SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 15, 1998
BIOMUNE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-11472
Nevada 87-0380088
(State of Incorporation) (I.R.S. Employer Identification No.)
2401 South Foothill Drive, Salt Lake City, UT 84109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(801) 466-3441
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ITEM 5. Other Events
In the quarter ended September 30, 1998, the Company issued 454,104
shares of its common stock in payment of accounts payable totaling $175,000
(or approximately $.39 per share). The Company sold 85 shares of Non-
Voting Convertible Preferred Stock ("Preferred Stock") at a price of $1,000
per share, for a total of $85,000. Also during the quarter, the Company
issued a convertible debenture for $100,000 ("Debenture"). After September
30, 1998, the Company sold an additional 650 shares of Preferred Stock for
$1,000 per share, or a total of $650,000 and the Debenture holder agreed to
convert the Debenture to 100 shares of Preferred Stock effective September
30, 1998.
The Preferred Stock issued in the above transactions is non-voting, has a
preferred dividend of 10% per annum, payable at the option of the Company in
cash or shares of common or Preferred Stock. The number of shares issuable
upon conversion of one share of Preferred Stock will be calculated by dividing
the market price of the Company's common stock on the date of conversion
into 1000. The total number of shares of common stock issuable upon
conversion cannot exceed the lesser of 2,500,000 shares or 19.9% of the
Company's issued and outstanding Common Stock as of September 30, 1998.
The remaining shares of Preferred Stock, if any, following conversion to
the maximum number of shares of common stock as indicated above, will be
redeemed by the Company within 360 days of the original conversion date at
a price of $1,333 per share (133% of stated value), or the Company will
obtain necessary shareholder approvals to issue additional shares of common
stock upon conversion of such remaining shares of Preferred Stock.
On December 10, 1998, in connection with its acquisition of a
majority interest in a subsidiary, the Company entered into an agreement
whereby the minority interest holder of the subsidiary assumed the negative
net worth of that entity, totaling $891,260 at September 30, 1998. The
assumption of this obligation is effective September 30, 1998, will be
evidenced by a promissory note, secured by guarantees and assets of the
minority interest holder and a significant stockholder of the Company.
In December 1998, a Nasdaq Listing Qualifications Panel considered
the application of the Company to continue inclusion of its common stock on
The Nasdaq SmallCap Market pursuant to an exception to the net tangible
assets/market capitalization/net income and bid price requirements under
NASD Marketplace Rules 4310(c)(2) and 4310(c)(4). Based on information
provided to the Panel by the Company, the Panel determined to continue the
listing of the Company's securities pursuant to an exception under the
Rules.
The foregoing transactions, will be discussed in more detail in the
Company's forthcoming Annual Report on Form 10-K for the fiscal year ended
September 30, 1998.
In connection with the previously disclosed grant of the exception to
certain of the NASD Marketplace Rules, the Panel required, among other
things, that the Company file a Form 8-K on or before December 15, 1998
evidencing a minimum of $3,000,000 in net tangible assets. This Current
Report on Form 8-K has been filed in order to satisfy that requirement.
The Panel also required that the Company effect a 1 for 10 reverse stock
split on or before December 31, 1998; that the closing bid price of the
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Company's Common Stock equal or exceed $1.00 per share for a minimum of ten
consecutive trading days following the effective date of the reverse split;
that the Company file a Form 10-Q for the quarter ending December 31, 1998
demonstrating positive net income, on or before February 15, 1998; and the
Company must be able to demonstrate compliance with all requirements for
continued listing.
ITEM 7. Financial Statements and Exhibits
(a) Unaudited Pro Forma Balance Sheet as of October 31, 1998.
The attached Pro Forma Balance Sheet is filed pursuant to the
order of a Nasdaq Listing Qualifications Panel in connection with its grant
of an exception to certain Nasdaq maintenance criteria. The information
presented is Pro Forma, as opposed to historic, and is as of a date on
which the Company does not ordinarily report financial information.
Consequently, it is not comparable to other information filed previously by
the Company, and is of limited utility to the average investor. Investors
should not rely on the attached Pro Forma Balance Sheet in connection with
making an investment decision to purchase or sell the Company's securities.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report, as amended, to be signed on its
behalf by the undersigned thereunto duly authorized.
BIOMUNE SYSTEMS, INC.
(Registrant)
By: /s/ Michael G. Acton
---------------------------------
Michael G. Acton
Date: December 15, 1998 Chief Executive Officer
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<TABLE>
<CAPTION>
Biomune Systems, Inc.
Pro Forma Condensed Consolidated Balance Sheet
ASSETS
Pro Forma as of
October 31, 1998
----------------
(unaudited)
<S> <C>
Current Assets
Cash & Securities 1,202,595
Interest Receivable 66,537
Accounts Receivable, net 351,246
Inventories, net 545,194
Notes Receivable 1,707,108
----------------
Total current assets 3,872,680
Equipment and other assets, net 118,046
Good will, net 1,884,926
Long-term note receivable 500,000
----------------
Total other assets 2,502,972
----------------
Total Assets 6,375,652
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Dividends payable 18,333
Accounts payable 772,598
Loan payable 559,000
----------------
Total current liabilities 1,349,931
Shareholders' Equity
Preferred stock 2,538,715
Common stock 1,315
Additional paid in capital 41,106,568
Accumulated deficit (38,620,877)
----------------
Total shareholders' equity 5,025,721
----------------
Total Liabilities 6,375,652
================
Net Tangible Asset Calculation
Total Assets 6,375,652
Less: Goodwill (1,884,926)
Liabilities (1,349,931)
----------------
Net Tangible Assets 3,140,795
================
</TABLE>
(See notes on following page.)
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NOTES:
The above Pro Forma unaudited balance sheet for October 31, 1998
includes the following:
a. Issuances of 454,104 shares of the Company's Common Stock as
settlement of accounts payable of $175,000.
b. Issuance of 635 shares of the Company's Preferred Stock for
$635,000.
c. Conversion of a $100,000 debenture into 100 shares of the
Company's Preferred Stock.
d. The contribution to capital of $891,260 by the minority
interest shareholder in the Rockwood subsidiary by assumption of the
negative net worth of Rockwood at September 30, 1998.
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