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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, 1999
[ ]    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                          (I.R.S. 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 12(b) of the Act: None

Name of each exchange on which registered: 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, 1999 were $528,904.

Registrant's  common  stock  has not  traded  and  there  is no  market  for the
registrant's common stock at this time.

The number of shares of common stock of the registrant outstanding as of January
7, 2000 was 2,721,042.

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


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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  fiscal 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  2,211,407  shares  of the  Company's  Common  Stock  were
distributed  pro rata as a stock  dividend to the holders of the Common Stock of
Biomune.  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 conducts the operations it conducted as a subsidiary
of Biomune.

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
in "Risk Factors" in Item 6 -  "Management's  Discussion and Analysis or Plan of
Operation."

Business Strategy

           Volu-Sol's  primary business  strategy is 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. Volu-Sol's strategy includes the following elements:

           Acquire Complementary Businesses, Products and Technologies. Volu-Sol
           intends  to  evaluate  potential  acquisitions  of  distributors  and
           complementary  products  and  businesses  from  time to  time  and to
           consummate  transactions  in  those  situations  where  there  is  an
           appropriate economic and strategic fit with the Company's.

           Expand Distribution.  Volu-Sol intends to increase its distribution
           base through agreements with independent distributors.

           Develop  Broader  Product Lines.  Volu-Sol offers over 70 products in
           five major product lines as well as instrumentation,  in an effort to
           serve  effectively  a  diverse  and  highly  decentralized  industry.
           Volu-Sol believes that its many and diverse products economically and
           reliably address the needs of medical  diagnosticians  and laboratory
           technicians.  Nevertheless,  Volu-Sol  has  determined  that  it  can
           improve its  revenue-generating  capacity  by adding to its  existing
           product line.

           Offer Top  Quality  Products.  Volu-Sol  constantly  strives to offer
           products with the greatest  purity and reliability  possible  through
           its  quality  control  system.  It intends to  continue to assure the
           quality of its product line.


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           Outsource Non-Stain  Manufacturing.  To minimize capital requirements
           associated  with the  manufacture  of  products  other  than  stains,
           solutions and other  chemicals,  Volu-Sol intends to continue to take
           advantage of strategic alliances with third-party manufacturers.

           Esprit de Corps.  Volu-Sol  seeks to create a team  spirit  among its
           employees,  foster  awareness of its objectives and strategies at all
           levels and reward meritorious performance with compensation and other
           incentives.  Volu-Sol  believes this creates  loyalty to and pride in
           its  products,  which  translates  into greater  product  quality and
           enhanced customer service.

Research and Development

           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.  Volu-Sol  does not
presently anticipate making material investments in research and development for
the foreseeable future.

Dependence on Major Customers

           During the fiscal year ended September 30, 1999, Volu-Sol had  sales
to a company which accounted for approximately 11% and 12%,  respectively of the
Company's total revenues.  Another single customer  accounted for  approximately
15% of the Company's total revenues during fiscal year 1999 and 1998.

Employees

           At  September  30,  1999  Volu-Sol  had 5 full time  employees  and 3
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    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.

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. Base monthly rent
payments  are  $4,620.  The  monthly  base  rent  amount  is  subject  to annual
adjustments  according to changes in the Consumer Price Index. The lease extends
through November 2000 and the Company anticipates it will renew the Lease.

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 1999.



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                                    Part II

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

           Market. Prior to the Distribution,  all of the Company's Common Stock
was owned by Biomune  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 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 will be accepted.

           Holders.  As of January 7, 2000, there were approximately 1,295
record holders of the Company's Common Stock.

           Dividends.  Since its  incorporation,  Volu-Sol  has not declared any
dividend on any of its Common Stock.  Volu-Sol does not  anticipate  declaring a
dividend on any of its Common  Stock for the  foreseeable  future.  The Series A
Preferred  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.

           During the fiscal year ended September 30, 1999 a 10% dividend in the
form of 848.4 additional shares was declared and paid on the outstanding  shares
of Series A Preferred.

           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,  including
those receiving their shares in the Distribution.

           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").

1997
           In February 1997, Biomune, the Company's former parent, declared that
it would  divest  itself  of the  Company  in a  dividend  by which one share of
Volu-Sol  common stock would be issued to each Biomune  stockholder of record as
of March 5,  1997 for  every 10  shares of  Biomune  common  stock  held by such
stockholder.  The  divestiture  of Volu-Sol was effective as of October 1, 1997.
Volu-Sol  registered  its common  stock as a class  under  Section  12(g) of the
Exchange Act of 1934 by filing a Form 10 S-B which was declared effective by the
SEC  December 1, 1997.  On or about  February 1, 1998,  the  dividend  shares of
Volu-Sol  Common  Stock  were  delivered  to Biomune  stockholders  who had been
shareholders of record as of March 5, 1997.

           Both  Volu-Sol and Biomune  were  unaware  that Nasdaq had  announced
February  11, 1998 to be the  ex-dividend  date for the  spin-off  distribution,
notwithstanding  the fact  that  Biomune  had  previously  notified  Nasdaq  and
publicly   announced  that  March  5,  1997  would  be  the  ex  dividend  date.
Consequently, holders of Biomune common

                                        4

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stock as of February  11, 1998 were  informed by Nasdaq that they would  receive
the dividend of one share Volu-Sol common stock for each share of Biomune common
stock held by them as of such date.

           After  consultation with the NASD, parent of the Nasdaq Stock Market,
Biomune and Volu-Sol agreed to issue additional  shares of Volu-Sol common stock
as part of the  original  dividend  announced  March 5,  1997,  to cover (a) the
dividend in Volu-Sol  that  technically  inured to the benefit of the holders of
Volu-Sol's  common stock issued  between  March 5, 1997 and February 11, 1998 by
reason of the Nasdaq  action;  and (b) short  positions  held by accounts  which
purchased Biomune common stock after March 5, 1997 and before February 11, 1998,
which were  purchased from accounts not then held in "street name" and which did
not,  therefore,  by  operation  of  Depository  Trust  procedures,  send on the
Volu-Sol  dividend  shares  when  they were  physically  received.  Street  name
accounts were electronically credited with the dividend shares.

           Immediately prior to the issuance of such additional dividend shares,
Volu-Sol had 2,111,216 shares of Common Stock issued and outstanding. The number
of  additional  shares to be issued as part of the  dividend is not  expected to
exceed 3,500,000  shares.  Since the original  distribution,  a total of 609,826
additional   shares  of  common  stock  have  been  issued  to  former   Biomune
stockholders.

           Volu-Sol  sold  797.5  shares of  Series A  Preferred  to  accredited
investors  for  $159,500.  The  offer  and  sale  was  made in  accordance  with
exemptions under Section 4(2) and 3(b) of the Securities Act, including Rule 506
of Regulation D.

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 in settlement of a
lawsuit.

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 848.4 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,  orricers,  directors,  and
consultants as compensation for services rendered to the Company.  Volu-Sol also
issued  2,011  shares of Series A Preferred  Stock to satisfy 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
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.

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.

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           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, 1999 Compared to Fiscal Year Ended September 30,
1998

           In the fiscal year ended  September  30, 1999,  Volu-Sol had revenues
totaling $528,904 compared to $514,256 for fiscal year ended September 30, 1998.

           Cost of goods  sold in the  fiscal  year  ended  September  30,  1999
totaled  $364,646  compared to $399,013 for the fiscal year ended  September 30,
1998. The overall gross margin for the fiscal year ended  September 30, 1999 was
approximately 31% compared to 22.4% of revenues in fiscal year 1998.

           Selling,  general and  administrative  expenses  totaled  $938,898 in
fiscal year 1999, compared to $804,551 in 1998, an overall increase of $134,347.

           Volu-Sol incurred a net loss of $906,500 in 1999, compared to a net
loss of $719,781 in fiscal year 1998.  This net loss is the result of  increased
selling,  general  and  administrative  expenses  in 1999  and a  write-down  of
inventory.

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,
1999, the Volu-Sol  financed its operations  primarily through the sale of 797.5
shares of Series A Preferred for gross proceeds of $159,500. These proceeds were
used to supplement cash from operations as working capital.

           In addition,  during the year ended  September 30, 1999,  the Company
borrowed $70,000 from Biomune,  its former parent.  The obligation was repaid by
the issuance of 2,011 shares of Series A Preferred Stock.

           As of September 30, 1999,  the Company had cash and cash  equivalents
of $44,123  and working  capital of  $113,340,  compared  to cash of  $16,411and
working capital of $145,665 as of September 30, 1998.

           Interest expense decreased from $34,683 in fiscal year 1998 to
$18,864 in the fiscal year ended September 30, 1999.

           During fiscal year 1999, the Company's operating activities used cash
of $227,449  compared to $539,337 in 1998.  This cash was primarily  provided by
the sale of Series A Preferred Stock in both years.

           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

           For the year ended  September 30, 1999, the Company  adopted SFAS No.
130,  "Reporting  Comprehensive  Income" (SFAS 130). SFAS 130 requires  entities
presenting a complete set of financial statements to include details

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of comprehensive income that arise in the reporting period. Comprehensive income
consists of net earnings or loss for the current period and other  comprehensive
income,  which consists of revenue,  expenses,  gains and losses that bypass the
statement  of earnings  and are  reported  directly in a separate  component  of
equity.  Other  comprehensive  income  includes,  for example,  foreign currency
items, minimum pension liability  adjustments and unrealized gains and losses on
certain investment securities.

           SFAS 130 requires that components of comprehensive income be reported
in a financial  statement  that is displayed  with the same  prominence as other
financial  statements.  SFAS is  effective  for  fiscal  years  beginning  after
December 15, 1997 and requires  restatement of prior period financial statements
presented for comparative purposes.

           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 becomes effective for all fiscal
years beginning after December 15, 1998. Volu-Sol adopted SOP 98-5 in its fiscal
year that began October 1, 1999.

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.

           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, 1999 of  $4,092,473.
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."

           Intense  Competition.  The medical  diagnostic supply and biochemical
industries,  including those segments devoted to manufacturing  and distributing
laboratory equipment, stain solutions and chemical reagents are characterized by
intense competition.  Volu-Sol faces, and will continue to face,  competition in
the stain solution,  reagent and related equipment fields. Many, if not most, of
the  Company's  competitors  and  potential  competitors  are  much  larger  and
consequently  have  greater  access  to  capital  as well as mature  and  highly
sophisticated  distribution channels. Some of the larger competitors are able to
manufacture  chemical  products on a much larger scale and therefore  presumably
would be able to take  advantage of economies of scale not presently  enjoyed by
the Company.  Moreover,  many of the Company's competitors have far greater name
recognition and experience in the medical diagnostic supply industry.  There can
be no  assurance  that  competition  from  other  companies  will not render the
Company's products noncompetitive.

                                       7

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           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
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.


                                        8

<PAGE>



Item 7.  Financial Statements

           The Company's financial  statements and associated notes are included
set forth on pages F-2 through F-16.


                                    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 January 7,
2000 are as follows:

            Name                  Age                       Position

Wilford W. Kirton, III             39     Chief Executive Officer and Director
Barry Edwards                      47     Director
Christopher L. Matthews            45     Director
F. Kenneth Westover                72     Director
Nicholas A. Smith                  48     Director
Michael Acton                      36     Secretary, Treasurer and Acting CFO

Wilford W. Kirton, III

           Mr. Kirton became a director and the Chief Executive Officer of Volu-
Sol in January 1998.  Mr. Kirton holds a bachelors  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 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.

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.

Christopher L. Matthews

           Mr.  Mathews  became a director  of Volu-Sol  in  December  1998.  He
received  his BS in Finance and his MBA degree from the  University  of Utah and
was the  Director  of Asset  Services  for CB  Richard  Ellis,  a New York Stock
Exchange company that provides commercial real estate services  worldwide.  From
1990 to 1997,  Mr.  Matthews was  principal of Chris  Matthews &  Associates,  a
boutique  leasing and  property  management  services  company  specializing  in
institutionally-owned  distressed  properties.  From  1981 to  1990 he was  Vice
President of Asset  Management  for the Denver region of Equitable  Real Estate,
where he had responsibility for a portfolio of commercial  properties located in
the Intermountain West, valued at $900,000,000.

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.

                                        9

<PAGE>



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.

Nicholas A. Smith

           Mr.  Smith is Chairman  and CEO of I-Sim  Corporation,  a  technology
company that develops,  manufactures and markets vehicle simulation and training
services for professional  drivers in trucking,  emergency  vehicle and military
markets.  Before joining I-Sim,  he was Senior Vice  President,  Chief Operating
Officer,  Director,  Secretary and a founder of Phonex Corporation.  Phonex is a
world leader in wireless dialtone technology. It has developed, manufactured and
sold over 2.5 million of its systems,  with  revenues of over $90 million  since
1994, and has become one of the fastest growing companies in Utah. Mr. Smith was
responsible  for the  financing  and  capitalization  of Phonex,  in addition to
managing its operations.  Prior to joining Phonex,  Mr. Smith was a principal in
Mountain  West  Financial  and Advisors  West.  He holds BA and MBA degrees from
Brigham Young University.

Michael G. Acton

           Mr. Acton has been Secretary, Treasurer and acting CFO 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. He is Chief  Executive  Officer of Biomune since June 1998 and
Chief Financial  Officer since July 1997. 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.

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

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,  1999,  that was not filed with the
Commission.

Item 10.     Executive Compensation

           No  executive  officer or  employee  of the Company is paid more than
$100,000 per year in salary and benefits. The Company's Chief Executive Officer,
Wilford W. Kirton, III, receives an annual salary of $48,000.

Director Compensation

           Members of the Board of Directors received options to purchase common
stock of the Company as compensation for their service as directors.



                                       10

<PAGE>



Item 11.    Security Ownership of Certain Beneficial Owners and Management

           The  following  table  sets  forth  certain   information   regarding
beneficial  ownership of the Company's common stock (i) by each person (or group
of affiliated  persons) who owns  beneficially  more than 5% of the  outstanding
shares of common stock, (ii) by each director and Named Executive Officer of the
Company, and (iii) by all of the directors and executive officers of the Company
as a group.

<TABLE>
<CAPTION>
Name and Address                         Shares of Common Stock
of Beneficial Owner (1)                  Beneficially Owned (2)       Percentage of Class
-----------------------                  ----------------------       -------------------

5% Beneficial Owners

<S>                                                <C>                           <C>
Cygni S A                                          152,308                       5.3%
C/O Soreq Inc.
620 Wilson Ave Ste 501
Toronto Ontario Canada
M3K 1Z3

Leviticus Trust (3)                                238,918                       8.0%
821 Northpoint Drive
Salt Lake City, UT 84103

Biomune Systems, Inc.                              565,760                      17.2%
2401 South Foothill Dr.
Salt Lake City, Utah 84109

David G. Derrick                                   465,248                      14.6%
 352 South 200 West, Suite 4
P.O. Box 643
Farmington, UT 84025

Executive Officers and Directors

Wilford W. Kirton III (4)                          120,048                       4.2%
(Chief Executive Officer, Director)

Barry Edwards, Director (4)                         25,424                       0.9%
9914 N. 4500 W.
Cedar Hills, Utah 84062

Chris Matthews (4)                                  52,704                       1.9%
956 East Sunburst Lane
Alpine, Utah 84004

Ken Westover (4)                                    85,968                       3.1%
1697 E. 6550 S.
Salt Lake City, Utah 84121

Nicholas A. Smith                                   22,960                          *
2961 W. California Ave.
Salt Lake City, Utah 84104

All executive officers and                         307,104                      11.3%
directors as a group (5 persons)
</TABLE>


                                       11

<PAGE>



* Less than 1%.

           (1)       Unless otherwise indicated, such person's address is the
                     same as the Company's address.

           (2)       A person is deemed to be the beneficial owner of securities
                     that can be acquired by such person within 60 days from the
                     date of  this  Report  upon  the  exercise  of  options  or
                     warrants.  Each beneficial  owner's percentage of ownership
                     is  determined  by  assuming  that  options or  warrants or
                     convertible  preferred  stock held by such  person (but not
                     those  held  by  any  other  person)  and   exercisable  or
                     convertible  within  60 days  from the date of this  Report
                     have been fully  exercised or converted.  Unless  otherwise
                     noted,  Volu-Sol  believes the persons  named in this table
                     possess  sole voting and  investment  power with respect to
                     all  shares of  common  stock  shown as being  beneficially
                     owned. Percentages are calculated based on 2,721,042 shares
                     of common stock  outstanding  (as  adjusted for  additional
                     shares   deemed   to  be   beneficially   owned   by   such
                     shareholder).

           (3)       The Leviticus Trust is an irrevocable trust established for
                     the  benefit of its sole  beneficiary,  Genesis  Investment
                     Corporation,  a Utah corporation ("GIC"). The directors and
                     executive   officers  of  GIC  are  Jacob  "Jack"  Solomon,
                     President, Royden G. Derrick, Vice President and Secretary,
                     and Edna Ennise Richardson,  Sam Pekeles and Jerry Pekeles,
                     directors.  The  beneficial  owners of GIC are the  Solomon
                     family.  The  trustee  of the  Leviticus  Trust  is  Robert
                     Pomerantz,  an individual residing in New York. The trustee
                     has the power to vote and to dispose of the shares  held by
                     the Leviticus Trust,  consistent with the terms and subject
                     to the conditions of the Trust Declaration establishing the
                     trust.

           (4)       All shares shown are issuable  upon  conversion of Series A
                     Preferred held by such person as of the date of this Report
                     at a conversion rate of $1.25 per share.

           Except for the matters  described  herein,  there are no arrangements
known to Volu-Sol, the operation of which may, at a subsequent date, result in a
change of ownership or control of Volu-Sol.

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.

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:

(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).

                                       12

<PAGE>



           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.



            [The remainder of this page is intentionally left blank.]

                                        13

<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 10, 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      Director, Chairman, and         January 10, 2000
--------------------------      Chief Executive Officer
Wilford W. Kirton, III


/s/ Barry Edwards               Director                        January 10, 2000
--------------------------
Barry Edwards


/s/ Chris Matthews              Director                        January 11, 2000
--------------------------
Chris Matthews


/s/ Nicholas A. Smith           Director                        January 11, 2000
--------------------------
Nicholas A. Smith


 /s/ Michael G. Acton           Acting Chief Financial Officer  January 12, 2000
--------------------------
Michael G. Acton



                                       14
<PAGE>
VOLU-SOL, INC.
Consolidated Financial Statements
September 30, 1999 and 1998


<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,  1999,  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years  ended  September  30,  1999 and 1998.  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, 1999,  and the results of their  operations  and
their cash flows for the years ended  September  30, 1999 and 1998 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 1, 1999

                                                                             F-2

<PAGE>


<TABLE>
<CAPTION>
                                                                     VOLU-SOL, INC.
                                                         Consolidated Balance Sheet

                                                                 September 30, 1999
-----------------------------------------------------------------------------------



            Assets

Current Assets:
<S>                                                                    <C>
    Cash                                                               $    44,123
    Accounts receivable, less allowance for
      doubtful accounts of $2,188                                           75,697
    Inventories                                                             56,220
                                                                       -----------

                Total current assets                                       176,040

Property and equipment, net                                                106,384
Other assets                                                                 4,222
                                                                       -----------

                Total assets                                           $   286,646
                                                                       -----------

                                                                       -----------

            Liabilities and Stockholders' Equity

Current liabilities:
    Accounts payable                                                   $    34,366
    Accrued liabilities                                                     28,334
                                                                       -----------

                Total current liabilities                                   62,700
                                                                       -----------

Commitments and contingencies                                                 --

Stockholders' equity:
    Preferred stock, $.0001 par value; 10,000,000 shares authorized:
      12,703 shares issued and outstanding (aggregate liquidation
      preference $29,291)                                                3,000,416
    Common stock, $.0001 par value; 50,000,000 shares authorized,
      2,712,502 shares issued and outstanding                                  271
    Additional paid-in capital                                           1,654,032
    Preferred stock subscriptions receivable                              (338,300)
    Accumulated deficit                                                 (4,092,473)
                                                                       -----------

                Total stockholders' equity                                 223,946
                                                                       -----------

                Total liabilities and stockholders' equity             $   286,646
                                                                       -----------

-----------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
                                                                             F-3

<PAGE>
<TABLE>
<CAPTION>

                                                                                 VOLU-SOL, INC.
                                                           Consolidated Statement of Operations

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




                                                                      1999           1998
                                                                -------------------------------

<S>                                                             <C>               <C>
Sales                                                           $        528,904  $     514,256
Cost of goods sold                                                       364,646        399,013
                                                                -------------------------------

                Gross margin                                             164,258        115,243

Selling, general and administrative expenses                            (938,898)      (804,551)
Impairment loss                                                         (114,620)             -
                                                                -------------------------------

                Loss from operations                                    (889,260)      (689,308)

Other income (expense):
    Interest income                                                        1,624          4,210
    Interest expense                                                     (18,864)       (34,683)
                                                                -------------------------------

    Loss before provision for income taxes                              (906,500)      (719,781)

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

                Net loss                                        $       (906,500) $    (719,781)
                                                                -------------------------------

Dividends on Series A preferred stock                                   (169,638)       (67,716)
                                                                -------------------------------

Net loss applicable to common stock                             $     (1,076,138) $    (787,497)
                                                                -------------------------------

Net loss per common share - basic and diluted                   $           (.42) $        (.36)
                                                                -------------------------------

-----------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.
                                                                             F-4

<PAGE>
<TABLE>
<CAPTION>


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

                                                                    Years Ended September 30, 1999 and 1998
-----------------------------------------------------------------------------------------------------------
                                                                                   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 October 1, 1997    6,408 $ 1,249,554  2,111,216   $  211  $ 2,200,600     $ 900,000  $ 2,228,838

Additional shares issued
as a result of the
divestiture of the
Company's common stock            -           -    100,191       10         (10)             -            -

Issuance of preferred
stock for:
         Cash                 1,835     312,000          -        -            -             -            -
         Commissions            800     160,000          -        -            -             -            -
         Settlement of           15       3,000          -        -            -             -            -
lawsuit

Dividends on preferred
stock                           337      67,716          -        -            -             -      (67,716)

Accretion of preferred            -     240,758          -        -     (240,758)            -            -
stock

Net loss                          -           -          -        -            -             -      (719,781)
                          ----------------------------------------------------------------------------------

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

Additional shares issued
as a result of the
divestiture of the
Company's common stock            -           -    501,095       50          (50)            -            -

Issuance of preferred
stock for:
         Commission             775     155,000          -        -            -             -            -
         Board of
directors                     1,485     297,000          -        -            -             -            -
           compensation
         Compensation           200      40,000          -        -            -             -            -

Collection of stock
  subscription:
         Cash                     -           -          -        -            -       159,500            -
         Exchange of              -           -          -        -            -       402,200            -
liabilities

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

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

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

Balance at September 30,
1999                         12,703 $ 3,000,416  2,712,502   $  271  $ 1,654,032    $ (338,300) $(4,092,473)
                          ==================================================================================
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                                                 VOLU-SOL, INC.
                                                           Consolidated Statement of Cash Flows

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



                                                                      1999           1998
                                                                -------------------------------
Cash flows from operating activities:
<S>                                                             <C>               <C>
    Net loss                                                    $       (906,500) $    (719,781)
    Adjustments to reconcile net loss to
      net cash used in operating activities:
        Depreciation                                                      79,902         80,015
        Provision for losses on accounts receivable                         (987)        (9,824)
        Preferred stock issued for services                              492,000        163,000
        Impairment loss                                                  114,620              -
        (Increase) decrease in:
            Accounts receivable                                          (12,002)        11,327
            Inventories                                                   29,231        (15,683)
            Other assets                                                     742        (14,390)
        Increase (decrease) in:
            Accounts payable                                              (8,168)        (4,432)
            Accrued liabilities                                          (16,287)       (29,569)
                                                                -------------------------------

                    Net cash used in
                    operating activities                                (227,449)      (539,337)
                                                                -------------------------------

Cash flows from investing activities-
    purchase of property and equipment                                      (339)        (4,592)
                                                                -------------------------------


Cash flows from financing activities:
    Proceeds from notes payable                                           96,000              -
    Proceeds from sale of preferred stock                                      -        337,000
    Payment on subscription recceivable                                  159,500              -
    Payment on notes payable                                                   -       (114,351)
                                                                -------------------------------

                    Net cash provided by
                    financing activities                                 255,500        222,649
                                                                -------------------------------

                    Net increase (decrease) in cash                       27,712       (321,280)

Cash, beginning of year                                                   16,411        337,691
                                                                -------------------------------

Cash, end of year                                               $         44,123  $      16,411
                                                                -------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.
                                                                             F-5

<PAGE>


                                                                  VOLU-SOL, INC.
                                      Notes to Consolidated Financial Statements

                                                     September 30, 1999 and 1998
--------------------------------------------------------------------------------


1.  Summary of Significant Accounting Policies

Organization and Business Activity
The consolidated  financial statements consist of Volu-Sol,  Inc. (the Company),
formerly a wholly owned subsidiary of Biomune Systems, Inc. (Biomune), which was
incorporated  on July  27,  1995 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.  Prior to its  incorporation,  the  Company  had been
operated as a division of Biomune.

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.

The board of directors of Biomune  approved the divestiture and  distribution of
the Company's  common stock to the Biomune common  stockholders  of record as of
March 5, 1997 (the Distribution). This approval was subject to the completion of
certain definitive agreements. These agreements were finalized in September 1997
and the Company filed a Form 10-SB with the Securities  and Exchange  Commission
on October 1,  1997,  the  effective  date of the  Distribution.  The Form 10-SB
became effective December 1, 1997. Biomune stockholders of record as of March 5,
1997 received one share of Volu-Sol,  Inc.  common stock for every ten shares of
Biomune common stock owned at that date.


Going Concern
The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As of September 30, 1999, the Company
had an accumulated deficit of $4,092,473 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.

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



                                                                             F-6

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



1.  Summary of Significant Accounting Policies
    Continued

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.


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.

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



                                                                             F-7

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



1.  Summary of Significant Accounting Policies
    Continued

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.

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,  1999 and 1998  advertising
expenses totaled approximately $-0- and $18,000, respectively.


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




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



                                                                             F-8

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



2.  Property and Equipment

Property and equipment consist of the following:


Leasehold improvements                                  $        224,045
Furniture and fixtures                                           170,939
Equipment                                                         32,060
                                                        ----------------

                                                                 427,044

Accumulated depreciation                                        (320,660)
                                                        ----------------

                                                        $        106,384
                                                        ----------------



3.  Related Party Transactions

During the year ended  September  30,  1999,  the Company  entered a  consulting
agreement  with a  shareholder.  As a  result  of  this  agreement  the  Company
recognized and paid consulting expense of $120,000.


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,
                                    --------------------------------
                                          1999            1998
                                    --------------------------------

Federal income tax benefit at
  statutory rate                    $        308,000  $      245,000
Meals and entertainment                       (1,000)              -
Other                                         (5,000)              -
Change in valuation allowance               (302,000)       (245,000)
                                    --------------------------------

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



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



                                                                             F-9

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



4.  Income Tax Continued

Deferred tax assets  (liabilities)  are  comprised of the following at September
30, 1999:


Net operating loss carryforward                       $       553,000
Depreciation and reserves                                      69,000
Valuation allowance                                          (622,000)
                                                      ---------------

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

At  September  30,  1999,  the  Company  has net  operating  loss  carryforwards
available to offset future taxable income of approximately $1,617,000 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   2000.   Future   minimum   rental   payments  under  the
non-cancelable  operating  lease as of September 30, 1999 are  approximately  as
follows:


    Year Ending September  30:                               Amount
                                                        ----------------

                        2000                            $         61,000
                        2001                                      10,000
                                                        ----------------

    Total future minimum rental payments                $         71,000
                                                        ----------------

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.



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



                                                                            F-10

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



6.  Supplemental Cash Flow Information

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

o   Recognized dividends of $169,638 on preferred stock.

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.

During the year ended September 30, 1998, the Company:

o   Recognized dividends of $67,716 on preferred stock.

o   Increased preferred stock and decreased additional paid-in-capital
    for $240,758 due to accretion.


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


                                                Years Ended
                                                September 30,
                                    --------------------------------
                                          1999            1998
                                    --------------------------------

Interest                            $            318  $       34,683
                                    --------------------------------

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



7.  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-11

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



8.  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,
                        1999,  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) $1.25.


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



                                                                            F-12

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



8.  Preferred Stock
    Continued

Series A - Continued
                        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.


    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.


9.  Major Customers

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


                                       Years Ended September 30,
                                    --------------------------------
                                          1999            1998
                                    --------------------------------

Company A                                      14.6%               -
Company B                                      11.0%           11.8%
Company C                                          -           12.3%




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



                                                                            F-13

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



10. 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. To date, no awards of any kind have been made under the 1997 Plan.


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-14

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------



10. 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 October 1, 1997               896,660  $ 1.16 to 5.00
 Expired                                    (369,310)   1.16 to 5.00
                                      ------------------------------

Outstanding at September 30, 1998            527,350    1.16 to 4.00
 Expired                                     (81,250)   1.25 to 4.00
                                      ------------------------------

Outstanding at September 30, 1999            446,100  $ 1.16 to 3.00
                                      ------------------------------




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



                                                                            F-15

<PAGE>


                                                                  VOLU-SOL, INC.

                                      Notes to Consolidated Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------


10. Stock Options and Warrants
    Continued

The  following  table  summarizes  information  about stock options and warrants
outstanding at September 30, 1999:


                        Outstanding                   Exercisable
            ------------------------------------------------------------
                          Weighted
                           Average
               Number    Remaining    Weighted     Number     Weighted
  Range of  Outstanding Contractual   Average   Exercisable   Average
  Exercise       at         Life      Exercise       at       Exercise
   Prices     09/30/99     (Years)     Price      09/30/99     Price
------------------------------------------------------------------------

$1.16 - 2.38 421,100           0.9  $      1.54  421,100  $        1.54
        3.00  25,000           1.8         3.00   25,000           3.00
------------------------------------------------------------------------

$1.16 - 3.00 446,100           1.0  $      1.62  446,100  $        1.62
------------------------------------------------------------------------



11. Fair Value of Financial Instruments

None of the Company's financial  instruments are held for trading purposes.  The
Company estimates that the fair value of all financial  instruments at September
30, 1999, does not differ  materially from the aggregate  carrying values of its
financial  instruments recorded in the accompanying balance sheet. The estimated
fair value amounts have been  determined by the Company using  available  market
information and appropriate valuation  methodologies.  Considerable judgement is
necessarily  required in  interpreting  market data to develop the  estimates of
fair value, and,  accordingly,  the estimates are not necessarily  indicative of
the amounts that the Company could realize in a current market exchange.



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



                                                                            F-16