-----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, MSQM8lgP8NMftgS2z1iD9HoYQ8fPGzdxqciJpHcWOctjPvOhzrpO0EXHaNP5oUJw lCoimNOupewzBqYopPiZjA== 0001004878-96-000062.txt : 19960719 0001004878-96-000062.hdr.sgml : 19960719 ACCESSION NUMBER: 0001004878-96-000062 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960718 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: 001-11889 FILM NUMBER: 96596417 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 June 30, 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 0-11503 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 7,046,902 July 15, 1996 Page 1 of ___ pages TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Page Balance Sheets 3-4 Statements of Operations 5-6 Statements of Cash Flow 7-8 Notes to Financial Statements 9 Item 2. Management's Discussion and Analysis 11 PART II Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 1996 AND 1995 (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 June 30, 1996 and the results of operations for the nine-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 June 30, 1996, 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 NINE MONTHS ENDED JUNE 30, 1996 AND 1995 (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 nine months ended June 30, 1996. Effective October 31, 1995, the Company has consolidated CELSCI'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 nonaffiliated landlord for 7,800 square feet in Baltimore, Maryland. In the spring of 1994 the Company 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 June 30, 1996 is $628,729. D. CONVERTIBLE DEBENTURES On March 28, 1996, the Company raised $1,250,000 in a private placement. The placement was structured as a convertible debenture. It is convertible into Cel-Sci common stock prior to December 1, 1996. The money will be used for research and development and clinical trials with the Company's cancer and HIV products. As of June 30, 1996, $825,000 of the debentures were converted into 165,000 shares of the Company's common stock. 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. All of these warrants were exercised. Results of Operations Interest income during the nine months ending June 30, 1996 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.) Research and development expenses have also increased due to new research on the TB vaccine, increased work to follow up on positive findings with the AIDS vaccine and the commencement of three clinical studies with cancer and AIDS patients. General and administrative expenses increased due to interest expense on the note and due to the consolidation of Cel- Sci and Viral Technologies general and administrative expenses and increased expenses related to corporate development and money raising. PART II Item 6. (a) Exhibits EX-27, Financial Data Schedule (b) Reports on Form 8-K The Company filed no reports on Form 8-K during the fiscal quarter ended June 30, 1996. 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) June 30, September 30, 1996 1995 CURRENT ASSETS: Cash and cash equivalents $6,646,257 $3,886,950 Investments, net 170,000 170,000 Interest receivable 75,405 64,080 Accounts receivable 46,342 Prepaid expenses 267,933 341,295 Advances to officer/shareholder and employees 129,722 13,234 7,335,659 4,475,559 RECEIVABLE FROM JOINT VENTURE 0 522,695 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $801,874 and $589,897 935,090 1,102,038 DEPOSITS 18,178 18,178 PATENT COSTS- less accumulated amortization of $333,098 and $239,490 435,007 240,541 $8,723,934 $6,359,011 See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) June 30, September 30, 1996 1995 CURRENT LIABILITIES: Accounts payable $112,312 $248,488 Current portion note payable 243,372 243,372 Total current liabilities 355,684 491,860 NOTE PAYABLE 385,357 567,891 CONVERTIBLE DEBENTURE (Note D) 425,000 - DEFERRED RENT 24,959 24,959 EQUITY IN SUBSIDIARY 0 432,268 Total liabilities 1,191,000 1,516,978 STOCKHOLDERS' EQUITY Preferred stock, Series A 3,325,000 - Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 7,046,902 and 5,338,244 shares 70,469 53,382 Additional paid-in capital 32,723,024 28,799,198 Deficit (28,499,459) (24,010,547) Short-term note receivable from (86,100) - shareholder TOTAL STOCKHOLDERS' EQUITY 7,532,934 4,842,033 $8,723,934 $6,359,011 See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Nine Months Ended June 30, 1996 1995 REVENUES: Gross Sales $51,605 $- Interest income 136,651 273,417 Other income - 39,588 TOTAL INCOME 188,256 313,005 EXPENSES: Research and development 2,350,600 1,383,978 Depreciation and amortization 208,912 201,197 General and administrative 2,113,884 1,268,677 TOTAL OPERATING EXPENSES 4,673,396 2,853,852 EQUITY IN LOSS OF JOINT VENTURE (3,772) (395,224) 4,677,168 3,249,076 NET LOSS $4,488,912 $2,936,071 LOSS PER COMMON SHARE $0.74 $0.70 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,086,492 4,194,563 See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended June 30, 1996 1995 REVENUES: Gross Sales $44,280 $- Interest Income 51,737 83,111 Other Income - 21,977 TOTAL INCOME 96,017 105,088 EXPENSES: Research and development 617,987 234,035 Depreciation and amortization 68,950 67,211 General and administrative 894,165 490,429 TOTAL OPERATING EXPENSES 1,581,102 791,675 EQUITY IN LOSS OF JOINT VENTURE 0 (104,884) 1,581,102 896,559 NET LOSS $1,485,085 $791,471 LOSS PER COMMON SHARE $0.22 $0.19 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,612,293 4,207,200 See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (unaudited) Nine Months Ended June 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(4,488,912) $(2,936,071) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 208,912 201,197 Equity in loss of joint venture 3,772 395,224 Research and development expense related to purchase of Viral 515,617 Technologies, Inc. Amortization of premium on - 60,954 investments Realized loss on sale of 13,422 investments Changes in assets and liabilities, net of effect from purchase of Viral Technologies, Inc.: Decrease (increase) in interest (11,325) - receivable Decrease (increase) in accounts (46,342) 38,128 receivable Decrease (increase) in prepaid 73,362 (225,853) expenses Decrease (increase) in advances (116,488) (19,472) Decrease (increase) in receivable from joint venture - (123,952) Increase (decrease) in accounts (136,176) (203,594) payable NET CASH USED IN OPERATING (3,997,580) (2,800,017) ACTIVITIES CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments - 2,906,132 Purchase of investments - (400,000) Advance to Joint Venture - (287,952) Payment on note payable (182,534) (121,689) Note receivable from (114,800) employee/shareholder Payments received on note 28,700 receivable from employee/shareholder Laboratory construction - (10,135) Purchase of research and office (17,808) (128,750) equipment Patent costs (30,800) - NET CASH USED IN INVESTING (317,242) 1,957,606 ACTIVITY Continued on next page CASH FLOW, CONTINUED FROM PREVIOUS PAGE CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: Issuance of convertible 1,250,000 - debenture Issuance of note payable - 205,195 Issuance of preferred stock 3,325,000 - Issuance of common stock 2,499,129 990,890 NET CASH PROVIDED BY FINANCING 7,074,129 1,196,085 ACTIVITIES NET (DECREASE) INCREASE IN CASH 2,759,307 353,674 CASH AND CASH EQUIVALENTS: Beginning of period 3,886,950 3,370,713 End of period $6,646,257 $3,724,387 NON-CASH TRANSACTION: In October 1995, Cel-Sci issued 159,170 shares of common stock as consideration for the purchase of the remaining 50% of Viral Technology, Inc. In conjunction with the acquisition, CEL-SCI obtained net assets with a fair value of approximately $170,000. NON-CASH TRANSACTION: In March, 1996, a shareholder of the corporation exercised options to purchase 40,000 shares of common stock. The shareholder signed a note for the stock, agreeing to pay the note by the end of June, 1996. NON-CASH TRANSACTION: $825,000 of the convertible debenture was converted into 165,000 shares of common stock during the three monts ended June 30, 1996. See notes to condensed financial statements. 8 EX-27 2
5 0000725363 CEL SCI CORPORATION 3-MOS SEP-30-1995 JUN-30-1996 6,646,257 170,000 121,747 0 0 7,335,659 1,736,964 801,874 8,723,934 355,684 425,000 0 3,325,000 70,469 32,723,024 8,723,934 51,605 188,256 0 4,677,168 0 0 0 (4,488,912) 0 0 0 0 0 (4,488,912) (0.74) (0.74)
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