new and evolving, it is difficult to predict with any certainty the
size of this market and its growth rate,  if any.  There is no assurance  that a
market for these  products or services  will ever develop or that demand for the
Company's  products and services  will emerge or be  sustainable.  If the market
fails to develop,  develops more slowly than expected or becomes  saturated with
competitors,  the Company's business,  financial condition and operating results
would be materially adversely affected.

     Risks of  technological  uncertainty.  The Company may not realize revenues
from the sale of any of its new products for several  years,  if at all. Some of
the  products the Company is currently  evaluating  likely will require  further
research and development efforts before they can be commercialized. There can be
no  assurance  that the  Company's  research  and  development  efforts  will be
successful or that the Company will be successful in developing any commercially
successful  products.  In  addition,  technology,  particularly  those  that are
integrated or expected to be integrated  with the Company's  product and service
offerings,  is  rapidly  changing  and  developing.   The  Company  faces  risks
associated  with the possible  obsolescence  of its  technology and the risks of
delay in the further development of its own technologies. Other difficulties and
uncertainties  normally associated with new industries or the application of new
technologies in new or existing industries also threaten the Company's business,
including  the possible  lack of consumer  acceptance,  difficulty  in obtaining
financing  for  untested   technologies,   increasing  competition  from  larger


                                       14

<PAGE>

well-funded  competitors,  advances  in  competing  or other  technologies,  and
changes in laws and regulations  affecting the development,  marketing or use of
the Company's new products and related services.

     Dependence  upon  strategic  alliances.  The  Company's  strategy  for  the
identification,     development,    testing,    manufacture,    marketing    and
commercialization  of its products and services  includes  entering into various
collaborations through corporate alliances. The Company has already entered into
a  collaborative   relationship  with  a  significant  engineering  and  product
commercialization  company  and the  Company  believes  that  this  relationship
provides  the  Company  with a strong  strategic  alliance  for the  design  and
engineering of its products. The Company's alliance is with a large engineering,
consulting and research and development firm with close  connections to the Food
and  Drug  Administration  and  other  governmental  agencies.  There  can be no
assurance, however, that this relationship will succeed or that the Company will
be able to negotiate strategic alliances with other parties on acceptable terms,
if at all, or that any of these  collaborative  arrangements will be successful.
To the  extent  the  Company  chooses  not,  or are not able to  establish  such
arrangements,  the Company could experience  increased capital requirements as a
result of undertaking such activities at its own risk and expense.  In addition,
the Company may encounter  significant delays in introducing  products currently
under development into the marketplace or find that the development, manufacture
or sale of the Company's proposed products are adversely affected by the absence
of successful collaborative agreements.

     Need to attract and retain key  personnel.  The  Company's  future  success
depends in significant  part on the continued  service of its senior  management
and  successfully   recruiting  additional  senior  management  to  oversee  the
Company's  move into a new business plan. The loss of the services of certain of
the  Company's  key  employees  could  have a  material  adverse  effect  on its
business.  The Company does not  currently  have key man insurance on any of its
employees and the Company does not  anticipate  obtaining  such insurance in the
near future. The Company's future success also depends on its ability to attract
and retain  highly  qualified  design,  technical,  sales,  marketing,  customer
service and managerial  personnel with experience in its newly targeted markets.
The Company faces  competition for qualified  individuals  from numerous medical
and  clinical   companies,   universities   and  other  research   institutions.
Competition for such personnel is intense, and the Company cannot guarantee that
it will be able to attract  or retain a  sufficient  number of highly  qualified
employees in the future.  Failure to hire and retain  personnel in key positions
could materially  adversely affect the Company's  business,  financial condition
and results of operations.

     Inability to manage rapid growth.  To execute the Company's  business plan,
it must grow  significantly.  This growth will place a significant strain on the
Company's personnel,  management systems and resources. The Company expects that
the number of its employees, including management-level employees, will continue
to increase for the foreseeable  future and that it may need  additional  office
space  and  expanded  technology   infrastructure.   Failure  to  manage  growth
effectively will materially adversely affect the Company's business,  results of
operations and financial condition.

     Significant  future  capital  needs and no  assurance  the Company  will be
successful  in  obtaining  necessary  additional  funding.  The  identification,
development  and  commercialization  of the  Company's  products  will require a
commitment of substantial funds to conduct development activities, to create and
expand  distribution  and  marketing  capabilities,  and to  acquire  and expand
manufacturing  capacity.  Given  the  development  stage  of  the  new  business
direction it is uncertain  how long these net proceeds  will fund the  Company's
operations.  The Company may be  required or elect to raise  additional  capital
before that time. The Company's actual capital  requirements will depend on many
factors,  including  but not  limited  to, the costs and  timing of its  ongoing
development  activities,  the number  and type of  clinical  or other  tests the
Company may be required to conduct in seeking  government or agency  approval of
these products,  the success of its development  efforts, the cost and timing of
establishing or expanding its sales, marketing and manufacturing activities, the
extent to which its products  gain market  acceptance,  its ability to establish
and maintain  collaborative  relationships,  competing  technological and market
developments,   the   progress   of  its   commercialization   efforts  and  the
commercialization  efforts of its  marketing  alliances,  the costs  involved in
preparing,  filing, prosecuting,  maintaining and enforcing and defending patent
claims  and  other  intellectual   property  rights,   developments  related  to
regulatory  issues,  and other  factors,  including  many that are  outside  its
control.

     To satisfy  its capital  requirements,  the Company may seek to raise funds
through  public or  private  financings,  collaborative  relationships  or other
arrangements. Any arrangement that includes the issuance of equity securities or
securities  convertible into the Company's equity  securities may be dilutive to
shareholders  (including the purchasers of the Debentures),  and debt financing,
if  available,  may involve  significant  restrictive  covenants  that limit the


                                       15

<PAGE>

Company's  ability  to  raise  capital  in  other  transactions.   Collaborative
arrangements,  if  necessary  to raise  additional  funds,  may require that the
Company   relinquish  or  encumber  its  rights  to  certain  of  the  Company's
technologies,  products or marketing  territories.  Any  inability or failure to
raise  capital  when  needed  could also have a material  adverse  effect on the
Company's business,  financial condition and results of operations. There can be
no assurance that any such  financing,  if required,  will be available on terms
satisfactory to the Company, if at all.

     Current and possibly future government  regulation.  The Company intends to
market  medical  devices  that  may be  regulated  by a number  of  governmental
agencies,  including the United States Food & Drug Administration  ("FDA").  The
FDA requires governmental clearance of all medical devices and drugs before they
can be marketed in the United States.  Similar approvals are required from other
regulatory  bodies  in  most  foreign   countries.   The  regulatory   processes
established by these government agencies are lengthy,  expensive,  and uncertain
and may  require  extensive  and  expensive  clinical  trials.  There  can be no
assurance that any future products  developed by the Company that are subject to
the FDA's  authority  will  prove to be safe and  effective  and meet all of the
applicable  regulatory  requirements  necessary to be  marketed.  The results of
testing  activities  could be susceptible to varied  interpretations  that could
delay, limit or prevent required regulatory approvals.  In addition, the Company
may  encounter  delays or  denials  of  approval  based on a number of  factors,
including  future  legislation,  administrative  action or changes in FDA policy
made during the period of product  development  and FDA regulatory  review.  The
Company may encounter similar delays in foreign countries. Furthermore, approval
may entail ongoing requirements for, among other things, post-marketing studies.
Even if the  Company  obtains  regulatory  approval of a marketed  product,  its
manufacturer and its manufacturing  facility are subject to on-going  regulation
and  inspections.  Discovery  of  previously  unknown  problems  with a product,
manufacturer  or  facility  could  result in FDA  sanctions,  restrictions  on a
product  or  manufacturer,  or an order to  withdraw  and/or  recall a  specific
product  from the market.  There can also be no  assurance  that  changes in the
legal or regulatory  framework or other subsequent  developments will not result
in limitation,  suspension or revocation of regulatory  approvals granted to the
Company.  Any such  events,  were they to occur,  could have a material  adverse
effect on the Company's business, financial condition and results of operations.

     The  Company  may also be  required  to  comply  with FDA  regulations  for
manufacturing  practices,  which mandate  procedures  for extensive  control and
documentation  of product  design,  control and validation of the  manufacturing
process and overall product quality.  Foreign  regulatory  agencies have similar
manufacturing  standards. Any third parties manufacturing the Company's products
or supplying  materials or  components  for such products may also be subject to
these  manufacturing  practices and mandatory  procedures.  If the Company,  its
management  or its third  party  manufacturers  fail to comply  with  applicable
regulations  regarding these manufacturing  practices,  it could be subject to a
number of sanctions,  including fines,  injunctions,  civil  penalties,  delays,
suspensions or withdrawals of market  approval,  seizures or recalls of product,
operating restrictions and, in some cases, criminal prosecutions.

     The Company's  products and related  manufacturing  operations  may also be
subject to regulation,  inspection and licensing by other governmental agencies,
including the Occupational Health and Safety Administration ("OSHA").

     Lack of in-house  research,  development or manufacturing  capability.  The
Company has no in-house  research,  development or  manufacturing  capability or
capacity to produce any  products.  The Company  initially  intends to establish
relationships  with  other  companies  to  provide  research,   development  and
manufacturing services in connection with its components and products. Any delay
in  availability of products may result in a delay in the submission of products
for any required regulatory approval or market introduction, subsequent sales of
such  products,  which  could have a material  adverse  effect on the  Company's
business,  financial  condition and results of operations.  These  manufacturing
processes may be labor intensive and, if so, significant increases in production
volume would likely require  changes in both product and process design in order
to facilitate increased automation of the production processes.  There can be no
assurance  that any such changes in products or processes or efforts to automate
all or any portion of these manufacturing processes would be successful, or that
manufacturing  or  quality  problems  will not  arise as the  Company  initiates
production of any products it might develop.

     Lack of  experienced  sales and marketing  capability for the Company's new
product and service  lines.  The Company  currently  has no experience in sales,
marketing or  distribution in its intended  market(s).  To market any of its new
products  or  services  directly,  the  Company  would be  required to develop a
marketing  and  sales  force  with  technical   expertise  and  with  supporting
distribution capability. Alternatively, the Company may obtain the assistance of
other companies with established  distribution  and sales forces,  in which case
the Company  would be required to enter into  agreements  regarding  the use and


                                       16

<PAGE>

maintenance  of these  distribution  systems and sales  forces.  There can be no
assurance  that  the  Company  will be  able to  establish  in-house  sales  and
distribution  capabilities,  or that the Company will be  successful  in gaining
market  acceptance for its products through the use of third parties.  There can
be no  assurance  that the Company  will be able to recruit,  train and maintain
successfully any such sales and marketing personnel, or that the efforts of such
personnel will be successful.

     Risks and  uncertainties  associated  with the  protection of  intellectual
property and related  proprietary  rights. The Company believes that its success
will  depend,  in large  part,  on the  Company's  ability to obtain and enforce
patents,   maintain  trade  secrets  and  operate  without   infringing  on  the
proprietary  rights of others in the United States and in other  countries.  The
enforcement  of patent  rights can be uncertain  and involve  complex  legal and
factual  questions.  The  scope and  enforceability  of  patent  claims  are not
systematically predictable with absolute accuracy.

     The strength of the Company's  patent  rights  depends,  in part,  upon the
breadth and scope of  protection  provided by the patent and the validity of its
patents, if any. The Company's inability to obtain or to maintain patents on its
key products could  adversely  affect its business.  The Company intends to file
patent  applications  in the  United  States  and in key  foreign  jurisdictions
relating  to its  technologies,  improvements  to  those  technologies  and  for
specific  products  the  Company may  develop.  There can be no  assurance  that
patents will issue on any of these  applications or that, if issued, any patents
will not be challenged,  invalidated or circumvented.  The prosecution of patent
applications  and the enforcement of patent rights are expensive and the expense
may  adversely  affect  the  Company's  profitability  and  the  results  of its
operations.  In addition,  there can be no assurance that the rights afforded by
any patents will guarantee proprietary protection or competitive advantage.

     The  Company's  success will also depend,  in part, on its ability to avoid
infringing the patent rights of others. The Company must also avoid any material
breach of technology licenses it may enter into with respect to its new products
and  services.  Existing  patent and  license  rights may require the Company to
alter the designs of its products or processes, obtain licenses or cease certain
activities.  In  addition,  if patents  have been issued to others that  contain
competitive or conflicting  claims and such claims are ultimately  determined to
be valid  and  superior  to the  Company's  own,  it may be  required  to obtain
licenses to those patents or to develop or obtain alternative technology. If any
licenses are required,  there can be no assurance  that the Company will be able
to obtain any necessary licenses on commercially favorable terms, if at all. Any
breach of an existing  license or failure to obtain a license to any  technology
that may be necessary in order to commercialize the Company's  products may have
a material  adverse impact on its business,  results of operations and financial
condition.  Litigation  that  could  result  in  substantial  costs  may also be
necessary to enforce  patents  licensed or issued to the Company or to determine
the scope or  validity  of third  party  proprietary  rights.  If the  Company's
competitors prepare and file patent applications in the United States that claim
technology  also  claimed  by  the  Company,  it  may  have  to  participate  in
proceedings  declared  by the U.S.  Patent  and  Trademark  Office to  determine
priority of  invention,  which could result in  substantial  costs,  even if the
Company  eventually  prevails.  An adverse  outcome could subject the Company to
significant liabilities to third parties, require disputed rights to be licensed
from third parties or require that the Company cease using such technology.

     The  Company  relies  on trade  secrets  laws to  protect  portions  of its
technology  for  which  patent  protection  has not yet been  pursued  or is not
believed to be  appropriate  or  obtainable.  These laws may protect the Company
against  the  unlawful  or  unpermitted  disclosure  of  any  information  of  a
confidential and proprietary nature,  including but not limited to the Company's
know-how, trade secrets, methods of operation, names and information relating to
vendors or suppliers and customer names and addresses.

     The Company intends to protect this unpatentable and unpatented proprietary
technology  and processes,  in addition to other  confidential  and  proprietary
information in part, by entering into confidentiality agreements with employees,
collaborative  partners,  consultants and certain  contractors.  There can be no
assurance that these agreements will not be breached, that the Company will have
adequate  remedies for any breach, or that the Company's trade secrets and other
confidential  and proprietary  information will not otherwise become known or be
independently discovered or reverse-engineered by competitors.

     No  certainty  that the market  will  accept  the  Company's  products  and
services.  The  Company's  targeted  markets  may  never  accept  its  products.
Insurance companies,  physicians, nurses, patients and consumers may not use the
Company's  products unless they determine,  based on experience,  clinical data,
advertising or other factors,  that those products are a preferable  alternative
to currently available methods of diagnosis. In addition, decisions to adopt new


                                       17

<PAGE>

medical  diagnostic  devices can be  influenced  by  government  administrators,
regulatory factors,  and other factors largely outside the Company's control. No
assurance  can be given that key  decision-makers  or third  party  payors  will
accept the Company's new products, which could have a material adverse effect on
the Company's business, financial condition and results of operations.

     Intense  competition.  The Company's  expected  product markets are rapidly
changing. Existing products and emerging products will compete directly with the
products the Company is seeking to develop and market. The Company's  technology
will compete directly with other technology,  and, although the Company believes
its technology has or will have advantages over these competing  systems,  there
can be no assurance that the Company's  technology will have advantages that are
significant  enough  to cause  users to adopt  its use.  Competition  from  such
products is expected to increase.

     Many of the  companies  currently  in the  remote  medical  monitoring  and
diagnostic  market  may  have  significantly  greater  financial  resources  and
expertise in research and development,  marketing,  manufacturing,  pre-clinical
and clinical testing,  obtaining  regulatory  approvals and marketing than those
available to the Company.  Smaller  companies  may also prove to be  significant
competitors,  particularly through  collaborative  arrangements with large third
parties.  Academic  institutions,  governmental  agencies and public and private
research  organizations  also  conduct  research,  seek  patent  protection  and
establish  collaborative  arrangements for product and clinical  development and
marketing  in the  medical  diagnostic  arena.  Many of these  competitors  have
products or techniques approved or in development and operate large, well-funded
research and development  programs in the field.  Moreover,  these companies and
institutions  may be in the  process  of  developing  technology  that  could be
developed  more  quickly or be  ultimately  more  effective  than the  Company's
planned products.

     The Company faces  competition  based on product  efficacy,  the timing and
scope of  regulatory  approvals,  availability  of supply,  marketing  and sales
capability,  reimbursement coverage,  price and patent position. There can be no
assurance that the Company's competitors will not develop more effective or more
affordable   products,   or  achieve   earlier  patent   protection  or  product
commercialization.

     Uncertainties  Related  to  Ability  to  License  Proprietary   Technology.
Volu-Sol  historically  has not been involved in research and development of new
technologies.  Consequently,  the  Company's  success in adding to its  existing
product line depends on its ability to acquire or otherwise license  competitive
technologies  and products and to operate  without  infringing  the  proprietary
rights of others,  both in the United States and  internationally.  No assurance
can be  given  that  any  licenses  required  from  third  parties  will be made
available  on terms  acceptable  to  Volu-Sol,  or at all. If Volu-Sol  does not
obtain such licenses,  it could encounter delays in product  introductions while
it attempts to adopt alternate  measures,  or could find that the manufacture or
sale of products  requiring  those  licenses is not possible.  Litigation may be
necessary to defend against claims of infringement,  to protect trade secrets or
know-how  owned by  Volu-Sol,  or to  determine  the scope and  validity  of the
proprietary  rights of others.  Litigation  could have an adverse  and  material
impact on the Company and its operations.

     Inability to Adequately Protect  Proprietary  Information.  Volu-Sol relies
upon  unpatented  trade  secrets  and  improvements,  unpatented  know  how  and
continuing  technological  innovation  to develop and maintain  its  competitive
position, which it seeks to protect, in part, by confidentiality agreements with
its employees and  consultants.  There can be no assurance that these agreements
will not be breached or that they will be  enforceable  by the Company,  or that
the Company's trade secrets and know how will not otherwise be compromised.

     Environmental  Risks. The chemical  manufacturing  processes of the Company
involve  the  controlled  use of  hazardous  materials.  Volu-Sol  is subject to
federal,  state and local laws and regulations  governing the use,  manufacture,
storage,  handling and disposal of such  materials and certain  waste  products.
Although  Volu-Sol  believes  that  its  activities  currently  comply  with the
standards  prescribed  by such  laws and  regulations,  the  risk of  accidental
contamination or injury from these materials cannot be eliminated.  In the event
of an  accident,  Volu-Sol  could be held liable for any damages that result and
any such liability could exceed the resources of the Company. In addition, there
can be no  assurance  that  Volu-Sol  will not be required to incur  significant
costs to comply with environmental laws and regulations in the future.

     Sufficiency  of  Marketing  and  Sales  Capabilities.  Volu-Sol  sells  its
products to  independent  distributors  who are free to resell the products.  In
order to achieve  profitable  operations,  the Company must maintain its current


                                       18

<PAGE>

base of distributors  and must expand that base in the future.  Volu-Sol's sales
staff competes with other  companies that  currently have  experienced  and well
funded  marketing and sales  operations.  To the extent that the Company  enters
into  co-promotion  or  other  marketing  and  sales   arrangements  with  other
companies,  any  revenues to be received by the Company will be dependent on the
efforts of  others,  and there can be no  assurance  that such  efforts  will be
successful.

     Potential Product Liability  Exposure and Limited Insurance  Coverage.  The
use of any of the  Company's  existing or potential  products in  laboratory  or
clinical settings may expose the Company to liability claims. These claims could
be made  directly by persons who assert that  inaccuracies  or  deficiencies  in
their  test  results  were  caused by defects  in its  products.  Alternatively,
Volu-Sol  could  be  exposed  to  liability  indirectly  by  being  named  as  a
third-party  defendant in actions brought against  companies or persons who have
purchased  its  products.   Volu-Sol  has  obtained  limited  product  liability
insurance  coverage for such  events.  However,  insurance  coverage is becoming
increasingly  expensive and no assurance can be given that Volu-Sol will be able
to maintain  insurance coverage at a reasonable cost or in sufficient amounts to
protect Volu-Sol against losses due to liability. There can also be no assurance
that Volu-Sol will be able to obtain  commercially  reasonable product liability
insurance for any products added to its product line in the future. A successful
product  liability claim or series of claims brought against Volu-Sol could have
a material  adverse effect on its business,  financial  condition and results of
operations.

     Dilution.  A significant  number of shares of  Volu-Sol's  common stock are
authorized but not issued. In addition, there are a substantial number of shares
of common stock of Volu-Sol  reserved for issuance  upon the exercise of certain
options,  warrants and preferred stock conversion  rights.  If and to the extent
such  options,  warrants or rights are  exercised,  or if the Board of Directors
determines to issue authorized but previously unissued shares of common stock in
connection  with  acquisitions  or  other  transactions,  such  issuances  could
substantially dilute the voting power of the existing  shareholders of Volu-Sol.
Furthermore,  the possibility of such issuances may adversely  affect the market
for Volu-Sol's common stock, should such a market ever develop.

Item 7.  Financial Statements

     The  Company's  audited  financial  statements  and  associated  notes  are
included and set forth on pages F-2 through F-18 of this report.

                                    Part III

Item 9.  Directors and Executive Officers of the Registrant

Executive Officers, Key Employees and Directors

     The  executive  officers and  directors of Volu-Sol as of December 31, 2000
are as follows:


         Name              Age                    Position

Wilford W. Kirton, III      40         Chief Executive Officer and Director
Michael Acton               37         Secretary, Treasurer and Acting Principal
                                       Accounting Officer
Barry Edwards               48         Director
F. Kenneth Westover         73         Director



Wilford W. Kirton, III

     Mr. Kirton became a director and the Chief Executive Officer of Volu-Sol in
January 1998. Mr. Kirton holds a bachelor's degree in Political Science from the
University of Utah. Prior to joining Volu-Sol, Mr. Kirton was the proprietor and
President of Travel Systems Network, a travel agency and tour operator from 1987


                                       19

<PAGE>

to February 1994. From February 1994 to June 1996, Mr. Kirton was Vice President
of Old  Republic  Title,  a real estate title  company.  From July 1996 to March
1997,  Mr.  Kirton  was a  sales  representative  for  Schwanns  Foods,  a  food
distributor in Utah. Mr. Kirton was an officer of Optim Nutrition,  a subsidiary
of Biomune (former parent of Volu-Sol),  from March 1997 until joining  Volu-Sol
in January 1998.

Michael G. Acton

     Mr. Acton has been  Secretary,  Treasurer and acting  Principal  Accounting
Officer  since  March 3,  1999.  Prior to that  time,  he was the  President  of
Volu-Sol  from March  1996 until  March  1997 and Chief  Executive  Officer  and
Chairman  of  Volu-Sol  from March 1997 to  January  1998.  From June 1998 until
November 2000, Mr. Acton was Chief Executive  Officer of Biomune,  where he also
served as Chief  Financial  Officer from July 1997 through  November 2000.  From
October  1994 to July 1997,  he was the  Controller  of Biomune.  From June 1989
through October 1994, Mr. Acton was employed by Arthur Andersen LLP in Salt Lake
City,  Utah,  where he  performed  various  tax,  audit  and  business  advisory
services.  Mr. Acton received a Bachelor of Science Degree in Accounting in 1988
and a  Masters  of  Professional  Accountancy  Degree  in  1989,  both  from the
University of Utah. He is a Certified Public Accountant in the State of Utah.

Barry Edwards

     Mr.  Edwards became a director of Volu-Sol in December 1998. He is the City
Administrator  of Highland,  Utah and has been  employed as Director of Research
and  Development at Kiva, a software  company,  since  February  1998.  Prior to
joining Kiva, Mr. Edwards worked as the City Manager of Belmont,  California for
three  years  and was the  City  Administrator  of  Ridgecrest,  California.  He
received a BS in Political Science and a Masters of Public  Administration (MPA)
from Brigham Young University.

Ken Westover

     Mr.  Westover  became a director of Volu-Sol  in December  1998.  He is the
owner of  Westover  &  Associates,  a  manufacturing  representative  for  floor
coverings,  a firm he  founded  in 1984.  Prior to  founding  his own firm,  Mr.
Westover was a factory  representative for O'Brien Corporation from 1962 to 1971
and for Hollytex  Carpet Mills from 1971 to 1984. He received his  undergraduate
degree  from LDS  Business  College  in Salt  Lake  City and also  attended  the
University of Utah and Brigham Young University.

     None of Volu-Sol's  executive officers or directors is related to any other
executive officer or director of the Company.

         The Board of Directors has not organized any committees to date.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers,  directors  and  persons  who  beneficially  own  more  than  10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission.  Officers,
directors  and greater than 10%  shareholders  are required by regulation of the
Securities  and  Exchange  Commission  to furnish the Company with copies of all
Section 16(a) forms they file.

     Based  solely upon its review of the copies of such forms  furnished to it,
and representations made by certain persons subject to this obligation that such
filings  were  not  required  to be made,  Volu-Sol  believes  that all  reports
required to be filed by these  individuals  and persons under Section 16(a) were
filed in a timely  manner and Volu-Sol is not aware of any  transactions  in its
outstanding securities by or on behalf of any director, executive officer or 10%
holder,  which would require the filing of any report  pursuant to Section 16(a)
during the fiscal year ended  September  30,  2000,  that was not filed with the
Commission.

                                       20

<PAGE>

Item 10.     Executive Compensation

     In January  1998 the Company  engaged  Wilford W. Kirton III as  President,
Chief Executive  Officer and director.  Mr. Kirton has no written agreement with
the Company. He receives an annual salary of $108,000.  In addition,  in October
2000 Mr. Kirton was granted  options to purchase  400,000 shares of common stock
at a price of $1.00 per share.  A total of 200,000 shares may be acquired at any
time under these options.  The remaining 200,000 shares vest at such time as the
Company  enters into a join venture or similar  agreement  for  marketing of the
Company's new products and services.

     Since1996  the Company has engaged the services of Michael  Acton,  who has
served in several executive  positions with the Company.  Currently Mr. Acton is
the Company's Acting Principal Accounting Officer. There is no written agreement
between Mr. Acton and the Company.  In October 2000, the Board granted Mr. Acton
options to purchase 200,000 shares of common stock at an exercise price of $1.00
per share.  One-half of these options (100,000 shares) are now exercisable.  The
remaining  portion vests at such time as the Company enters into a joint venture
or similar agreement for marketing of the Company's new products and services.

     The following table sets forth the compensation paid to the Company's chief
executive  officer during the past three fiscal years. No other officer was paid
total  annual  compensation  in excess of $100,000  during the three years ended
September 30, 2000.

                           Summary Compensation Table

                                                     Compensation

Name and Principal Position                     Year          Salary ($)

Wilford Kirton III                              1998                  -
President, Chief Executive Officer and          1999             48,000
Director                                        2000             89,000

Stock Plans

The 1997 Volu-Sol, Inc. Transition Plan

     At the time of the Company's  divestiture  by Biomune,  it adopted the 1997
Volu-Sol,  Inc.  Transition Plan (the "Transition  Plan") to govern the issuance
and exercise of certain options to purchase the Company's common stock.  Certain
officers,  directors  and  employees  of  Biomune  had been  granted  options to
purchase  shares of Biomune  common stock (the "Biomune  Options").  The Biomune
Options  were  granted  pursuant to various  Biomune  stock plans (the  "Biomune
Plans").  The  Biomune  Plans  gave the  committee  of the  Biomune  Board  that
administers  the plans (the  "Biomune  Plan  Committee")  the  authority to make
equitable  adjustments  to outstanding  Biomune  Options in the event of certain
transactions, such as the divestiture of the Company.

     At the time of the divestiture,  the Biomune Plan Committee and the Biomune
Board determined that, immediately prior to the divestiture, each Biomune Option
would be  divided  into two  separately  exercisable  options:  (i) an option to
purchase the Company's common stock (the "Add-on Volu-Sol  Option") in an amount
that  would  have been  issued in the  divestiture  in  respect of the shares of
Biomune common stock subject to the applicable  Biomune Option,  if such Biomune
Option had been  exercised in full  immediately  prior to the record date of the
divestiture,  and  containing  substantially  equivalent  terms as the  existing
Biomune  Option,  and (ii) an  option  to  purchase  Biomune  common  stock  (an
"Adjusted Biomune Option"), exercisable for the same number of shares of Biomune
common  stock as the  corresponding  Biomune  Option  had  been.  The per  share
exercise  price of the  Biomune  Option  would  remain the same in the  Adjusted
Biomune Option, and all other terms of such Biomune Option would remain the same
in all material  respects.  The Add-on  Volu-Sol Option carry an option exercise
price per share  equal to the price per share of the  exercise  price  under the
Biomune Option.

     As a  result  of  the  foregoing,  certain  persons  who  remained  Biomune
employees or non-employee  directors of Biomune after the divestiture  hold both
Adjusted Biomune Options and separate Add-on Volu-Sol  Options.  The obligations


                                       21

<PAGE>

with respect to the Adjusted Biomune Options and Add-on Volu-Sol Options held by
Biomune  employees and  non-employee  directors  following the  distribution are
obligations  solely of  Biomune.  The  Company  has  reserved a total of 732,101
shares of common stock for issuance upon exercise of the Add-on Volu-Sol Options
granted at the time of the divestiture under the Transition Plan.

     The  Transition  Plan  is  administered  by the  Board  of  Directors  or a
Committee of the Board of Directors appointed by the Board.

The 1997 Volu-Sol, Inc. Stock Incentive Plan

     Immediately prior to the divestiture in August 1997 the Company adopted the
1997  Volu-Sol,  Inc.  Stock  Incentive  Plan ("1997  Plan").  The 1997 Plan was
approved by action of Biomune,  then the Company's sole  shareholder.  Under the
1997 Plan,  the Company  may issue  stock  options,  stock  appreciation  rights
("SARs"),  restricted  stock  awards,  and  other  incentives  to the  Company's
employees,  officers and directors.  The principal features of the 1997 Plan are
summarized  below, but the following Summary is qualified in its entirety by the
written plan.

     The 1997 Plan  provides  for the award of  incentive  stock  options to the
Company's  key  employees  and  directors  and the award of  nonqualified  stock
options,  stock appreciation rights, bonus rights, and other incentive grants to
employees and certain  non-employees who have important  relationships  with the
Company's  subsidiaries  or the  Company.  5,000,000  shares are  available  for
issuance pursuant to awards granted under the 1997 Plan.

     At a  regular  meeting  of the Board in  October  2000,  the Board  granted
options  under  the  plan  to  certain   officers,   directors,   employees  and
consultants.  A total of 1,950,000  shares of common stock have been reserved to
be issued upon exercise of those options.

Director Compensation

     Directors  are paid an annual fee of $7,500 for their  service as directors
of the  Company.  Directors  are also  reimbursed  for  expenses  they  incur in
connection with their attendance at or participation in meetings of the Board of
Directors or shareholders of the Company.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

     The  following  table  presents the  beneficial  ownership of the Company's
common  stock as of November 30, 2000 and as adjusted to reflect the sale of the
Debentures (and including the shares of common stock  underlying the Debentures)
by (i) each person known by the Company to be the beneficial  owner of more than
5% of the outstanding  shares of the Company's common stock; (ii) each director;
(iii) each executive officer; and (iv) all directors and executive officers as a
group.  Shares of common stock that a person has the right to acquire  within 60
days  of the  date  of this  Memorandum  are  considered  to be  outstanding  in
calculating the percentage  ownership of that person,  but are not considered to
be outstanding for any other purpose.  Unless  otherwise  noted,  the address of
each beneficial owner listed below is c/o Volu-Sol,  Inc., 5095 West 2100 South,
Salt Lake City, Utah 84120.



<TABLE>
<CAPTION>
                                                 Shares of Common Stock         Percentage of
                                                   Beneficially Owned              Class
                                                ------------------------       ---------------
        5% Stockholders

        <S>                                               <C>                   <C>
           ADP Management                                 1,500,000             50.9%
           David G. Derrick (2)                           2,500,748             63.4%
           James Dalton                                     400,000             13.6%
           Battelle Memorial Institute                      400,000             13.6%
        Officers & Directors

           Wilford Kirton III (3)                           200,000              6.4%
           Michael Acton (4)                                100,000              3.3%
        All Officers and Directors as a group (2            300,000              9.7%
        persons)
</TABLE>

                                       22

<PAGE>

    (1)  Assumes a total of 3,091,246 shares issued and outstanding.

    (2)  Includes 1,500,000 shares owned directly by ADP Management, an entity
         owned and  controlled  by  Mr.Derrick,  options to purchase  1,000,000
         shares of common  stock,  as well as 748 shares  held  directly by Mr.
         Derrick.  Mr. Derrick has been nominated to serve as a director of the
         Company upon completion of a private  placement of the Company's debt,
         expected to be completed in or about April 2001.

    (3)  Includes options to purchase 200,000 shares of common stock.

    (4)  Includes options to purchase 100,000 shares of common stock.


Item 12.  Certain Relationships and Related Transactions

     Volu-Sol has agreed to indemnify  each of its directors and officers to the
fullest extent permitted by the Revised Utah Business Corporation Act.

     During the year ended September 30, 1999, the Company borrowed $70,000 from
Biomune  under a  promissory  note.  On March  31,  1999  Biomune  sold the note
relating to this  obligation  to Bioxide  Corporation  in exchange for shares of
Bioxide Corporation common stock. Subsequently, Bioxide Corporation assigned the
note to MK Financial, Inc., an entity owned or controlled by David G. Derrick, a
shareholder  of  the  Company,  in  satisfaction  of an  obligation  owed  to MK
Financial,  Inc. by Bioxide  Corporation.  MK Financial accepted the issuance of
approximately  2,011  shares of Series A Preferred  Stock from  Volu-Sol in full
satisfaction of the note.

     On April 17, 2000, the Company entered into a Technical  Services Agreement
for research and  development  with Battelle.  This agreement forms the basis of
the Company's  mutual  cooperation in the further  research and development of a
remote  access  diagnostic  system for medical  professionals  and  consumers to
further the Company's new business plan. Under the terms of this agreement,  the
Company will compensate Battelle for its services in furthering the research and
development  of the project by payment of $800,000 in the form of $400,000  cash
and 400,000  restricted shares of common stock. The Company also granted options
to Battelle to purchase  1,350,000 shares of common stock at prices ranging from
$3.00 to $7.00 per share. The agreement also grants certain anti-dilution rights
to Battelle. Battelle may also appoint a nominee to serve on the Company's Board
of Directors. To date Battelle has not exercised this right.

     During March 2000 the Company sold 1,900,000  shares of common stock to ADP
Management (an entity owned by David  Derrick,  a nominee for director after the
closing of this  Offering)  and to James  Dalton.  The Company  received cash of
$1,900,000 in these transactions.

     The  Company  has  also  entered  into  a  consulting  agreement  with  ADP
Management for the one-year  period  commencing  April 1, 2000 through March 31,
2001. Under the terms of this Agreement, ADP Management is paid a consulting fee
of $10,000 per month.  The Company has also  agreed to  reimburse  the  expenses
incurred by ADP Management in the course of its performance under the consulting
agreement and in connection with its efforts.

Item 13.  Exhibits and Reports on Form 8-K

     The following  exhibits are filed herewith or are incorporated by reference
to exhibits previously filed with the Commission:


                                       23

<PAGE>

(a)      Exhibits

Exhibit Number             Title of Document

         3.01              Articles of  Incorporation  and Amendments  thereto
                           (incorporated  by reference to the Company's
                           Registration  Statement  and  Amendments  thereto on
                           Form  10-SB,  effective December 1, 1997).

         3.02              Bylaws  (incorporated  by reference  to the Company's
                           Registration  Statement on Form  10-SB, effective
                           December 1, 1997).

         10.01             Distribution  and  Separation Agreement (incorporated
                           by reference to the Company's Registration  Statement
                           and  Amendments  thereto on Form 10-SB,  effective
                           December 1, 1997).

         10.02             1997 Stock Incentive Plan of the Company,
                           (incorporated  by reference to the Company's
                           Registration  Statement and  Amendments  thereto on
                           Form 10-SB,  effective  December 1, 1997).

         10.03             1997  Transition Plan  (incorporated  by reference to
                           the Company's  Registration  Statement and Amendments
                           thereto on Form 10-SB, effective December 1, 1997).

         10.04             Securities   Purchase  Agreement  for  $1,200,000  of
                           Series A Preferred Stock  (incorporated  by reference
                           to   the   Company's   Registration   Statement   and
                           Amendments thereto on Form 10-SB,  effective December
                           1, 1997).

         27                Financial Data Schedule.

(b)      Reports on Form 8-K

     No  reports  on Form 8-K have been  filed  during  the last  quarter of the
period covered by this report.


                                       24

<PAGE>

                                   SIGNATURES

In accordance  with Section 13 and/or 15(d) of the Securities  Exchange Act, the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                        Volu-Sol, Inc.

                                        By:    /s/ Wilford W. Kirton, III
                                           -------------------------------------
                                           Wilford W. Kirton, III, Chief
                                           Executive Officer

                                           Dated: January 11, 2000

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

Signature                                  Title                       Date

 /s/ Wilford W. Kirton, III                                     January 11, 2000
-------------------------------  Director, Chairman, and
Wilford W. Kirton, III           Chief Executive Officer



-------------------------------  Director                       January __, 2000
Barry Edwards


 /s/ Ken Westover
-------------------------------  Director                       January 11, 2000
Ken Westover

 /s/ Michael G. Acton
-------------------------------  Acting Chief Financial Officer January 11, 2000
Michael G. Acton

                                       25

<PAGE>
VOLU-SOL, INC.

Consolidated Financial Statements
September 30, 2000 and 1999


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Index to Consolidated Financial Statements

--------------------------------------------------------------------------------



                                                                           Page

Report of Tanner + Co.                                                      F-2


Consolidated balance sheet                                                  F-3


Consolidated statement of operations                                        F-4


Consolidated statement of stockholders' equity                              F-5


Consolidated statement of cash flows                                        F-6


Notes to consolidated financial statements                                  F-7



--------------------------------------------------------------------------------





                                                                            F-1


<PAGE>



                                                    INDEPENDENT AUDITORS' REPORT

To the Board of Directors
and Stockholders of Volu-Sol, Inc.

We have audited the accompanying  consolidated  balance sheet of Volu-Sol,  Inc.
and  subsidiary  (the  Company),  as of  September  30,  2000,  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years  ended  September  30,  2000 and 1999.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Volu-Sol,  Inc. and
subsidiary as of September  30, 2000,  and the results of their  operations  and
their cash flows for the years ended  September  30, 2000 and 1999 in conformity
with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has incurred recurring operating losses, and
has an accumulated  deficit.  These conditions raise substantial doubt about its
ability to continue  as a going  concern.  Management's  plans  regarding  those
matters also are described in Note 1. The consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

                                      TANNER + CO.

Salt Lake City, Utah
December 8, 2000

                                                                            F-2


<PAGE>


                                                                  VOLU-SOL, INC.
                                                      Consolidated Balance Sheet

                                                             September 30, 2000

--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
              Assets

Current Assets:
<S>                                                                             <C>
     Cash                                                                       $          278,421
     Accounts receivable, less allowance for
       doubtful accounts of $21,188                                                         78,105
     Inventories                                                                            50,890
                                                                                ------------------

                  Total current assets                                                     407,416

Property and equipment, net                                                                 56,315
Other assets                                                                                 3,272
                                                                                ------------------

                  Total assets                                                  $          467,003
                                                                                ------------------

--------------------------------------------------------------------------------------------------

              Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable                                                           $          190,630
     Accrued liabilities                                                                    39,089
                                                                                ------------------

                  Total current liabilities                                                229,719
                                                                                ------------------

Commitments and contingencies                                                                    -

Stockholders' equity:
     Preferred stock, $.0001 par value; 10,000,000 shares authorized:
       16,138 shares issued and outstanding (aggregate liquidation
       preference $43,310)                                                               3,829,112
     Common stock, $.0001 par value; 50,000,000 shares authorized,
       2,941,246 shares issued and outstanding                                                 294
     Additional paid-in capital                                                          4,542,553
     Preferred stock subscriptions receivable                                             (338,300)
     Accumulated deficit                                                                (7,796,375)
                                                                                ------------------

                  Total stockholders' equity                                               237,284
                                                                                ------------------

                  Total liabilities and stockholders' equity                    $          467,003
                                                                                ------------------
</TABLE>



--------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                F-3


<PAGE>


                                                                  VOLU-SOL, INC.
                                            Consolidated Statement of Operations

                                                       Years Ended September 30,
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                              2000              1999
                                                    -----------------------------------

<S>                                                 <C>                  <C>
Sales                                               $         496,211    $      528,904
Cost of goods sold                                            291,213           364,646
                                                    -----------------------------------

                  Gross margin                                204,998           164,258

Research and development - related party                    2,069,231                 -
Selling, general and administrative expenses                1,596,601           938,898
Impairment loss                                                     -           114,620
                                                    -----------------------------------

                  Loss from operations                     (3,460,834)         (889,260)

Other income (expense):
     Interest income                                           15,482             1,624
     Interest expense                                               -           (18,864)
                                                    -----------------------------------

     Loss before provision for income taxes                (3,445,352)         (906,500)

Provision for income taxes                                          -                 -
                                                    -----------------------------------

                  Net loss                          $      (3,445,352)   $      906,500)
                                                    -----------------------------------

Dividends on Series A preferred stock                        (258,550)         (169,638)

Preferred stock accreation                                   (171,746)         (305,750)

Net loss applicable to common stock                 $      (3,875,648)   $   (1,381,888)
                                                    -----------------------------------

Net loss per common share - basic and diluted       $           (2.85)   $        (2.67)
                                                    -----------------------------------

Weighted average shares - basic and diluted                 1,359,530           517,239
                                                    -----------------------------------
</TABLE>




--------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                F-4



<PAGE>

                                                                  VOLU-SOL, INC.
                                  Consolidated Statement of Stockholders' Equity

                                         Years Ended September 30, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                           Preferred
                                                                            Additional     Stock
                                    Preferred Stock       Common Stock        Paid-In     Subscriptions  Accumulated
                                ------------------------------------------
                                 Shares     Amount      Shares     Amount     Capital      Receivable     Deficit
                                --------------------------------------------------------------------------------------

<S>                                <C>    <C>           <C>        <C>       <C>          <C>             <C>
Balance at September 30, 1998      9,395  $  2,033,028  2,211,407  $    221  $ 1,959,832  $    (900,000)  $ (3,016,335)

Effect of 1 for 5 stock split at
April 15, 2000                         -             - (1,769,126)     (177)         177              -              -

Additional shares issued as a
result of the divestiture of the
Company's common stock                 -             -    100,219        10          (10)             -              -

Issuance of preferred stock for:

   Commission                        775       155,000          -         -            -              -              -
   Board of directors
     compensation                  1,485       297,000          -         -            -              -              -
   Compensation                      200        40,000          -         -            -              -              -

Collection of stock
  subscription:

   Cash                                -             -          -         -            -        159,500              -
   Exchange of liabilities             -             -          -         -            -        402,200              -

Dividends on preferred stock         848       169,638          -         -            -              -       (169,638)

Accretion of preferred stock           -       305,750          -         -     (305,750)             -              -

Net Loss                               -             -          -         -            -              -       (906,500)
                                ---------------------------------------------------------------------------------

Balance at September 30, 1999     12,703     3,000,416    542,500        54    1,654,249       (338,300)  (  4,092,473)

Additional shares issued as a
result of the divestiture of the
Company's common stock                 -             -      1,746         -            -              -              -

Issuance of common stock for:

   Cash (related party)                -             -  1,900,000       190    1,499,810              -              -
   Services                            -             -     25,000         3       24,997              -              -
   Services (related party)            -             -    400,000        40      399,960              -              -
   Conversion of preferred          (288)      (57,600)    72,000         7       57,593              -              -
stock

Issuance of preferred stock for:

   Cash                            1,330       236,000          -         -            -              -              -
   Cash (related party)              580       116,000          -         -            -              -              -
   Services                        1,100       220,000          -         -            -              -              -

Issuance of stock options for
services to related party              -             -          -         -    1,077,690              -              -

Dividends on preferred stock       1,293       258,550          -         -            -              -       (258,550)

Accretion of preferred stock           -       171,746          -         -     (171,746)             -              -

Net loss                               -             -          -         -            -              -     (3,445,352)
                                --------------------------------------------------------------------------------------

Balance at September 30, 2000     16,138  $  3,829,112  2,941,246  $    294  $ 4,542,553  $    (338,300)  $ (7,796,375)
                                --------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                F-5


<PAGE>

                                                                  VOLU-SOL, INC.
                                            Consolidated Statement of Cash Flows

                                                       Years Ended September 30,
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                             2000               1999
                                                                       ----------------------------------
Cash flows from operating activities:

<S>                                                                    <C>                  <C>
     Net loss                                                          $    (3,445,352      $    (906,500)
     Adjustments to reconcile net loss to
       net cash used in operating activities:
         Depreciation                                                           59,262             79,902
         Provision for losses on accounts receivable                            19,000               (987)
         Common stock issued for services                                      425,000                  -
         Stock options issued for services                                   1,077,690                  -
         Preferred stock issued for services                                   220,000            492,000
         Impairment loss                                                             -            114,620
         (Increase) decrease in:
              Accounts receivable                                              (21,408)           (12,002)
              Inventories                                                        5,330             29,231
              Other assets                                                         950                742
         Increase (decrease) in:
              Accounts payable                                                 156,264             (8,168)
              Accrued liabilities                                               10,755            (16,287)
                                                                       ----------------------------------

                      Net cash used in
                      operating activities                                  (1,492,509)          (227,449)
                                                                       ----------------------------------

Cash flows from investing activities:

     Purchase of property and equipment                                         (9,193)              (339)
     Proceeds from payment on related party note receivable                    200,000                  -
     Payment for issue of related party note receivable                       (200,000)                 -
                                                                       ----------------------------------

                  Net cash used in
                  investing activities                                          (9,193)              (339)
                                                                       ----------------------------------


Cash flows from financing activities:

     Proceeds from issuance of common stock                                  1,500,000                  -
     Proceeds from notes payable                                                     -             96,000
     Proceeds from sale of preferred stock                                     236,000                  -
     Payment on subscription receivable                                              -            159,500
                                                                       ----------------------------------

                      Net cash provided by
                      financing activities                                   1,736,000            255,500
                                                                       ----------------------------------

                      Net increase in cash                                     234,298             27,712

Cash, beginning of year                                                         44,123             16,411
                                                                       ----------------------------------

Cash, end of year                                                      $       278,421      $      44,123
                                                                       ----------------------------------
</TABLE>
--------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                F-6


<PAGE>

                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements

                                                     September 30, 2000 and 1999
--------------------------------------------------------------------------------


1.   Summary of
     Significant
     Accounting
     Policies

Organization and Business Activity

The consolidated  financial statements consist of Volu-Sol,  Inc. (the Company),
which is  incorporated  in the state of Utah,  and its wholly owned  subsidiary,
Volu-Sol  Reagents  Corporation,  which was incorporated on March 5, 1998 in the
state of Utah.

The Company engages in the manufacturing,  marketing and distribution of medical
diagnostic  stains and the marketing and  distribution  of the  Definitive.  The
Definitive  is a  hematology  staining  instrument  that  contains  a  microchip
(proprietary to a third party) that regulates precise stain amounts.

Going Concern

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As of September 30, 2000, the Company
had an accumulated deficit of $7,796,375 and has incurred continuous losses from
operations.  These conditions raise  substantial  doubt about the ability of the
Company to continue as a going concern.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

The  Company's  ability  to  continue  as a  going  concern  is  subject  to the
attainment of profitable  operations or obtaining necessary funding from outside
sources.  Management's plans with respect to this uncertainty  include obtaining
debt or equity funding to finance the Company's operations.  However,  there can
be no assurance they will be successful.

Principles of Consolidation

The consolidated  financial  statements include the accounts of the Company, and
its subsidiary. All significant intercompany balances and transactions have been
eliminated.

Estimates  in  the  Preparation  of  Financial  Statements  The  preparation  of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

--------------------------------------------------------------------------------
                                                                            F-7


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



1.   Summary of
     Significant
     Accounting
     Policies
     Continued

Concentration of Credit Risk

Financial  instruments which potentially subject the Company to concentration of
credit risk consist  primarily  of trade  receivables.  In the normal  course of
business, the Company provides credit terms to its customers.  Accordingly,  the
Company  performs  ongoing  credit  evaluations  of its  customers and maintains
allowances for possible losses which, when realized,  have been within the range
of management's expectations.

The Company  maintains its cash in bank deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts and believes it is not exposed to any  significant  credit risk on
cash and cash equivalents.

Cash and Cash Equivalents

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  debt  instruments  with a  maturity  of three  months or less to be cash
equivalents.

Inventories

Inventories are recorded at the lower of cost or market,  cost being  determined
on a first-in,  first-out  (FIFO) method.  Substantially,  all items included in
inventory are finished goods.

Sales of the  Definitive  have been lower than  expected  by the  Company,  as a
result,  the  Company  has  written  off the  carrying  cost  of its  Definitive
inventory,  and recognized an impairment  loss in its statement of operations in
1999.

Property and Equipment

Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation and amortization are determined using the straight-line method over
the  estimated  useful lives of the assets.  Expenditures  for  maintenance  and
repairs are expensed when incurred and  betterments are  capitalized.  Gains and
losses on sale of property and equipment are reflected in operations.

Income Taxes

Deferred  income  taxes are  provided  in amounts  sufficient  to give effect to
temporary  differences between financial and tax reporting,  principally related
to depreciation.

--------------------------------------------------------------------------------
                                                                            F-8


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



1.   Summary of
     Significant
     Accounting
     Policies
     Continued

Earnings Per Share

Basic and diluted  earnings per share are computed in accordance  with Statement
of  Financial  Accounting  Standards  (SFAS) No. 128,  Earnings Per Share (EPS).
Basic EPS  excludes  dilution  and is computed by dividing  income  available to
common stockholders by the weighted- average number of common shares outstanding
for the period.  Diluted EPS reflects the potential  dilution from securities or
contracts to issue common stock.  Common equivalent shares are excluded from the
computation of diluted EPS when their effect is antidilutive.

Advertising

The Company  expenses  the cost of  advertising  the first time the  advertising
takes  place.  For the  years  ended  September  30,  2000 and 1999  advertising
expenses totaled approximately $6,000 and $-0-, respectively.

Revenue Recognition

Revenue from the sale of the Company's  products,  less reserves for returns, is
recognized upon shipment to the customer.

2.   Property
     and
     Equipment

Property and equipment consist of the following:

Leasehold improvements                                       $          224,045
Furniture and fixtures                                                  170,939
Equipment                                                                41,253
                                                             ------------------

                                                                        436,237

Accumulated depreciation                                               (379,922)
                                                             ------------------

                                                             $           56,315
                                                             ------------------



3.   Related
     Party
     Transactions

During the year ended  September 30, 2000, the Company paid  $2,069,231 in stock
and cash to an entity,  which  holds more than 5% of the issued and  outstanding
common shares of the Company,  for research and development  services.  Accounts
payable to this entity were $145,000 at September 30, 2000.

--------------------------------------------------------------------------------
                                                                            F-9


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



3.   Related
     Party
     Transactions
     Continued

During the year ended  September 30, 2000 the Company paid $90,000 in consulting
expenses  to an entity  controlled  by a major  shareholder  and  another  major
shareholder.  The  Company is  obligated  under an  agreement  to pay $60,000 in
fiscal year 2001.

During the year ended  September  30, 2000 certain  shareholders  of the Company
purchased 1,900,000 shares of common stock at approximately $.80 per share.

4.   Income Tax

The benefit for income taxes is different  than amounts  which would be provided
by applying the statutory  federal income tax rate to loss before  provision for
income taxes for the following reasons:

                                                   September 30,

                                        -----------------------------------
                                               2000             1999
                                        -----------------------------------
Federal income tax benefit at
  statutory rate                        $        1,171,000  $       308,000
Meals and entertainment                             (2,000)          (1,000)
Other                                               (9,000)          (5,000)
Change in valuation allowance                   (1,160,000) $      (302,000)
                                        -----------------------------------

                                        $                -                -
                                        -----------------------------------


Deferred tax assets  (liabilities)  are  comprised of the following at September
30, 2000:

Net operating loss carryforward                            $      1,348,000
Stock options issued for services                                   366,000
Depreciation and reserves                                            66,000
Valuation allowance                                              (1,780,000)
                                                           ----------------

                                                           $              -
                                                           ----------------



--------------------------------------------------------------------------------
                                                                           F-10


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

4.   Income Tax
     Continued

At  September  30,  2000,  the  Company  has net  operating  loss  carryforwards
available to offset future taxable income of approximately $3,966,000 which will
begin to expire in 2018. The utilization of the net operating loss carryforwards
is  dependent  upon the tax laws in  effect at the time the net  operating  loss
carryforwards can be utilized.  The Tax Reform Act of 1986 significantly  limits
the annual amount that can be utilized for certain of these  carryforwards  as a
result of the change in ownership.

5.   Lease
     Obligations

The  Company  leases  facilities  under a  noncancellable  operating  lease that
expires  in  November   2005.   Future   minimum   rental   payments  under  the
non-cancelable  operating  lease as of September 30, 2000 are  approximately  as
follows:

     Year Ending September  30:                                     Amount

                                                              ------------------

                           2001                               $           60,000
                           2002                                           62,000
                           2003                                           64,000
                           2004                                           66,000
                           2005                                           68,000
                           Thereafter                                     11,000
                                                              ------------------

     Total future minimum rental payments                     $          331,000
                                                              ------------------

Rent expense related to these non-cancelable  operating leases was approximately
$  57,000  and  $60,000  for the  years  ended  September  30,  1999  and  1998,
respectively.

6.   Supplemental
     Cash Flow
     Information

During the year ended September 30, 2000, the Company:

o Issued preferred stock of $258,550 as dividends.

o    Increased  preferred  stock and decreased  additional  paid-in-capital  for
     $171,746 due to accretion.

o    Increased  common  stock  and  additional  paid in  capital  and  decreased
     preferred stock by $57,600 due to the conversion of 288 shares of preferred
     stock to common stock.

--------------------------------------------------------------------------------
                                                                           F-11


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

6.   Supplemental
     Cash Flow
     Information
     Continued

During the year ended September 30, 1999, the Company:

o    Issued preferred stock of $169,638 as dividends.

o    Increased  preferred  stock and decreased  additional  paid-in-capital  for
     $305,750 due to accretion.

o    Reduced notes payable by $372,149 and the  associated  accrued  interest of
     $30,051 in partial satisfaction of subscription receivable.

Actual amounts paid for interest and income taxes are as follows:

                                                    Years Ended
                                                   September 30,

                                        -----------------------------------
                                               2000             1999
                                        -----------------------------------

Interest                                $             -    $            318
                                        -----------------------------------

Income taxes                            $             -    $              -
                                        -----------------------------------



7.   Reverse
     Common
     Stock Split

On April 13, 2000, the Company's  Board of Directors  approved a 1-for-5 reverse
common stock split. All common share amounts,  per share information and numbers
of common shares into which  preferred  stock is convertible , and stock options
have been  retroactively  adjusted to reflect this reverse common stock split in
the accompanying consolidated financial statements.

8.   Capital
     Stock

The Company is authorized to issue 50,000,000 shares of common stock, $.0001 par
value per share, and 10,000,000 shares of preferred stock,  $.0001 par value per
share. The Company's board of directors has the authority to amend the Company's
Articles of Incorporation,  without further stockholder  approval,  to designate
and determine,  in whole or in part, the  preferences,  limitations and relative
rights of the preferred  stock before any issuance of the preferred stock and to
create one or more series of preferred stock.

--------------------------------------------------------------------------------
                                                                           F-12


<PAGE>

                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


9.   Preferred
     Stock

Series A

On  September 8, 1997,  the Company  amended its  Articles of  Incorporation  to
create a series of  preferred  stock.  The Series A 10%  Convertible  Non-Voting
Preferred Stock, consists of 20,000 shares with $.0001 par value. This series is
part of the  Company's  10,000,000  authorized  shares of  non-voting  preferred
stock. The Series A Preferred Stock has the following rights and privileges:

     1.  The holders of the shares are entitled to dividends at the rate of
         ten percent (10%) per annum on the stated value of the Series
         A Preferred Stock (or $200 per share), payable in cash or in
         additional shares of Series A Preferred Stock at the discretion
         of the Board of Directors.  Dividends are fully cumulative and
         accrue from the date of original issuance.  At September 30,
         2000, all dividends earned have been paid through the
         issuance of additional shares of preferred stock.


     2.  Upon the  liquidation of the Company,  the holders of
         the Series A Preferred Stock are entitled to receive,
         prior to any  distribution  of any  assets or surplus
         funds to the holders of shares of common stock or any
         other stock, an amount equal to $2.00 per share, plus
         accrued and unpaid regular or special  dividends,  if
         any, multiplied by 133% .

     3.  The shares are convertible at the option of the holder at any
         time subsequent to January 1, 1998 into common shares,
         determined by dividing $200 plus any accrued and unpaid
         regular or special dividends by an amount equal to the lesser of
         (i) the "Market Price" (defined as the average closing bid price
         of the Company's Common Stock for the three trading days
         immediately preceding the applicable Conversion Date) less
         20%; or (ii) $6.25.


         A single  holder (or  affiliated  holders) may not at
         any time hold shares of the  Company's  Common  Stock
         exceeding  4.9% of the total  number  of  issued  and
         outstanding  shares of Common Stock. Thus, any holder
         or group of  affiliated  holders will only be allowed
         to convert  shares of Series A  Preferred  Stock into
         shares  of Common  Stock in an amount  such that such
         holder's ownership of shares of Common Stock does not
         exceed  4.9%  of  the  total  number  of  issued  and
         outstanding shares of Common Stock.

--------------------------------------------------------------------------------
                                                                           F-13


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------

9.   Preferred
     Stock
     Continued

     4.  The holders of the shares have no voting rights.

     5.  The Company may, at its option, redeem up to 66-2/3% of the
         total number of shares of Series A Preferred Stock.  The
         Company may designate a different and lower conversion price
         and the call price for all shares of Series A Preferred Stock
         called for redemption by the Company shall be 133% of the
         New Conversion Price for all shares of Series A Preferred Stock
         called after January 1, 1998.


10.  Major
     Customers

Sales to major customers which exceeded 10 percent of net sales are as follows:

                                             Years Ended September 30,

                                        -----------------------------------
                                               2000             1999
                                        -----------------------------------

Company A                                      19.3%            14.6%
Company B                                         -             11.0%



11.  Stock Options
     and Warrants

Stock Incentive Plan

The Company has adopted the 1997 Volu-Sol,  Inc. Stock Incentive Plan (the "1997
Plan").  The  1997  Plan  was  approved  by  action  of  Biomune,  the  original
stockholder of the Company, in August 1997. Under the 1997 Plan, the Company may
issue stock options,  stock  appreciation  rights,  restricted stock awards, and
other  incentives  to  employees,  officers and directors of the Company and the
award of  nonqualified  stock  options and other awards to employees and certain
non- employees who have important  relationships with the Company.  Five million
shares are initially available for grant under the 1997 Plan.

--------------------------------------------------------------------------------
                                                                           F-14


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


11.  Stock Options
     and Warrants
     Continued

Add-on Volu-Sol Options

In connection with the  Distribution of the Company's common stock, the Board of
Directors  of  Biomune  determined  that each  Biomune  stock  option  ("Biomune
Option") would be divided into two separately  exercisable options: an option to
purchase  Biomune common stock and an option to purchase  Volu-Sol  common stock
(the latter being the "Add-on  Volu-Sol  Option").  The Add-on Volu-Sol  Options
grant the holder the right to purchase the  Company's  common stock in an amount
that  would  have been  issued in the  Distribution  in respect of the shares of
Biomune common stock subject to the applicable  Biomune Option,  if such Biomune
Option had been exercised in full  immediately  prior to the  Distribution,  and
containing  substantially  equivalent terms as the existing Biomune Option.  The
Add-on  Volu-Sol  Options carry an option  exercise price per share equal to the
price per share of the exercise price under the Biomune Option.

As a result of the foregoing,  certain  persons who remain Biomune  employees or
non-employee  directors  after the  Distribution  and  certain  persons who were
Biomune employees prior to the Distribution but become Volu-Sol  employees after
the Distribution hold both Biomune Options and separate Add-on Volu-Sol Options.
The obligations  with respect to the Biomune Options and Add-on Volu-Sol Options
held by Biomune employees and non-employee  directors following the Distribution
will be  obligations  solely of Biomune.  Volu-Sol has agreed to sell to Biomune
from time to time  shares of  Volu-Sol  common  stock as  necessary  to  satisfy
Biomune's obligations under the Distribution Agreement.  The sales price of such
shares  of  Volu-Sol  common  stock  will be a sum  equal  to the  consideration
received by Biomune in exercise of the related option.

--------------------------------------------------------------------------------
                                                                           F-15


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


11.  Stock Options
     and Warrants
     Continued

Volu-Sol Warrants

Biomune  has  granted  rights to purchase  Biomune  common  stock in the form of
warrants (the "Biomune Warrants").  Under the agreements governing the grant and
exercise of the Biomune Warrants,  Biomune has agreed to issue to the holders of
such rights,  securities  otherwise  issuable with respect to the Biomune common
shares underlying the Biomune Warrants if and to the extent the Biomune Warrants
are exercised.  Consequently,  if the holders of the Biomune  Warrants  exercise
their  rights  thereunder,  Biomune  must  issue to those  holders  one share of
Volu-Sol  common  stock  for each  share  of  Biomune  common  stock  issued  in
connection with such exercise. Volu-Sol has agreed to sell to Biomune the shares
of Volu-Sol  common stock needed to meet this  obligation of Biomune.  The sales
price of such shares of Volu-Sol  common stock will be a sum equal to 10 percent
of the consideration received by Biomune in exercise of the Biomune Warrants.

                                             Number of
                                            Options and       Price Per

                                              Warrants          Share

                                          ---------------------------------

Outstanding at September 30, 1998                2,636,750  $ 5.80 to 20.00
 Expired                                          (406,250)   6.25 to  4.00
                                          ---------------------------------

Outstanding at September 30, 1999                2,230,500    5.80 to 20.00
 Expired                                        (1,420,000)   5.80 to 15.00
 Granted                                         1,350,000    3.00 to  7.00
                                          ---------------------------------

Outstanding at September 30, 2000                2,160,500  $ 3.00 to 15.00
                                          ---------------------------------



--------------------------------------------------------------------------------
                                                                           F-16


<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------


11.  Stock Options
     and Warrants
     Continued

When  accounting  for the  issuance  of stock  options  and  warrants  financial
accounting  standards  allows entities the choice between  adopting a fair value
method or an intrinsic  value method with footnote  disclosures of the pro forma
effects if the fair value method had been adopted. The Company has opted for the
latter  approach.  During the year ended  September  30, 2000,  1,350,000  stock
options were  awarded to a  related-party  entity for  research and  development
services.  The options  were valued at a price  derived  from the  Black-Scholes
option pricing model and are recognized as part of the net loss per common share
as reported in the statement of operations. No options were awarded for the year
ended September 30, 1999. Accordingly,  the loss applicable to common shares and
loss per common share for pro-forma presentation in accordance with Statement of
Financial  Accounting  Standards  No. 123 does not differ  from that of reported
amounts as follows:

                                                        Years Ended
                                                       September 30,

                                            ------------------------------------
                                                   2000              1999
                                            ------------------------------------

Net loss applicable to common
  shares - as reported                      $       (3,875,648)  $   (1,381,888)
Net loss applicable to common
  shares - pro forma                        $       (3,875,648)  $   (1,381,888)
Loss per common share - as reported         $             (2.8)  $        (2.67)
Loss per common share -   pro forma         $            (2.85)  $        (2.67)
                                            ------------------------------------

11.  Stock Options
     and Warrants
     Continued

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:

                                                         September 30,

                                               ---------------------------------
                                                     2000            1999
                                               ---------------------------------

Expected dividend yield                        $            -   $             -
Expected stock price volatility                             -                 -
Risk-free interest rate                                     6%             5.25%
Expected life of options                              5 years            5 years
                                               ---------------------------------

The  weighted  average  fair  value of  options  granted  during  the year ended
September 30, 2000 and 1999 are $.80 and $0, respectively.

--------------------------------------------------------------------------------
                                                                           F-17


<PAGE>

                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements
                                                                       Continued

--------------------------------------------------------------------------------



The  following  table  summarizes  information  about stock options and warrants
outstanding at September 30, 2000:

                            Outstanding                      Exercisable
              ------------------------------------------------------------------
                             Weighted
                              Average
                 Number      Remaining    Weighted      Number       Weighted
   Range of    Outstanding  Contractual    Average    Exercisable    Average
   Exercise        at          Life       Exercise         at        Exercise
    Prices      09/30/00      (Years)       Price      09/30/00       Price
--------------------------------------------------------------------------------
$        3.00       450,000         4.56  $    3.00       450,000  $        3.00
  5.00 - 7.00     1,520,500         2.92       5.92     1,520,500           5.92
11.70 - 15.00       190,000         0.74      13.92       190,000           3.00
--------------------------------------------------------------------------------
$        3.00     2,160,500         3.07  $    6.01     2,160,500  $        6.01
--------------------------------------------------------------------------------



12.  Fair Value of
     Financial
     Instruments

The Company's financial  instruments consist of cash,  receivables and payables.
The carrying amount of cash,  receivables and payables  approximates  fair value
because of the short-term nature of these items.

--------------------------------------------------------------------------------
                                                                           F-18