-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nj0dxNOxw62khKJQmONwFSfj4+5257zb+BT++KBxrmML41VN0Q21Y8C7lRL6TScL Z8RuBvTXgpsX9A6EC01ElA== 0001004878-96-000019.txt : 19960411 0001004878-96-000019.hdr.sgml : 19960411 ACCESSION NUMBER: 0001004878-96-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960410 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEL SCI CORP CENTRAL INDEX KEY: 0000725363 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 840916344 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11503 FILM NUMBER: 96545780 BUSINESS ADDRESS: STREET 1: 66 CANAL CENTER PLZ STE 510 CITY: ALEXANDRIA STATE: VA ZIP: 22314 BUSINESS PHONE: 7035495293 MAIL ADDRESS: STREET 1: 66 CANAL CENTER PLAZA SUITE 510 CITY: ALEXANDRIA STATE: VA ZIP: 22314 FORMER COMPANY: FORMER CONFORMED NAME: INTERLEUKIN 2 INC DATE OF NAME CHANGE: 19880317 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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, 1995. 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 0-11503 CEL-SCI CORPORATION Colorado 84-0916344 ____________________________ ____________________________ State or other jurisdiction (IRS) Employer incorporation Identification Number 66 Canal Center Plaza, Suite 510 Alexandria, Virginia 22314 _____________________________ Address of principal executive offices (703) 549-5293 _____________________________ Registrant's telephone number, including area code Indicate by 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) had been subject to such filing requirements for the past 90 days. Yes ____X_____ No __________ Class of Stock No. Shares Outstanding Date Common 5,809,914 February 20, 1996 Page 1 of ___ pages TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Page Balance Sheets 3-4 Statements of Operations 5 Statements of Cash Flow 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis 9 PART II Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (unaudited) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with rules established by the Securities and Exchange Commission for Form 10-Q. Not all financial disclosures required to present the financial position and results of operations in accordance with generally accepted accounting principles are included herein. The reader is referred to the Company's Financial Statements included in the registrant's Annual Report on Form 10-K for the year ended September 30, 1995. In the opinion of management, all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the financial position as of December 31, 1995 and the results of operations for the three- month period then ended have been made. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. Investments Effective September 30, 1994, the Company adopted, on a prospective basis, Statement of Financial Accounting Standard No. 115, "Accounting for Certain Debt and Equity Securities" (SFAS 115) and revised its policy for investments. Investments that may be sold as part of the liquidity management of the Company or for other factors are classified as available-for-sale and are carried at fair market value. Unrealized gains and losses on such securities are reported as a separate component of stockholders' equity. Realized gains and losses on sales of securities are reported in earnings and computed using the specific identified cost basis. As of December 31, 1995, there is no effect on the Company's financial statements. Loss per Share Net loss per common share is based on the weighted average number of common shares outstanding during the period. Common stock equivalents, including options to purchase common stock, are excluded from the calculation as they are antidilutive. Long-lived Assets Statement of Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of" is effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's opinion that the adoption of the statement would have no material effect on its Financial Statements. CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (unaudited) (continued) B. JOINT VENTURE On October 30, 1995, the Company announced it had acquired Alpha 1 Biomedical's interest in Viral Technologies, Inc. ("VTI"). VTI was formed by the two companies in 1986. This transaction gives CEL-SCI 100% ownership of VTI. Under the terms of the agreement, CEL-SCI gave Alpha 1 Biomedicals, Inc. 159,170 shares of CEL-SCI common stock as the purchase price for net assets with a fair value of approximately $170,000. The acquisition was accounted for under the purchase method of accounting; and as the acquisition represents primarily research and development costs, the purchase price was expensed and is included as research and development expense for the three months ended December 31, 1995. The contract also contains provisions allowing for the repurchase of the shares by CEL-SCI and limits the amount of shares that can be sold in the open market at any given time. Effective October 31, 1995, the Company has consolidated CEL-SCI's and VTI's financial statements and the consolidated financial statements reflect the results of VTI's operations since the date of acquisition. This results in a significant increase in patent costs on the consolidated balance sheet. Intercompany accounts are eliminated upon consolidation. C. CONSTRUCTION OF NEW LABORATORY AND FUNDING On January 31, 1994, the Company entered into a leasing agreement with a non-affiliated landlord for 7,800 square feet at 4820 Seton Drive, Baltimore, Maryland. In the spring of 1994 the commenced construction of the new laboratory. The cost of the laboratory buildout and equipment was approximately $1,100,000. To fund this laboratory, the Company borrowed funds from a bank at a rate of prime plus 2%. The outstanding loan balance at December 31, 1995 is $750,418. CEL-SCI CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Liquidity and Capital Resources The Company has had only limited revenues from operations since its inception in March 1983. The Company has relied upon proceeds realized from the public and private sale of its Common Stock and short-term borrowings to meet its funding requirements. Funds raised by the Company have been expended primarily in connection with the acquisition of an exclusive worldwide license to certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system, the funding of VTI's research and development program, patent applications, the repayment of debt, the continuation of Companysponsored research and development and administrative costs, and the construction of laboratory facilities. Inasmuch as the Company does not anticipate realizing significant revenues until such time as it enters into licensing arrangements regarding the technology and know-how licensed to it or until such time it receives permission to sell its product (which could take a number of years), the Company is mostly dependent upon short-term borrowings and the proceeds from the sale of its securities to meet all of its liquidity and capital resource requirements. In February, 1992, the Company sold 1,035,000 Units at $15.50 per Unit in a public offering. Each unit consisted of five shares of Common Stock and five Common Stock Purchase Warrants. Ten Warrants entitle the holder to purchase one additional share of Common Stock at a price of $46.50 per share prior to February 7, 1997. In June and September, 1995, the Company completed private offerings whereby it sold a total of 1,150,000 units at $2.00 per unit. Each unit consisted of one share of Common Stock and one Warrant. Each Warrant entitles the holder to purchase one additional share of Common Stock at a price of $3.25 per share at any time prior to June 30, 1997. The net proceeds to the Company from these offerings, after the payment of Sales Agent's commissions and other offering expenses, were approximately $2,000,000. On November 30, 1995 the Company and the investors in these Private Offerings agreed to reduce the exercise price of the Warrants to $1.60 per share in return for the commitment on the part of the investors to exercise 312,500 Warrants ($500,000) prior to December 23, 1995 and an additional 312,500 Warrants ($500,000) prior to January 31, 1996. Results of Operations Interest income during the three months ending December 31, 1995 reflects interest accrued on investments. The interest income has declined from the previous year because the interest income from the loans to VTI is eliminated upon consolidation. Research and development expenses increased because of the consolidation of Cel-Sci and Viral Technologies research and development expenses. In addition, the purchase of the second 50% of VTI from Alpha 1 was expensed as research and development cost. (See Note B.) Before consolidation, Cel-Sci's research and development costs decreased by approximately $100,000 due to cost savings achieved from the consolidation of research in the Company's new lab. General and administrative expenses increased due to interest expense on the note and because of the consolidation of Cel-Sci and Viral Technologies general and administrative expenses. PART II Item 5. Other Information In December, 1995, Cel-Sci's subsidiary, Viral Technologies, (VTI) began phase I human testing in HIV-positive individuals in a clinical trial in California. The trial will involve injecting 22 individuals with CD4 counts between 50 and 600 with VTI's HGP30 HIV immunogen in a series of three injections over a period of six months. On January 4, 1996, the Company announced that it had acquired a new patented medical technology which directs the body to chose a specific immune response. This new T-cell Modulation Process using "heteroconjugates" was acquired from CELL MED, Inc. of Columbia, Maryland. Item 6. (a) Exhibits No exhibits are filed with this document. (b) Reports on Form 8-K The Company filed no reports on Form 8-K during the fiscal quarter ended December 31, 1995. 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. CEL-SCI Corporation Date:_______________, 1996 ____________________________ Geert Kersten Chief Executive Officer* *Also signing in the capacity of the Chief Accounting Officer and Principal Financial Officer. Item 1. FINANCIAL STATEMENTS CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS - ------------------------ ASSETS (unaudited) December 31, September 30, 1995 1995 CURRENT ASSETS: Cash and cash equivalents $3,040,412 $3,886,950 Investments, net 170,000 170,000 Interest receivable 66,143 64,080 Prepaid expenses 303,962 341,295 Advances to officer/shareholder and employees 6,930 13,234 3,587,447 4,475,559 RECEIVABLE FROM JOINT VENTURE 0 522,695 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $678,605 and $589,897 1,040,549 1,102,038 DEPOSITS 18,178 18,178 PATENT COSTS- less accumulated amortization of $318,723 and $239,490 423,467 240,541 $5,069,641 $6,359,011 See notes to condensed financial statements. 3 CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS - ------------------------ (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) December 31, September 30, 1995 1995 CURRENT LIABILITIES: Accounts payable $64,071.00 $248,488.00 Current portion note payable 243,372 243,372 Total current liabilities 307,443 491,860 NOTE PAYABLE 507,046 567,891 DEFERRED RENT 24,959 24,959 EQUITY IN SUBSIDIARY 0 432,268 Total liabilities 839,448 1,516,978 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; authorized, 200,000 shares; none issued - - Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 5,809,914 and 5,338,244 shares 58,099 53,382 Additional paid-in capital 29,911,265 28,799,198 Deficit (25,739,171) (24,010,547) TOTAL STOCKHOLDERS' EQUITY 4,230,193 4,842,033 $5,069,641 $6,359,011 See notes to condensed financial statements. 4 CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - --------------------------------- (unaudited) Three Months Ended December 31, 1995 1994 REVENUES: Interest income $44,421 $116,701 Other income 18,080 - TOTAL INCOME 62,501 116,701 EXPENSES: Research and development 1,238,197 618,636 Depreciation and amortization 71,268 66,775 General and administrative 477,888 398,281 TOTAL OPERATING EXPENSES 1,787,353 1,083,692 EQUITY IN LOSS OF JOINT VENTURE (3,772) (181,578) 1,791,125 1,265,270 NET LOSS $1,728,624 $1,148,569 LOSS PER COMMON SHARE $0.32 $0.27 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,457,431 4,188,244 See notes to condensed financial statements. 5 CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW - --------------------------------- (unaudited) Three Months Ended December 31, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(1,728,624) $(1,148,569) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 71,268 66,775 Equity in loss of joint venture 3,772 181,578 Amortization of premium on - - investments Realized loss on sale of 5,962 investments Changes in assets and liabilities: Decrease (increase) in interest (2,063) 23,999 receivable Decrease (increase) in prepaid 37,333 78 expenses Decrease (increase) in advances 6,304 (844) Decrease (increase) in receivable from joint venture - (38,292) Increase (decrease) in equity 432,268 in subsidiary Increase (decrease) in accounts (184,417) (255,546) payable NET CASH USED IN OPERATING (1,364,159) (1,164,859) ACTIVITIES CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Purchase of 50% of Viral (533,433) - Technologies from Alpha 1 Sales of investments - 690,900 Advance to Joint Venture - (34,455) Payment on note (60,845) (797) Purchase of research and office - (112,211) equipment Patent costs (4,885) - NET CASH USED IN INVESTING (599,163) 543,437 ACTIVITY CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: Issuance of common stock 1,116,784 - NET CASH PROVIDED BY FINANCING 1,116,784 - ACTIVITIES NET INCREASE IN CASH (846,538) (621,422) CASH AND CASH EQUIVALENTS: Beginning of period 3,886,950 3,370,713 End of period $3,040,412 $2,749,291 See notes to condensed financial statements. 6 EX-27 2
5 0000725363 CEL SCI CORPORATION 1 3-MOS SEP-30-1995 OCT-1-1995 DEC-31-1995 $3,040,412 170,000 73,073 0 0 3,587,447 1,040,549 0 5,069,641 307,443 507,046 0 0 58,099 29,911,265 5,069,641 18,080 62,501 0 1,787,353 3,772 1,728,624 0 (1,728,624) 0 (1,728,624) 0 0 0 (1,728,624) (0.32) (0.32)
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