Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
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 registrant as specified in its charter)
Nevada 87-0380088
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(801) 466-3441
(Address and telephone number of principal executive offices)
Indicate by a check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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 __
Indicate the number of shares outstanding of each of the issuer s classes
of Common Stock, as of the latest practicable date.
Outstanding as of January
Class 31, 1997
Common Stock, $0.0001 par value 22,634,394
Series A 10% Cumulative Convertible
Preferred Stock, $0.0001 par value 85,403 (1)
Series B 10% Cumulative Convertible
Non-Voting Preferred Stock, 12,058 (1)
$0.0001 par value
3,350 (1)
Series C 8% Cumulative Convertible
Non-Voting Preferred Stock,
$0.0001 par value
(1) Series A, Series B, and Series C Cumulative Convertible
Preferred Stock have been included because such shares may be
converted at any time into shares of Common Stock.
Page 1 of 47
INDEX
Page
No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance
Sheets as of December 31, 1996 and
September 30, 1996 3
Unaudited Condensed Consolidated
Statements of Operations for the three
months ended December 31, 1996 and
December 31, 1995 5
Unaudited Condensed Consolidated Statements of Cash
Flows for the three months ended December 31, 1996
and December 31, 1995 6
Notes to Unaudited Condensed Consolidated Financial
Statements 8
Item 2. Management s Discussion and
Analysis of Financial
Condition and Results of
Operations 11
PART II. OTHER INFORMATION 17
PART I - ITEM 1
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
December 31, September 30,
1996 1996
Current assets:
Cash and cash equivalents $6,658,673 $4,192,868
Accounts receivable, net 137,486 74,784
Inventories 472,345 556,742
Amounts due from related 7,500 15,000
parties -- 3,500,000
Preferred Stock subscription __________ __________
receivable
Total current assets 7,276,004 8,339,394
Property and equipment, net 472,192 434,205
Other assets, net 480,917 498,403
__________ __________
Total assets $8,229,113 $9,272,002
========== ==========
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
Page 2 of 2
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, September 30,
1996 1996
Current liabilities:
Accounts payable and accrued
liabilities $236,387 $351,565
Preferred Stock dividends
payable 80,473 91,199
Accrued payroll and payroll
taxes 62,005 60,451
Other accrued liabilities 22,906 38,262
-- 84,000
Unearned revenue ________ ________
Total current
liabilities 401,771 625,477
Shareholders' equity:
Convertible Preferred Stock:
Series A, 85,403 and
135,589 shares
outstanding,
respectively 413,700 652,199
Series B, 12,058 and
11,058 shares
outstanding,
respectively 178,837 163,837
Series C, 5,000 shares
outstanding 4,171,500 4,171,500
Common Stock, 21,111,312 and
19,877,034 shares outstanding,
respectively 2,111 1,988
Additional paid-in-capital 28,103,400 26,392,477
Deficit accumulated during the
development stage (24,972,259) (23,372,299)
Receivable from sale or issuance
of Common Stock (196,000) --
Deferred consulting expense (757,220) (246,450)
883,273 883,273
Outstanding warrants _________ _________
Total shareholders' 7,827,342
equity _________ 8,646,525
Total liabilities and $8,229,113 $9,272,002
shareholders' equity ========== ==========
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months
Ended December 31,
1996 1995
REVENUES $ 296,167 $ 116,258
___________ ___________
OPERATING EXPENSES:
Cost of revenues 131,093 76,672
Management, consulting and
research fees 721,355 711,845
Other general and
administrative 1,038,491 703,686
___________ ___________
Total operating 1,890,939 1,492,203
expenses ___________ ___________
(1,594,772) (1,375,945)
LOSS FROM OPERATIONS
75,285 67,160
INTEREST INCOME ___________ ___________
(1,519,487) (1,308,785)
NET LOSS
(80,473) (26,750)
PREFERRED STOCK DIVIDENDS ___________ ___________
$(1,599,960) $(1,335,535)
NET LOSS APPLICABLE TO =========== ===========
COMMON SHARES
$ (.08) $ (.08)
NET LOSS PER COMMON SHARE =========== ===========
20,691,866 17,471,281
WEIGHTED AVERAGE COMMON =========== ===========
SHARES OUTSTANDING
The accompanying notes are an integral part of these condensed consolidated
statements.
Page 1 of 2
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Increase (Decrease) in Cash and Cash Equivalents
For the Three Months
Ended December 31,
1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(1,519,487) $(1,308,785)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 36,985 43,225
Issuance of Common Stock and
warrants for services 214,078 111,516
Amortization of deferred
consulting expense 431,750 238,750
Changes in assets and
liabilities:
Accounts receivable, net ( 62,702) (14,944)
Inventories 84,397 ( 5,239)
Accounts payable and accrued
liabilities (130,534) 82,642
Unearned revenue ( 84,000) --
Accrued payroll and payroll
taxes 1,554 ( 9,554)
_____________ ____________
Net cash used in operating
activities ( 1,027,959) (862,389)
_____________ ____________
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and equipment ( 57,486) (129,207)
Loans to employees -- (32,399)
Net decrease in amounts due from
related parties 7,500 50,052
Advances to related parties (80,000) --
_____________ ____________
Net cash used in investing
activities (129,986) (111,554)
_____________ ____________
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Preferred Stock
subscriptions receivable 3,500,000 --
Proceeds from exercise of
Common Stock warrants 123,750 --
Offering costs for Series D
Preferred Stock -- (235,000)
_____________ ____________
Net cash provided by (used in)
financing activities $ 3,623,750 $ (235,000)
============ ============
The accompanying notes are an integral part of these condensed consolidated
statements.
Page 2 of 2
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Increase (Decrease) In Cash and Cash Equivalents
For the Three Months
Ended December 31,
1996 1995
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $2,465,805 $(1,208,943)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD 4,192,868 5,206,112
__________ ___________
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD $6,658,673 $ 3,997,169
========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the three months ended December 31, 1996, an employee exercised
options to purchase 100,000 shares of Common Stock at $1.16 per share, for
which the Company accepted payment in the form of a note receivable for
$116,000.
During the three months ended December 31, 1996, 15,240 shares of Series A
Preferred Stock and 1,000 shares of Series B Preferred Stock were issued as
payment of dividends.
During the three months ended December 31, 1996, 65,426 shares of Series A
Preferred Stock with a recorded value of $314,699 were converted into
196,278 shares of Common Stock.
During the three months ended December 31, 1995, 16,364 shares of Series A
Preferred Stock with a recorded value of $73,638 were converted into 49,092
shares of Common Stock.
On December 29, 1995, the Company entered into a Subscription Agreement for
the sale of a total of 5,000 shares of its Series D Preferred Stock for
$1,000 per share.
The accompanying notes are an integral part of these condensed consolidated
statements.
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial
statements have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the following disclosures
are adequate to make the information presented not misleading. These
condensed financial statements reflect all adjustments (consisting only of
normal recurring adjustments) that, in the opinion of management, are
necessary to present fairly the financial position and results of
operations of the Company for the periods presented. It is suggested that
these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996.
(2) NET LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted
average number of common shares outstanding during the periods presented.
Convertible Preferred Stock, warrants and options outstanding were not
included in the computations because any assumption of conversion would be
anti-dilutive, thereby decreasing net loss per common share. Preferred
Stock dividends increase the net loss applicable to common shares for
purposes of computing the net loss per common share.
(3) STOCK TRANSACTIONS
For the three months ended December 31, 1996, 65,426 shares
of Series A Preferred Stock with a recorded value of $314,699 were
converted into 196,278 shares of Common Stock. During the three months
ended December 31, 1996, the Company accrued dividends of $6,723, $3,750
and $70,000 on its outstanding Series A, Series B and Series C Preferred
Stock, respectively. Preferred Stock dividends are payable in either
additional shares of Preferred Stock or in cash, at the Board of Directors'
option. Dividends on Series A and Series B Preferred Stock accrued as of
September 30, 1996 totaling $91,199 were paid during the three months ended
December 31, 1996 by issuing 15,240 shares of Series A Preferred Stock and
1,000 shares of Series B Preferred Stock.
During the three months ended December 31, 1996, the
Company issued 883,000 shares of Common Stock for services rendered or to
be rendered to the Company and recorded expense of $1,156,598 associated
with those shares. Of this expense, $942,520 was initially deferred and
will be recognized over the term of the related consulting agreements. The
Company also has deferred consulting expense related to shares issued under
consulting agreements entered into prior to September 30, 1996 as well as
from stock warrants issued during fiscal year 1996. These deferred amounts
will be recognized over the remaining terms of the agreements as services
are provided. Total amortization of these deferred consulting amounts was
$431,750 for the three months ended December 31, 1996.
On December 4, 1996, James J. Dalton, the Vice Chairman of
the Board and Senior Vice President of Investor Relations, exercised
options to purchase 100,000 shares of Common Stock at $1.16 per share, for
which the Company accepted payment in the form of a note receivable for
$116,000. This note bears interest at 7%, is full recourse in nature and
is due on demand. This note receivable is classified as a reduction in
shareholders' equity in the accompanying financial statements.
During the three months ended December 31, 1996, existing
options for 55,000 shares of Common Stock were exercised at $2.25 per share
for total proceeds of $123,750.
(4) STOCK OPTIONS AND WARRANTS
During the three months ended December 31, 1996, the
Company granted options to employees to purchase a total of 447,500 shares
of Common Stock at an exercise price of $1.16 per share, which price
represented the closing price of the Company's Common Stock on the grant
date. The Company amended stock option agreements to adjust the exercise
price of all outstanding options held by employees and directors,
aggregating 2,214,419 options, to $1.16 per share, which price represented
the closing price of the Company's Common Stock at that date.
(5) RELATED-PARTY TRANSACTIONS
During the three months ended December 31, 1996, the
Company loaned $30,000 to Genesis Investment Corporation and $50,000 to
Daliz Associates, entities owned by shareholders of the Company. These
loans were made in consideration for the termination of agreements the
Company had previously entered into with each of those entities, are non-
interest bearing, are due within 90 days and are secured by shares of the
Company's Common Stock. These amounts have been classified as a reduction
in shareholders' equity in the accompanying financial statements.
(6) CONSULTING AGREEMENTS
Paramount Marketing Corp.
On October 23, 1996, the Company entered into a consulting
agreement with Paramount Marketing Corp. ("Paramount"), whereby Paramount
was issued a total of 108,000 shares of the Company's Common Stock in
exchange for consulting services to be provided through September 30, 1997.
Paramount is assisting the Company in developing marketing strategies. The
shares have "piggy back" registration rights. The Company recorded
consulting expense of $125,280 of which $93,960 is deferred as of December
31, 1996 and will be recognized over the remaining term of the consulting
agreement.
AAM Group, Inc.
Effective November 1, 1996, the Company entered into a
four-month agreement with AAM Group, Inc. ("AAM") whereby AAM has agreed to
provide consulting services, consisting primarily of introducing the
Company to potential business partners, in exchange for 30,000 shares of
the Company's registered Common Stock. The Company recorded consulting
expense of $72,300 of which $43,380 is deferred as of December 31, 1996 and
will be recognized over the remaining term of the agreement.
Medefin Incorporated
On October 23, 1996, the Company entered into a consulting
agreement with Medefin Incorporated ("Medefin"), whereby Medefin was issued
a total of 300,000 shares of the Company's Common Stock in exchange for
consulting services to be provided through September 30, 1997. Medefin is
assisting the Company in developing marketing strategies. The shares have
"piggy back" registration rights. The Company recorded consulting expense
of $348,000 of which $261,000 is deferred as of December 31, 1996 and will
be recognized over the remaining term of the consulting agreement.
J.R. Axelrod and Company
On October 23, 1996, the Company entered into a consulting
agreement with J.R. Axelrod and Company ("Axelrod") whereby Axelrod was
issued a total of 180,000 shares of Common Stock in exchange for consulting
services, consisting primarily of investment advisory services, to be
provided through September 30, 1997. The shares have "piggy back"
registration rights. The Company recorded consulting expense of $208,800
of which $156,600 is deferred as of December 31, 1996 and will be
recognized over the remaining term of the consulting agreement.
Consolidated General Ltd.
On October 23, 1996, the Company entered into a consulting
agreement with Consolidated General Ltd. ("Consolidated") whereby
Consolidated was issued a total of 200,000 shares of Common Stock in
exchange for consulting services, consisting primarily of financial
advisory and investment banking services, to be provided through October
23, 1997. The shares have "piggy back" registration rights. The Company
recorded consulting expense of $232,000 of which $174,000 is deferred as of
December 31, 1996 and will be recognized over the remaining term of the
consulting agreement.
(7) SUBSEQUENT EVENT
On January 16, 1997, 1,650 shares of Series C Preferred
Stock were converted into 1,523,082 shares of the Company's Common Stock.
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following information includes forward-looking statements, the
realization of which may be impacted by certain important factors discussed
below.
General
Biomune Systems, Inc. (the "Company") is a development
stage nutraceutical and biopharmaceutical company that is engaged in the
business of research, development, production and marketing of
nutraceutical food supplements and biologic pharmaceutical products derived
from the Biomune Whey Protein Technology (the "BWPT"). The Company is
conducting its nutraceutical operations through its wholly-owned subsidiary
Optim Nutrition, Inc. ("Optim Nutrition"), while the pharmaceutical product
research and development is being conducted directly by the Company.
Nutraceutical products are food supplements that are derived from a food
base and marketed as a beneficial source of nutrients to promote good
health in humans. The Company's primary emphasis and focus to date has been
on commercializing one or more nutraceutical products and on the research
and development of biologic pharmaceutical products, with the goal of
commercializing one or more pharmaceutical products. However, the Center
for Biologics Evaluation and Research at the United States Food and Drug
Administration (the "FDA") has notified companies doing research in the
biologics area that it would like such companies to conduct additional
studies on their products to identify which component is responsible for
the biological activity of their product, to the extent such data was not
developed during preclinical investigations. Because the FDA strongly
encourages companies to provide such data in order to support their potency
claims, the Company is currently in the process of compiling this data for
submission to the FDA and will continue with the clinical trials on its
BWPT-301(TM) and BWPT-302(TM) product candidates. While a several month
delay in the clinical trials on BWPT-301(TM) and BWPT-302(TM) will result
from the FDA's request, the Company views that request as routine in
nature. Moreover, while those additional studies are being conducted, the
Company nevertheless is proceeding ahead as planned with the marketing and
commercialization of its first nutraceutical product. Management believes
that the introduction of OPTIMUNE(TM), the Company's first nutraceutical
product, will allow the Company to begin generating cash flow in the short-
term while it continues with the research and development of its
pharmaceutical products.
Nutraceutical Products. Based upon the results of and the
information obtained from clinical trials and other studies involving the
Company's protein whey concentrate (the "Base Product") and BWPT-301(TM),
the Company, through Optim Nutrition, developed and is now marketing
OPTIMUNE(TM), the Company's first nutraceutical product. The Company began
marketing OPTIMUNE(TM) in July 1996, and is now marketing that product in
the United States and certain regions of Africa. OPTIMUNE(TM), which is
based on the BWPT, is being marketed to nutritionally-stressed individuals
with immune-compromised conditions as a product to improve immune function
and assist with weight gain and the maintenance of a healthy weight. Optim
Nutrition generated limited revenues from the sale of OPTIMUNE(TM) during
the first quarter of fiscal year 1997. Optim Nutrition is conducting
nutritional studies on OPTIMUNE(TM) at various sites for its effect against
chronic weight loss in immune compromised humans. A study at two sites in
the San Francisco bay area (St. Francis Memorial Hospital and the East Bay
AIDS Clinic) has been completed. Twenty-nine subjects out of 35 completed
the six week study. Overall patient weight for all 29 subjects increased
an average 1.5 pounds during the study. Body weight increased for 22
patients (75.9%), decreased for five patients (17.2%) and remained constant
for two patients (6.9%). In total, 83% of the individuals in the study
either gained weight or maintained the weight they had upon entry into the
study. Gaining and maintaining weight were both considered advantageous by
the Company because the patient population had a history of losing weight,
and were each at least 10% below their ideal body weight prior to entering
the study. Out of the 22 patients who gained weight, the average increase
was 3.5 pounds, with the highest gain being 13 pounds. A quality of life
profile was taken at the conclusion of the study, and 83% of the subjects
reported feeling better. In addition, the investigators believed that 87%
of the subjects had improvement over the course of the six week study. Out
of the 22 patients who gained weight, 13 gained body cell mass (muscle),
with an average increase of 1.45 pounds, with the highest gain being 7.1
pounds. In addition, Dr. Donald P. Kotler at St. Lukes-Roosevelt Hospital
Center in New York City, New York is studying the metobolic activity in
people with AIDS. Other sites located in California, Florida, New York
and Oklahoma have begun less rigorous studies. These studies are designed
to yield anecdotal corroborating data of the previous studies and to
provide new data that may encourage the Company to engage in additional
expanded rigorous studies and to introduce potential customers to
OPTIMUNE(TM). There can be no assurance that this or any other
nutraceutical study will be successful or will be successfully completed in
a timely manner.
While FDA approval is not required to commence the
marketing and sale of nutraceutical products, in order to make broad and
non-specific claims regarding the benefits of using a particular
nutraceutical product, studies must be conducted to substantiate those
claims. In addition, the Company's products must be appropriately labeled
in accordance with the Dietary Supplement Health and Education Act of 1994
(the "Dietary Supplement Act"). At any time subsequent to a company's com-
mencement of marketing of a nutraceutical product, both the FDA and the
United States Federal Trade Commission (the "FTC") have the right to review
the accuracy of the product claims being made by requiring the production
of the study results. A company marketing nutraceutical products cannot
make claims such as the ability of a product to cure a particular disease.
Rather, claims must be broadly made and may not be made with respect to
diagnosis, treatment, cure, mitigation or prevention of a specific disease.
Pharmaceutical Products. The Company also believes that
the BWPT may be utilized to develop pharmaceutical products to treat
various gastrointestinal and infectious diseases in humans. The Company
has filed Investigational New Drug Applications ("IND") with the FDA, the
United States government agency that regulates drugs for humans, on two
biological pharmaceutical candidates developed from the BWPT: (a) BWPT-
301(TM), which the Company believes may prevent and/or treat
cryptosporidiosis, a gastrointestinal disease caused by the cryptosporidium
parvum microorganism that causes acute and severe diarrhea in humans, and
(b) BWPT-302(TM), which the Company believes may be used in the treatment
of infection by the life-threatening bacteria Escherichia coli, strain
0157:H7 ("E. coli, strain 0157:H7"), a disease that causes severe bloody
diarrhea, and in children, a hemolytic uremic syndrome associated with a
high risk of permanent kidney damage. At the FDA's request, the Company is
currently conducting additional clinical studies on BWPT-301(TM) in order
to identify which component is responsible for the distinctive biological
activity in that product candidate. The FDA has told the Company that an
important aspect of the licensure process is the evaluation of the potency
of the product and the test or tests that are used to assess potency.
"Potency" refers to the specific ability of a product to effect a given
result. The Company anticipates continuing its Phase II clinical trials on
its BWPT-301(TM) product candidate upon the completion of the potency
studies currently being conducted, and now anticipates that those Phase II
clinical trials will be completed in approximately 1998. Assuming those
Phase II clinical trials are successful, the Company anticipates that it
will commence Phase III clinical trials on BWPT-301(TM) possibly as early
as mid-1999. In addition, the Company has concluded its Phase I clinical
trials on its BWPT-302(TM) product candidate and, after the analysis of the
data from those trials, is planning to commence a Phase I/II clinical trial
in approximately mid-1998 to continue gathering data on the safety and
tolerance of that product and to begin evaluating the efficacy of BWPT-
302(TM). The Company has generated no revenues from the sale of any
biological pharmaceutical drugs or drug candidate to date and does not
anticipate any revenues from any pharmaceutical product until approximately
1999 at the earliest.
Based on the results of Phase I and Phase II clinical
trials that were conducted using the Company's BWPT-301(TM) product
candidate, the Company believes that products developed based on the BWPT
may be successful in improving and promoting gastrointestinal health,
especially in (i) people who are HIV positive or have AIDS, (ii) immune-
compromised patients such as those undergoing high-dose antibiotic or
chemotherapy treatment and (iii) post-surgical and chronic care patients.
Some of the other diseases or microbial infections that the Company
believes may be preventable and/or treatable include certain infectious
bacteria known to be enteric pathogens (including, for example,
Helicobacter pylori, Clostridium difficile, Campylobacter jejuni, Yersinia
enterocolitica and Staphylococcus aureus, and possibly certain non-
infectious immunologically-based syndromes, diseases and other conditions
(including, for example, certain cancers, such as prostate cancer,
arthritis, irritable bowel syndrome and acne).
The Company has a variety of studies and clinical trials on
its pharmaceutical products underway and planned, although the timing of
certain of those studies will be delayed as the Company continues to focus
its efforts on OPTIMUNE(TM) and other possible nutraceutical products.
These studies include studies to further the basic knowledge about the BWPT
and to fully characterize the activities of the Base Product and its
components and parameters for formulation and use. At least one study will
address pharmacokinetics. Studies at universities and hospital sites are
testing for various activities against selected disease organisms. Several
human clinical trials have been completed to test the safety and tolerance
of the BWPT. Other clinical trials are assessing dose ranges and effects.
Still others will measure the efficacy of BWPT-301(TM) against
cryptosporidiosis in people who are also infected with the HIV virus or
have AIDS. Additional clinical trials are anticipated to be undertaken in
the future to conclude the dose ranging considerations and prepare for the
clinical trials that will assess the efficacy of BWPT-302(TM) against E.
coli, strain 0157:H7. Additional studies on E. coli, strain 0157:H7, are
also anticipated for the future.
Other Products and Technology.
Through the Company's wholly-owned subsidiary, Volu-Sol,
Inc. ("Volu-Sol"), the Company is engaged in the manufacture and
distribution of medical diagnostic stains. Moreover, in October 1996,
Volu-Sol entered into a contract with GG&B Engineering, Inc., whereby Volu-
Sol will purchase from GG&B Engineering and resell an instrument that will
only use the proprietary Volu-Sol diagnostic stains. The Company has and
continues to receive revenues from the sale of Volu-Sol's traditional
medical diagnostic stains.
In addition, the Company owns the rights to certain medical
waste technologies, which consist of (a) a device for the sterilization and
decontamination of medical devices and wastes, (b) a bioremediation process
to detoxify and degrade hazardous substances and (c) a device and process
for the safe treatment of used medical stains. During fiscal year 1996,
the Company granted a license to a third party, Biomed Patent Development
L.L.C., to use the technology related to the medical sterilization and
decontamination device in return for certain royalties.
All forward-looking statements contained herein are deemed
by the Company to be covered by and to quality for the safe harbor
protection provided by the Private Securities Litigation Reform Act of 1995
(the "1995 Act"). For purposes of this report, words or phrases such as
"will likely result," "expects," "intends," "will continue," "is
anticipated," "estimates," "projects" and similar expressions are intended
to identify forward-looking statements within the meaning of the 1995 Act.
Investors and prospective investors in the Company should understand that
several factors govern whether any forward-looking statement contained
herein will be or can be achieved. Any one of those factors could cause
actual results to differ materially from those projected herein. Investors
and prospective investors are referred to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1996 for a more detailed
discussion of the factors that could cause actual results to differ. 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 and its subsidiaries,
Optim Nutrition and Volu-Sol. The forward-looking statements and
associated risks set forth herein relate to (i) the commercialization of
OPTIMUNE(TM) or any other nutraceutical product by Optim Nutrition; (ii)
production efficiencies and increased gross margin from Volu-Sol; (iii) the
total research and development, general and administrative and other direct
costs associated with obtaining final FDA approval on BWPT-301(TM) and
BWPT-302(TM); (iv) the dollar amount to be expended during fiscal years
1997 and 1998 on the BWPT-301(TM) clinical trials and the BWPT-302(TM)
clinical trials; (v) the estimated date of receipt of final FDA approval on
BWPT-301(TM) and BWPT-302(TM); (vi) the estimated commencement date of
Phase III clinical trials and the completion of those clinical trials on
BWPT-301(TM); and (vii) the Company having sufficient cash to fund its
projected operations and budgeted research and development for fiscal 1997.
The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. These
forward-looking statements are based on assumptions, among others, (a) that
the efficacy of BWPT-301(TM) will be established during the ongoing Phase
II clinical trials and the contemplated Phase III clinical trials; (b) that
the Company will be able to successfully undertake and complete clinical
trials on BWPT-302(TM); (c) that the Company will be able to continue to
market and successfully commercialize OPTIMUNE(TM); (d) that the Company
will be able to successfully develop and commercialize the BWPT; (e) that
the Company will need to conduct additional Phase II clinical trials on
BWPT-301(TM) and may need to conduct clinical trials that are different
from those that have been conducted to date or that are currently
contemplated by the Company; and (f) that the Company will be able to
timely and properly quantify and analyze the data derived from its on going
clinical trials on its pharmaceutical product candidates and the studies on
its nutraceutical product candidates. Assumptions relating to the
foregoing 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 product studies, and the time and
money required to successfully complete those clinical trials and studies,
all of which are difficult or impossible to predict accurately and many of
which are beyond the control of the Company and its management. Although
the Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of those assumptions could
prove inaccurate and, therefore, there is and can be no assurance that the
results contemplated in any such forward-looking statement will be
realized. This is particularly true given the dynamic nature of the
process in which the Company is involved with respect to OPTIMUNE(TM),
BWPT-301(TM) and BWPT-302(TM). Budgeting and other management decisions
are subjective in many respects and thus 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, the Company's results of operations
could be adversely impacted. In light of the significant uncertainties
inherent in the forward-looking statement included herein, the inclusion of
any such statements should not be regarded as a representation by the
Company or any other person that the objectives or plans of the Company or
of either of its subsidiaries will be achieved.
Results of Operations
Comparison of the three months ended December 31, 1996 with the three
months ended December 31, 1995
During the three months ended December 31, 1996, the
Company had revenues of $296,167 compared to $116,258 for the comparable
three month period ended December 31, 1995. Of the total revenues
generated for the three months ended December 31, 1996, $110,762 were
generated by Volu-Sol, $140,405 were generated by Optim Nutrition and
$45,000 in royalties were received from the license of the medical
sterilization and decontamination device. All of the revenues generated
for the three months ended December 31, 1995 were derived from Volu-Sol.
Cost of sales for Volu-Sol was $79,571 and cost of sales for Optim
Nutrition was $51,522 for the three month period ended December 31, 1996
compared to cost of sales of $76,672 for Volu-Sol for the same period in
1995.
Management, consulting and research fees were $721,355 for
the three months ended December 31, 1996, as compared to $711,845 for the
three months ended December 31, 1995. General and administrative expenses
increased from $703,686 for the three months ended December 31, 1995 to
$1,038,491 for the three months ended December 31, 1996. Those increases
were primarily due to the Company s efforts to further develop and market
OPTIMUNE(TM).
Interest income was $75,285 for the three months ended
December 31, 1996 and resulted from the investment of the Company s cash
proceeds from the sale of shares of Preferred Stock.
The net loss applicable to common shares increased from
$1,335,535 for the three months ended December 31, 1995 to $1,599,960 for
the three months ended December 31, 1996. The increase in the net loss
applicable to common shares was primarily attributable to the increased
level of activity in developing and marketing OPTIMUNE(TM). The Company
expects to incur a net loss for fiscal year 1997. While the Company is not
at this time able to forecast the expected net loss for fiscal year 1997,
that net loss could exceed the net loss incurred for fiscal year 1996. The
factors that will dictate the size of the Company's net loss for fiscal
1997 include the cost of further developing the BWPT, required expenditures
for clinical trials on BWPT-301(TM), required expenditures for the clinical
trials on BWPT-302(TM), required expenditures for the nutritional studies
on OPTIMUNE(TM) and the associated development and marketing costs related
to OPTIMUNE(TM).
Liquidity and Capital Resources
The Company is currently unable to finance its operations
from its cash flows from operating activities. Substantial funds and time
will be required to complete clinical trials on BWPT-301(TM) (assuming
efficacy is established during the Phase II clinical trials), to undertake
and complete the necessary clinical trials on BWPT-302(TM), to obtain
regulatory approval for and to commercialize the BWPT, to achieve
profitability in Volu-Sol's operations and to continue the marketing effort
on OPTIMUNE(TM). Because revenue-generating activities are not in place at
significant levels and because the Company will require significant capital
to accomplish the objectives set forth above, additional equity and/or debt
funding will most likely be required, although such funding may not be
available or may not be available on terms acceptable to the Company and
its management.
As of December 31, 1996, the Company had current assets of
$7,276,004 and positive working capital of $6,874,233, as compared to
current assets of $8,339,394 and positive working capital of $7,713,917 as
of September 30, 1996. This decrease in the Company's current assets and
positive working capital was due to the net loss for the three months ended
December 31, 1996.
During the three months ended December 31, 1996, the
Company s operating activities used $1,027,959 of cash, compared with
$862,389 of cash used for operating activities during the same three month
period in 1995. This increase was the result of increased costs associated
with the marketing of OPTIMUNE(TM).
Management intends to continue the development of its the
BWPT, including products in both the nutraceutical and pharmaceutical
markets.
The Company currently estimates that the total research and
development, general and administrative and other direct costs associated
with reaching the stage of obtaining final FDA approval on BWPT-301(TM) in
treating cryptosporidiosis in people with AIDS, in the aggregate, will
approximate $16-$18 million, some of which will be paid in cash and some of
which has been and likely will be paid in shares of the Company's Common
Stock. As of December 31, 1996, approximately $13 million had been spent
on research and development related to BWPT-301(TM). An estimated
$200,000 to $400,000 will be expended as clinical trials on BWPT-301(TM)
continue. Final FDA approval on BWPT-301(TM) is currently estimated to be
received possibly as early as late-calendar 1999.
Currently, it is estimated that the total research and
development, general and administrative and other direct costs associated
with reaching the stage of obtaining final FDA approval on BWPT-302(TM) in
treating E. coli, strain 0157:H7, will approximate $8-$10 million, some of
which will be paid in cash and some of which likely will be paid in shares
of the Company's Common Stock. The Company has completed initial Phase I
clinical trials and will continue Phase I clinical trials throughout the
remainder of fiscal year 1997. As of December 31, 1996, the Company spent
approximately $500,000 on the BWPT-302(TM) and anticipates spending
approximately $100,000 to $200,000 as clinical trials continue.
As of December 31, 1996, the Company had spent
approximately $726,000 on developing OPTIMUNE(TM). In July 1996, the
Company introduced OPTIMUNE(TM) and began marketing efforts of that product
through a direct mail program. During the next 12 months the Company
anticipates incurring direct costs of approximately $2-$4 million in
conducting additional nutritional studies and entering into the private
label and wholesale and retail markets.
The Company cannot currently predict, however, how much of
the above referenced expenditures will be paid in cash and how much will be
paid in shares of Common Stock. The factors that will impact the actual
total research and development, general and administrative and other direct
costs associated with OPTIMUNE(TM), BWPT-301(TM) and BWPT-302(TM) include
the number of clinical trials or nutritional studies necessary to establish
efficacy, the results of the continuing clinical trials and nutritional
studies, possible changes in the FDA's regulations and approval processes,
and general inflationary factors.
The Company has no credit facility with any lending
institution and no current or long-term debt obligations.
The Company is continuing to focus on building the sales
and profitability of Volu-Sol. However, the Company will be required to
fund losses incurred by Volu-Sol if profitability is not achieved.
The Company currently estimates that it has sufficient cash
to fund its projected operations and budgeted research and development for
the remainder of fiscal year 1997. The factors that could cause the
forward-looking statement contained in the immediately preceding sentence
to differ from that projected include catastrophic unanticipated events,
dramatic increases in research and development costs, the ultimate cost to
conduct the planned nutraceutical studies and the clinical trials on BWPT-
301(TM) and BWPT-302(TM), and an adverse judgement in the pending lawsuit
filed by Roman Sterlin (see Part II, Item 1 - Legal Proceedings, below).
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
Refer to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 for a discussion of the legal
proceeding captioned Sterling v. Biomune systems, Inc. pending in the
United States District Court for the District of Utah, Central Division
(civil number 2:95CV-0944G).
Item 2 - Change in Securities
Not applicable
Item 3 - Defaults upon Senior Securities
Not applicable
Item 4 - Submission of Matter to a Vote of Security Holders
Not applicable
Item 5 - Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Agreement by and between Biomune Systems, Inc. and
Consolidated General, Ltd.
10.2 Agreement by and between Biomune Systems, Inc. and
AAM Group, Inc.
10.3 Agreement by and between Biomune systems, Inc. and
J.R. Axelrod and Company
10.4 Agreement by and between Biomune Systems, Inc. and
Medefin Incorporated
10.5 Agreement by and between Biomune Systems, Inc. and
Paramount Marketing Corp.
10.6 Agreement by and between Volu-Sol and GG&B
Engineering, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BIOMUNE SYSTEMS, INC.
(Registrant)
Date: February 12, 1997 /s/ David G. Derrick
David G. Derrick, Chief Executive
Officer and Chairman of the Board
(Principal Executive Officer)
Date: February 12, 1997 /s/ Milton G. Adair
Milton G. Adair, President
Date: February 12, 1997 /s/ Michael G. Acton
Michael G. Acton, Chief Financial
Officer and Controller (Principal
Financial and Accounting Officer)
EXHIBIT INDEX
Exhibit Number Description Page
10.1 Agreement by and between Biomune Systems, Inc. and
Consolidated General, Ltd. . . . . . . . . . . . . . . . . 20
10.2 Agreement by and between Biomune Systems, Inc. and AAM Group,
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.3 Agreement by and between Biomune Systems, Inc. and J.R.
Axelrod and Company . . . . . . . . . . . . . . . . . . . 26
10.4 Agreement by and between Biomune Systems, Inc. and Medefin
Incorporated . . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Agreement by and between Biomune Systems, Inc. and Paramount
Marketing Corp. . . . . . . . . . . . . . . . . . . . . . 32
10.6 Agreement by and between Volu-Sol and GG&B Engineering, Inc. 35
27 Financial Data Schedule
EXHIBIT 10.1
CONSOLIDATED GENERAL LTD.
44 OXFORD STREET
LONDON, ENGLAND
October 23, 1996
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
Attention: Mr. David Derrick
Chief Executive Officer
Dear Mr. Derrick:
We are pleased to confirm our mutual understanding concerning the
retention by Biomune Systems, Inc. (The "Company") of
Consolidated General Ltd. ("Consolidated") to act as a financial
advisor and investment banker to the Company with respect to
investment banking and other corporate matters that may arise in
the future.
1. Scope of Engagement. (a) In connection with this
engagement, Consolidated will assist in reviewing and evaluating
(i) the Company's financial condition and historical and
projected financial results, (ii) the Company's current
operations and business prospects, (iii) the current condition of
the industry, as well as any recent trends, and the Company's
competitive position therein, all with a view toward assisting
the Company in formulating an overall plan for its corporate and
financial development, and (iv) assist the Company in expanding
its financial markets, obtain research reports and, in general
increase the Company's exposure to the financial markets. The
Company and consolidated will endeavor, every 90 days or other
Company's corporate development. In addition, Consolidated will
advise you on a variety of joint ventures, divestitures and other
potential transactions which merit consideration by you.
Consolidated will also be available for advice, consultation and
assistance with respect to other corporate or financial matters
the Company may consider from time to time, such as
recapitalizations and restructurings, decisions relating to
business and marketing strategies and planning for resource
allocation and capital expenditures.
(b) In addition, if during the term of this engagement the
Company proposes to participate in any transaction which would
generally require the services of an investment banker or
financial advisor, as the case may be, on a fee paying basis and
at the Company's sole option, including matters relating to (i)
the raising of debt or equity capital, both public and private,
(ii) possible mergers or stock or asset acquisition s, (iii)
sales or other dispositions of businesses or assets, (iv) stock
repurchases, recapitalizations or restructurings, (v) joint
ventures or corporate partnering arrangements and (vi) other
financial or corporate matters with which the Company may from
time to time require assistance, Consolidated shall have the
rights at the Company's option to act as the Company's investment
banker and financial advisor in connection with such transaction.
2. Advisory Fees and Expenses. In consideration for the
services described in paragraph 1(a) above, the Company shall pay
to Consolidated on the date hereof the total sum of 200,000
shares of the Company's restricted Common Stock with "piggy back"
registration rights.
In addition to the foregoing, before commencing any specific
assignment on the Company's behalf as referred to in paragraph
1(b) hereof, the Company and Consolidated will discuss, and
mutually determine, a reasonable and customary fee or fee scale
to be paid to Consolidated in connection therewith.
3. Term and Termination. The initial term of this
engagement shall be for a period of one year from the date hereof
and may be extended as the parties shall mutually agree, subject
to the establishment of arrangements for additional compensation
and other appropriate terms for such extension. However, at the
option of the Company, this Agreement may be terminated upon five
days written notice in which case the compensation referenced in
Paragraph 2 above will be pro rated to the termination date.
4. Miscellaneous. No waiver, amendment or other
modification of this agreement shall be effective unless in
writing and signed by each party to be bound hereby. This
agreement, and any claim related directly or indirectly to this
agreement, shall be governed by, and construed in accordance
with, the laws of the State of Utah applicable to agreement
executed and to be fully performed therein. No such claim shall
be commenced, prosecuted or continued in any court other than the
courts of the State of Utah. Consolidated and the Company waive
all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, or otherwise) related
to or arising out of our engagement. The obligations of this
agreement shall be binding upon and shall inure to the benefit of
the parties hereto.
Please confirm that the foregoing is in accordance with your
understanding of the terms of our engagement by signing and
returning to us the enclosed duplicate of this letter, which
shall thereupon constitute a binding agreement between us.
Very truly yours,
CONSOLIDATED GENERAL, LTD.
By: /s/ Derek J. Jones
Its:
Accepted and agreed to
as of the date first above written:
BIOMUNE SYSTEMS, INC.
By: /s/ David G. Derrick
Its: CEO
EXHIBIT 10.2
AGREEMENT
This Agreement, made effective November 1, 1996, by and between
AAM Group, Inc. ("AAM") and Biomune Systems, Inc., a Nevada
Corporation ("Biomune");
NOW THEREFORE, the parties agree as follows:
1. Engagement, Duties and Acceptance.
1.1 Engagement by Biomune. Biomune hereby agrees to
retain AAM for the following purposes:
(a) Provide introductions to potential business
partners;
(b) Provide introductions and information to and
about potential business partners.
1.2 Acceptance of Engagement by AAM. AAM hereby
accepts such engagement and shall render
management services as described above.
2. Term of Agreement. The term of AAM's engagement under
this Agreement (the "Term") shall commence on November
1, 1996 (the "Commencement Date") and shall continue
through and expire on the 30th day of March, 1997,
unless sooner terminated by either Biomune or AAM upon
thirty (30) days written notice. This Agreement may
continue in effect beyond the Term if mutually agreed
in writing by both Biomune and AAM.
3. Compensation. As compensation for services to be
rendered pursuant to this Agreement, Biomune shall pay
AAM Group, Inc. 30,000 shares of Biomune common stock
that will be registered pursuant to an S-8 registration
statement.
4. Confidential Information. During the Term of this
Agreement and for a period of five (5) years after the
termination of this Agreement, AAM shall keep secret
and retain in strictest confidence and shall not use,
for the benefit of itself or others, all confidential
matters of the Biomune including, without limitation,
"know-how", trade secrets, customer lists, details of
client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies,
product development techniques or plans, methods of
production and distribution, technical processes,
designs and design projects, inventions and research
projects of Biomune learned by AAM heretofore or during
the Term hereof.
5. Other Provisions.
5.1 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed,
telexed or sent by facsimile ransmission or, if mailed,
five days after the date of deposit in the United
States mail, as follows:
(i) if to Biomune, to:
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah
84109
with a copy to:
Nolan Taylor, Esquire
LeBoeuf, Lamb, Greene & MacRae
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah
84101
(ii) if to AAM, to:
AAM Group, Inc.
100 Daly Blvd. Unite 2807
Oceanside, New York
11572
5.2 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the
subject matter hereof and supersedes all prior
agreement, written or oral, with respect thereto.
5.3 Governing Law; Venue. This Agreement shall be governed
and construed in accordance with the laws of the State
of Utah applicable to agreements made and to be
performed entirely within such state. The parties
submit themselves to the jurisdiction of the federal
and state courts located in Utah and agree to commence
any lawsuit arising under or relating to this Agreement
in such courts.
5.4 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party
hereto without the prior written consent of the other
party.
5.5 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above-written.
BIOMUNE SYSTEMS, INC.
By: /s/ Michael G. Acton
Its: Chief Financial Officer
AAM GROUP, INC.
By: /s/ Adam Krisftcher
Its: President
EXHIBIT 10.3
AGREEMENT
This Agreement is made effective as of October 23, 1996, between
Biomune Systems, Inc., a Nevada Corporation (the "Company"), and
J.R. Axelrod and Company, a Florida general partnership
("Consultant").
WHEREAS, Consultant can provide services to the Company in
arranging for various investment advisors, market markers,
providing financial market advice, and in participating in the
raising of funds for the Company;
WHEREAS, the Company desires to have Consultant provide such
services;
NOW THEREFORE, in consideration of the foregoing, and the
agreements set forth below, the parties agree as follows:
1. Engagement, Duties and Acceptance.
1.1 Engagement by the Company. The Company hereby agrees
to retain the Consultant as a consultant to the Company
for the Term (as hereinafter defined) to render such
consultation and advice as the Company may request.
1.2 Acceptance of Engagement by the Consultant. The
Consultant hereby accepts such engagement and shall
render such consultation and advice as the Company may
request.
2. Term of Agreement. The term of the Consultant's engagement
under this Agreement (the "Term") shall commence on the
effective date of this Agreement and shall continue through
and expire on the 30th day of September, 1997, unless sooner
terminated by either the Company or the Consultant upon
thirty (30) days prior written notice. The Company's
obligations under this Agreement shall immediately cease
upon the termination hereof and Consultant shall only be
entitled to the pro rata portion of its quarterly
compensation hereunder for the quarter in which this
Agreement is terminated.
3. Compensation. As compensation for the services to be
rendered pursuant to this Agreement, the Company agrees to
pay to the Consultant a quarterly fee during the Term of
this Agreement of 45,000 shares of the Company's restricted
common stock each quarter during the Term. Said shares will
have "piggy back" registration rights, but not demand
registration rights. Any out-of-pocket expenses which have
been approved in advance shall be accrued and paid (less
such deductions as shall be required to be withheld by
applicable laws and regulations) promptly upon submission of
documentary evidence of such expenses.
4. Confidential Information. During the Term of this Agreement
and thereafter, the Consultant shall keep secret and retain
in strictest confidence and shall not use, for the benefit
of himself or others, all confidential matters of the
Company including, without limitation, "know-how", trade
secrets, customer lists, details of client or consultant
contracts, pricing policies, results of trials, operational
methods, marketing plans or strategies, product development
techniques or plans, methods of production and distribution,
technical processes, designs and design projects, inventions
and research projects of the Company learned by the
Consultant heretofore or during the term hereof.
5. Other Provisions.
5.1 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be
delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered
or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally,
telegraphed, telexed or sent by facsimile transmission
or, if mailed, five (5) days after the date of deposit
in the United States mail, as follows:
(i) if to the Company, to:
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah
84109
with a copy to:
Nolan Taylor, Esquire
LeBoeuf, Lamb, Green and MacRae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah 84101
(ii) if to the Consultant, to:
J.R. Axelrod
20423 State Road 7
Suite 153
Boca Rotan, Florida
33498
Any party may change its address for notice hereunder
by notice to the other parties hereto.
5.2 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the
subject matter hereof and supersedes all prior
agreements (including, without limitations, the
Existing Agreement), written or oral, with respect
thereto.
5.3 Governing Law; Venue. The Agreement shall be governed
and construed in accordance with the laws of the State
of Utah applicable to agreements made and to be
performed entirely within such state. The parties
submit themselves to the jurisdiction of the Federal
and State courts located in Utah and agree to commence
any lawsuit arising under or relating to this Agreement
in such courts.
5.4 Assignment. This Agreement and any rights and
obligations hereunder, may not be assigned by any party
hereto without the prior written consent of the other
party.
5.5 Headings. The headings of this Agreement are for
reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above-written.
BIOMUNE SYSTEMS, INC. JR. AXELROD & COMPANY
By: /s/ David G. Derrick By: /s/ Berry Polmerantz
Its: Chief Executive Officer Its: Partner
EXHIBIT 10.4
AGREEMENT
This Agreement is made effective as of October 23, 1996, between
Biomune Systems, Inc. a Nevada Corporation (the "Company"), and
Medefin Incorporated ("Consultant").
WHEREAS, Consultant has expertise in marketing products,
utilizing multi-level marketing techniques and in the
distribution of nutraceuticals.
WHEREAS, the Company desires to commence a multi level marketing
approach on its various nutraceutical products.
NOW THEREFORE, in consideration of the foregoing, and the
agreements set forth below, the parties agree as follows:
1. Engagement, Duties and Acceptance.
1.1 Engagement by the Company. The Company hereby agrees
to retain the Consultant as a consultant to the Company
for the Term (as hereinafter defined) to render such
consultation and advice and to assist the Company in
setting up a multi level marketing plan and create the
distribution of the Company's nutraceutical products.
1.2 Acceptance of Engagement by the Consultant. The
Consultant hereby accepts such engagement and shall
render such consultation and advice as the Company may
request.
2. Term of Agreement. The term of the Consultant's engagement
under this Agreement (the "Term") shall commence on the
effective date of this Agreement and shall continue through
and expire on the 30th day of September, 1997, unless sooner
terminated by either the Company or the Consultant upon five
(5) days prior written notice. The Company's obligations
under this Agreement shall immediately cease upon the
termination hereof and Consultant shall only be entitled to
the pro rata portion of its quarterly compensation hereunder
for the quarter in which this Agreement is terminated.
3. Compensation. As compensation for the services to be
rendered pursuant to this Agreement, the Company agrees to
pay to the Consultant a quarterly fee during the Term of
this Agreement of 75,000 shares of the Company's restricted
common stock each quarter during the Term ("Share
Compensation"). Said shares will have "piggy back"
registration rights, but not demand registration rights.
Any out-of-pocket expenses or expenses incurred by
Consultant due to its relationship as a consultant to the
Company shall be paid promptly upon submission of
documentary evidence of such expenses.
4. Confidential information. During the Term of this Agreement
and thereafter, the Consultant shall keep secret and retain
in strictest confidence and shall not use, for the benefit
of himself or others, all confidential matters of the
Company including, without limitation, "know-how", trade
secrets, customer lists, details of client or consultant
contracts, pricing policies, results of trials, operational
methods of production and distribution, technical processes,
designs and design projects, inventions and research
projects of the Company learned by the Consultant heretofore
or during the term hereof.
5. Other Provisions.
5.1 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission
or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five (5) days after the date of
deposit in the United States mail, as follows:
(i) if to the Company, to:
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
with a copy to:
Nolan Taylor, Esquire
LeBoeuf, Lamb, Green and MacRae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah
84101
(ii) if to the Consultant, to:
Medefin Incorporated
P.O. Box 348
Woodbury, New York
11797-0348
Any party may change its address for notice hereunder by
notice to the other parties hereto.
5.2 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the
subject matter hereof and supersedes all prior
agreements (including, without limitations, the
Existing Agreement), written or oral, with respect
thereto.
5.3 Governing Law; Venue. The Agreement shall be governed
and construed in accordance with the laws of the State
of Utah applicable to agreements made and to be
performed entirely within such state. The parties
submit themselves to the jurisdiction of the Federal
and State courts located in Utah and agree to commence
any lawsuit arising under or relating to this Agreement
in such courts.
5.4 Assignment. This Agreement and any rights and
obligations hereunder, may not be assigned by any party
hereto without the prior written consent of the other
party.
5.5 Headings. The headings of this Agreement are for
reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above-written.
BIOMUNE SYSTEMS, INC. MEDEFIN INCORPORATED
By: /s/ David G. Derrick By: /s/ Paul Norton
Its: CEO Its: Sec.
11/14/96
EXHIBIT 10.5
AGREEMENT
This Agreement is made effective ads of October 23, 1996, between
Biomune Systems, Inc., a Nevada Corporation (the "Company"), and
Paramount Marketing Corp. ("Consultant").
WHEREAS, Consultant has expertise in marketing products utilizing
multi-level marketing techniques;
WHEREAS, the Company desires to commence a multi level marketing
approach on its various products;
NOW THEREFORE, in consideration of the foregoing, and the
agreements set forth below, the parties agree as follows:
1. Engagement, Duties and Acceptance.
1.1 Engagement by the Company. The Company hereby agrees
to retain the Consultant as a consultant to the Company
for the Term (as hereinafter defined) to render such
consultation and advice and to assist the Company in
setting up a multi level marketing plan.
1.2 Acceptance of Engagement by the Consultant. The
Consultant hereby accepts such engagement and shall
render such consultation and advice as the Company may
request.
2. Term of Agreement. The term of the Consultant's engagement
under this Agreement (the "Term") shalcommence on the
effective date of this Agreement and shall continue through
and expire on the 30th day of September, 1997, unless sooner
terminated by either the Company or the Consultant upon
thirty (30) days prior written notice. The Company's
obligations under this Agreement shall immediately cease
upon the termination hereof and Consultants shall only be
entitled to the pro rata portion of its quarterly
compensation hereunder for the quarter in which this
Agreement is terminated.
3. Compensation. As compensation for the services to be
rendered pursuant to this Agreement, the Company agrees to
pay to the Consultant a quarterly fee during the Term of
this Agreement of 27,000 shares of the Company's restricted
common stock each quarter during the Term ("Share
Compensation"). Said shares will have "piggy back"
registration rights, but not demand registration rights.
4. Confidential Information. During the Term of this Agreement
and thereafter, the Consultant shall keep secret and retain
in strictest confidence and shall not use, for the benefit
of himself or others, all confidential matters of the
Company including, without limitation, "know-how", trade
secrets, customer lists, details of client or consultant
contracts, pricing policies, results of trials, operational
methods, marketing plans or strategies, product development
techniques or plans, methods of production and distribution,
technical processes, designs and design projects, inventions
and research projects of the Company learned by the
Consultant heretofore or during the term hereof.
5. Other Provisions.
5.1 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be
delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered
or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally,
telegraphed, telexed or sent by facsimile transmission
or, if mailed, five (5) days after the date of deposit
in the United States mail, as follows:
(i) if to the Company, to
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
with a copy to:
Nolan Taylor, Esquire
LeBoeuf, Lamb, Greene and Macrae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah
84101
(ii) if to the Consultant, to:
Paramount Marketing Corp.
1455 West Center Street
Orem, Utah 84058
Any party may change its address for notice hereunder
by notice to the other parties hereto.
5.2 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the
subject matter hereof and supersedes all prior
agreements (including, without limitations, the
Existing Agreement), written or oral with respect
thereto.
5.3 Governing Law; Venue. The Agreement shall be governed
and construed in accordance with the laws of the State
of Utah applicable to agreements made and to be
performed entirely within such state. The parties
submit themselves to the jurisdiction of the Federal
and State courts located in Utah and agree to commence
any lawsuit arising under or relating to this Agreement
in such courts.
5.4 Assignment. This Agreement and any rights and
obligations hereunder, amy not be assigned by any party
hereto without the prior written consent of the other
party.
5.5 Headings. The headings of this Agreement are for
reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above-written.
BIOMUNE SYSTEMS, INC. PARAMOUNT MARKETING CORP.
By: /s/ David G. Derrick By: /s/ Lewis R. Jensen
Its: CEO Its: President
EXHIBIT 10.6
AGREEMENT
THIS AGREEMENT is made and entered into this 21 day of
October, 1996, by and between Volu-Sol., Inc, a Utah Corporation
having a place of business at 5095 West 2100 South, Salt Lake
City, Utah 84120 (hereinafter "Volu-Sol"); and GG&B Engineering,
Inc., a Texas corporation having a principal place of business at
3411 West McNeil Boulevard, Suite 302, Wichita Falls, Texas 76308
(hereinafter "GG&B").
Recitals
WHEREAS, GG&B is the sole owner of certain technology
related to a device commonly known as the automated slide stainer
(hereinafter "Stainer") and is the sole and exclusive
manufacturer of that device;
WHEREAS, Volu-Sol desires to obtain an exclusive, worldwide
license in the technology and an exclusive worldwide
distributorship for the purpose of marketing and selling Stainers
manufactured and provided by GG&B;
WHEREAS, GG&B is interested in granting such a license and
distributorship to Volu-Sol;
NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto agree as follows:
I. Definitions
1.1 LICENSED PRODUCTS - means the Stainers manufactured by
GG&B.
1.2 COMPONENT PARTS - means the Stain Packs used in
connection with Stainers. It is acknowledged that Volu-Sol will
manufacture all of the Stain Packs except for the memory module.
The memory module will be programmed as to the operating codes
for the operation of the machines by GG&B at its expense. The
memory module will be programmed as to the lot number, expiration
date, product number, number of tests available and similar
matters by Volu-Sol at its expense.
1.3 NET SALES PRICE - means the gross sales price of
COMPONENT PARTS, less:
(a) discounts allowed in amounts customary in the
trade;
(b) sales or use taxes, tariff duties, import and
export taxes, and other sales and excise taxes
customary in the trade;
(c) insurance and transportation costs from the place
of manufacture or distribution to the customer's
premises or next point of distribution or sale if
paid by Volu-Sol;
(d) bone fide returns or credits.
1.4 TECHNOLOGY - means all technology which relates to
Stainers or their manufacture or operation. The parties
acknowledge that there is presently no patent or other
proprietary information related to the Stainer technology. The
only protected material will be the copyright protection on the
software.
1.5 CONFIDENTIAL INFORMATION - means any confidential
documentary or oral communications provided or communicated from
one party to the other, and which refers or relates to the
TECHNOLOGY, LICENSED PRODUCTS, or COMPONENT PARTS. The term
CONFIDENTIAL INFORMATION shall specifically include, but not be
limited to, all samples, reports, research notebooks, drawings,
test results, business or technical information and research, or
correspondence referring to or incorporating any portion of the
TECHNOLOGY.
II. Grant
2.1 GG&B hereby grants to Volu-Sol a worldwide, license in
and exclusive distributorship to market and sell LICENSED
PRODUCTS and the Memory Module portion of the COMPONENT PARTS.
GG&B further grants to Volu-Sol an exclusive, worldwide license
in the TECHNOLOGY, subject only to GG&B's exclusive right to
manufacture Stainers employing the TECHNOLOGY. The license
hereby granted does not include any right for Volu-Sol to
manufacture Stainers or to authorize anyone else to manufacture
Stainers.
2.2 In order to fully implement the license granted above,
GG&B agrees to provide Volu-Sol with full disclosure of all
TECHNOLOGY in its possession or reasonable control within thirty
(30) days following completion of the final design of the
Stainer. During the entire term of this Agreement, GG&B agrees
to provide Volu-Sol with a best efforts level of training and
support sufficient to enable Volu-Sol to effectively understand
the TECHNOLOGY and to sell and distribute LICENSED PRODUCTS and
COMPONENT PARTS.
2.3 In consideration for the grant of an exclusive
distributorship as provided herein, Volu-Sol agrees to use its
best efforts to promote the sale and distribution of LICENSED
PRODUCTS and COMPONENT PARTS. GG&B agrees to provide Volu-Sol
with all its requirements for Stainers and memory modules
throughout the term of this Agreement.
2.4 In consideration for the license and distributorship
granted herein, Volu-Sol agrees to purchase from GG&B a minimum
of six hundred (600) Stainers per calendar year. The purchase
price for such stainers shall not exceed $750 per Stainer,
through December 31, 1997. Volu-Sol and GG&B agree to negotiate
annually, in good faith, all price increases and decreases based
on volume of purchases and costs of manufacturing effective
January 1, 1998 and each January 1 thereafter during the term of
this Agreement. In the event Volu-Sol purchases fewer than six
hundred (600) stainers in any year, GG&B shall have the option to
convert the license and distributorship granted herein to a
nonexclusive license and nonexclusive distributorships, upon
written notice to Volu-Sol.
III. Royalties and Payments
3.1 In consideration for the license and distributorship
granted in paragraph 2.1 above, Volu-Sol has previously paid to
GG&B a partial licensing and distributorship fee of Ten Thousand
dollars ($10,000). Volu-Sol agrees to pay GG&B Fifteen Thousand
dollars ($15,000) upon approval by Volu-Sol of Cuvette size and
design, over-lay design, tubing design and programming of memory
module. Volu-Sol agrees to pay GG&B an additional Fifteen
Thousand ($15,000.00) on delivery of three (3) finished
prototypes to Volu-Sol. These prototypes must be delivered to
Volu-Sol by October 14, 1996.
3.2 Volu-Sol shall pay to GG&B an additional fee in the
amount of Twenty-five Thousand dollars ($25,000.00) upon initial
order of Stainers from GG&B. This initial order will occur no
later than November 1, 1996.
3.3 Volu-Sol shall pay to GG&B a royalty of three percent
(3%) of the NET SALES PRICES for all COMPONENT PARTS which Volu-
Sol actually sells. Both parties acknowledge that there shall be
no royalty payment for the Stainers which are the LICENSED
PRODUCTS, it being recognized that total consideration to GG&B
for such shall be the purchase price per Stainer set out in
Section 2.4 hereof. The terms of all orders of Stainers shall be
net 30 from shipping date.
3.4 Royalties shall accrue when payment for COMPONENT PARTS
is actually received by Volu-Sol. Royalty payments shall be made
within ninety (90) days following the end of the calendar quarter
in which they accrue. All royalty payments and purchase price
payments shall be made in United States dollars and shall be
directed to the address specified by GG&B. In the event GG&B
fails to specify an address for the payment, royalties shall be
forwarded to GG&B's address as set forth in paragraph 12.1 below.
IV. Records
4.1 Volu-Sol shall keep proper books of account with
reference to all LICENSED PRODUCTS and COMPONENT PARTS which
sells. When requested by GG&B, such books of account shall be
open at reasonable times for GG&B, through a certified public
accountant, to inspect such books of account and to make
abstracts therefrom for the purpose of verifying the royalties
due or paid.
V. Improvements
5.1 In the event GG&B makes improvements in the design of
the Stainer, it shall incorporate those improvements into the
Stainer with the permission of Volu-Sol. It is acknowledged that
this Agreement is limited to the Stainer that is currently being
developed and does not extend to any additional products that
GG&B may develop. However, if this Agreement is still in full
force and effect at the time GG&B develops a new product, GG&B
agrees to give Volu-Sol the first right of refusal to participate
with GG&B on that product.
VI. Confidential Disclosure
6.1 The parties acknowledge that, from time to time during
the relationship between the parties, it will be necessary for
CONFIDENTIAL INFORMATION to be disclosed by one party to the
other in order to promote the business of both parties and to
implement the provisions of this Agreement. The parties
acknowledge that the provisions of this Agreement are necessary
in order to protect the confidentiality, value, and secrecy of
the TECHNOLOGY and the CONFIDENTIAL INFORMATION.
6.2 The party receiving CONFIDENTIAL INFORMATION agrees to
take all precautions necessary to maintain the confidential
nature of the CONFIDENTIAL INFORMATION. The receiving party
further agrees not to disclose such CONFIDENTIAL INFORMATION to
any third party except to those full-time employees in its
organization who have a need to know. The receiving party agrees
to take all appropriate action by instruction and agreement with
its full-time employees so that such persons shall be bound by
all of the same obligations as is said receiving party with
respect to all CONFIDENTIAL INFORMATION.
6.3 Any CONFIDENTIAL INFORMATION provided by one party to
another shall be treated by the receiving party with at least the
same degree of secrecy or confidentiality as would similar
information of the receiving party. The receiving party agrees
to specifically notify its employees that CONFIDENTIAL
INFORMATION is to be treated in the same manner as receiving
Party's own secret and Confidential Information.
6.4 In the event the receiving party deems it necessary to
convey any portion of the CONFIDENTIAL INFORMATION to any person
or entity which is not one of its full-time employees, it shall
not do so without the express written consent of the other party
and then only after that person or entity has signed a
Confidential Disclosure Agreement containing terms similar to
those contained in this Agreement.
6.5 All written documents containing CONFIDENTIAL
INFORMATION shall, prior to disclosure to the party, be
conspicuously marked as confidential or proprietary information.
If such disclosure is oral, within thirty (30) days following the
oral disclosure, the contents of the oral communication shall be
reduced to writing and appropriately marked as confidential or
proprietary.
VII. Warranties
7.1 GG&B hereby warrants that it is the sole and exclusive
owner and assignee of the TECHNOLOGY and that it has the right
and ability to enter into this Agreement and to grant the license
and distributorship as defined above.
7.2 The parties hereby warrant that they have full
corporate authority to enter into this Agreement and that the
individual signing on behalf of each party has full authority to
enter into this Agreement and to bind the corporation.
7.3 GG&B states that to the best of its knowledge and
belief practicing the TECHNOLOGY does not constitute an
infringement of the claims of any United States or foreign
patents held by any third parties.
7.4 GG&B DOES NOT MAKE ANY WARRANTIES EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTIES OR MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. THE PARTIES ACKNOWLEDGE THAT BEFORE THE
STAINERS AND THE STAIN PACKS ARE SOLD, THEY WILL NEED TO DRAFT A
LIMITED WARRANTY THAT WOULD BE APPROPRIATE FOR THESE TYPES OF
PRODUCTS. THEY AGREE THAT SUCH WARRANTIES WILL BE ONLY SO GREAT
AS IS NECESSARY IN ORDER TO SUCCESSFULLY MARKET THE PRODUCTS. AT
THAT TIME, THEY WILL AGREE UPON HOW TO SHARE THE COST OF ANY
WARRANTY CLAIMS.
7.5 GG&B will perform service work on the Stainers upon
such terms that it shall set from time to time.
7.6 GG&B will provide Volu-Sol and Volu-Sol will provide
customers a twelve (12) month limited warranty of Stainer to be
free from defects in materials, workmanship and assembly.
VIII. Term and Termination
8.1 Unless this Agreement is terminated earlier as provided
herein, the TERM of this Agreement shall be perpetual.
8.2 In the event that either party defaults or breaches any
of the provisions of this Agreement, or fails to account for or
pay any of the purchase prices or royalties that become due and
payable, the other party shall have the right to terminate this
Agreement upon thirty (30) days advance written notice; unless
within said thirty (30) day notice period the party in breach or
default cures the default or breach.
8.3 In the event of any termination of this Agreement,
Volu-Sol shall not be relieved of the duty and obligation to pay
the full purchase prices and royalties that have accrued at the
effective date of such termination. Thereafter, Volu-Sol shall
have no further rights under this Agreement and shall immediately
return to GG&B all Stainers in its possession which have not been
sold. The parties agree to return all CONFIDENTIAL INFORMATION.
8.4 This Agreement may be immediately terminated upon
giving notice to the other party in the event that:
(a) either party undergoes a dissolution;
(b) either party makes an assignment for the benefit
of creditors;
(c) either party files a petition in bankruptcy
(including a petition for reorganization under the
United States Bankruptcy Code or similar law) or
has such a petition filed and granted against it;
(d) either party has an order of receivership issued
against it; or
(e) either party becomes insolvent.
IX. Independence of the Parties
9.1 This Agreement shall not constitute the designation of
either party as the representative or agent of the other, nor
shall either party by this Agreement have the right or authority
to make any promise, guarantee, warranty, or representation, or
to assume, create, or incur any liability or other obligation of
any kind, express or implied, against or in the name of or on
behalf of the other.
X. Arbitration and Applicable Law
10.1 Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by
arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, and judgment upon the
award rendered by the arbitrator(s) may be entered in any Court
having jurisdiction thereof.
10.2 In the event Volu-Sol believes that GG&B has violated
the terms of this Agreement, Volu-Sol shall have the right to
have the Arbitration take place in the state of Utah and Utah Law
will apply. In the event GG&B believes that Volu-Sol has
violated the terms of this Agreement, GG&B shall have the right
to have the Arbitration take place in Wichita Falls, Texas and
Texas law will apply.
XI. Assignment
11.1 Volu-Sol shall have the right to assign or otherwise
transfer this Agreement and the license and distributorship
granted hereby and the rights acquired by it hereunder without
the prior written consent of GG&B to any corporations under the
direct or indirect control of Volu-Sol, its parent company
Biomune Systems, Inc., or their successors in interest. Volu-Sol
shall have the right to assign or otherwise transfer the license
and distributorship granted herein to other parties upon the
prior written consent of GG&B, which consent shall not be
unreasonably withheld.
11.2 Upon such assignment or transfer of this agreement to
any assignee or transferee, the term "Volu-Sol" as used herein
shall include such assignee or transferee.
11.3 GG&B shall have the right to delegate the manufacturing
and repair obligations to others upon the prior written consent
of Volu-Sol, which consent shall not be unreasonably withheld.
XII. Notices
12.1 Any written notice required or permitted by this
Agreement shall be given by registered or certified mail, postage
prepaid, and shall be effective upon proper mailing. The
addresses of the parties for communication and notice, unless
subsequently changed by written notice to the other, shall be:
Volu-Sol, Inc.
5095 West 2100 South
Salt Lake City, Utah 84120
GG&B Engineering, Inc
3411 West McNeil Boulevard
Suite 302
Wichita Falls, Texas 76308
XIII. General Provisions
13.1 The parties agree that this Agreement shall constitute
the complete and exclusive statement of the Agreement between
them and supersedes all proposals, oral or written, and all other
communications between them relating to the Technology.
13.2 No agreement changing, modifying, amending, extending,
superseding, discharging, or terminating this Agreement or any
provisions hereof shall be valid unless it is in writing and is
dated and signed by duly authorized representatives of the party
or parties to be charged.
13.3 The provisions of this Agreement are severable, and in
the event that any provisions of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
13.4 Failure of any of the parties to enforce any of the
provisions of this Agreement or any rights with respect thereto
or failure to exercise any election provided for herein, shall in
no way be considered a waiver of such provisions, rights, or
elections or in any way to affect the validity of this Agreement.
No term or provision of this Agreement shall be deemed waived and
no breach excused, unless such waiver or consent shall be in
writing and signed by the party claimed to have waived or
consented. Any consent by any party to, or waiver of, a breach
by the other, whether expressed or implied, shall not constitute
a consent to, waiver of, or excuse for any other different or
substitute breach.
13.5 Headings used in this Agreement are for reference
purposed only and shall not be deemed part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and witnessed as of the date first
mentioned above.
GG&B Engineering, Inc.
By: /s/ Jeff Gibbs
Its: President
Volu-Sol, Inc.
By: /s/ Michael G. Acton
Its: President
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