SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
(X)      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                                                    OR

(   )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO
         -------------



                         Commission File Number 0-11472

                              BIOMUNE SYSTEMS, INC.

        (Exact name of small business issuer as specified in its charter)


       Nevada                                           87-0380088
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)



64 E. Winchester Drive, Suite 303
Murray, Utah                                                            84107
(Address of principal executive offices)                              (Zip Code)

                                 (801) 261-2727
                           (Issuer's telephone number)





Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  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 __ -

As of August 10, 2000, the issuer had issued and outstanding 8,599,900 shares of
common stock, par value $.0001.

Transitional Small Business Disclosure Format
(Check One):

Yes      No X
   --       --


                                       -1-


<PAGE>



                                TABLE OF CONTENTS

PART I.           FINANCIAL INFORMATION
                                                                            Page
                                                                             No.
                                                                            ----
         1.       Financial Statements

                  Unaudited Condensed Consolidated Balance Sheets as of
                  June 30, 2000 and September 30, 1999.........................3

                  Unaudited Condensed Consolidated Statements of Operations
                  for the three and nine months ended June 30, 2000 and 1999...4

                  Unaudited Condensed Consolidated Statements of Cash Flows
                  for the nine months ended June 30, 2000 and 1999.............5

                  Notes to Unaudited Condensed Consolidated Financial
                  Statements...................................................7

         2.       Management's Discussion and Analysis or Plan of Operation...11


PART II.          OTHER INFORMATION...........................................13


                                       -2-


<PAGE>



                                     PART I

 ITEM 1 - Financial Statements

                     BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
ASSETS

                                                                               June 30,           Sep. 30,
                                                                                 2000               1999
                                                                               -------            -------


Current assets:
<S>                                                                         <C>                <C>
  Cash and cash equivalents                                                 $       29,92     $            -
  Receivables, net                                                                122,025            483,995
  Inventories, net                                                                215,452            255,992
  Prepaids                                                                        125,000            306,638
                                                                            --------------     --------------
 Total current assets                                                             492,405          1,046,625

Long-term receivables, net                                                        105,622             84,091
Property and equipment, net                                                        72,282             82,805
Investment in Rockwood                                                            450,377            450,377
Investments                                                                       864,434          1,977,026
Intangibles, net                                                                  280,182            554,081
Other assets, net                                                                   6,657             11,346
                                                                            --------------     --------------
       Total assets                                                         $   2,271,959      $   4,206,351
                                                                            ==============     ==============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                                     $     305,543      $     628,230
  Notes payable                                                                   201,275            435,000
                                                                            --------------     --------------
     Total current liabilities                                                    506,818          1,063,230
Shareholders' equity:
    Preferred stock, $.0001 par value; 50,000,000 shares authorized
         38,523 shares and 1,428,388 shares issued and outstanding
         respectively                                                             192,642          2,174,043
   Common stock, $.0001 par value; 500,000,000 shares authorized
        8,599,900 shares and 2,522,413 shares outstanding respectively                860                252
   Additional paid-in capital                                                  45,303,052         41,914,343
   Stock subscriptions receivable                                                 (31,982)           (55,192)
   Deferred compensation and consulting                                          (177,596)          (202,486)
   Accumulated other comprehensive loss                                                 -           (768,200)
   Accumulated deficit                                                        (43,521,835)       (39,919,639)
                                                                            --------------     --------------
           Total shareholders' equity                                           1,765,141          3,143,121
                                                                            --------------     --------------
                                                                            $   2,271,959      $   4,206,351
                                                                            ==============     ==============
</TABLE>







    The accompanying notes are an integral part of these unaudited condensed
                          consolidated balance sheets.

                                       -3-


<PAGE>



                     BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   For the Three Months               For the Nine Months
                                                                      Ended June 30,                     Ended June 30,
                                                                  2000           1999               2000           1999
                                                                 -------       --------            ------         ------
<S>                                                         <C>              <C>              <C>              <C>
REVENUES                                                    $     133,408    $     612,085    $     591,198    $   1,387,394

OPERATING EXPENSES:
  Cost of revenues                                                 84,025          261,566          310,264          552,209
  Management, consulting and research fees                        847,499           98,932        2,201,403          578,682
  Other general and administrative                                722,464           89,855          980,561          341,008
                                                            --------------   --------------   --------------   --------------
         Total operating expenses                               1,653,988          450,353        3,492,228        1,471,899
                                                            --------------   --------------   --------------   --------------
INCOME (LOSS) FROM OPERATIONS                                  (1,520,580)         161,732       (2,901,030)         (84,505)
OTHER INCOME (EXPENSE):
  Interest income, net                                           (158,655)           9,883         (175,386)          93,005
  Loss on investment                                               10,000                -         (692,800)               -
   Minority interest                                                                     -                -           16,341
  Other, net                                                      (33,462)               -          301,775          495,000
   Gain on sale of furniture                                       16,495                -           16,495                -
                                                            --------------   --------------   --------------   --------------
         Total other income, net                                 (165,622)                         (549,916)         604,346
                                                            --------------   --------------   --------------   --------------
NET INCOME (LOSS)                                              (1,686,202)         171,616       (3,450,946)         519,841
Preferred stock dividends and accretion of
    beneficial conversion feature                                  (2,625)         (46,545)        (151,250)        (152,297)
                                                            --------------   --------------   --------------   --------------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES                  (1,688,827)         125,071       (3,602,196)         367,544
                                                            ==============   ==============   ==============   ==============
NET INCOME (LOSS) PER COMMON SHARE  (BASIC)                 $        (.20)   $        0.06    $       ( .61)   $         0.22
                                                            ==============   ==============   ==============   ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                      8,590,000        2,056,000        5,920,000        1,652,000
   (BASIC)

NET INCOME (LOSS) PER COMMON SHARE (DILUTED)                $        (.20)   $        0.04    $        (.61)   $        0.14
                                                            ==============   ==============   ==============   ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                      8,590,000        3,102,000        5,920,000        2,698,000
   (DILUTED)
</TABLE>

         The accompanying notes are an integral part of these unaudited
                       condensed consolidated statements.

                                       -4-


<PAGE>


                     BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                                     For the Nine Months
                                                                        Ended June 30,

                                                                    2000             1999
                                                                  --------         --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>              <C>
Net income (loss)                                              $  (3,450,946)   $     519,841
  Adjustments to reconcile net loss to net cash used in
      operating activities:
  Depreciation and amortization                                       86,233           96,515
  Allowance for doubtful accounts                                     98,653                -
  Issuance of Common Stock, options and warrants for services        806,602                -
  Amortization of deferred consulting expense                         24,890           81,098

  Loss (Gain) on sale of investments, net                            391,025         (270,000)

  Gain on sale of equipment                                          (16,494)               -

  Income from management fee from equity investment                        -         (450,000)
  Changes in assets and liabilities:
  Accounts receivable, net                                           133,317          698,283
  Inventories                                                         40,540          261,933

  Prepaid expenses, net                                              181,638       (1,483,618)

  Other assets                                                         4,689                -
  Accounts payable and accrued liabilities                          (322,686)          88,190
                                                               --------------   --------------
    Net cash (used) in operating activities                       (2,022,476)        (457,758)
                                                               --------------   --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable                                156,669                -
Purchase of assets                                                   (16,192)          (5,546)
Proceeds from sale of assets, net                                  1,772,442          431,000
Purchase investments, net                                                  -         (288,122)
                                                               --------------   --------------
    Net cash generated in investing activities                     1,912,919        137,232
                                                               --------------   --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options                                            350,000                -
Proceeds from issuance of common stock, net                                -          848,985
Proceeds from stock subscriptions                                     23,210                -
Net decrease in notes payable                                       (233,725)        (515,500)
                                                               --------------   --------------
    Net cash provided (used) by financing activities                 139,485          333,485
                                                               --------------   --------------
</TABLE>
















         The accompanying notes are an integral part of these unaudited
                       condensed consolidated statements.

                                       -5-


<PAGE>



                     BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                Increase (Decrease) in Cash and Cash Equivalents

                                                     For the Nine Months
                                                        Ended June 30,
                                                     -------------------

                                                       2000       1999
                                                      ------     ------
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                       $29,928     $12,959

CASH AND CASH EQUIVALENTS AT  BEGINNING
   OF THE PERIOD                                           0      27,901
                                                     --------    --------

CASH AND CASH EQUIVALENTS AT END OF
   THE PERIOD                                        $29,928     $40,660
                                                     ========    ========



     SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the nine months ended June 30, 2000,  the Company  paid  preferred  stock
dividends of 151,250 by issuing additional shares of preferred stock.

During the nine months ended June 30, 2000, the Company issued 200,000 shares of
common  stock in exchange  for a $100,000  payment on a purchase of a technology
license.

During the nine months ended June 30, 2000, the Company issued  4,443,500 shares
of common  stock in exchange  for  $2,132,651  of its  preferred  series J and F
stock.

During the nine  months  ended June 30,  2000,  the  Company  sold a  technology
license in which a partial payment was received in the form of a note receivable
of $48,200.

During the nine months  ended June 30,  2000 and 1999 the  Company  paid cash of
$19,000 and $33,421 for interest, respectively, and $0 for income taxes.

During the nine months ended June 30, 2000 the Company  issued 200,000 shares of
the Company's common stock to pay accrued interest on debt of $174,980.

         The accompanying notes are an integral part of these unaudited
                       condensed consolidated statements.

                                       -6-


<PAGE>



                     BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     -----------------------------------------------------------

The  accompanying  interim  condensed   consolidated  financial  statements  are
unaudited and have been prepared  consistent with generally accepted  accounting
principles for interim  financial  information and with the instructions to Form
10-QSB and Item 310(b) of Regulation S-B.  Accordingly,  they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements. These statements should be read in
conjunction with the audited financial  statements and notes thereto included in
the Company's  annual report on Form 10-KSB for the fiscal year ended  September
30, 1999. Reference to the Company or Biomune includes Biomune Systems, Inc. and
its wholly owned subsidiary, Optim Nutrition, Inc.

In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements  contain  all  adjustments   (consisting  only  of  normal
recurring  adjustments)  necessary  to fairly  present the  Company's  financial
position as of June 30, 2000 and the results of operations  for the three months
and nine months and cash flows for the nine months ended June 30, 2000 and 1999.
The  interim  financial  statements  should  be read  in  conjunction  with  the
following  explanatory notes. The results of operations for the three months and
nine months ended June 30, 2000 are not  necessarily  indicative  of the results
that may be expected for the year ending September 30, 2000.

(2)  NET INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per common share ("Basic EPS") excludes  dilution and is
computed by dividing net income (loss) by the weighted  average number of common
shares outstanding during the period. Diluted net income (loss) per common share
("Diluted  EPS")  reflects  the  potential  dilution  that could  occur if stock
options or other contracts to issue common stock including convertible preferred
stock were exercised or converted into common stock.  The computation of Diluted
EPS does not assume  exercise or  conversion  of  securities  that would have an
anti-dilutive effect on net income per common share.

At June 30,  2000,  there were  outstanding  options  and  warrants  to purchase
262,580  shares of common stock and there were 38,523 shares of preferred  stock
outstanding, convertible into a minimum of 1,169 shares of common stock.

                                              Convertible
                                               into # of
     Preferred             Number of            Common
       Stock           Preferred Shares         Shares

    Series A                   38,074             1,164
    Series B                      449                 5
                             ----------        ----------
                               38,523             1,169
                             ==========        ==========




                                       -7-


<PAGE>



(3)  COMMON STOCK TRANSACTIONS

The Company has  deferred  consulting  expense  related to shares  issued  under
consulting  agreements  entered into prior to September 30, 1999. These deferred
amounts are being  recognized  over the terms of the  agreements as services are
provided.  Total amortization of these deferred  consulting expenses was $24,890
for the nine months  ended June 30, 2000 and $8,297 for the three  months  ended
June 30, 2000.

(4)  STOCK OPTIONS AND WARRANTS

During the nine months  ended June 30, 2000  employees  and  consultants  of the
Company  exercised  options to purchase  common  stock and the Company  received
proceeds of $350,000 in cash.

During the nine months ended June 30, 2000 the Company  issued 432,788 shares of
common  stock to  consultants  and the Board of Directors  as  compensation  for
services.

Also during the nine  months  ended June 30, 2000, the  Company  issued  200,000
shares to Amerifit Nutrition, Inc. in connection with the purchase of NiteBite.

(5)  RELATED-PARTY TRANSACTIONS

During the nine months  ended June 30, 1999,  the Company  recorded a management
fee of $225,000 from Twin Eagle LC (formerly Rockwood) subsidiary.

During the nine months ended June 30, 2000 the Company  terminated its marketing
agreement  with  Harrogate  Marketing  LLC.  Under the  terms of the  Settlement
Agreement terminating the marketing agreement, Harrogate waived its claim to 45%
of the future  proceeds of the medical food  products line and all other amounts
owed by the Company in consideration for a payment of $400,000.

From  March 5, 1997  through  September  30,  1997,  the  Company  made loans to
Volu-Sol,  Inc.  "Volu-Sol,"  (then a wholly  owned  subsidiary  of the Company)
totaling  $390,500.  During the year ended  September 30, 1999,  Volu-Sol made a
payment of $150,000 of which $114,351 went to principal and $35,649 to interest.
During the six months ended March 31, 1999 the Company made additional  loans to
Volu-Sol totaling $96,000.  These loans  (collectively the "Volu-Sol Note") bear
interest  at a rate of 10% per annum and are due on demand.  Accrued  but unpaid
interest owed to the Company on the Volu-Sol  Note totaled  $28,813 at March 31,
1999.  On March 31, 1999,  the Company sold and assigned the Volu-Sol  Note plus
accrued  interest to "Purizer,"  formerly Bioxide  Corporation,  in exchange for
178,205 shares of Purizer Corporation common stock.

During the nine months  ended June 30,  2000,  the Company sold a portion of its
marketable  securities  (including  both  Purizer  Corporation  common stock and
Volu-Sol preferred stock) for $1,187,992 and recorded a net loss of $692,800.

During the nine months  ended June 30, 2000,  the CEO of the Company  loaned the
Company approximately $185,000.

At June 30,  2000 and 1999 the Company had  advances  to and  investments  in an
affiliate in the amount of $450,377 and $2,181,377, respectively.

At June 30, 2000 and 1999 the Company had $57,422 and $314,091 of related  party
notes receivable, respectively.

During the nine months ended June 30, 2000 and 1999 the Company paid  commission
and  consulting  expenses to  Harrogate,  an entity  under  common  control,  of
$985,276  and  $400,341,  respectively.  In  addition,  at June 30, 1999 the
Company had a prepaid expense to the related entity of $1,502,650.

During the nine months ended June 30, 1999, the Company exchanged 322,000 shares
of its common stock for 1,900 shares of Volu-Sol Series A Preferred  pursuant to
an agreement  with  investors  entered into prior to the  effective  date of the
divestiture  of  Volu-Sol.  Approximately  122,000  shares of common  stock were
issued in the exchange to a shareholder of the Company and its former President,
CEO and Chairman.

                                       -8-


<PAGE>



During the nine months ended June 30, 1999 the Company  sold  320,000  shares of
Purizer Corporation stock and recorded a gain of $270,000.

(6) PREFERRED STOCK TRANSACTIONS

During the nine months ended June 30, 2000, the Company accrued dividends on its
outstanding  Series A, series F and Series J Preferred stock of $7,825,  $30,400
and  $113,025,  respectively.  Preferred  stock  dividends are payable in either
additional  shares of preferred  stock (of the same  series) or in cash,  at the
option of the Company. During the period, accrued dividends on Series A, F and J
Preferred stock totaling  $151,250 were paid by issuing 1,575 shares of Series A
Preferred  stock  50,666  shares of Series F  Preferred  stock and 113 shares of
Series J Preferred stock, respectively.

During the nine months ended June 30, 1999, 307.4 shares of the Company's Series
E preferred  stock were  converted into  approximately  287,000 shares of common
stock.

During  the nine  months  ended June 30,  2000,  all  outstanding  shares of the
Company's  Series F and Series J preferred  stock were  converted into 4,443,500
shares of common stock.

(7) SALE OF NITEBITE

During the three  months  ended  December  31,  1999,  the Company  entered into
letters of intent and definitive  agreements with Amerifit  Nutrition,  Inc. and
ICN  Pharmaceutical  for the purchase and sale of the NiteBite product line. The
transaction involved,  among other things,  issuing 200,000 shares of restricted
common stock to Amerifit Nutrition,  Inc. The net result of this transaction was
a gain of $301,775, which is recorded in the statement of operations under other
income.

ITEM 2 - Management's Discussion and Analysis or Plan of Operation

         The  following  discussion  should  be read  in  conjunction  with  the
unaudited  condensed  consolidated  financial  statements  and the notes thereto
appearing elsewhere in this Quarterly Report on Form 10-QSB.

Overview

         The Company is engaged in the research,  development,  distribution and
sale of  biologic  pharmaceutical  products,  nutraceutical  food  products  and
supplements, medical foods and health and beauty aids. Certain of these products
have been  developed  by the Company and  incorporate  a patented  whey  protein
technology,  which is designed to provide or increase protective immunities from
an immune response to disease and to provide  nutritional  supplementation.  The
energy and sports  nutrition bars of the Company are marketed under an exclusive
license from the developer of the products under the label "Mountain  Lift." The
Company also holds a minority interest in Rockwood LC, a California company that
distributes  health and beauty aids and related  products to national  wholesale
and retail customers.

         The Company  believes its future results of operations will be affected
by factors such as:

         o        the availability of cash from financing activities to fund
                  its operations;

         o        the  results  of  research  and  development  efforts  and the
                  clinical  trials  on  BWPT-301,   BWPT-302  and  other  future
                  pharmaceutical  drug  candidates  based on or derived from the
                  Technology;

         o        market acceptance of Optimune, the nutrition bars, and
                  pharmaceutical drug candidates;

         o        increased competitive pressures;


                                       -9-


<PAGE>



        o         changes in raw material sources and costs; and

        o         adverse changes in general economic conditions in any market
                  in which the Company conducts or markets its products.

         The Company believes that the majority of its future revenues will come
from its nutrition and medical food products and new nutraceutical  products and
pharmaceutical  drugs. The Company cannot determine the ultimate effect that new
products will have on revenues,  earnings,  or the price of the Company's common
stock.

         The Company's  primary  focus and efforts  during the fiscal year ended
September 30, 1999, were the  commercialization  of its nutraceutical  products,
assessing and obtaining additional  nutraceutical and medical products to add to
product  line,  and, to a lesser  extent,  continuing  its efforts to obtain FDA
approval of BWPT-301 for the treatment of  cryptosporidiosis in people with AIDS
and  BWPT-302  for the  treatment of E. coli,  strain  0157:H7.  During the nine
months  and the  quarter  ended  June 30,  2000,  the  Company's  revenues  were
generated  from  the  sale of  Optimune  and  Maximune,  spacial  food  bars and
nutrition bars.

         Continuing in fiscal year 2000,  the Company has directed its resources
and efforts on:

        o         commercialization of its nutraceutical products;

        o         continued marketing and selling of Mountain Lift bars;

        o         acquisition of new nutraceutical and or medical food products;

        o         development of one or more additional nutraceutical products.

Results of Operations

Comparison of the Three Months Ended June 30, 2000
with the Three Months Ended June 30, 1999

         During the three months  ended June 30, 2000,  the Company had revenues
of $133,408  compared to $612,085  for the  comparable  three month period ended
June  30,  1999.  The  decrease  in sales  is due  primarily  to the sale of the
Company's  interest in the  NiteBite  product  line as well as a decrease in the
sales of the Company's energy bars.

         Cost of sales were  $84,025  for the three  months  ended June 30, 2000
compared to cost of sales of $261,566  for the same period in 1999.  The overall
gross  margin for the quarter in 2000 was 37% of  revenues,  compared to 57% for
the comparable quarter in 1999. The decrease in gross margin is due to the lower
margins from the sale of the Company's sports and energy bars.

         Management,  consulting  and research  fees were $847,499 for the three
months  ended June 30,  2000,  as compared to $98,932 for the three months ended
June 30, 1999.  General and  administrative  expenses increased from $89,855 for
the three months ended June 30, 1999 to $722,464 for the three months ended June
30, 2000.  The increase in fees and  expenses is due to the  termination  of the
marketing  agreement  under which the Company was  outsourcing its marketing and
selling function. This function was brought in-house during the quarter.

         During the three  months  ended June 30,  1999,  the  Company had a net
profit of $125,071  ($0.04 per share,  fully diluted)  compared to a net loss of
$1,688,827  ($0.20 per share) for the three  months  ended June 30,  2000.  This
reversal  from a net profit in 1999 to a net loss in the same quarter in 2000 is
attributable   primarily  to  the   decrease  in  revenue  from  the   Company's
nutraceutical  products  and  medical  food bars and an  increase  in  operating
expense discussed above.

Comparison of the Nine Months Ended June 30, 2000
with the Nine Months Ended June 30, 1999

                                      -10-


<PAGE>



         During the nine months ended June 30, 2000, the Company had revenues of
$591,198  compared to $1,387,394 for the comparable nine month period ended June
30, 1999. The decrease in revenues is due to the sale of the Company's  interest
in the NiteBite product line as well as a decrease in the sales of the Company's
sports and energy bars.

         Cost of sales were  $310,264  for the nine  months  ended June 30, 2000
compared to cost of sales of $552,209  for the same period in 1999.  The overall
gross  margin for 2000 was 48% of revenues,  compared to 60% for the  comparable
quarter in 1999.  The decrease in gross margin is due to the lower gross margins
from the Company's Optim product line.

         Management,  consulting and research fees were  $2,201,403 for the nine
months ended June 30, 2000,  compared to $578,682 for the nine months ended June
30,  1999.  This  increase is due to the  Company's  decision to  terminate  the
marketing  agreement  under which the Company was  outsourcing its marketing and
selling function.  General and  administrative  expenses increased from $341,008
for the nine months  ended June 30, 1999 to $980,561  for the nine months  ended
June 30, 2000. The increase in these expenses is due to the  discontinuation  of
the practice of outsourcing sales and marketing functions.

         During the nine months ended June 30, 2000,  the Company had a net loss
of  $3,602,196  ($0.61 per share,  fully  diluted),  compared to a net profit of
$367,544  ($.22 per share)  during the nine  months  ended June 30,  1999.  This
reversal  from a net profit in 1999 to a net loss in the same quarter in 2000 is
attributable   primarily  to  the   decrease  in  revenue  from  the   Company's
nutraceutical products, and an increase in operating expenses discussed above.

Liquidity and Capital Resources

         Historically,  the Company  has been  unable to finance its  operations
from cash flows from operating  activities.  The Company expects it will require
substantial funds to continue operations. At the present time it has no plans to
continue  the  commercialization  of its  nutraceutical  products,  to  complete
clinical trials,  to obtain regulatory  approval for and commercialize  products
utilizing  the   Technology   and  to  develop  and   commercialize   additional
nutraceutical  products  based  on  the  Technology.  These  activities  require
significant  cash and resources  currently  unavailable to the Company and there
can be no assurance  that  financing  in amounts  sufficient  to continue  these
activities will be obtained. Because revenue-generating operating activities are
not in  place at  significant  levels  and  because  the  Company  will  require
significant  capital to accomplish the  objectives  set forth above,  additional
funding will be required,  although such funding may not be available or may not
be available on favorable  terms.  Management  believes that the  Company-funded
research and  development  efforts to date have positioned the Company to pursue
future research and development  efforts and clinical trials with joint venture,
strategic alliance,  government or private grants or other third-party  funding.
Management may seek strategic partnership, merger or other combination to obtain
financing for ongoing operations and business  development  activities described
above.

     As of June 30, 2000,  the Company had cash and cash  equivalents of $29,928
and  negative  working  capital  of  $(14,413)  as  compared  to cash  and  cash
equivalents of $0 and negative  working capital of,  $(16,605),  as of September
30, 1999. The increase in cash is due to the sale of Purizer shares.

         The  Company  paid  preferred  stock  dividends  of $151,250 by issuing
additional shares of preferred stock.

         During the nine months ended June 30,  2000,  the  Company's  operating
activities  used cash of  $2,022,476.  During  the same  period in the  previous
fiscal year, the Company's operating activities used $457,758 of cash, which was
provided by the raising of capital from the sale of preferred stock.

         The Company has no  established  credit  facility  with a bank or other
lending  institution.  The Company has in the past, from time to time,  borrowed
money from certain shareholders,  but there is no formal financing  arrangement,
agreement or understanding in effect at this time.

                                      -11-


<PAGE>



Special Statement Concerning Forward-looking Statements

         This Report, in particular the "Management's Discussion and Analysis or
of  Operation"  section,  contains  forward-looking  statements  concerning  the
expectations  and  anticipated  operating  results  of  the  Company.  All  such
forward-looking   statements  are  intended  to  qualify  for  the  safe  harbor
protection  provided by Section 21E of the  Securities  Exchange Act of 1934, as
amended.  The Company  cautions the reader that numerous  factors govern whether
events  described  by any  forward-looking  statement  made by the Company  will
occur.  Any one of such factors could cause actual results to differ  materially
from those  projected  by the  forward-looking  statements  made in this Report.
These forward-looking  statements include plans and objectives of management for
future operations,  including plans and objectives  relating to the products and
the future economic performance of the Company, including:

        o         market acceptance of the products;

        o         development of new nutraceutical products;

        o         the extent of additional research and development, general and
                  administrative and other direct costs associated with clinical
                  trials  and  FDA  approval  of  certain   products  using  the
                  Technology;

        o         unexpected delays in receipt of final FDA approval; and

        o         and the lack of sufficient  cash to fund current and projected
                  operations and budgeted  research and  development  for fiscal
                  year 2000.

         The  forward-looking  statements are based on current  expectations and
assumptions, such as:

        o         the Company will have adequate financing available;

        o         the efficacy of the Technology-based products will be
                  established during the ongoing clinical trials and future
                  clinical trials;

        o         the Company will successfully market the health and beauty
                  aids and its nutraceutical products and successfully develop
                  and commercialize other nutraceutical products;

        o         the Company will successfully develop and commercialize the
                  Technology; and

        o         the Company will timely and properly quantify and analyze the
                  data derived from its clinical trials.

         Assumptions  involve  judgments  with respect to,  among other  things,
future economic,  competitive and market conditions,  future business decisions,
and the  results  of the  clinical  trials  and the time and money  required  to
successfully  complete those trials, all of which are difficult or impossible to
predict  accurately  and many of which are  beyond the  control of the  Company.
Although   the   Company   believes   that  the   assumptions   underlying   the
forward-looking   statements  in  this  Report  are  reasonable,  any  of  these
assumptions  could prove inaccurate.  Therefore,  there can be no assurance that
the  results  contemplated  in any of the  forward-looking  statements  will  be
realized.  Budgeting  and other  management  decisions  are  subjective  in many
respects and are susceptible to  interpretations  and periodic revision based on
actual experience and business  developments,  the impact of which may cause the
Company to alter its marketing capital expenditure plans or other budgets.  This
will  affect  the  Company's  business,   financial  condition  and  results  of
operations.   In  light  of  the  significant   uncertainties  inherent  in  the
forward-looking  statements,  any such  statement  should not be  regarded  as a
representation  by the Company or any other person that the  objectives or plans
of the Company will be achieved.

                                      -12-


<PAGE>



                           PART II. OTHER INFORMATION

ITEM 2.  Changes in Securities and Use of Proceeds

Issuance of Unregistered Equity Securities During the Quarter Ended June 30,
2000.

         During the  quarter  ended June 30,  2000,  the  Company  did not issue
restricted securities.

ITEM 5.  Other Matters

         On August 7, 2000, the Company sold  approximately  2,200,000 shares of
common  (approximately  19.9% of the total issued and outstanding  shares of the
Company) to Donlar Corporation for a note receivable.  The shares are restricted
shares, sold under the terms of a Stock Purchase Agreement.

         On August  8,  2000,  the  Company  entered  into an  agreement  (Asset
Purchase  Agreement)  to  purchase  substantially  all of the  assets  of Donlar
Corporation, an Illinois corporation, in exchange for stock of the Company.

 The transaction is subject to approval of the shareholders of the Company. As a
result, the shareholders of Donlar Corporation will own approximately 95% of the
issued  and  outstanding  stock  of the  Company  at the  effective  date of the
transaction  and the current  shareholders  of the Company will  continue to own
approximately  5% of the Company's  issued and  outstanding  common  stock.  The
rights and preference as of the holders of preferred  stock on the Company would
not be affected by the transaction.

ITEM 6.   Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  10.118 Stock Purchase Agreement (Incorporated by reference to
                  Exhibit filed with Form 8-K on August 15, 200)

                  10.119 Asset Purchase Agreement (Incorporated by reference to
                  Exhibit filed with Form 8-K on August 15, 200)

                  27       Financial Data Schedule

         (b)      Reports on Form 8-K
                  No reports on Form 8-K were filed by the Company during the
                  quarter ended June 30, 2000

                                      -13-


<PAGE>


                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                  BIOMUNE SYSTEMS, INC.

                                  (Registrant)

Date:   August 21, 2000           /s/ Michael G. Acton
                                  --------------------
                                  Michael G. Acton, Chief Executive Officer and
                                  Controller (Principal Financial and Accounting
                                  Officer)