10-K

                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   (Mark One)

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 For the fiscal year ended September 30, 2005.

                                       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 1-11889
                               CEL-SCI CORPORATION
                          ----------------------------
             (Exact name of registrant as specified in its charter)

               COLORADO                               84-0916344
  -----------------------------------             ------------------
    (State or other jurisdiction of                (I.R.S.Employer
   incorporation or organization)                 Identification No.)

              8229 Boone Blvd., Suite 802
                     Vienna, Virginia                     22182
            --------------------------------             -----------
         (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code: (703) 506-9460 Securities
registered pursuant to Section 12(b) of the Act: None Securities registered
pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ]

Indicate by check mark whether the registrant (1) has filed all reports 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. (Check one):
  Large accelerated filer [ ]  Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-25 of the Exchange Act):  [  ] Yes   [X] No

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the common stock on March 31,
2005, as quoted on the American Stock Exchange, was approximately
$54,485,000.

As of April 20, 2006, the Registrant had 80,045,847 issued and outstanding
shares of common stock.

Documents Incorporated by Reference:   None



                                     PART I

ITEM 1.  BUSINESS

      CEL-SCI Corporation was formed as a Colorado corporation in 1983.
CEL-SCI's principal office is located at 8229 Boone Boulevard, Suite 802,
Vienna, VA 22182. CEL-SCI's telephone number is 703-506-9460 and its web site is
www.cel-sci.com. CEL-SCI makes its electronic filings with the Securities and
Exchange Commission (SEC), including its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to these
reports available on its website free of charge as soon as practicable after
they are filed or furnished to the SEC.

OVERVIEW

      CEL-SCI's lead product, Multikine(R), is being developed for the treatment
of cancer. Multikine is a patented immunotherapeutic agent consisting of a
mixture of naturally occurring cytokines, including interleukins, interferons,
chemokines and colony-stimulating factors, currently being developed for
treatment of cancer. Multikine is designed to target the tumor micro-metastases
that are mostly responsible for treatment failure. The basic concept is to add
Multikine to the current cancer treatments with the goal of making the overall
cancer treatment more successful. Phase II data indicated that Multikine
treatment resulted in a substantial increase in the survival of patients. The
lead indication is advanced primary head & neck cancer (500,000 new cases per
annum). Since Multikine is not tumor specific, it may also be applicable in many
other solid tumors.

      In August 2005, the Canadian regulatory agency, the Biologics and Genetic
Therapies Directorate, concurred with the initiation of a global Phase III
clinical trial in head and neck cancer patients using Multikine. The formal "no
objection" letter from the Biologics and Genetic Therapies Directorate to the
Clinical Trial Application (CTA) enables CEL-SCI to initiate the Canadian arm of
the Phase III Multikine trial.

      About 500 patients will be enrolled worldwide in the Phase III trial. The
protocol is designed to develop conclusive evidence of the efficacy of Multikine
in the treatment of advanced primary squamous cell carcinoma of the oral cavity
(head and neck cancer). A successful outcome from this trial should enable
CEL-SCI to apply for a Biologics License to market Multikine for the treatment
of this patient population.

      The trial will test the hypothesis that Multikine treatment administered
prior to the current standard therapy for head and neck cancer patients
(surgical resection of the tumor and involved lymph nodes followed by
radiotherapy or radiotherapy and concurrent chemotherapy) will enhance the
local/regional control of the disease, reduce the rate of disease progression
and extend the time of progression-free survival in patients with advanced oral
squamous cell carcinoma.

   Clinical trials in over 200 patients have been completed with Multikine with
the following results:

   1)      It has been demonstrated to be safe and non-toxic.


                                       2


   2)      It has been shown to render cancer cells much more susceptible to
           radiation therapy (The Laryngoscope, December 2003, Vol.113 Issue
           12).

   3)      A publication in the Journal of Clinical Oncology (Timar et al, JCO,
           23(15): May 2005), revealed the following:

         (i)  Multikine induced anti-tumor immune responses through the combined
              activity of the different cytokines present in Multikine following
              local administration of Multikine for only three weeks.

         (ii) The combination of the different cytokines caused the induction,
              recruitment into the tumor bed, and proliferation of anti-tumor
              T-cells and other anti-tumor inflammatory cells, leading to a
              massive anti-tumor immune response.

         (iii) Multikine induced a reversal of the CD4/CD8 ratio in the tumor
              infiltrating cells, leading to a marked increase of CD4 T-cells in
              the tumor, which resulted in the prolongation of the anti-tumor
              immune response and tumor cell destruction.

         (iv) The anti-tumor immune-mediated processes continued long after the
              cessation of Multikine administration.

         (v)  A three-week Multikine treatment of patients with advanced primary
              oral squamous cell carcinoma resulted in an overall response rate
              of 42% prior to standard therapy, with 12% of the patients having
              a complete response.

         (vi) A histopathology study showed that the tumor load in Multikine
              treated patients was reduced by nearly 50% as compared to tumors
              from control patients in the same pathology study.

         (vii) The tumors of all of the patients in this Phase II trial who
              responded to Multikine treatment were devoid of the cell surface
              marker for HLA Class II. This finding, if confirmed in this global
              Phase III clinical trial, may lead to the establishment of a
              marker for selecting the patient population best suited for
              treatment with Multikine.

      CEL-SCI also owns a pre-clinical technology called L.E.A.P.S.TM (Ligand
Epitope Antigen Presentation System). The lead product derived from this
technology is the CEL-1000 peptide which has shown protection in animals against
herpes, malaria, viral encephalitis and cancer. With the help of government
grants, NIAID and US Army and US Navy collaborations, CEL-1000 is now being
tested against avian flu, viral encephalitis, West Nile Virus, SARS, Vaccinia,
Smallpox, herpes, malaria and other agents.

MULTIKINE

     Multikine has been tested in 200 patients in clinical  trials  conducted in
the U.S., Canada,  Europe and Israel.  Most of these patients were head and neck
cancer  patients,  but some  studies  were also  conducted  in  prostate  cancer


                                       3


patients,  HIV-infected  patients and  HIV-infected  women with Human  Papilloma
Virus  ("HPV")-induced  cervical  dysplasia,  the  precursor  stage  before  the
development of cervical cancer. The safety profile was found to be very good and
CEL-SCI  believes  that the clinical  data  suggests  that  further  studies are
warranted.

      The function of the immunological system is to protect the body against
infectious agents, including viruses, bacteria, parasites and malignant (cancer)
cells. An individual's ability to respond to infectious agents and to other
substances (antigens) recognized as foreign by the body's immune system is
critical to health and survival. When the immune response is adequate, infection
is usually combated effectively and recovery follows. Severe infection can occur
when the immune response is inadequate. Such immune deficiency can be present
from birth but, in adult life, it is frequently acquired as a result of intense
sickness or as a result of the administration of chemotherapeutic drugs and/or
radiation. It is also recognized that, as people reach middle age and
thereafter, the immune system grows weaker.

      Two classes of white blood cells, macrophages and lymphocytes, are
believed to be primarily responsible for immunity. Macrophages are large cells
whose principal immune activity is to digest and destroy infectious agents.
Lymphocytes are divided into two sub-classes. One sub-class of lymphocytes,
B-cells, produces antibodies in response to antigens. Antibodies have unique
combining sites (specificities) that recognize the shape of particular antigens
and bind with them. The combination of an antibody with an antigen sets in
motion a chain of events which may neutralize the effects of the foreign
substance. The other sub-class of lymphocytes, T-cells, regulates immune
responses. T-cells, for example, amplify or suppress antibody formation by
B-cells, and can also directly destroy "foreign" cells by activating "killer
cells."

      It is generally recognized that the interplay among T-cells, B-cells and
the macrophages determines the strength and breadth of the body's response to
infection. It is believed that the activities of T-cells, B-cells and
macrophages are controlled, to a large extent, by a specific group of hormones
called cytokines. Cytokines regulate and modify the various functions of both
T-cells and B-cells. There are many cytokines, each of which is thought to have
distinctive chemical and functional properties. IL-2 is but one of these
cytokines and it is on IL-2 and its synergy with other cytokines that CEL-SCI
has focused its attention. Scientific and medical investigation has established
that IL-2 enhances immune responses by causing activated T-cells to proliferate.
Without such proliferation no immune response can be mounted. Other cytokines
support T-cell and B-cell proliferation. However, IL-2 is the only known
cytokine which causes the proliferation of T-cells. IL-2 is also known to
activate B-cells in the absence of B-cell growth factors.

      Although IL-2 is one of the best characterized cytokines with anticancer
potential, CEL-SCI is of the opinion that to have optimum therapeutic value,
IL-2 should be administered not as a single substance but rather as a mixture of
IL-2 and certain cytokines, i.e. as a "cocktail". This approach, which was
pioneered by CEL-SCI, makes use of the synergism between these cytokines. It
should be noted, however, that neither the Food and Drug Administration (FDA)
nor any other agency has determined that CEL-SCI's Multikine product will be
effective against any form of cancer.

      Research and human clinical trials sponsored by CEL-SCI have indicated a
correlation between administration of Multikine to cancer patients and
immunological responses. On the basis of these experimental results, CEL-SCI
believes that Multikine may have application for the treatment of solid tumors
in humans.


                                       4


      Between 1985 and 1988 Multikine was tested at St. Thomas Hospital in
London, UK in forty-eight patients with various types of cancers. Multikine was
shown to be safe when used by these patients.

      In November 1990, the Florida Department of Health and Rehabilitative
Services ("DHRS") gave the physicians at a southern Florida medical institution
approval to start a clinical cancer trial in Florida using CEL-SCI's Multikine
product. The focus of the trial was unresectable head and neck cancer.

      In 1991, four patients with regionally advanced squamous cell cancer of
the head and neck were treated with CEL-SCI's Multikine product. The patients
had previously received radical surgery followed by radiation therapy but
developed recurrent tumors at multiple sites in the neck and were diagnosed with
terminal cancer.

      Significant tumor reduction occurred in three of the four patients as a
result of the treatment with Multikine. Negligible side effects, such as
injection site soreness and headaches, were observed and the patients were
treated as outpatients. Notwithstanding the above, it should be noted that these
trials were only preliminary and were only conducted on a small number of
patients. It remains to be seen if Multikine will be effective in treating any
form of cancer.

      These results caused CEL-SCI to embark on a major manufacturing program
for Multikine with the goal of being able to produce a drug that would meet the
stringent regulatory requirements for advanced human studies. This program
included building a pilot scale manufacturing facility.

      The objective of CEL-SCI scientists is to use Multikine as an adjunct
(additive) therapy to the existing treatment of previously untreated head & neck
cancer patients with the goal of reducing cancer recurrence and ultimately
increasing survival. However, pursuant to FDA regulations, CEL-SCI was required
to test the drug first for safety in locally recurrent, locally metastatic head
and neck cancer patients who had failed other cancer therapies. This dose
escalation study was started in 1995 at several centers in Canada and the US
where 16 patients were enrolled at 4 different dosage levels. The study ended in
1998 and showed Multikine to be safe and well tolerated at all dose levels.

      Because CEL-SCI scientists have determined that patients with previously
untreated disease would most likely benefit more from Multikine treatment,
CEL-SCI started a safety trial in Canada in 1997 in advanced primary head & neck
cancer patients who had just recently been diagnosed with head & neck cancer.
This study ultimately enrolled 28 patients, also at 4 different dosage levels,
and ended in late 1999. Halfway through this study, CEL-SCI launched a number of
phase II studies in advanced primary head & neck cancer to determine the best
dosage, best route of administration and best frequency of administration of
Multikine. Those studies involved 19 patients in Israel (1997 - 2000), 30
patients in Poland and the Czech Republic (1999 - 2000), and 94 patients (half
treated with Multikine and the other half disease-matched cancer patients served
as control) in Hungary (1999 - 2003). The Hungarian trial compared the control
group (receiving only conventional cancer therapy) to the Multikine treated
patients (receiving Multikine prior to conventional therapy) by histopathology
and immunohistochemistry. The results of these studies were published in
peer-reviewed scientific journals and/or presented at scientific meetings. The
studies that have not yet been published were conducted in support of
Multikine's safety and clinical utility.


                                       5


      The above studies, which are all completed, indicate that Multikine was
safe and well tolerated at all dose levels investigated. The studies also showed
partial and complete tumor responses following Multikine treatment at the best
treatment regimen combinations as well as tumor necrosis (destruction) and
fibrosis (as determined by histopathology).

      While CEL-SCI scientists believe partial and complete tumor responses to
be very important, they also believe that other findings with Multikine in these
studies are equally important since they may serve to enhance existing cancer
therapies, thereby affecting the clinical outcome of the cancer patient's
treatment.

      The initial results of the Hungarian study were published in December
2003. Data from a Phase I/II clinical trial in fifty-four (54) advanced primary
head and neck cancer patients (half treated, half control), the first part of
the Hungarian study, were published in The Laryngoscope, December 2003, Vol.113
(12). The title of the article is "The Effect of Leukocyte Interleukin Injection
(MULTIKINE) on the Peritumoral and Intratumoral Subpopulation of Mononuclear
Cells and on Tumor Epithelia: A Possible New Approach to Augmenting Sensitivity
to Radiation Therapy and Chemotherapy in Oral Cancer - A Multi Center Phase I/II
Clinical Trial".

      The data demonstrates that treatment with Multikine rendered a high
proportion of the tumor cell population highly susceptible to radiation therapy.
This finding represents a major advance in the treatment of cancer since, under
current standard therapy, only about 5%-10% of the cancer cells are thought to
be susceptible to radiation therapy at any one point in time.

      The increased sensitivity of the Multikine-treated tumors to radiation was
derived from a dramatic increase in the number of proliferating (those that are
in cell cycle) cancer cells. Following Multikine treatment, the great majority
of the tumor cells were in a proliferative state, as measured by the
well-established cell proliferation marker Ki67. The control patients (not
treated with Multikine) had only low expression (near background) of the same
proliferation marker (Ki67) in this study. These findings were statistically
significant (p<0.05, ANOVA).

      This is an important finding because the ability of radiation therapy (and
chemotherapy) to kill tumor cells is dependent, in large part, on the
proliferative state of the tumor cells at the time of radiation (and
chemotherapy) treatment. As seen in the control group in this study, and also in
many other tumor types, the great majority of tumor cells (about 90% or more)
are in a "resting" state (non-proliferating). It is generally accepted that
tumor cells in the "resting" state are by-and-large resistant to radiation and
chemotherapy. However, Multikine treatment induced a reversal of this
non-proliferative state of the tumor cells and caused the great majority of the
tumor cells to enter into the proliferative state, thereby rendering the tumor
highly susceptible to radiation therapy (and chemotherapy).

      The results of the Israeli trial have been published in Archives of
Otolaryngology - Head & Neck Surgery, August 2003, Vol.129. This paper on 12
patients treated by Dr. Feinmesser shows positive safety, tumor response and
clinical outcome data, but no firm conclusions can be drawn from a study of only
12 patients.

     Results from the Multikine  Phase II clinical trials were published in June
2004 at the 40th ASCO Annual  Meeting.  The study involved 39 head & neck cancer
patients,  19 of whom were treated with CEL-SCI's  immunotherapy  drug Multikine
prior to  surgery  and  radiation.  The  other 20  patients  served  as  matched
controls,  meaning  that they did not  receive  Multikine  prior to surgery  and
radiation.  In a comparison  pathology study of the tumors,  Multikine treatment
caused a significant  shift in the ratio of key immune cells that infiltrate the
tumor. The cancer patients treated with Multikine were shown to have much higher
rate of tumor cell killing,  resulting in a 42% overall response rate, including
12% complete responses.


                                       6


      The tumors of the 39 head & neck cancer patients were analyzed by three
independent pathologists, blinded to the study. Of the 19 Multikine treated
patients in this study, 2 patients (12%) had no remaining cancer cells, another
2 patients (12%) had a reduction in the cancer cell mass greater than 50% and an
additional 4 patients (21%) had a reduction in the cancer cell mass of more than
30%. The objective response rate in this trial was 21%, with an overall response
rate of 42%, as determined by pathology.

      This study, which used a three-week, non-toxic treatment with Multikine,
caused a shift from a low CD4/CD8 cell ratio (less than one CD4 cell for each
CD8 cell) to a high (over 2.5 - 3) CD4/CD8 cell ratio (2.5 - 3 CD4 cells for
each CD8 cell) in the tumor. This indicates that Multikine treatment shifts the
immune response from a mainly CD8 cell anti-tumor response to a predominately
CD4 anti-tumor response. Both CD4 and CD8 are key cells of the immune system.

      The change in the immune response from CD8 to CD4 cells is very important
for the cancer patient because the cancer cells seem to have learned to shut
down the CD8 anti-tumor immune response. This "shut-down" of the CD8 cells was
evident in the tumors of the control (non-Multikine treated) group. The control
group had predominately CD8 cell infiltrate which was inactive against the
tumor. The Multikine treated group, on the other hand, had a predominately CD4
cell infiltrate. The tumor was unable, or less able, to shut down the Multikine
induced CD4 cell immune response and, as a result thereof, the cancer patients
treated with Multikine were shown to have a much higher rate of tumor cell
killing.

      A publication in the Journal of Clinical Oncology (Timar et al, JCO,
23(15): May 2005), revealed the following:

(i)  Multikine induced anti-tumor immune responses through the combined activity
     of  the  different   cytokines   present  in  Multikine   following   local
     administration of Multikine for only three weeks.

(ii) The   combination  of  the  different   cytokines   caused  the  induction,
     recruitment into the tumor bed, and proliferation of anti-tumor T-cells and
     other anti-tumor inflammatory cells, leading to a massive anti-tumor immune
     response.

(iii) Multikine   induced  a  reversal  of  the  CD4/CD8   ratio  in  the  tumor
     infiltrating  cells,  leading to a marked  increase  of CD4  T-cells in the
     tumor, which resulted in the prolongation of the anti-tumor immune response
     and tumor cell destruction.

(iv) The anti-tumor immune-mediated processes continued long after the cessation
     of Multikine administration.



                                       7


(v)  A three-week  Multikine  treatment of patients with  advanced  primary oral
     squamous cell carcinoma  resulted in an overall  response rate of 42% prior
     to standard therapy, with 12% of the patients having a complete response.

(vi) A  histopathology  study  showed that the tumor load in  Multikine  treated
     patients  was  reduced by nearly 50% as  compared  to tumors  from  control
     patients in the same pathology study.

(vii) The tumors of all of the patients in this Phase II trial who  responded to
     Multikine  treatment  were devoid of the cell surface  marker for HLA Class
     II. This finding, if confirmed in this global Phase III clinical trial, may
     lead to the establishment of a marker for selecting the patient  population
     best suited for treatment with Multikine.

        In February 2006, CEL-SCI announced the results of a follow-up on the
Phase II study written about in the Journal of Clinical Oncology. This follow-up
study indicated that Multikine treatment resulted in a substantial increase in
the survival of patients. In addition, Multikine treatment also improved local
regional control of the patients' tumors. Improved local regional control of the
tumor is considered by many surgeons and oncologists to be an important
measurement of the success of a head & neck cancer drug. Both survival and local
regional control of the tumor are stated endpoints in CEL-SCI's planned Phase
III clinical trial.

        The Phase II study, which used the same Multikine treatment protocol as
proposed for the Phase III trial, included advanced primary head & neck cancer
patients who were scheduled for their first cancer treatment. The Multikine
treatment was administered for 3 weeks prior to the standard treatment for head
& neck cancer, surgery or surgery plus radiation/chemotherapy.

        The median follow-up period for the patients was 3.2 years. The results
of the Phase II trial follow-up study showed that the Multikine-treated patients
had substantially increased survival rates and achieved a higher rate of 2-year
local regional control as compared to the survival and the 2-year local regional
control rates published in the scientific literature (39 clinical trials between
1987 and 2004 in a similar population of head & neck cancer patients). As of
March 24, 2006, CEL-SCI could not provide the detailed results of this long-term
follow-up study of Multikine treatment as the data were being prepared for
publication.

      In early January 2005 CEL-SCI submitted a protocol for a worldwide Phase
III clinical trial to the FDA and later in 2005 to the Canadian Biologics and
Genetic Therapies Directorate. The protocol for the Phase III clinical trial was
designed to develop conclusive evidence of the safety and efficacy of Multikine
in the treatment of advanced primary squamous cell carcinoma of the oral cavity.
CEL-SCI is in discussion with the FDA about this study. In August 2005 CEL-SCI
received a "no objection" letter from the Canadian Biologics and Genetic
Therapies Directorate which enables CEL-SCI to begin its Phase III clinical
trial in Canada.

     The Phase III trial will test the hypothesis  that  Multikine  administered
prior  to the  current  standard  therapy  for head  and  neck  cancer  patients
(surgical   resection  of  the  tumor  and  involved  lymph  nodes  followed  by
radiotherapy  or  radiotherapy  and  concurrent  chemotherapy)  will enhance the


                                       8


local/regional  control of the disease,  reduce the rate of disease  progression
and extend the time for survival in patients  with  advanced  oral squamous cell
carcinoma.  The  submission  to the  Canadian  Biologics  and Genetic  Therapies
Directorate was the same as that submitted to the FDA. A successful outcome from
this trial  should  enable  CEL-SCI to apply for a  Biologics  License to market
Multikine for the treatment of this patient population.

      In May 2005 CEL-SCI was issued a new U.S. patent covering Multikine. The
patent, No. 6,896,879, relates to a new method for pre-sensitizing cancer with
Multikine prior to therapeutic treatment such as chemotherapy, radiation therapy
or immunotherapy.

      Multikine has also been tested in 15 HIV-infected patients (1998 - 1999)
in California. This small study found Multikine to be safe in the HIV-infected
population and showed preliminary evidence of improved delayed type
hypersensitivity response to recall antigens. The results of this study were
reported in Antiviral Therapy 5 (Supplement), 2000.

      Another study at the Thomas Jefferson Medical Center (1998) used very
small amounts of Multikine to determine the feasibility of injecting Multikine
into the prostate of 5 hormonal therapy refractive prostate cancer patients
scheduled for prostatectomy. Although deemed safe by the investigators,
Multikine administration in this trial directly into the prostate (under
ultrasound guidance) resulted in occasional mild dysuria and mild increase in
urinary frequency. Two out of the five treated cases had an inflammatory
response in the prostate and a third case had fibrosis. The Company believes
that more Multikine injections will need to be given to achieve a potential
outcome as seen in head & neck cancer. None of the prostate cancer patients
received more than half of the amounts given to the head & neck cancer patients.
Also, no testing was done at the time to determine if Multikine would enhance
susceptibility to radiation therapy in the prostate. The results of this trial
were published in Seminars in Oncology Vol. 26 (4) (August) 1999.

      In May 2001, CEL-SCI also started a Phase I clinical trial at the
University of Maryland Biotechnology Institute (UMBI). The focus of this study
was HIV-infected women with Human Papilloma Virus (HPV)-induced cervical
dysplasia, the precursor stage before the development of cervical cancer. The
goal of the study was to obtain safety and preliminary efficacy data on
Multikine as a treatment for pre-cancerous lesions of the cervix (dysplasia).
Most cervical dysplasia and cancer is due to infection with HPV. The rationale
for using Multikine in the treatment of cervical dysplasia/cancer is that
Multikine may safely boost the patients' immune systems to the point where their
immune systems can eliminate the virally-induced cancer. Cervical cancer is the
second leading cause of cancer death in women worldwide.

      The HIV-infected women with HPV-induced cervical dysplasia were chosen as
a study group because of the high morbidity and low success rate of current
surgical therapies. Since HIV infection results in immune suppression,
HPV-induced cervical dysplasia follows a more malignant and aggressive course of
disease in such women. Co-infection with HPV is common in HIV-positive women
(about 83%) and cervical cancer is considered an AIDS-defining illness.

      HPV infection is also a leading health problem in non HIV-infected
American college-age women. A large concern among women who have HPV-induced
cervical dysplasia is that the repeated surgical procedures will lead to a
hysterectomy and the inability to bear children.

     At the March  2002 33rd  Annual  Meeting of the  Society  of  Gynecological
Oncologists in Miami,  Florida,  scientists from UMBI and CEL-SCI presented data
from this trial in HIV-infected women with HPV induced cervical  dysplasia.  The


                                       9


results were as follows: 8 patients had been treated with no major toxicity. The
lower  dosage  group had 3 out of 5 patients  resolved/improved  with 2 out of 5
patients with no change in their  cervical  dysplasia  status as compared to the
patient's own baseline disease.  The higher dosage group had 2 out of 3 patients
who  improved  and 1 out of 3 patients  with no change.  The  changes in disease
status were determined by both Colposcopy and Histology.

      Subsequent HPV testing during 2001 and 2002 of the first three patients
revealed the elimination of HPV virus types (using in situ PCR) following
treatment with Multikine and ranged from 54% to 84% (Avg = 68%) reduction in HPV
virus in the cervical tissue of Multikine treated HIV/HPV co-infected patients.
The study was closed due to the inability to enroll further patients.

      CEL-SCI's future studies in the HPV-induced cervical dysplasia area will
only be conducted with grant or government funds as CEL-SCI plans to devote its
resources to head and neck cancer, the area where it has the most data.

      In November 2000, CEL-SCI concluded a development, supply and distribution
agreement with Orient Europharma of Taiwan. The agreement gives Orient
Europharma the exclusive marketing rights to Multikine for all cancer
indications in Taiwan, Singapore, Hong Kong and Malaysia. The agreement provides
for Orient Europharma to fund the clinical trials needed to obtain marketing
approvals in the four countries for head and neck cancer, naso-pharyngeal cancer
and potentially cervical cancer, which are very prevalent in Far East Asia.
CEL-SCI may use the clinical data generated in these trials to support
applications for marketing approvals for Multikine in other parts of the world.

      Under the agreement, CEL-SCI will manufacture Multikine and Orient
Europharma will purchase the product from CEL-SCI for distribution in the
territory. Both parties will share in the revenue from the sale of Multikine. As
of September 30, 2005 Orient Europharma had not started any clinical trials
since CEL-SCI's plan is for Orient Europharma to begin a Phase III clinical
trial when CEL-SCI begins its Phase III clinical trial or to do one combined
Phase III clinical trial. The above will be finalized in the future.

      In May 2003, CEL-SCI entered into an agreement with Eastern Biotech which
provided Eastern Biotech with the following (i) the exclusive right to
distribute Multikine and CEL-1000 in Greece, Serbia and Croatia, (ii) a royalty
equal to 1% of CEL-SCI's net sales of Multikine and CEL-1000 prior to May 30,
2033, (iii) 1,100,000 shares of CEL-SCI's common stock and, (iv) warrants which
allow Eastern Biotech to purchase an additional 1,100,000 shares of CEL-SCI's
common stock at a price of $0.47 per share at any time prior to May 30, 2008. In
consideration for the above Eastern Biotech paid CEL-SCI $500,000. Because the
Company did not register these shares prior to September 30, 2003, the royalty
percentage increased to 2%. If Eastern Biotech did not meet certain clinical
development milestones within one year, it would lose the right to sell both
products in these three countries. As of June 1, 2004, Eastern Biotech lost its
exclusive right to market, distribute and sell Multikine in accordance with the
agreement.

     Since 1985, Multikine has been well tolerated in clinical studies involving
over 200  patients.  Forty-eight  patients  were treated in the United States in
accordance  with clinical trials  authorized by the FDA. The remaining  patients


                                       10


were  treated  outside  of  the  United  States  in  accordance  with  protocols
authorized by comparable  health  regulatory  authorities in the countries where
the patients were treated.  All the clinical trials were conducted in accordance
with the Declaration of Helsinki (1985),  and informed consent was obtained from
each patient  volunteer.  This process is the standard procedure for the conduct
of human clinical trials.

      Proof of efficacy for anti-cancer drugs is a lengthy and complex process.
At this early stage of clinical investigation, it remains to be proven that
Multikine will be effective against any form of cancer. Even if some form of
Multikine is found to be effective in the treatment of cancer, commercial use of
Multikine may be several years away due to extensive safety and effectiveness
tests that would be necessary before required government approvals are obtained.
It should be noted that other companies and research teams are actively involved
in developing treatments and/or cures for cancer, and accordingly, there can be
no assurance that CEL-SCI's research efforts, even if successful from a medical
standpoint, can be completed before those of its competitors.

T-CELL MODULATION PROCESS

      CEL-SCI's patented T-cell Modulation Process uses "heteroconjugates" to
direct the body to choose a specific immune response. The heteroconjugate
technology, referred to as L.E.A.P.S. (Ligand Epitope Antigen Presentation
System), is intended to selectively stimulate the human immune system to more
effectively fight bacterial, viral and parasitic infections and cancer, when it
cannot do so on its own. Administered like vaccines, L.E.A.P.S. combines T-cell
binding ligands with small, disease associated, peptide antigens and may provide
a new method to treat and prevent certain diseases.

      The ability to generate a specific immune response is important because
many diseases are often not combated effectively due to the body's selection of
the "inappropriate" immune response. The capability to specifically reprogram an
immune response may offer a more effective approach than existing vaccines and
drugs in attacking an underlying disease.

      Using the LEAPS technology, CEL-SCI discovered a peptide, named CEL-1000,
which is currently being tested in animals for the prevention/treatment of avian
flu, herpes simplex, malaria, viral encephalitis, smallpox, vaccinia and a
number of other indications.

      In the Spring of 2002, CEL-SCI, in conjunction with The Naval Medical
Research Center, announced that CEL-1000 provided 100% protection against
malaria infection in a mouse model. The same peptide also induced protective
effects in mouse models for herpes simplex virus and cancer. In the Fall of 2002
CEL-SCI announced that it had signed a Cooperative Research and Development
Agreement (CRADA) with the U.S. Navy for CEL-1000 in malaria.

     CEL-SCI  received two grants in April 2003,  one grant in May 2003, and one
grant in September 2003, all from the National  Institutes of Health (NIH).  The
first grant totaling  $1,100,000 was awarded to Northeastern  Ohio  Universities
College of Medicine (NEOUCOM) with CEL-SCI as a subcontractor.  The grant is for
a period of three years and is intended to support the  development of CEL-SCI's
new  compound,  CEL-1000,  as a possible  treatment  for viral  encephalitis,  a
potentially lethal  inflammation of the brain. The grant was awarded following a
peer review process and will fund pre-clinical  studies leading up to toxicology
studies.  The second grant,  totaling $134,000 and awarded to CEL-SCI with Johns
Hopkins  Medical  Institutions as a  subcontractor,  is a Phase I Small Business


                                       11


Innovation  Research  (SBIR)  grant for the further  development  of a potential
treatment  for  autoimmune  myocarditis,  a  heart  disease.  The  third  grant,
announced  on May 7, 2003 for  $162,000 was awarded to CEL-SCI with NEOUCOM as a
sub-contractor,  and is a Phase I SBIR  grant  for the  further  development  of
CEL-1000 against Herpes Simplex. The fourth grant, totaling $104,000 was awarded
to CEL-SCI with the University of Nebraska as a sub-contractor, and is a Phase I
SBIR grant  from the  National  Institute  of Allergy  and  Infectious  Diseases
(NIAID),  NIH, for the  development of CEL-1000 as a potential  therapeutic  and
prophylactic  agent against  vaccinia and smallpox  infections as a single agent
and as an  adjuvant  for  vaccinia  vaccines.  Vaccinia is the virus used in the
smallpox  vaccine.  The grant funds are  disbursed  for the  necessary  expenses
incurred  by the  Company  for each  specific  grant.  The  Company  submits its
expenses by  accessing  the Division of Payment  Management,  a Health and Human
Services  program support center,  when CEL-SCI is the primary  contractor,  or,
when CEL-SCI is a  sub-contractor,  by invoicing  the primary  contractor of the
grant, on a monthly basis, for expenses incurred for the grant.

      As of September 30, 2005 approximately $288,000 remained from the viral
encephalitis grant. The other three grants were closed out during fiscal year
2005. As of September 30, 2005 CEL-SCI had received approximately $591,000 from
these grants. The remaining funds will be spent over the next six months.

      In June 2003 CEL-SCI signed a Cooperative Agreement with the NIAID and the
U.S. Army Medical Research Institute of Infectious Disease (USAMRIID) to test
CEL-1000 against various bio-terrorism agents as well as other hard to treat
diseases.

      In May 2005 CEL-SCI scientists, in collaboration with scientists from the
laboratory of Dr. Noel Rose at The Johns Hopkins University Department of
Pathology, presented animal data showing that pretreatment and early therapy of
Experimental Autoimmune Myocarditis with a compound developed by CEL-SCI
resulted in significant reduction in heart enlargement and disease associated
histopathological changes. The compound used to achieve these results was
derived from CEL-SCI's patented L.E.AP.S. technology.

      This new finding could potentially lead to the development of a treatment
for autoimmune myocarditis, a life threatening heart disease which is
characterized by an enlarged and weakened heart. Myocarditis is a precursor to
dilated cardiomyopathy, a condition leading to a form of chronic heart failure
(CHF) characterized by an inflamed heart. End state CHF requires a heart
transplant or death ensues. The incidence in the United States alone of dilated
cardiomyopathy is about 200,000 people.

      The protection observed was statistically significant for both
pretreatment and early therapy. This protective effect was shown to be
antigen-specific and was associated with an increase in IL-13 in both the sera
and heart tissue and of IL-1a in the sera of the protected mice. Other studies
from Dr. Rose's laboratory with IL-13 knockout mice (mice missing the IL-13
gene) demonstrate the importance of IL-13 in this model of Experimental
Autoimmune Myocarditis and corroborated these findings.

      In December 2005 CEL-SCI signed an agreement with the National Institute
for Allergy and Infectious Diseases (NIAID), whereby NIAID agreed to test our
CEL-1000 drug against the avian flu virus in animal models, which are very hard
to come by.



                                       12



RESEARCH AND DEVELOPMENT

      Since 1983, and through September 30, 2005, approximately $50,794,000 has
been expended on CEL-SCI-sponsored research and development, including
approximately $2,326,000, $2,052,000 and $2,030,000 respectively during the
years ended September 30, 2005, 2004 and 2003.

      The extent of CEL-SCI's clinical trials and research programs is primarily
based upon the amount of capital available to CEL-SCI and the extent to which
CEL-SCI has received regulatory approvals for clinical trials. CEL-SCI's
research and development expenditures have decreased in the past three years
compared to previous years due in part to the capital available to CEL-SCI and
due in part to the fact that the costs involved in manufacturing Multikine for
use in clinical trials and costs involved in validating the manufacturing
process were primarily incurred in fiscal 2001 and prior periods.

      The costs associated with the clinical trials relating to CEL-SCI's
technologies, research expenditures and CEL-SCI's administrative expenses have
been funded with the public and private sales of CEL-SCI's securities and
borrowings from third parties, including affiliates of CEL-SCI.

GOVERNMENT REGULATION

New drug development and approval process

      Regulation by governmental authorities in the United States and other
countries is a significant factor in the manufacture and marketing of biological
and other drug products and in ongoing research and product development
activities. CEL-SCI's products will require regulatory approval by governmental
agencies prior to commercialization. In particular, these products are subject
to rigorous preclinical and clinical testing and other premarket approval
requirements by the FDA and regulatory authorities in other countries. In the
United States, various statutes and regulations also govern or influence the
manufacturing, safety, labeling, storage, record keeping and marketing of
pharmaceutical and biological drug products. The lengthy process of seeking
these approvals, and the subsequent compliance with applicable statutes and
regulations, require the expenditure of substantial resources. CEL-SCI believes
that it is currently in compliance with applicable statutes and regulations that
are relevant to its operations. CEL-SCI has no control, however, over compliance
by its manufacturing and other partners.

      The FDA's statutes, regulations, or policies may change and additional
statutes or government regulations may be enacted which could prevent or delay
regulatory approvals of biological or other drug products. CEL-SCI cannot
predict the likelihood, nature or extent of adverse governmental regulation that
might arise from future legislative or administrative action, either in the U.S.
or abroad.

     Regulatory  approval,  when and if  obtained,  may be limited in scope.  In
particular,  regulatory  approvals  will  restrict the marketing of a product to
specific uses.  Further,  approved  biological and other drugs, as well as their
manufacturers,  are subject to ongoing review.  Discovery of previously  unknown
problems with these products may result in  restrictions  on their  manufacture,
sale or use or in their  withdrawal  from the  market.  Failure  to comply  with
regulatory  requirements  may result in criminal  prosecution,  civil penalties,
recall or seizure of products,  total or partial  suspension  of  production  or
injunction,  as well as other actions affecting CEL-SCI.  Any failure by CEL-SCI


                                       13


or its manufacturing and other partners to obtain and maintain,  or any delay in
obtaining,  regulatory  approvals could  materially  adversely  affect CEL-SCI's
business.

      The process for new drug approval has many steps, including:

Preclinical testing

      Once a biological or other drug candidate is identified for development,
the drug candidate enters the preclinical testing stage. During preclinical
studies, laboratory and animal studies are conducted to show biological activity
of the drug candidate in animals, both healthy and with the targeted disease.
Also, preclinical tests evaluate the safety of drug candidates. These tests
typically take approximately two years to complete. Preclinical tests must be
conducted in compliance with good laboratory practice regulations. In some
cases, long-term preclinical studies are conducted while clinical studies are
ongoing.

Investigational new drug application

      When the preclinical testing is considered adequate by the sponsor to
demonstrate the safety and the scientific rationale for initial human studies,
an investigational new drug application (IND) is filed with the FDA to seek
authorization to begin human testing of the biological or other drug candidate.
The IND becomes effective if not rejected by the FDA within 30 days after
filing. The IND must provide data on previous experiments, how, where and by
whom the new studies will be conducted, the chemical structure of the compound,
the method by which it is believed to work in the human body, any toxic effects
of the compound found in the animal studies and how the compound is
manufactured. All clinical trials must be conducted under the supervision of a
qualified investigator in accordance with good clinical practice regulations.
These regulations include the requirement that all subjects provide informed
consent. In addition, an institutional review board (IRB), comprised primarily
of physicians and other qualified experts at the hospital or clinic where the
proposed studies will be conducted, must review and approve each human study.
The IRB also continues to monitor the study and must be kept aware of the
study's progress, particularly as to adverse events and changes in the research.
Progress reports detailing the results of the clinical trials must be submitted
at least annually to the FDA and more frequently if adverse events occur. In
addition, the FDA may, at any time during the 30-day period after filing an IND
or at any future time, impose a clinical hold on proposed or ongoing clinical
trials. If the FDA imposes a clinical hold, clinical trials cannot commence or
recommence without FDA authorization, and then only under terms authorized by
the FDA. In some instances, the IND process can result in substantial delay and
expense.

      Some limited human clinical testing may also be done under a physician's
IND that allows a single individual to receive the drug, particularly where the
individual has not responded to other available therapies. A physician's IND
does not replace the more formal IND process, but can provide a preliminary
indication as to whether further clinical trials are warranted, and can, on
occasion, facilitate the more formal IND process.

      Clinical trials are typically conducted in three sequential phases, but
the phases may overlap.


                                       14


Phase I clinical trials

      Phase I human clinical trials usually involve between 20 and 80 healthy
volunteers or patients and typically take one to two years to complete. The
tests study a biological or other drug's safety profile, and may seek to
establish the safe dosage range. The Phase I clinical trials also determine how
a drug candidate is absorbed, distributed, metabolized and excreted by the body,
and the duration of its action.

Phase II clinical trials

      In Phase II clinical trials, controlled studies are conducted on an
expanded population of patients with the targeted disease. The primary purpose
of these tests is to evaluate the effectiveness of the drug candidate on the
volunteer patients as well as to determine if there are any side effects or
other risks associated with the drug. These studies generally take several years
and may be conducted concurrently with Phase I clinical trials. In addition,
Phase I/II clinical trials may be conducted to evaluate not only the efficacy of
the drug candidate on the patient population, but also its safety.

Phase III clinical trials

      This phase typically lasts two to three years and involves an even larger
patient population, often with several hundred or even several thousand patients
depending on the use for which the drug is being studied. Phase III trials are
intended to establish the overall risk-benefit ratio of the drug and provide, if
appropriate, an adequate basis for product labeling. During the Phase III
clinical trials, physicians monitor the patients to determine efficacy and to
observe and report any reactions or other safety risks that may result from use
of the drug candidate.

Chemical and formulation development

      Concurrent with clinical trials and preclinical studies, companies also
must develop information about the chemistry and physical characteristics of the
drug and finalize a process for manufacturing the product in accordance with
current good manufacturing practice requirements (cGMPs). The manufacturing
process must be capable of consistently producing quality batches of the product
and the manufacturer must develop methods for testing the quality, purity, and
potency of the final drugs. Additionally, appropriate packaging must be selected
and tested and chemistry stability studies must be conducted to demonstrate that
the product does not undergo unacceptable deterioration over its shelf-life.

New drug application or biological license application

      After the completion of the clinical trial phases of development, if the
sponsor concludes that there is substantial evidence that the biological or
other drug candidate is effective and that the drug is safe for its intended
use, a new drug application (NDA) or biologics license application (BLA) may be
submitted to the FDA. The application must contain all of the information on the
biological or other drug candidate gathered to that date, including data from
the clinical trials. Under the Pediatric Research Equity Act of 2003, a company
is also required to include an assessment, generally based on clinical study
data, on the safety and efficacy of the drug candidate for all relevant
pediatric populations before submitting an application. The statute provides for
waivers or deferrals in certain situations but no assurance can be made that
such situations will apply to a particular product.


                                       15


      The FDA reviews all NDAs and BLAs submitted before it accepts them for
filing. It may request additional information rather than accepting an
application for filing. In this event, the application must be resubmitted with
the additional information. The resubmitted application is also subject to
review before the FDA accepts it for filing. Once the submission is accepted for
filing, the FDA begins an in-depth review of the application. The FDA may refer
the application to an appropriate advisory committee, typically a panel of
clinicians, for review, evaluation and a recommendation. The FDA is not bound by
the recommendation of an advisory committee. If FDA evaluations of the NDA or
BLA and the manufacturing facilities are favorable, the FDA may issue an
approval letter authorizing commercial marketing of the drug or biological
candidate for specified indications. The FDA could also issue an approvable
letter, which usually contains a number of conditions that must be met in order
to secure final approval of the NDA or BLA. When and if those conditions have
been met to the FDA's satisfaction, the FDA will issue an approval letter. On
the other hand, if the FDA's evaluation of the NDA or BLA or manufacturing
facilities is not favorable, the FDA may refuse to approve the application or
issue a non-approvable letter.

      Among the conditions for NDA or BLA approval is the requirement that each
prospective manufacturer's quality control and manufacturing procedures conform
to current good manufacturing practice standards and requirements (cGMPs).
Manufacturing establishments are subject to periodic inspections by the FDA and
by other federal, state or local agencies.

COMPETITION AND MARKETING

      Many companies, nonprofit organizations and governmental institutions are
conducting research on cytokines. Competition in the development of therapeutic
agents incorporating cytokines is intense. Large, well-established
pharmaceutical companies are engaged in cytokine research and development and
have considerably greater resources than CEL-SCI has to develop products. The
establishment by these large companies of in-house research groups and of joint
research ventures with other entities is already occurring in these areas and
will probably become even more prevalent. In addition, licensing and other
collaborative arrangements between governmental and other nonprofit institutions
and commercial enterprises, as well as the seeking of patent protection of
inventions by nonprofit institutions and researchers, could result in strong
competition for CEL-SCI. Any new developments made by such organizations may
render CEL-SCI's licensed technology and know-how obsolete.

     Several biotechnology companies are producing IL-2-like compounds.  CEL-SCI
believes, however, that it is the only producer of a patented IL-2 product using
a patented  cell-culture  technology with normal human cells.  CEL-SCI  foresees
that   its    principle    competition    will    come   from    producers    of
genetically-engineered  IL-2-like  products.  However,  it is CEL-SCI's  belief,
based upon growing  scientific  evidence,  that its natural IL-2  products  have
advantages  over  the  genetically  engineered,   IL-2-like  products.  Evidence
indicates that  genetically  engineered,  IL-2-like  products,  which lack sugar
molecules  and  typically  are  not  water  soluble,  may be  recognized  by the
immunological  system as a  foreign  agent,  leading  to a  measurable  antibody
build-up and thereby  possibly  voiding their  therapeutic  value.  Furthermore,
CEL-SCI's  research has established that to have optimum  therapeutic value IL-2
should be  administered  not as a single  substance  but rather as an  IL-2-rich
mixture of certain cytokines and other proteins, i.e. as a "cocktail".  If these
differences  prove  to be of  importance,  and if the  therapeutic  value of its
Multikine product is conclusively established,  CEL-SCI believes it will be able
to establish a strong competitive position in a future market.


                                       16


      CEL-SCI has not established a definitive plan for marketing nor has it
established a price structure for CEL-SCI's saleable products. However, CEL-SCI
intends, if CEL-SCI is in a position to begin commercialization of its products,
to enter into written marketing agreements with various major pharmaceutical
firms with established sales forces. The sales forces in turn would probably
target CEL-SCI's products to cancer centers, physicians and clinics involved in
immunotherapy.

      CEL-SCI may encounter problems, delays and additional expenses in
developing marketing plans with outside firms. In addition, CEL-SCI may
experience other limitations involving the proposed sale of its products, such
as uncertainty of third-party reimbursement. There is no assurance that CEL-SCI
can successfully market any products which they may develop or market them at
competitive prices.

      Some of the clinical trials funded to date by CEL-SCI have not been
approved by the FDA, but rather have been conducted pursuant to approvals
obtained from certain states and foreign countries. Conducting clinical studies
in foreign countries is normal industry practice since these studies can often
be completed in less time and are less expensive than studies conducted in the
U.S. Conducting clinical studies in foreign countries is also beneficial since
CEL-SCI will need the approval from a foreign country prior to the time CEL-SCI
can market any of its drugs in the foreign country. However, since the results
of these clinical trials may not be accepted by the FDA, competitors conducting
clinical trials approved by the FDA may have an advantage in that the products
of such competitors are further advanced in the regulatory process than those of
CEL-SCI. CEL-SCI is conducting its trials in compliance with internationally
recognized standards. By following these standards, CEL-SCI anticipates
obtaining acceptance from world regulatory bodies, including the FDA.

EMPLOYEES

      As of February 28, 2006 CEL-SCI had 19 employees. Seven employees are
involved in administration, 10 employees are involved in manufacturing and 2
employees are involved in general research and development with respect to
CEL-SCI's products.

ITEM 1A.  RISK FACTORS

      Investors should be aware that the risks described below could adversely
affect the price of CEL-SCI's common stock.

Risks Related to CEL-SCI

Since CEL-SCI Has Earned Only Limited Revenues and Has a History of Losses,
CEL-SCI Will Require Additional Capital to Remain in Operation.

      CEL-SCI has had only limited revenues since it was formed in 1983. Since
the date of its formation and through September 30, 2005 CEL-SCI incurred net
losses of approximately $99,000,000. CEL-SCI has relied principally upon the
proceeds of public and private sales of its securities to finance its activities
to date. All of CEL-SCI's potential products, with the exception of Multikine,
are in the early stages of development, and any commercial sale of these
products will be many years away. Even potential product sales from Multikine
are many years away as cancer trials can be lengthy. Accordingly, CEL-SCI
expects to incur substantial losses for the foreseeable future.


                                       17


Since CEL-SCI does not intend to pay dividends on its common stock, any return
to investors will come only from potential increases in the price of CEL-SCI's
common stock.

      At the present time, CEL-SCI intends to use available funds to finance
CEL-SCI's operations. Accordingly, while payment of dividends rests within the
discretion of the Board of Directors, no common stock dividends have been
declared or paid by CEL-SCI and CEL-SCI has no intention of paying any common
stock dividends.

If CEL-SCI cannot obtain additional capital, CEL-SCI may have to postpone
development and research expenditures which will delay CEL-SCI's ability to
produce a competitive product. Delays of this nature may depress the price of
CEL-SCI's common stock.

      Clinical and other studies necessary to obtain approval of a new drug can
be time consuming and costly, especially in the United States, but also in
foreign countries. CEL-SCI's estimates of the costs associated with future
clinical trials and research may be substantially lower than the actual costs of
these activities. The different steps necessary to obtain regulatory approval,
especially that of the Food and Drug Administration, involve significant costs
and may require several years to complete. CEL-SCI expects that it will need
substantial additional financing over an extended period of time in order to
fund the costs of future clinical trials, related research, and general and
administrative expenses. Although CEL-SCI's equity line of credit agreement is
expected to be a source of funding, the amounts which CEL-SCI is able to draw
from the equity line during each drawdown period are limited and may not satisfy
CEL-SCI's capital needs.

      The extent of CEL-SCI's clinical trials and research programs are
primarily based upon the amount of capital available to CEL-SCI and the extent
to which CEL-SCI has received regulatory approvals for clinical trials. CEL-SCI
is unable to estimate the future costs of clinical trials since CEL-SCI has not
yet met with the FDA to discuss the design of future clinical trials; and until
the scope of future clinical trials is known, CEL-SCI will not be able to price
any trials with clinical trial organizations.

      Over the past three years CEL-SCI's research and development expenditures
have decreased, due in part to the capital available to CEL-SCI. The inability
of CEL-SCI to conduct clinical trials or research, whether due to a lack of
capital or regulatory approval, will prevent CEL-SCI from completing the studies
and research required to obtain regulatory approval for any products which
CEL-SCI is developing.

      To raise additional capital CEL-SCI will most likely sell shares of its
common stock or securities convertible into common stock at prices that may be
below the prevailing market price of CEL-SCI's common stock at the time of sale.
The issuance of additional shares will have a dilutive impact on other
stockholders and could have a negative effect on the market price of CEL-SCI's
common stock. During the two years ended September 2005 CEL-SCI has sold
approximately 11,700,000 shares of its common stock to private investors at
prices that were between 11% and 22% below the market price of CEL-SCI's common
stock at the time of sale.

      Any failure to obtain or any delay in obtaining required regulatory
approvals may adversely affect the ability of CEL-SCI or potential licensees to
successfully market any products they may develop.


                                       18


Multikine is made from components of human blood which involves inherent risks
that may lead to product destruction or patient injury which could materially
harm CEL-SCI's financial results, reputation and stock price.

      Multikine is made, in part, from components of human blood. There are
inherent risks associated with products that involve human blood such as
possible contamination with viruses, including Hepatitis or HIV. Any possible
contamination could require CEL-SCI to destroy batches of Multikine or cause
injuries to patients who receive the product thereby subjecting CEL-SCI to
possible financial losses and harm to its business.

Although CEL-SCI has product liability insurance for Multikine, the successful
prosecution of a product liability case against CEL-SCI could have a materially
adverse effect upon its business if the amount of any judgment exceeds CEL-SCI's
insurance coverage.

      Although no claims have been brought to date, participants in CEL-SCI's
clinical trials could bring civil actions against CEL-SCI for any unanticipated
harmful effects arising from the use of Multikine or any drug or product that
CEL-SCI may try to develop. Although CEL-SCI believes its insurance coverage of
$1,000,000 per claim is adequate, the defense or settlement of any product
liability claim could adversely affect CEL-SCI even if the defense and
settlement costs did not exceed CEL-SCI's insurance coverage.

CEL-SCI's directors are allowed to issue shares of preferred stock with
provisions that could be detrimental to the interests of the holders of
CEL-SCI's common stock.

      The provisions in CEL-SCI's Articles of Incorporation relating to
CEL-SCI's Preferred Stock would allow CEL-SCI's directors to issue Preferred
Stock with rights to multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to CEL-SCI's Common Stock.
The issuance of Preferred Stock with such rights may make more difficult the
removal of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.

Risks Related to Government Approvals

CEL-SCI's product candidates must undergo rigorous preclinical and clinical
testing and regulatory approvals, which could be costly and time-consuming and
subject CEL-SCI to unanticipated delays or prevent CEL-SCI from marketing any
products.

      Therapeutic agents, drugs and diagnostic products are subject to approval,
prior to general marketing, by the FDA in the United States and by comparable
agencies in most foreign countries. Before obtaining marketing approval,
CEL-SCI's product candidates must undergo rigorous preclinical and clinical
testing which is costly and time consuming and subject to unanticipated delays.
There can be no assurance that such approvals will be granted.

     CEL-SCI  cannot be certain when or under what  conditions it will undertake
further  clinical  trials,  including  a Phase III program  for  Multikine.  The
clinical  trials  of  CEL-SCI's  product  candidates  may  not be  completed  on
schedule,  and the FDA or foreign regulatory  agencies may order CEL-SCI to stop


                                       19


or modify its  research  or these  agencies  may not  ultimately  approve any of
CEL-SCI's product candidates for commercial sale. Varying interpretations of the
data  obtained from  pre-clinical  and clinical  testing  could delay,  limit or
prevent regulatory approval of CEL-SCI's product candidates.  The data collected
from  CEL-SCI's  clinical  trials may not be  sufficient  to support  regulatory
approval of its various product candidates,  including  Multikine.  For example,
Multikine  is now being made by a process  that was  different  from the process
tested in many of CEL-SCI's  clinical  studies to date.  It is possible that the
FDA will require CEL-SCI to conduct  additional  studies to demonstrate that the
Multikine  that it plans to use for its  Phase  III  program  is the same as the
product  previously  tested  in  CEL-SCI's  phase II  studies.  Even if  CEL-SCI
believes the data collected from its clinical trials are sufficient, the FDA has
substantial  discretion in the approval  process and may disagree with CEL-SCI's
interpretation of the data. CEL-SCI can make no assurances that the FDA will not
require  CEL-SCI to conduct  more Phase II studies  before  beginning  Phase III
trials.  CEL-SCI's failure to adequately  demonstrate the safety and efficacy of
any of its product candidates would delay or prevent regulatory  approval of its
product  candidates  in the United  States,  which could  prevent  CEL-SCI  from
achieving profitability.

      The requirements governing the conduct of clinical trials, manufacturing,
and marketing of CEL-SCI's product candidates, including Multikine, outside the
United States vary widely from country to country. Foreign approvals may take
longer to obtain than FDA approvals and can require, among other things,
additional testing and different trial designs. Foreign regulatory approval
processes include all of the risks associated with the FDA approval processes.
Some of those agencies also must approve prices for products. Approval of a
product by the FDA does not ensure approval of the same product by the health
authorities of other countries. In addition, changes in regulatory policy in the
US or in foreign countries for product approval during the period of product
development and regulatory agency review of each submitted new application may
cause delays or rejections.

      In addition to conducting further clinical studies of Multikine and
CEL-SCI's other product candidates, CEL-SCI also must undertake the development
of its manufacturing process and optimize its product formulations.

      CEL-SCI has only limited experience in filing and pursuing applications
necessary to gain regulatory approvals, which may impede its ability to obtain
timely approvals from the FDA or foreign regulatory agencies, if at all. CEL-SCI
will not be able to commercialize Multikine and other product candidates until
it has obtained regulatory approval, and any delay in obtaining, or inability to
obtain, regulatory approval could harm its business. In addition, regulatory
authorities may also limit the types of patients to which CEL-SCI or others may
market Multikine or CEL-SCI's other products.

Even if CEL-SCI obtains regulatory approval for its product candidates, CEL-SCI
will be subject to stringent, ongoing government regulation.

      Even if CEL-SCI's products receive regulatory approval, either in the
United States or internationally, it will continue to be subject to extensive
regulatory requirements. These regulations are wide-ranging and govern, among
other things:


                                       20


o    product design, development, manufacture and testing;
o    adverse drug experience and other reporting regulations;
o    product advertising and promotion;
o    product manufacturing, including good manufacturing practice requirements;
o    record keeping requirements;
o    registration  of CEL-SCI's  establishments  with the FDA and certain  state
     agencies;
o    product storage and shipping;
o    drug sampling and distribution requirements;
o    electronic record and signature requirements; and
o    labeling changes or modifications.

      CEL-SCI and any third-party manufacturers or suppliers must continually
adhere to federal regulations setting forth requirements, known as current Good
Manufacturing Practices, or cGMPs, and their foreign equivalents, which are
enforced by the FDA and other national regulatory bodies through their
facilities inspection programs. If CEL-SCI's facilities, or the facilities of
its manufacturers or suppliers, cannot pass a pre-approval plant inspection, the
FDA will not approve the marketing application of CEL-SCI's product candidates.
In complying with cGMP and foreign regulatory requirements, CEL-SCI and any of
its potential third-party manufacturers or suppliers will be obligated to expend
time, money and effort in production, record-keeping and quality control to
ensure that its products meet applicable specifications and other requirements.
State regulatory agencies and the regulatory agencies of other countries have
similar requirements.

      CEL-SCI has an agreement with Cambrex Bio Science, Inc. whereby Cambrex
agreed to provide CEL-SCI with a facility for the periodic manufacturing of
Multikine in accordance with the cGMPs established by FDA regulations. This
agreement expires on December 31, 2006. If the Cambrex facility were not
available for the production of Multikine, CEL-SCI estimates that it would take
approximately six to ten months to find or build an alternative manufacturing
facility for Multikine. CEL-SCI does not know what cost it would incur to obtain
an alternative source of Multikine.

      If CEL-SCI does not comply with regulatory requirements at any stage,
whether before or after marketing approval is obtained, it may be subject to
criminal prosecution, seizure, injuction, fines, or be forced to remove a
product from the market or experience other adverse consequences, including
restrictions or delays in obtaining regulatory marketing approval, which could
materially harm CEL-SCI's financial results, reputation and stock price.
Additionally, CEL-SCI may not be able to obtain the labeling claims necessary or
desirable for product promotion. CEL-SCI may also be required to undertake
post-marketing trials. In addition, if CEL-SCI or other parties identify adverse
effects after any of CEL-SCI's products are on the market, or if manufacturing
problems occur, regulatory approval may be withdrawn and CEL-SCI may be required
to reformulate its products, conduct additional clinical trials, make changes in
its product's labeling or indications of use, or submit additional marketing
applications to support these changes. If CEL-SCI encounters any of the
foregoing problems, its business and results of operations will be harmed and
the market price of our common stock may decline.

      Also, the extent of adverse government regulations which might arise from
future legislative or administrative action cannot be predicted. Without
government approval, CEL-SCI will be unable to sell any of its products.


                                       21


Risks Related to Intellectual Property

CEL-SCI may not be able to achieve or maintain a competitive position and other
technological developments may result in CEL-SCI's proprietary technologies
becoming uneconomical or obsolete.

      The biomedical field in which CEL-SCI is involved is undergoing rapid and
significant technological change. The successful development of therapeutic
agents from CEL-SCI's compounds, compositions and processes through
CEL-SCI-financed research, or as a result of possible licensing arrangements
with pharmaceutical or other companies, will depend on its ability to be in the
technological forefront of this field.

      Many pharmaceutical and biotechnology companies are developing products
for the prevention or treatment of cancer and infectious diseases including
Introgen Therapeutics, Inc. and ImClone Systems, Inc. which are currently
developing drugs for head and neck cancer. Both Introgen and ImClone, as well as
many other companies working on drugs designed to prevent, cure or treat cancer,
have substantial financial, research and development, and marketing resources
and are capable of providing significant long-term competition either by
establishing in-house research groups or by forming collaborative ventures with
other entities. In addition, smaller companies and non-profit institutions are
active in research relating to cancer and infectious diseases and are expected
to become more active in the future.

CEL-SCI's patents might not protect CEL-SCI's technology from competitors, in
which case CEL-SCI may not have any advantage over competitors in selling any
products which it may develop.

     Certain aspects of CEL-SCI's  technologies  are covered by U.S. and foreign
patents. In addition,  CEL-SCI has a number of new patent applications  pending.
There is no assurance that the applications  still pending or which may be filed
in the future will result in the issuance of any patents. Furthermore,  there is
no assurance as to the breadth and degree of protection any issued patents might
afford  CEL-SCI.  Disputes may arise between  CEL-SCI and others as to the scope
and validity of these or other  patents.  Any defense of the patents could prove
costly and time  consuming and there can be no assurance that CEL-SCI will be in
a position, or will deem it advisable, to carry on such a defense. Other private
and public concerns, including universities, may have filed applications for, or
may have been issued,  patents and are expected to obtain additional patents and
other  proprietary  rights to  technology  potentially  useful or  necessary  to
CEL-SCI.  The scope and  validity of such  patents,  if any, the extent to which
CEL-SCI may wish or need to acquire the rights to such patents, and the cost and
availability  of such  rights are  presently  unknown.  Also,  as far as CEL-SCI
relies upon unpatented proprietary technology, there is no assurance that others
may not  acquire  or  independently  develop  the  same or  similar  technology.
CEL-SCI's first Multikine patent expired in 2000. Since CEL-SCI does not know if
it will ever be able to sell  Multikine on a commercial  basis,  CEL-SCI  cannot
predict  what  effect  the  expiration  of this  patent  will  have on  CEL-SCI.
Notwithstanding the above,  CEL-SCI believes that trade secrets and later issued
patents will protect the technology associated with Multikine.


                                       22


Risks Related to CEL-SCI's Common Stock

Since the market price for CEL-SCI's common stock is volatile, investors in this
offering may not be able to sell any of CEL-SCI's shares at a profit.

      The market price of CEL-SCI's common stock, as well as the securities of
other biopharmaceutical and biotechnology companies, have historically been
highly volatile, and the market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. During the year ended September 30, 2005 CEL-SCI's stock
price has ranged from a low of $0.46 per share to a high of $1.08 per share.
Factors such as fluctuations in CEL-SCI's operating results, announcements of
technological innovations or new therapeutic products by CEL-SCI or its
competitors, governmental regulation, developments in patent or other
proprietary rights, public concern as to the safety of products developed by
CEL-SCI or other biotechnology and pharmaceutical companies, and general market
conditions may have a significant effect on the future market price of CEL-SCI's
common stock.

Shares issuable upon the exercise of options and warrants, or as a result of
sales made in connection with the equity line of credit may substantially
increase the number of shares available for sale in the public market and may
depress the price of CEL-SCI's common stock.

      CEL-SCI had outstanding options and warrants which as of September 30,
2005 allow the holders to acquire up to 15,798,603 additional shares of
CEL-SCI's common stock. Until the options and warrants expire, the holders will
have an opportunity to profit from any increase in the market price of CEL-SCI's
common stock without assuming the risks of ownership. Holders of the options and
warrants may exercise or convert these securities at a time when CEL-SCI could
obtain additional capital on terms more favorable than those provided by the
options. The exercise of the options and warrants will dilute the voting
interest of the owners of presently outstanding shares of CEL-SCI's common
stock.

      CEL-SCI has filed, or plans to file, registration statements with the
Securities and Exchange Commission so that substantially all of the shares of
common stock which are issuable upon the exercise of outstanding options and
warrants may be sold in the public market. The sale of common stock issued or
issuable upon the exercise of the warrants described above, or the perception
that such sales could occur, may adversely affect the market price of CEL-SCI's
common stock.

Equity Line of Credit

     An  unknown  number of shares  of  common  stock may also be sold  under an
equity line of credit  arrangement  with Jena  Holdings  LLC.  As CEL-SCI  sells
shares of its common stock to Jena Holdings LLC under the equity line of credit,
and Jena  Holdings  LLC sells the common  stock to third  parties,  the price of
CEL-SCI's common stock may decrease due to the additional  shares in the market.
If CEL-SCI decides to draw down on the equity line of credit as the price of its
common  stock  decreases,  CEL-SCI  will be required to issue more shares of its
common stock for any given dollar amount invested by Jena Holdings LLC,  subject
to the minimum  selling  price  specified  by CEL-SCI.  The more shares that are
issued  under the equity line of credit,  the more  CEL-SCI's  then  outstanding
shares will be diluted and the more  CEL-SCI's  stock  price may  decrease.  Any


                                       23


decline in the price of CEL-SCI's common stock may encourage short sales,  which
could place further  downward  pressure on the price of CEL-SCI's  common stock.
Short  selling is a practice of selling  shares  which are not owned by a seller
with the  expectation  that the market price of the shares will decline in value
after the sale.

ITEM 2.   PROPERTIES

      CEL-SCI leases office space at 8229 Boone Blvd., Suite 802, Vienna,
Virginia at a monthly rental of approximately $6,750. The lease on the office
space expires in June 2007.
 CEL-SCI believes this arrangement is adequate for the conduct of its present
business.

      CEL-SCI has a 17,900 square foot laboratory located at 4820 A-E Seton
Drive, Baltimore, Maryland. The laboratory is leased by CEL-SCI at a cost of
approximately $10,556 per month. The laboratory lease expires in 2009, with an
extension available until 2014.

ITEM 3.   LEGAL PROCEEDINGS

      None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      Not Applicable

ITEM 5.   MARKET FOR REGISTRANT'S  COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
          AND ISSUER PURCHASES OF EQUITY SECURITIES

      As of February 28, 2006 there were approximately 2,550 record holders of
CEL-SCI's common stock. CEL-SCI's common stock is traded on the American Stock
Exchange under the symbol "CVM". Set forth below are the range of high and low
quotations for CEL-SCI's common stock for the periods indicated as reported on
the American Stock Exchange. The market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commissions and may not necessarily
represent actual transactions.

      Quarter Ending           High             Low

        12/31/03              $1.75             $0.91
         3/31/04              $1.45             $0.86
         6/30/04              $1.30             $0.67
         9/30/04              $0.89             $0.52

        12/31/04              $0.67             $0.46
         3/31/05              $1.08             $0.62
         6/30/05              $0.73             $0.48
         9/30/05              $0.60             $0.46

        12/31/05              $0.69             $0.45

     Holders of Common Stock are entitled to receive dividends as may be
declared by the Board of Directors out of legally available funds and, in the
event of liquidation, to share pro rata in any distribution of CEL-SCI's assets


                                       24


after payment of liabilities. The Board of Directors is not obligated to declare
a dividend. CEL-SCI has not paid any dividends on its common stock and CEL-SCI
does not have any current plans to pay any common stock dividends.

      The provisions in CEL-SCI's Articles of Incorporation relating to
CEL-SCI's Preferred Stock would allow CEL-SCI's directors to issue Preferred
Stock with rights to multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to CEL-SCI's Common Stock.
The issuance of Preferred Stock with such rights may make more difficult the
removal of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.

      The market price of CEL-SCI's common stock, as well as the securities of
other biopharmaceutical and biotechnology companies, have historically been
highly volatile, and the market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. Factors such as fluctuations in CEL-SCI's operating
results, announcements of technological innovations or new therapeutic products
by CEL-SCI or its competitors, governmental regulation, developments in patent
or other proprietary rights, public concern as to the safety of products
developed by CEL-SCI or other biotechnology and pharmaceutical companies, and
general market conditions may have a significant effect on the market price of
CEL-SCI's Common Stock.

      During the three months ended September 30, 2005 neither CEL-SCI, any
officer or director of CEL-SCI, nor any principal shareholder purchased any
shares of CEL-SCI's common stock either from CEL-SCI, from third parties in a
private transaction, or as a result of purchases in the open market.

Other Shares Which May Be Issued:

      The following table lists additional shares of CEL-SCI's common stock
which may be issued as of February 28, 2006 as the result of the exercise of
other outstanding options or warrants issued by CEL-SCI:

                                                     Number of          Note
                                                        Shares      Reference

   Shares issuable upon exercise of warrants        4,983,499          A
     held by private investors

   Shares issuable upon exercise of options and    10,433,769          B
     warrants granted to CEL-SCI's officers,
     directors, employees, consultants, and
     third parties

   Shares issuable upon exercise of options           310,000          C
     granted to investor relations consultants

Note A. In August 2003, the Company issued warrants to a private investor. The
warrants permit the holder to purchase 23,758 shares of CEL-SCI's common stock
at a price of $0.77 per share at any time prior to August 17, 2006.


                                       25


       In July and September 2002, CEL-SCI sold Series G convertible notes, plus
Series G warrants, to a group of private investors for $1,300,000. As of June
30, 2003 all of the Series G notes had been converted into 8,390,746 shares of
CEL-SCI's common stock. As of September 30, 2005 the Series G warrants allowed
the holders to purchase up to 450,000 shares of CEL-SCI's common stock at a
price of $0.145 per share at any time prior to July 12, 2009. Every three months
after December 9, 2005, the exercise price of the Series G warrants will be
adjusted to an amount equal to 84% of the average of the 3 lowest daily trading
prices of CEL-SCI's common stock on the American Stock Exchange during the 15
trading days immediately prior to the three month adjustment date, provided that
the adjusted price is lower than the warrant exercise price on that date.

       In January and July 2003, CEL-SCI sold Series H convertible notes, plus
Series H warrants, to a group of private investors for $1,350,000. As of October
31, 2003 all of the Series H notes had been converted into 3,233,229 shares of
CEL-SCI's common stock. As of September 30, 2005 the Series H warrants allowed
the holders to purchase up to 550,000 shares of CEL-SCI's common stock at a
price of $0.25 per share at any time prior to January 7, 2010. Every three
months after September 26, 2005 the exercise price of the Series H warrants will
be adjusted to an amount equal to 84% of the average of the 3 lowest daily
trading prices of CEL-SCI's common stock on the American Stock Exchange during
the 15 trading days immediately prior to the three month adjustment date,
provided that the adjusted price is lower than the warrant exercise price on
that date.

      In May 2003 CEL-SCI sold shares of its common stock plus Series I warrants
to a strategic partner, at prices equal to or above the then current price of
CEL-SCI's common stock. The Series I warrants allow the holder to purchase
1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per share at any
time prior to May 30, 2008.

      In September 2003 CEL-SCI entered into an equity line of credit agreement
with Rubicon Group Ltd. An unknown number of shares of common stock are issuable
under the equity line of credit agreement between CEL-SCI and Rubicon Group,
Ltd. As consideration for extending the equity line of credit, CEL-SCI granted
Rubicon Group warrants to purchase 395,726 shares of common stock at a price of
$0.83 per share at any time prior to September 16, 2008. On July 6, 2004,
Rubicon Group transferred 50% (197,863) of their warrants to another entity. The
terms of the warrants remain the same.

      On December 1, 2003, CEL-SCI sold 2,999,964 shares of its common stock, to
a group of private institutional investors for approximately $2,550,000, or
$0.85 per share. As part of this transaction, the investors in the private
offering received Series J warrants which allow the investors to purchase
991,003 shares of CEL-SCI's common stock at a price of $1.32 per share at any
time prior to December 1, 2006.

      In May 2004, CEL-SCI completed an offering to one institutional investor
of 6,402,439 shares of its common stock at a price of $0.82 per share. In
connection with this financing, Wachovia Capital Markets, LLC, the placement
agent for the offering, received warrants to purchase 76,642 shares of CEL-SCI's
common stock at a price of $1.37 per share. The warrants expire May 4, 2009.



                                       26


      On July 18, 2005, CEL-SCI sold 1,250,000 shares of its common stock and
375,000 warrants to one investor for $500,000. Each warrant entitles the holder
to purchase one share of CEL-SCI's common stock at a price of $0.65 per share at
any time prior to July 18, 2009. The shares of common stock and warrants are
"restricted" securities as defined in Rule 144 of the Securities and Exchange
Commission.

      On October 24, 2005, CEL-SCI entered into an equity line of credit
agreement with Jena Holdings LLC. An unknown number of shares of common stock
are issuable under the equity line of credit agreement between CEL-SCI and Jena
Holdings LLC. As consideration for extending the equity line of credit, CEL-SCI
granted Jena Holdings LLC warrants to purchase 271,370 shares of common stock at
a price of $0.55 per share at any time prior to October 24, 2010.

      On February 9, 2006 CEL-SCI sold 2,500,000 shares of its common stock to a
private investor for $1,000,000 or $0.40 per share. The investor also received
warrants which allow the investor to purchase up to 750,000 shares of CEL-SCI's
common stock at a price of $0.56 per share at any time prior to February 9,
2011. CEL-SCI agreed to file a registration statement for the common shares as
well as the common shares underlying the warrants and use its best efforts to
have the registration statement declared effective no later than June 9, 2006.
In connection with this transaction CEL-SCI agreed to lower the exercise price
of 441,176 warrants that the investor had received as part of a financing
several years ago to $0.56 per share, and to extend the life of those warrants
by one year until December 2007.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series G or H warrants, the warrant exercise price will be lowered
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be. If the warrant exercise price is
adjusted, the number of shares of common stock issuable upon the exercise of the
warrant will be increased by the product of the number of shares of common stock
issuable upon the exercise of the warrant immediately prior to the sale
multiplied by the percentage by which the warrant exercise price is reduced.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the market price of CEL-SCI's
common stock, the exercise price of the Series G or H warrants will be lowered
by a percentage equal to the price at which the shares were sold or the lowest
price at which the securities are convertible, as the case may be, divided by
the then prevailing market price of CEL-SCI's common stock. If the warrant
exercise price is adjusted, the number of shares of common stock issuable upon
the exercise of the warrant will be increased by the product of the number of
shares of common stock issuable upon the exercise of the warrant immediately
prior to the sale multiplied by the percentage determined by dividing the price
at which the shares were sold by the market price of CEL-SCI's common stock on
the date of sale.

      However, neither the exercise price of the Series G or H warrants nor the
shares issuable upon the exercise of the Series G or H warrants will be adjusted
as the result of shares issued in connection with a Permitted Financing. A
Permitted Financing involves shares of common stock issued or sold:

o     in connection with a merger or acquisition or a strategic partnership;


                                       27


o    upon the  exercise of options or the  issuance of common stock to CEL-SCI's
     employees, officers, directors,  consultants and vendors in accordance with
     CEL-SCI's equity incentive policies;

o    pursuant to the conversion or exercise of securities which were outstanding
     prior to July 12, 2002 in the case of the Series G warrants  and January 7,
     2003 in the case of the Series H warrants;

o     to key officers of CEL-SCI in lieu of their respective salaries.

Note B. The options are exercisable at prices ranging from $0.16 to $11.00 per
share. CEL-SCI may also grant options to purchase additional shares under its
Incentive Stock Option and Non-Qualified Stock Option Plans.

Note C. CEL-SCI has granted options for the purchase of 310,000 shares of common
stock to certain investor relations consultants in consideration for services
provided to CEL-SCI. The options are exercisable at prices ranging between $1.00
and $2.00 per share and expire between June 1, 2006 and October 14, 2010.

       The shares referred to in Notes B and C are being, or will be, offered
for sale by means of registration statements which have been filed with the
Securities and Exchange Commission.

ITEM 6.  SELECTED FINANCIAL DATA

      The following selected financial data should be read in conjunction with
the more detailed financial statements, related notes and other financial
information included herein. Certain amounts reported in previous years have
been reclassified to conform to the classifications being used as of and for the
year ended September 30, 2005.

                                                                                 
                                                      For the years ended September 30,
                                     ------------------------------------------------------------------
                                         2005        2004 (1)      2003 (1)      2002 (1)      2001 (1)
                                     ------------------------------------------------------------------

Grant revenue and other              $  269,925    $  325,479    $  318,304    $  384,939    $  293,871
Other expenses:
  Research and development            2,229,729     1,941,630     1,915,501     4,699,909     7,762,213
  Depreciation and amortization         190,420       198,269       199,117       226,514       209,121
  General and administrative          1,930,543     2,310,279     2,287,019     1,754,332     3,432,437
Gain (loss) on derivative
 instruments                            363,028     1,174,660    (2,319,005)    5,053,156        55,739
Other income                            625,472             -             -             -             -
Other costs of financing                      -             -      (270,664)            -      (235,563)
Interest income                          52,660        51,817        52,502        85,322       376,221
Interest expense                              -       (53,855)   (1,365,675)   (4,517,716)   (7,326,556)
                                  -------------  -------------  -------------  -----------   -----------
Net loss                          $  (3,039,607) $  (2,952,077) $(7,986,175)  $(5,675,054) $(18,240,059)
                                  =============  =============  ============= ============ =============
Net loss per common share
    Basic                         $       (0.04) $       (0.04) $     (0.16)  $     (0.20) $     (0.84)
    Diluted                       $       (0.05) $       (0.06) $     (0.19)  $     (0.24) $     (0.84)
Weighted average common
  shares outstanding
    Basic                            72,703,395     67,273,133   50,961,457     28,746,341  21,824,273
    Diluted                          73,581,925     68,924,099   51,127,439     31,788,281  21,824,273



 (1) The results for fiscal years 2001 through 2004 were restated (see Note 2 to
the Consolidated Financial Statements).


                                       28


Balance Sheet Data:

                                                                                 
                                                      For the years ended September 30,
                                     ------------------------------------------------------------------
                                         2005        2004 (1)      2003 (1)      2002 (1)      2001 (1)
                                     ------------------------------------------------------------------

Working capital (deficit)            $ 2,238,297   $ 4,592,332   $  205,815   $(1,366,925)   $2,758,122
Total assets                           3,092,352     5,513,810    2,915,206     3,771,258     4,508,920
Convertible debt (2)                           -             -      194,109     1,673,504             -
Note payable - Covance (2)                     -             -      184,330             -             -
Note payable - Cambrex (2)                     -             -      664,910     1,135,017             -
Series E preferred stock (2)                   -             -            -     2,001,591     6,692,922
Derivative instruments -
 current (2)                               1,280             -      319,295             4         4,559
Derivative instruments -
 noncurrent (2)                          811,180     1,175,488    2,517,131       314,844       556,348
Total liabilities                        987,313     1,391,468    4,694,385     6,115,876     7,806,174
Stockholders' equity (deficit)         2,105,039     4,122,342   (1,779,179)   (2,344,618)   (3,297,254)




(1) The results for fiscal years 2001 through 2004 were restated (see Note 2 to
the Consolidated Financial Statements).

(2) Included in total liabilities

No dividends have been declared on CEL-SCI's common stock.
      CEL-SCI's net losses for each fiscal quarter during the two years ended
September 30, 2005 were:

                                            Net income  (loss) per share
                    Net income                    ----------------------------
Quarter               (loss)                     Basic        Diluted
- -------            ------------                    -----        -------
12/31/2003       $ (1,381,433) (1)            $ (0.02) (1)     $(0.02) (1)
3/31/2004          (1,404,976) (1)              (0.02) (1)      (0.02) (1)
6/30/2004             353,647  (1)               0.01  (1)      (0.01) (1)
9/30/2004            (519,315) (1)              (0.01) (1)      (0.01) (1)

12/31/2004       $ (1,229,443) (2)            $ (0.02) (2)      (0.02) (2)
3/31/2005          (1,149,440) (2)              (0.02) (2)      (0.02) (2)
6/30/2005            (653,786) (2)              (0.01) (2)      (0.01) (2)
9/30/2005              (6,938)                      -               -

(1) The results for fiscal years 2001 through 2004 were restated (see Note 2 to
the Consolidated Financial Statements).

(2)The results for the quarterly periods in fiscal year 2005 have been restated.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this report. See
"Risk Factors". As discussed in Note 2 to the consolidated financial statements,
the Company's financial statements have been restated. The accompanying
management's discussion and analysis gives effect to that restatement.


                                       29

OVERVIEW

      CEL-SCI's most advanced product, Multikine, manufactured using the
Company's proprietary cell culture technologies, is being developed for the
treatment of cancer. Multikine is designed to target the tumor micro-metastases
that are mostly responsible for treatment failure. The basic idea of Multikine
is to make current cancer treatments more successful. Phase II data indicated
that Multikine treatment resulted in a substantial increase in the survival of
patients. The lead indication is advanced primary head & neck cancer (500,000
new cases per annum). Since Multikine is not tumor specific, it may also be
applicable in many other solid tumors.

      CEL-SCI also owns a pre-clinical technology called L.E.A.P.S. (Ligand
Epitope Antigen Presentation System). The lead product derived from this
technology is the CEL-1000 peptide which has shown protection in animals against
herpes, malaria and cancer. With the help of government grants, NIAID and US
Army and US Navy collaborations, CEL-1000 is now being tested against avian flu,
viral encephalitis, West Nile Virus, SARS, Vaccinia, Smallpox, herpes, malaria
and other agents. If the bio-terrorism tests are successful, CEL-SCI is likely
to push CEL-1000 for potential bio-terrorism disease indications to gain
accelerated approval.

      Since inception, CEL-SCI has financed its operations through the issuance
of equity securities, convertible notes, loans and certain research grants.
CEL-SCI's expenses will likely exceed its revenues as it continues the
development of Multikine and brings other drug candidates into clinical trials.
Until such time as CEL-SCI becomes profitable, any or all of these financing
vehicles or others may be utilized to assist CEL-SCI's capital requirements.

Results of Operations

Fiscal 2005

      "Grant revenues and other" decreased by $55,554 during the year ended
September 30, 2005, compared to 2004. This was due to the winding down of the
work funded by the grants in 2005. CEL-SCI is continuing to apply for grants to
support its work.

      During the year ended September 30, 2005, research and development
expenses increased by $288,099. The increase in research and development expense
was due largely to an increase in work related to CEL-SCI's Phase III
application for Multikine.

      During the year ended September 30, 2005, general and administrative
expenses decreased by $379,736. The decrease was mostly due to a decrease in
public relations and corporate presentation expenses, filing fees, travel
expenses, accounting fees and legal fees, as CEL-SCI's efforts were primarily
focused on the submission of the Phase III clinical trial application for
Multikine.

      The Company received $625,472 in settlement of a lawsuit in which the
Company was not a party. The litigation involved a shareholder and three former
investors in CEL-SCI. The lawsuit sought to recover short-swing profits
allegedly obtained by the defendants, their investment advisor and the
investment advisor's principal acting together as a group in trading CEL-SCI
securities.


                                       30


      Interest income during the year ended September 30, 2005 increased by $843
as a result of higher balances in interest bearing accounts during the year.
Interest expense decreased to zero as a result of the conversion of the
remaining convertible debt in October 2003. Interest expense for the year ended
September 30, 2004 is primarily for interest related to the convertible debt
payable to Cambrex Biosciences, Inc. and Covance AG.

      Gain on derivative instruments for the year ended September 30, 2005
decreased by $811,632 due to a decrease in the number of derivative instruments
outstanding during the year as a result of expiration of certain agreements or
reclassifications of certain instruments to equity.

Fiscal 2004

      Grant revenue and other during fiscal year 2004 remained at approximately
the same level as fiscal year 2003 as work continued on the four grants received
during the fiscal year 2003. Interest income also remained approximately at the
same level.

      Research and development expense increased by approximately $26,000 as the
Company's research and development costs on L.E.A.P.S. increased during fiscal
2004.

      General and administrative expenses increased by approximately $23,000
this year. The Company's cost reduction program continues. This reduction was
substantially offset by an increase in audit and audit-related fees and an
increase in filing and registration fees.

      CEL-SCI recognized a gain of $1,174,660 on derivative instruments during
fiscal year 2004 compared to a loss of $2,319,005 for the year ended September
30, 2003. This was due to primarily to a decrease in the trading price of
CEL-SCI's common stock which is a significant component of fair value of the
Company's derivative instruments. Also, during fiscal year 2004, several
derivative instruments met the criteria for equity classification after which
they were no longer marked to market.

      Other costs of financing decreased by $270,664 during fiscal year 2004
since the Company did not enter into an equity line of credit financing
arrangement during the year.

Research and Development Expenses

      During the five years ended September 30, 2005 CEL-SCI's research and
development efforts involved Multikine, L.E.A.P.S. and an AIDS vaccine. The
table below shows the research and development expenses associated with each
project during this five-year period.

                        2005         2004       2003        2002         2001
                        ----         ----       ----        ----         ----
MULTIKINE          $1,911,615   $1,539,454  $1,653,904  $4,405,678   $7,365,305
L.E.A.P.S.            318,114      402,176     261,597     244,769      280,766
AIDS Vaccine               --           --          --      43,462       94,642
Other                      --           --          --       6,000       21,500
                   ----------   ----------  ----------  ----------   ----------

       TOTAL       $2,229,729   $1,941,630  $1,915,501  $4,699,909   $7,762,213
                   ==========   ==========  ==========  ==========   ==========

                                       31


      CEL-SCI believes that it has compiled sufficient data and clinical
information to justify a Phase III clinical trial which would be designed to
prove the clinical benefit from Multikine as an addition to established
anti-cancer therapies. In 2005, CEL-SCI submitted a protocol to the FDA and the
Canadian regulatory agency, the Biologics and Genetic Therapies Directorate for
Phase III clinical trials. CEL-SCI is unable to estimate the future costs of
research and clinical trials involving Multikine since CEL-SCI has not yet
finalized the protocol with the FDA. Until the scope of these trials is known,
CEL-SCI will not be able to price any future trials.

      As explained in Item 1 of this report, as of February 28, 2006, CEL-SCI
was involved in a number of pre-clinical studies with respect to its L.E.A.P.S.
technology. As with Multikine, CEL-SCI does not know what obstacles it will
encounter in future pre-clinical and clinical studies involving its L.E.A.P.S.
technology. Consequently, CEL-SCI cannot predict with any certainty the funds
required for future research and clinical trials and the timing of future
research and development projects.

      Clinical and other studies necessary to obtain regulatory approval of a
new drug involve significant costs and require several years to complete. The
extent of CEL-SCI's clinical trials and research programs are primarily based
upon the amount of capital available to CEL-SCI and the extent to which CEL-SCI
has received regulatory approvals for clinical trials. The inability of CEL-SCI
to conduct clinical trials or research, whether due to a lack of capital or
regulatory approval, will prevent CEL-SCI from completing the studies and
research required to obtain regulatory approval for any products which CEL-SCI
is developing. Without regulatory approval, CEL-SCI will be unable to sell any
of its products.

      Since all of CEL-SCI's projects are under development, CEL-SCI cannot
predict when it will be able to generate any revenue from the sale of any of its
products.

      CEL-SCI discontinued its research efforts relating to the AIDS vaccine due
to a lack of government funding in 2000.

Liquidity and Capital Resources

      CEL-SCI has had only limited revenues from operations since its inception
in March l983. CEL-SCI has relied primarily upon proceeds realized from the
public and private sale of its common and preferred stock and convertible notes
to meet its funding requirements. Funds raised by CEL-SCI 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, patent applications, the repayment of
debt, the continuation of Company-sponsored research and development,
administrative costs and construction of laboratory facilities. Inasmuch as
CEL-SCI does not anticipate realizing revenues until such time as it enters into
licensing arrangements regarding the technology and know-how licensed to it
(which could take a number of years), CEL-SCI is mostly dependent upon the
proceeds from the sale of its securities to meet all of its liquidity and
capital resource requirements.

      In fiscal 2003, CEL-SCI reduced its discretionary expenditures. In fiscal
2004 and 2005 expenditures remained at the 2003 levels. If necessary, CEL-SCI
may reduce discretionary expenditures in fiscal 2006; however such reductions
would further delay the development of CEL-SCI's products.


                                       32


      Multikine has an FDA approved shelf life of two years. Consequently,
Multikine can only be used for two years after it is manufactured. Since the
last batch of Multikine was manufactured over two years ago, CEL-SCI does not
currently have any Multikine available for future clinical studies. As a result,
CEL-SCI will be required to manufacture additional quantities of Multikine for
future research and clinical studies. CEL-SCI anticipates that the Multikine
needed for its planned Phase III clinical trial will be manufactured in several
batches over a two to three year period at a cost of between $4 to $5 million.
CEL-SCI's last batch of Multikine was used during the fall of 2002.

Equity Lines of Credit

      In order to provide a possible source of funding for CEL-SCI's current
activities and for the development of its current and planned products, CEL-SCI
entered into an equity line of credit agreement with Rubicon Group Ltd. in
December 2003 and ending December 2005.

      Under the equity line of credit agreement, Rubicon Group has agreed to
provide CEL-SCI with up to $10,000,000 of funding during a two year period
beginning on December 29, 2003. During this period, CEL-SCI may request a
drawdown under the equity line of credit by selling shares of its common stock
to Rubicon Group, and Rubicon Group will be obligated to purchase the shares.
The minimum amount CEL-SCI can draw down at any one time is $100,000, and the
maximum amount CEL-SCI can draw down at any one time will be determined at the
time of the drawdown request using a formula contained in the equity line of
credit agreement. CEL-SCI may request a drawdown once every 22 trading days,
although CEL-SCI is under no obligation to request any drawdowns under the
equity line of credit.

      During the 22 trading days following a drawdown request, CEL-SCI will
calculate the number of shares it will sell to Rubicon Group and the purchase
price per share. The purchase price per share of common stock will be based on
the daily volume weighted average price of CEL-SCI's common stock during each of
the 22 trading days immediately following the drawdown date, less a discount of
11%.

      As of October 31, 2005 CEL-SCI had received net proceeds of $724,875 from
the sale of shares under the equity line of credit with the Rubicon Group.

      In October 2005 CEL-SCI entered into an equity line of credit agreement
with Jena Holdings LLC Ltd.

     Under the equity line of credit agreement,  Jena Holdings LLC has agreed to
provide  CEL-SCI  with up to  $5,000,000  of funding  during a  two-year  period
beginning  on the date the shares to be sold under the line of credit  have been
registered  with the  Securities and Exchange  Commission.  During this two-year
period,  CEL-SCI  may  request a  drawdown  under the  equity  line of credit by
selling  shares of its common stock to Jena  Holdings LLC, and Jena Holdings LLC
will be obligated to purchase the shares.  The minimum  amount  CEL-SCI can draw
down at any one time is $100,000,  and the maximum  amount CEL-SCI can draw down
at any one time will be determined  at the time of the drawdown  request using a


                                       33


formula contained in the equity line of credit agreement.  CEL-SCI may request a
drawdown once every 22 trading days,  although CEL-SCI is under no obligation to
request any draw-downs under the equity line of credit.

      During the 22 trading days following a drawdown request, CEL-SCI will
calculate the number of shares it will sell to Jena Holdings LLC and the
purchase price per share. The purchase price per share of common stock will be
based on the daily volume weighted average price of CEL-SCI's common stock
during each of the 22 trading days immediately following the drawdown date, less
a discount of 11%.

      As of February 28, 2006 the shares to be sold to Jena Holdings had not
been registered with the Securities and Exchange Commission.

Future Capital Requirements

      CEL-SCI plans to use its existing financial resources, the proceeds from
the sale of its common stock, and proceeds from the sale of common stock under
the equity line of credit agreement to fund its capital requirements during the
year ending September 30, 2006.

      Other than funding operating losses, funding its research and development
program, and paying its liabilities, CEL-SCI does not have any material capital
commitments. Material future liabilities as of September 30, 2005 are as
follows:

Contractual Obligations:                     Years  Ending September 30,
                                         -----------------------------------
                          Total             2006          2007         2008
                          -----             ----          ----         ----

Operating Leases      $   359,921        $156,067      $132,719       71,136
Employment Contracts    1,247,203         702,703       363,000      181,500
                      -----------       ---------     ---------    ---------
                       $1,607,124        $858,770      $495,719     $252,636
                       ==========        ========      ========     ========

      It should be noted that substantial additional funds will be needed for
more extensive clinical trials which will be necessary before CEL-SCI will be
able to apply to the FDA for approval to sell any products which may be
developed on a commercial basis throughout the United States. In the absence of
revenues, CEL-SCI will be required to raise additional funds through the sale of
securities, debt financing or other arrangements in order to continue with its
research efforts. However, there can be no assurance that such financing will be
available or be available on favorable terms. It is the opinion of management
that sufficient funds will be available from external financing and additional
capital and/or expenditure reduction in order to meet CEL-SCI's liabilities and
commitments as they come due during fiscal year 2006. Ultimately, CEL-SCI must
complete the development of its products, obtain appropriate regulatory
approvals and obtain sufficient revenues to support its cost structure.

      CEL-SCI's cash flow and earnings are subject to fluctuations due to
changes in interest rates on its certificates of deposit, and, to an immaterial
extent, foreign currency exchange rates.


                                       34







Critical Accounting Policies

      CEL-SCI's significant accounting policies are more fully described in Note
1 to the consolidated financial statements. However, certain accounting policies
are particularly important to the portrayal of financial position and results of
operations and require the application of significant judgments by management.
As a result, the consolidated financial statements are subject to an inherent
degree of uncertainty. In applying those policies, management uses its judgment
to determine the appropriate assumptions to be used in the determination of
certain estimates. These estimates are based on CEL-SCI's historical experience,
terms of existing contracts, observance of trends in the industry and
information available from outside sources, as appropriate. CEL-SCI's
significant accounting policies include:

      Patents - Patent expenditures are capitalized and amortized using the
straight-line method over 17 years. In the event changes in technology or other
circumstances impair the value or life of the patent, appropriate adjustment in
the asset value and period of amortization is made. An impairment loss is
recognized when estimated future undiscounted cash flows expected to result from
the use of the asset, and from disposition, is less than the carrying value of
the asset. The amount of the impairment loss is the difference between the
estimated fair value of the asset and its carrying value.

      Stock Options and Warrants - In October 1996, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation (SFAS No. 123). This statement
encourages but does not require companies to account for employee stock
compensation awards based on their estimated fair value at the grant date with
the resulting cost charged to operations. CEL-SCI has elected to continue to
account for its employee stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations. In December 2002, the
FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transaction
and Disclosure" which amends SFAS No. 123. SFAS No. 148 provided alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation and requires more prominent and
more frequent disclosures in the financial statements of the effects of
stock-based compensation. The Company has elected to continue to account for its
employee stock-based compensation using the intrinsic value method.

      Asset Valuations and Review for Potential Impairments - CEL-SCI reviews
its fixed assets every fiscal quarter. This review requires that CEL-SCI make
assumptions regarding the value of these assets and the changes in circumstances
that would affect the carrying value of these assets. If such analysis indicates
that a possible impairment may exist, CEL-SCI is then required to estimate the
fair value of the asset and, as deemed appropriate, expense all or a portion of
the asset. The determination of fair value includes numerous uncertainties, such
as the impact of competition on future value. CEL-SCI believes that it has made
reasonable estimates and judgments in determining whether its long-lived assets
have been impaired; however, if there is a material change in the assumptions
used in its determination of fair values or if there is a material change in
economic conditions or circumstances influencing fair value, CEL-SCI could be
required to recognize certain impairment charges in the future. As a result of
the reviews, no changes in asset values were required.


                                       35


      Prepaid Expenses and Laboratory Supplies--The majority of prepaid expenses
consist of bulk purchases of laboratory supplies used on a daily basis in the
lab and items that will be used for future production. The items in prepaid
expenses are expensed when used in production or daily activity as Research and
Development expenses. These items are disposables and consumables and can be
used for both the manufacturing of Multikine for clinical studies and in the
laboratory for quality control and bioassay use. They can be used in training,
testing and daily laboratory activities. Other prepaid expenses are payments for
services over a long period and are expensed over the time period for which the
service is rendered.

      Derivative Instruments--The Company enters into financing arrangements
that consist of freestanding derivative instruments or are hybrid instruments
that contain embedded derivative features. The Company accounts for these
arrangement in accordance with Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities", ("SFAS No.
133") and Emerging Issues Task Force Issue No. 00-19, "Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
Stock", ("EITF 00-19"), as well as related interpretations of these standards.
In accordance with accounting principles generally accepted in the United States
("GAAP"), derivative instruments and hybrid instruments are recognized as either
assets or liabilities in the statement of financial position and are measured at
fair value with gains or losses recognized in earnings or other comprehensive
income depending on the nature of the derivative or hybrid instruments. Embedded
derivatives that are not clearly and closely related to the host contract are
bifurcated and recognized at fair value with changes in fair value recognized as
either a gain or loss in earnings if they can be reliably measured. When the
fair value of embedded derivative features can not be reliably measured, the
Company measures and reports the entire hybrid instrument at fair value with
changes in fair value recognized as either a gain or loss in earnings. The
Company determines the fair value of derivative instruments and hybrid
instruments based on available market data using appropriate valuation models,
giving consideration to all of the rights and obligations of each instrument and
precluding the use of "blockage" discounts or premiums in determining the fair
value of a large block of financial instruments. Fair value under these
conditions does not necessarily represent fair value determined using valuation
standards that give consideration to blockage discounts and other factors that
may be considered by market participants in establishing fair value.

Quantitative and Qualitative Disclosure About Market Risks

     Market risk is the potential change in an instrument's value caused by, for
example,  fluctuations in interest and currency  exchange rates.  CEL-SCI enters
into  financing  arrangements  that  are  or  include  freestanding   derivative
instruments  or that are or include  hybrid  instruments  that contain  embedded
derivative  features.  CEL-SCI does not enter into  derivative  instruments  for
trading  purposes.   Additional   information  is  presented  in  the  Notes  to
Consolidated  Financial  Statements.  The fair  value of  these  instruments  is
affected  primarily by volatility of the trading prices of the CEL-SCI's  common
stock. For the years ended September 30, 2005, 2004 and 2003, CEL-SCI recognized
a  gain  of  $363,028,  a  gain  of  $1,174,660,   and  a  loss  of  $2,319,005,
respectively,  resulting  from changes in fair value of derivative  instruments.
CEL-SCI has no exposure to risks  associated with foreign  exchange rate changes
because none of the operations of CEL-SCI are transacted in a foreign  currency.
(The  interest rate risk on  investments  is  considered  immaterial  due to the
dollar value of  investments as of September 30, 2004 and June 30, 2005.)

                                       36

Recent Accounting Pronouncements

      In November 2004 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory Costs,
an amendment of Accounting Research Bulletin (ARB) 43, Chapter 4, Inventory
Pricing". This statement amends ARB 43, Chapter 4, to clarify accounting for
abnormal amounts of idle facility expense, freight, handling costs and wasted
material. SFAS No. 151 requires that those items be recognized as current-period
charges in all circumstances. SFAS No. 151 is effective for fiscal years
beginning after June 15, 2005. CEL-SCI does not believe that the adoption of
SFAS No. 151 will have a material effect on its financial position, results of
operations or cash flows.

      In December 2004 the FASB issued SFAS No. 123R, "Share-Based Payment".
SFAS No. 123R requires companies to recognize compensation expense in an amount
equal to the fair value of the share-based payment (stock options and restricted
stock) issued to employees. 123R applies to all transactions involving issuance
of equity by a Company in exchange for goods and services, including
transactions with employees. SFAS No. 123R is effective for the first interim
period in the fiscal year beginning after June 15, 2005. As of September 30,
2005, the Company has not determined the impact of adopting SFAS No. 123R.

      On December 16, 2004, the FASB issued SFAS No. 153, "Exchange of
Non-monetary Assets", an amendment of Accounting Principles Board ("APB")
Opinion No. 29. Statement No. 153 replaces the exception from fair value
measurement in APB No. 29, with a general exception from fair value measurement
for exchanges of non-monetary assets that do not have commercial substance. The
Statement is to be applied prospectively and is effective for non-monetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. CEL-SCI
does not believe that SFAS No. 153 will have a material impact on its results of
operations or cash flows.

      In March 2005, the FASB issued FIN No. 47, "Accounting for Conditional
Asset Retirement Obligations - an Interpretation of FASB Statement No. 143". The
interpretation clarifies terms used in FASB Statement No. 143 and is effective
no later than the end of fiscals ending after December 15, 2005. CEL-SCI does
not believe that FIN No. 47 will have a material impact on its results of
operations or cash flows.

      In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections--A replacement of APB Opinion No. 20 and FASB Statement No. 3". The
statement requires that retrospective application of a change in accounting
principle be limited to the direct effects of the change and is part of a
broader effort by the FASB to improve the comparability of cross-border
financial reporting by working with the International Accounting Standards Board
(IASB) toward development of a single set of high-quality accounting standards.

     In February 2006, the FASB issued SFAS No. 155, "Hybrid  Instruments".  The
statement  amends SFAS No. 133 and SFAS No. 140,  "Accounting  for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities". The statement
also resolves  issues  addressed in Statement 133  Implementation  Issue No. D1,
"Application of Statement 133 to Beneficial  Interests in Securitized  Financial
Assets."  The  statement:  a) permits  fair value  remeasurement  for any hybrid
financial  instrument that contains an embedded  derivative that otherwise would
require bifurcation,  b) clarifies which interest-only strips and principal-only
strips are not subject to the  requirements  of SFAS No. 133, c)  establishes  a
requirement to evaluate  interests in securitized  financial  assets to identify


                                       37


interests  that  are  freestanding  derivatives  or that  are  hybrid  financial
instruments  that  contain an  embedded  derivative  requiring  bifurcation,  d)
clarifies that  concentrations  of credit risk in the form of subordination  are
not  embedded  derivatives,  and  e)  amends  Statement  140  to  eliminate  the
prohibition  on a qualifying  special  purpose  entity from holding a derivative
financial  instrument that pertains to a beneficial  interest other than another
derivative financial instrument. CEL-SCI does not believe that SFAS No. 155 will
have a material impact on its results of operations or cash flows.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See the Financial Statements included with this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

      Deloitte & Touche LLP ("Deloitte") notified the Company on February 9,
2005 that it would resign as the Company's independent registered public
accounting firm upon completion of its review of the Company's interim financial
statements for the quarterly period ended December 31, 2004. On February 14,
2005, Deloitte completed its review and its resignation became effective.

      Deloitte`s reports on the Company's financial statements for the two most
recent fiscal years did not contain an adverse opinion, or disclaimer of
opinion, but included an explanatory paragraph referring to the restatement of
the financial statements.

      During the Company's two most recent fiscal years and the subsequent
interim period through February 14, 2005 there were no disagreements with
Deloitte on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement(s), if
not resolved to the satisfaction of Deloitte, would have caused it to make
reference to the subject matter of such disagreements in connection with its
reports.

      On May 3, 2005 the Company retained BDO Seidman, LLP to act as the
Company's independent certified public accountants.

      The change in the Company's auditors was recommended and approved by the
Company's board of directors and audit committee.

      During the two most recent fiscal years and subsequent interim period
ending May 3, 2005 the Company did not consult with BDO Seidman, LLP regarding
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, or any matter that was the subject of a
disagreement or a reportable event as defined in the regulations of the
Securities and Exchange Commission.

                                       38




ITEM 9A.  CONTROLS AND PROCEDURES

      Geert Kersten, CEL-SCI's Chief Executive and Financial Officer, has
evaluated the effectiveness of CEL-SCI's disclosure controls and procedures as
of September 30, 2005 and in his opinion CEL-SCI's disclosure controls and
procedures ensure that material information relating to CEL-SCI, including
CEL-SCI's consolidated subsidiary, is made known to him by others within those
entities, particularly during the period in which this report is being prepared,
so as to allow timely decisions regarding required disclosure. To the knowledge
of Mr. Kersten there have been no significant changes in CEL-SCI's internal
controls or in other factors that could significantly affect CEL-SCI's internal
controls subsequent to the date of evaluation, and as a result, no corrective
actions with regard to significant deficiencies or material weakness in
CEL-SCI's internal controls were required with the exception of accounting for
certain derivatives under FAS 133 and EITF 00-19. Subsequent to September 30,
2005, CEL-SCI adopted additional accounting policies and internal controls to
address the issues raised by the restatement of previously issued financial
statements for the years ended September 30, 2004 and 2003.

ITEM 9B.  OTHER INFORMATION

      Not applicable.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors

Name                    Age   Position

Maximilian de Clara       75   Director and President
Geert R. Kersten, Esq.    46   Director, Chief Executive Officer and Treasurer
Patricia B. Prichep       53   Senior Vice President of Operations and Secretary
Dr. Eyal Talor            49   Senior Vice President of Research and
                                Manufacturing
Dr. Daniel H. Zimmerman   64   Senior Vice President of Research, Cellular
                                Immunology
John Cipriano             63   Senior Vice President of Regulatory Affairs
Alexander G. Esterhazy    60   Director
Dr. C. Richard Kinsolving 69   Director
Dr. Peter R. Young        60   Director

      The directors of CEL-SCI serve in such capacity until the next annual
meeting of CEL-SCI's shareholders and until their successors have been duly
elected and qualified. The officers of CEL-SCI serve at the discretion of
CEL-SCI's directors.

      Mr. Maximilian de Clara, by virtue of his position as an officer and
director of CEL-SCI, may be deemed to be the "parent" and "founder" of CEL-SCI
as those terms are defined under applicable rules and regulations of the SEC.

      The principal occupations of CEL-SCI's officers and directors, during the
past several years, are as follows:


                                       39


      Maximilian de Clara. Mr. de Clara has been a Director of CEL-SCI since its
inception in March l983, and has been President of CEL-SCI since July l983.
Prior to his affiliation with CEL-SCI, and since at least l978, Mr. de Clara was
involved in the management of his personal investments and personally funding
research in the fields of biotechnology and biomedicine. Mr. de Clara attended
the medical school of the University of Munich from l949 to l955, but left
before he received a medical degree. During the summers of l954 and l955, he
worked as a research assistant at the University of Istanbul in the field of
cancer research. For his efforts and dedication to research and development in
the fight against cancer and AIDS, Mr. de Clara was awarded the "Pour le Merit"
honorary medal of the Austrian Military Order "Merito Navale" as well as the
honor cross of the Austrian Albert Schweitzer Society.

     Geert R. Kersten, Esq. Mr. Kersten was Director of Corporate and Investment
Relations  for CEL-SCI  between  February  1987 and October  1987. In October of
1987, he was appointed  Vice  President of  Operations.  In December  1988,  Mr.
Kersten was appointed Director of the Company. Mr. Kersten also became CEL-SCI's
Treasurer  in 1989.  In May 1992,  Mr.  Kersten was  appointed  Chief  Operating
Officer and in February  1995,  Mr. Kersten  became  CEL-SCI's  Chief  Executive
Officer.  In previous  years,  Mr.  Kersten  worked as a financial  analyst with
Source  Capital,  Ltd., an investment  advising  firm in McLean,  Virginia.  Mr.
Kersten is a stepson of Maximilian de Clara, who is the President and a Director
of CEL-SCI.  Mr. Kersten  attended George  Washington  University in Washington,
D.C.  where he earned a B.A.  in  Accounting  and an  M.B.A.  with  emphasis  on
International  Finance.  He also  attended law school at American  University in
Washington, D.C. where he received a Juris Doctor degree.

     Patricia  B.  Prichep  has been the  Company's  Senior  Vice  President  of
Operations  since March 1994.  Between December 1992 and March 1994, Ms. Prichep
was the Company's Director of Operations. Ms. Prichep became CEL-SCI's Corporate
Secretary  in May 2000.  From June 1990 to December  1992,  Ms.  Prichep was the
Manager of Quality  and  Productivity  for the NASD's  Management,  Systems  and
Support  Department.  Between 1982 and 1990,  Ms. Prichep was Vice President and
Operations Manager for Source Capital, Ltd.

      Eyal Talor, Ph.D. has been CEL-SCI's Senior Vice President of Research and
Manufacturing since March 1994. From October 1993 until March 1994, Dr. Talor
was Director of Research, Manufacturing and Quality Control, as well as the
Director of the Clinical Laboratory, for Chesapeake Biological Laboratories,
Inc. From 1991 to 1993, Dr. Talor was a scientist with SRA Technologies, Inc.,
as well as the director of SRA's Flow Cytometry Laboratory (1991-1993) and
Clinical Laboratory (1992-1993). During 1992 and 1993, Dr. Talor was also the
Regulatory Affairs and Safety Officer For SRA. Since 1987, Dr. Talor has held
various positions with the Johns Hopkins University, including course
coordinator for the School of Continuing Studies (1989-Present), research
associate and lecturer in the Department of Immunology and Infectious Diseases
(1987-1991), and associate professor (1991-Present).

      Daniel H. Zimmerman, Ph.D. has been CEL-SCI's Senior Vice President of
Cellular Immunology since January 1996. Dr. Zimmerman founded CELL-MED, Inc. and
was its president from 1987-1995. From 1973 to 1987 Dr. Zimmerman served in
various positions at Electronucleonics, Inc. including Scientist, Senior
Scientist, Technical Director and Program Manager. From 1969-1973 Dr. Zimmerman
was a Senior Staff Fellow at NIH.


                                       40


      John Cipriano, has been CEL-SCI's Senior Vice President of Regulatory
Affairs since March 2004. Mr. Cipriano brings to CEL-SCI over 30 years of
experience in both biotech and pharmaceutical companies. In addition, he held
positions at the United States Food and Drug Administration (FDA) as Deputy
Director, Division of Biologics Investigational New Drugs, Office of Biologics
Research and Review and was the Deputy Director, IND Branch, Division of
Biologics Evaluation, Office of Biologics. Mr. Cipriano completed his B.S. in
Pharmacy from the Massachusetts College of Pharmacy in Boston, Massachusetts and
his M.S. in Pharmaceutical Chemistry from Purdue University in West Lafayette,
Indiana.

      Alexander G. Esterhazy has been an independent financial advisor since
November 1997. Between July 1991 and October 1997 Mr. Esterhazy was a senior
partner of Corpofina S.A. Geneva, a firm engaged in mergers, acquisitions and
portfolio management. Between January 1988 and July 1991 Mr. Esterhazy was a
managing director of DG Bank in Switzerland. During this period Mr. Esterhazy
was in charge of the Geneva, Switzerland branch of the DG Bank, founded and
served as vice president of DG Finance (Paris) and was the President and Chief
Executive officer of DG-Bourse, a securities brokerage firm.

      C. Richard Kinsolving, Ph.D. has been a Director of CEL-SCI since April
2001. Since February 1999 Dr. Kinsolving has been the Chief Executive Officer of
BioPharmacon, a pharmaceutical development company. Between December 1992 and
February 1999 Dr. Kinsolving was the President of Immuno-Rx, Inc., a company
engaged in immuno-pharmaceutical development. Between December 1991 and
September 1995 Dr. Kinsolving was President of Bestechnology, Inc. a nonmedical
research and development company producing bacterial preparations for industrial
use. Dr. Kinsolving received his Ph.D. in Pharmacology from Emory University
(1970), his Masters degree in Physiology/Chemistry from Vanderbilt University
(1962), and his Bachelor's degree in Chemistry from Tennessee Tech. University
(1957).

      Peter R. Young, Ph.D. has been a Director of CEL-SCI since August 2002.
Dr. Young has been a senior executive within the pharmaceutical industry in the
United States and Canada for most of his career. Over the last 20 years he has
primarily held positions of Chief Executive Officer or Chief Financial Officer
and has extensive experience with acquisitions and equity financings. Since
November 2001 Dr. Young has been the President of Agnus Dei, LLC, which acts as
a partner in an organization managing immune system clinics which treat patients
with diseases such as cancer, multiple sclerosis and hepatitis. Since January
2003 Dr. Young has been the President and Chief Executive Officer of SRL
Technology, Inc., a company involved in the development of pharmaceutical (drug)
delivery systems. Between 1998 and 2001 Dr. Young was the Chief Financial
Officer of Adams Laboratories, Inc. Dr. Young received his Ph.D. in Organic
Chemistry from the University of Bristol, England (1969), and his Bachelor's
degree in Honors Chemistry, Mathematics and Economics also from the University
of Bristol, England (1966).

      All of CEL-SCI's officers devote substantially all of their time to
CEL-SCI's business.

     CEL-SCI has an audit committee and compensation  committee.  The members of
the audit  committee are Alexander G. Esterhazy,  C. Richard  Kinsolving and Dr.
Peter Young. Dr. Peter Young serves as the audit  committee's  financial expert.
In this  capacity,  Dr.  Young is  independent,  as that term is  defined in the


                                       41


listing   standards  of  the  American  Stock  Exchange.   The  members  of  the
compensation  committee  are  Maximilian  de Clara,  Alexander  Esterhazy and C.
Richard Kinsolving.

      CEL-SCI has adopted a Code of Ethics which is applicable to CEL-SCI'S
principal executive, financial, and accounting officers and persons performing
similar functions. The Code of Ethics is available on CEL-SCI's website, located
at www.cel-sci.com.

     If a violation of this code of ethics act is discovered  or suspected,  the
Senior  Officer  must  (anonymously,  if  desired)  send a detailed  note,  with
relevant  documents,  to CEL-SCI's Audit  Committee,  c/o Dr. Peter Young,  1247
Dogeton Drive, Frisco, TX 75034-1432.

ITEM 11.  EXECUTIVE COMPENSATION

      The following table sets forth in summary form the compensation received
by (i) the Chief Executive Officer of CEL-SCI and (ii) by each other executive
officer of CEL-SCI who received in excess of $100,000 during the fiscal year
ended September 30, 2005.

                                                               
                                                  All
                                                  Other                            Other
                                                  Annual     Restric-               Com-
                                                  Compen-   ted Stock    Options   pensa-
Name and Princi-       Fiscal   Salary   Bonus    sation      Awards     Granted    tion
 pal Position           Year     (1)      (2)       (3)        (4)          (5)      (6)
- ----------------       -----    ------   -----   --------   ---------    --------  -------

Maximilian de Clara,    2005   $363,000    --    $72,041         --       50,000        --
President               2004   $363,000    --    $60,165         --       50,000        --
                        2003   $363,000    --    $65,121         --      574,999   $72,600

Geert R. Kersten,       2005   $370,585    --    $18,260   $ 12,700       50,000   $    30
Chief Executive         2004   $366,673    --    $18,690   $ 11,296       50,000        --
Officer and             2003   $354,087    --    $12,558   $  9,244    1,890,000   $71,068
Treasurer

Patricia B. Prichep     2005   $159,864    --    $  3,000   $ 9,404       30,000   $   30
Senior Vice President   2004   $148,942    --    $  3,000   $ 7,110       50,000       --
of Operations and       2003   $147,904    --    $  3,000   $ 4,902      580,000       --
Secretary

Eyal Talor, Ph.D.       2005   $201,154    --    $  3,000   $ 8,400       30,000   $   30
Senior Vice President   2004   $192,373    --    $  3,000   $ 4,797       50,000       --
of Research and         2003   $191,574    --    $  3,000   $ 4,950      374,166       --
Manufacturing

Daniel Zimmerman, Ph.D. 2005   $154,350    --    $  3,000   $ 9,059       30,000   $   30
Senior Vice President   2004   $147,613    --    $  3,000   $ 7,176       50,000       --
Senior Vice President   2003   $147,000    --    $  3,000   $ 5,005      392,000       --
of Cellular Immunology

John Cipriano           2005   $150,000    --          --   $ 9,000       30,000   $   30
Senior Vice President
of Regulatory Affairs




                                       42


(1)  The dollar value of base salary (cash and non-cash) received. During the
     year ended September 30, 2005, $11,089 of the total salaries paid to the
     persons shown in the table were paid in restricted shares of CEL-SCI's
     common stock.

      Information concerning the issuance of these restricted shares is shown in
the following table:

        Date Shares              Number of              Price
        Were Issued            Shares Issued          Per Share

          10/07/03               133,390                $1.00
          09/15/04                19,511                $0.62

      On each date the amount of compensation satisfied through the issuance of
shares was determined by multiplying the number of shares issued by the Price
Per Share. The price per share was equal to the closing price of CEL-SCI's
common stock on the date prior to the date the shares were issued.

(2)  The dollar value of bonus (cash and non-cash) received.

(3)  Any other annual compensation not properly categorized as salary or bonus,
     including perquisites and other personal benefits, securities or property.
     Amounts in the table represent automobile, parking and other transportation
     expenses, plus, in the case of Maximilian de Clara and Geert Kersten,
     director's fees of $8,000 each.

(4)  During the periods covered by the table, the value of the shares of
     restricted stock issued as compensation for services to the persons listed
     in the table. In the case of all other persons listed in the table, the
     shares were issued as CEL-SCI's contribution on behalf of the named officer
     to CEL-SCI's 401(k) retirement plan.

      As of September 30, 2005, the number of shares of CEL-SCI's common stock,
owned by the officers included in the table above, and the value of such shares
at such date, based upon the market price of CEL-SCI's common stock were:

      Name                          Shares            Value

      Maximilian de Clara           537,527         $  252,638
      Geert R. Kersten            2,663,868         $1,252,018
      Patricia B. Prichep           519,485         $  244,158
      Eyal Talor, Ph.D.             423,796         $  199,184
      Daniel Zimmerman, Ph.D.       445,616         $  209,440
      John Cipriano                  24,287         $   11,415


                                       43


      Dividends may be paid on shares of restricted stock owned by CEL-SCI's
officers and directors, although CEL-SCI has no plans to pay dividends.

(5)  The shares of Common Stock to be received upon the exercise of all stock
     options granted during the periods covered by the table. Includes certain
     options issued in connection with CEL-SCI's Salary Reduction Plans as well
     as certain options purchased from CEL-SCI. See "Options Granted During
     Fiscal Year Ended September 30, 2005" below.

(6)  All other compensation received that CEL-SCI could not properly report in
     any other column of the table including annual Company contributions or
     other allocations to vested and unvested defined contribution plans, and
     the dollar value of any insurance premiums paid by, or on behalf of,
     CEL-SCI with respect to term life insurance for the benefit of the named
     executive officer, and the full dollar value of the remainder of the
     premiums paid by, or on behalf of, CEL-SCI. Amounts in the table for fiscal
     2003 represent the value of CEL-SCI's common stock issued at below market
     prices and discussed in (1) above.

Long Term Incentive Plans - Awards in Last Fiscal Year

      None.

Employee Pension, Profit Sharing or Other Retirement Plans

      During 1993 CEL-SCI implemented a defined contribution retirement plan,
qualifying under Section 401(k) of the Internal Revenue Code and covering
substantially all the Company's employees. Prior to January 1, 1998 CEL-SCI's
contribution was equal to the lesser of 3% of each employee's salary, or 50% of
the employee's contribution. Effective January 1, 1998 the plan was amended such
that the Company's contribution is now made in shares of CEL-SCI's common stock
as opposed to cash. Each participant's contribution is matched by CEL-SCI with
shares of common stock which have a value equal to 100% of the participant's
contribution, not to exceed the lesser of $1,000 or 6% of the participant's
total compensation. CEL-SCI's contribution of common stock is valued each
quarter based upon the closing price of the Company's common stock. The fiscal
2005 expenses for this plan were $79,406. Other than the 401(k) Plan, CEL-SCI
does not have a defined benefit, pension plan, profit sharing or other
retirement plan.

Compensation of Directors

      Standard Arrangements. CEL-SCI currently pays its directors $2,000 each
per quarter, plus expenses. CEL-SCI has no standard arrangement pursuant to
which directors of CEL-SCI are compensated for any services provided as a
director or for committee participation or special assignments.

      Other Arrangements. CEL-SCI has from time to time granted options to its
outside directors. See Stock Options below for additional information concerning
options granted to CEL-SCI's directors.


                                       44

Employment Contracts.

      In April 2005 the Company entered into a three-year employment agreement
with Mr. de Clara which expires April 30, 2008. The employment agreement
provides that CEL-SCI will pay Mr. de Clara an annual salary of $363,000 during
the term of the agreement. In the event that there is a material reduction in
Mr. de Clara's authority, duties or activities, or in the event there is a
change in the control of the Company, then the agreement allows Mr. de Clara to
resign from his position at the Company and receive a lump-sum payment from
CEL-SCI equal to 18 months salary. For purposes of the employment agreement, a
change in the control of CEL-SCI means the sale of more than 50% of the
outstanding shares of CEL-SCI's Common Stock, or a change in a majority of
CEL-SCI's directors.

      The Employment Agreement will also terminate upon the death of Mr. de
Clara, Mr. de Clara's physical or mental disability, the conviction of Mr. de
Clara for any crime involving fraud, moral turpitude, or CEL-SCI's property, or
a breach of the Employment Agreement by Mr. de Clara. If the Employment
Agreement is terminated for any of these reasons, Mr. de Clara, or his legal
representatives, as the case may be, will be paid the salary provided by the
Employment Agreement through the date of termination.

      Effective September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. The employment agreement provides that during the
term of the employment agreement CEL-SCI will pay Mr. Kersten an annual salary
of $370,585. In the event there is a change in the control of CEL-SCI, the
agreement allows Mr. Kersten to resign from his position at CEL-SCI and receive
a lump-sum payment from CEL-SCI equal to 24 months salary. For purposes of the
employment agreement a change in the control of CEL-SCI means: (1) the merger of
CEL-SCI with another entity if after such merger the shareholders of CEL-SCI do
not own at least 50% of voting capital stock of the surviving corporation; (2)
the sale of substantially all of the assets of CEL-SCI; (3) the acquisition by
any person of more than 50% of CEL-SCI's common stock; or (4) a change in a
majority of CEL-SCI's directors which has not been approved by the incumbent
directors.

      The Employment Agreement will also terminate upon the death of Mr.
Kersten, Mr. Kersten's physical or mental disability, willful misconduct, an act
of fraud against CEL-SCI, or a breach of the Employment Agreement by Mr.
Kersten. If the Employment Agreement is terminated for any of these reasons Mr.
Kersten, or his legal representatives, as the case may be, will be paid the
salary provided by the Employment Agreement through the date of termination.

Compensation Committee Interlocks and Insider Participation

     CEL-SCI  has  a  compensation  committee  comprised  of  all  of  CEL-SCI's
directors,  with the exception of Mr.  Kersten.  During the year ended September
30, 2005, Mr. de Clara was the only officer  participating  in  deliberations of
CEL-SCI's compensation committee concerning executive officer compensation.

      During the year ended September 30, 2005, no director of CEL-SCI was also
an executive officer of another entity, which had an executive officer of
CEL-SCI serving as a director of such entity or as a member of the compensation
committee of such entity.


                                       45


Stock Options

      The following tables set forth information concerning the options granted
during the fiscal year ended September 30, 2005, to the persons named below, and
the fiscal year-end value of all unexercised options (regardless of when
granted) held by these persons.

                Options Granted During Fiscal Year Ended September 30, 2005
                                                                      
                                                                          Potential Realizable
                                   % of Total                               Value at Assumed
                                     Options                             Annual Rates of Stock
                                   Granted to    Exercise                 Price Appreciation
                       Options    Employees in   Price Per  Expiration     for Option Term (1)
 Name                Granted (#)   Fiscal Year     Share       Date         5%          10%
- ------               -----------  ------------   ---------  ----------    -----        ----
10%

Maximilian de Clara     50,000       11.16%        $0.48     9/21/2015   $12,007      $24,014
Geert R. Kersten        50,000       11.16%        $0.48     9/21/2015   $12,007      $24,014
Patricia B. Prichep     30,000        6.70%        $0.48     9/21/2015    $7,204      $14,408
Eyal Talor, Ph.D.       30,000        6.70%        $0.48     9/21/2015    $7,204      $14,408
Daniel Zimmerman, Ph.D. 30,000        6.70%        $0.48     9/21/2015    $7,204      $14,408
John Cipriano           30,000        6.70%        $0.48     9/21/2015    $7,204      $14,408




(1)  The potential  realizable  value of the options shown in the table assuming
     the market price of CEL-SCI's  Common Stock  appreciates  in value from the
     date of the grant to the end of the option term at 5% or 10%.

                   Option Exercises and Year-End Option Values
                                                                Value (in $) of
                                                                  Unexercised
                                                 Number of       In-the-Money
                                                Unexercised    Options at Fiscal
                         Shares                  Options (3)      Year-End (4)
                     Acquired On     Value      Exercisable/       Exercisable/
Name                 Exercise (1) Realized (2) Unexercisable     Unexercisable
- ----                 ------------ ------------ -------------   -----------------

Maximilian de Clara      --           --      939,999/274,999  $ 95,833/$ 47,917
Geert R. Kersten         --           --    2,794,667/713,333  $315,000/$157,500
Patricia Prichep         --           --      886,334/256,666  $103,667/$ 48,333
Eyal Talor               --           --      613,277/188,055  $ 69,361/$ 31,181
Daniel Zimmerman         --           --      611,001/193,999  $ 72,334/$ 32,667
John Cipriano            --           --       40,001/109,999  $     --/$      0


(1)  The number of shares received upon exercise of options during the fiscal
     year ended September 30, 2005.

(2)  With respect to options exercised during CEL-SCI's fiscal year ended
     September 30, 2005, the dollar value of the difference between the option
     exercise price and the market value of the option shares purchased on the
     date of the exercise of the options.

(3)  The total number of unexercised options held as of September 30, 2005,
     separated between those options that were exercisable and those options
     that were not exercisable.


                                       46


(4)  For all unexercised options held as of September 30, 2005, the market value
     of the stock underlying those options as of September 30, 2005.

Stock Option and Bonus Plans

      CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option Plans
and Stock Bonus Plans. All Stock Option and Bonus Plans have been approved by
the stockholders. A summary description of these Plans follows. In some cases
these Plans are collectively referred to as the "Plans".

      Incentive Stock Option Plan. The Incentive Stock Option Plans authorize
the issuance of shares of CEL-SCI's common stock to persons who exercise options
granted pursuant to the Plan. Only Company employees may be granted options
pursuant to the Incentive Stock Option Plan.

      To be classified as incentive stock options under the Internal Revenue
Code, options granted pursuant to the Plans must be exercised prior to the
following dates:

      (a)  The expiration of three months after the date on which an option
           holder's employment by CEL-SCI is terminated (except if such
           termination is due to death or permanent and total disability);

      (b)  The expiration of 12 months after the date on which an option
           holder's employment by CEL-SCI is terminated, if such termination is
           due to the Employee's permanent and total disability;

      (c)  In the event of an option holder's death while in the employ of
           CEL-SCI, his executors or administrators may exercise, within three
           months following the date of his death, the option as to any of the
           shares not previously exercised;

      The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.

      Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the Common Stock of
CEL-SCI may not be exercisable by its terms after five years from the date of
grant. Any other option granted pursuant to the Plan may not be exercisable by
its terms after ten years from the date of grant.

      The purchase price per share of Common Stock purchasable under an option
is determined by the Committee but cannot be less than the fair market value of
the Common Stock on the date of the grant of the option (or 110% of the fair
market value in the case of a person owning more than 10% of CEL-SCI's
outstanding shares).

     Non-Qualified  Stock Option  Plans.  The  Non-Qualified  Stock Option Plans
authorize  the  issuance of shares of  CEL-SCI's  common  stock to persons  that
exercise options granted pursuant to the Plans. CEL-SCI's employees,  directors,


                                       47


officers,  consultants and advisors are eligible to be granted options  pursuant
to the Plans,  provided however that bona fide services must be rendered by such
consultants  or advisors and such services  must not be in  connection  with the
offer  or  sale of  securities  in a  capital-raising  transaction.  The  option
exercise price is determined by the Committee but cannot be less than the market
price of CEL-SCI's Common Stock on the date the option is granted.

      Stock Bonus Plan. Under the Stock Bonus Plans shares of CEL-SCI's common
stock may be issued to CEL-SCI's employees, directors, officers, consultants and
advisors, provided however that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.

      Other Information Regarding the Plans. The Plans are administered by
CEL-SCI's Compensation Committee ("the Committee"), each member of which is a
director of the Company. The members of the Committee were selected by CEL-SCI's
Board of Directors and serve for a one-year tenure and until their successors
are elected. A member of the Committee may be removed at any time by action of
the Board of Directors. Any vacancies which may occur on the Committee will be
filled by the Board of Directors. The Committee is vested with the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Committee is empowered to select those persons to whom
shares or options are to be granted, to determine the number of shares subject
to each grant of a stock bonus or an option and to determine when, and upon what
conditions, shares or options granted under the Plans will vest or otherwise be
subject to forfeiture and cancellation.

      In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan and any options
granted pursuant to the Incentive Stock Option Plan or the Non-Qualified Stock
Option Plan will be forfeited if the "vesting" schedule established by the
Committee administering the Plan at the time of the grant is not met. For this
purpose, vesting means the period during which the employee must remain an
employee of CEL-SCI or the period of time a non-employee must provide services
to CEL-SCI. At the time an employee ceases working for CEL-SCI (or at the time a
non-employee ceases to perform services for CEL-SCI), any shares or options not
fully vested will be forfeited and cancelled. At the discretion of the Committee
payment for the shares of Common Stock underlying options may be paid through
the delivery of shares of CEL-SCI's Common Stock having an aggregate fair market
value equal to the option price, provided such shares have been owned by the
option holder for at least one year prior to such exercise. A combination of
cash and shares of Common Stock may also be permitted at the discretion of the
Committee.

      Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Committee when the shares were issued.

     The Board of Directors  of CEL-SCI may at any time,  and from time to time,
amend,  terminate,  or suspend  one or more of the Plans in any manner they deem
appropriate,  provided that such  amendment,  termination or suspension will not
adversely  affect  rights or  obligations  with  respect  to  shares or  options


                                       48


previously  granted.  The  Board  of  Directors  may  not,  without  shareholder
approval:  make any  amendment  which would  materially  modify the  eligibility
requirements  for the Plans;  increase or decrease the total number of shares of
Common  Stock which may be issued  pursuant to the Plans except in the case of a
reclassification  of CEL-SCI's  capital  stock or a  consolidation  or merger of
CEL-SCI;  reduce  the  minimum  option  price per  share;  extend the period for
granting options;  or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.

      Summary. The following sets forth certain information, as of September 30,
2005, concerning the stock options and stock bonuses granted by CEL-SCI. Each
option represents the right to purchase one share of CEL-SCI's common stock.

                               Total       Shares
                              Shares     Reserved for    Shares     Remaining
                             Reserved    Outstanding   Issued as  Options/Shares
Name of Plan                Under Plans    Options    Stock Bonus  Under Plans
- ------------                -----------  -----------  ----------- --------------

Incentive Stock Option
  Plans                      6,100,000     3,972,633          N/A    1,999,115
Non-Qualified Stock
  Option Plans               9,760,000     6,215,363          N/A    2,018,005
Stock Bonus Plans            3,940,000           N/A    1,442,000    1,498,000

      Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 704,884
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to the Company's Incentive and
Non-Qualified Stock Option Plans as of September 30, 2005, CEL-SCI's most recent
fiscal year end. CEL-SCI's Incentive and Non-Qualified Stock Option Plans have
been approved by CEL-SCI's shareholders.

                                                                      

                                                                    Number of Securities
                                     Number                         Remaining Available
                                 of Securities                      For Future Issuance
                                 to be Issued    Weighted-Average      Under Equity
                                 Upon Exercise   Exercise Price of  Compensation Plans,
                                of Outstanding   of Outstanding     Excluding Securities
Plan category                       Options           Options       Reflected in Column (a)
- -------------------------------------------------------------------------------------------
                                      (a)

Incentive Stock Option Plans       3,972,633           $0.67              1,999,115
Non-Qualified Stock Option Plans   6,215,363           $0.66              2,018,005





ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

      The following table sets forth, as of February 28, 2006, information with
respect to the only persons owning beneficially 5% or more of the outstanding
Common Stock and the number and percentage of outstanding shares owned by each
director and officer and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of Common Stock.



                                       49


Name and Address                   Number of Shares (1)    Percent of Class (3)
- ----------------                   ----------------        ----------------

Maximilian de Clara                   1,349,742                   1.7%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland

Geert R. Kersten                      6,094,963                   7.4%
8229 Boone Blvd., Suite 802
Vienna, VA  22182

Patricia B. Prichep                   1,602,619                   2.0%
8229 Boone Blvd., Suite 802
Vienna, VA  22182

Eyal Talor, Ph.D.                     1,166,692                   1.5%
8229 Boone Blvd., Suite 802
Vienna, VA  22182

Daniel H. Zimmerman, Ph.D.            1,192,008                   1.5%
8229 Boone Blvd., Suite 802
Vienna, VA  22182

John Cipriano                           102,212                   0.1%
8229 Boone Blvd., Suite 802
Vienna, VA  22182

Alexander G. Esterhazy                  181,666                   0.2%
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland

C. Richard Kinsolving                   410,757                   0.5%
P.O. Box 20193
Bradenton, FL 34204-0193

Peter R. Young, Ph.D.                   182,934                   0.2%
1247 Dodgeton Drive
Frisco, TX 75034-1432

All Officers and Directors           12,283,593                  14.2%
as a Group (9 persons)
*    Less than 1%

(1)  Includes shares issuable prior to June 30, 2006 upon the exercise of
     options or warrants granted to the following persons:


                                       50


                                         Options or Warrants Exercisable
      Name                                   Prior to June 30, 2006
      ----                               -------------------------------

      Maximilian de Clara                         1,131,665
      Geert R. Kersten                            3,424,667
      Patricia B. Prichep                        1,078,167
      Eyal Talor, Ph.D.                            737,999
      Daniel H. Zimmerman, Ph.D.                   741,667
      John Cipriano                                 73,334
      Alexander G. Esterhazy                       181,666
      C. Richard Kinsolving, Ph.D.                 341,667
      Peter R. Young, Ph.D.                        168,333

(2)  Amount includes shares held in trust for the benefit of Mr. Kersten's minor
     children. Geert R. Kersten is the stepson of Maximilian de Clara.

(3)  Amount includes shares referred to in (1) above but excludes shares which
     may be issued upon the exercise or conversion of other options, warrants
     and other convertible securities previously issued by CEL-SCI.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------

      None.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
- ------------------------------------------------

      Deloitte & Touche LLP served as CEL-SCI's auditors for the years ended
September 30, 2004 and 2003. The following table shows the aggregate fees billed
to CEL-SCI for these years by Deloitte & Touche LLP:

                                                Year Ended September 30,
                                                2005                2004
                                                ----                ----

Audit Fees                                   $124,388            $131,000
Audit-Related Fees                             24,500              91,787
Financial Information Systems                      --                  --
Design and Implementation Fees                     --                  --
Tax Fees                                           --                  --
All Other Fees                                     --                  --

      Audit fees represent amounts billed for professional services rendered for
the audit of the CEL-SCI's annual financial statements and the reviews of the
financials statements included in CEL-SCI's 10-Q reports for the fiscal year.
Audit Related Fees represent amounts charged for reviewing various registration
statements filed with the SEC by CEL-SCI during the year as well as the
successor auditor review work. Before Deloitte & Touche LLP was engaged by
CEL-SCI to render audit or non-audit services, the engagement was approved by
CEL-SCI's audit committee.


                                       51


      BDO Seidman, LLP served as CEL-SCI's auditors for the year ended September
30, 2005. The following table shows the aggregate fees billed to CEL-SCI during
this year by BDO Seidman, LLP:

                                                Year Ended September 30, 2005

Audit Fees                                                  $53,500
Audit-Related Fees                                            9,773
Financial Information Systems                                    --
Design and Implementation Fees                                   --
Tax Fees                                                         --
All Other Fees                                                   --

      Audit fees represent amounts billed for professional services rendered for
the audit of the CEL-SCI's annual financial statements and the reviews of the
financials statements included in CEL-SCI's 10-Q reports for the fiscal year.
Audit Related Fees represent amounts charged for acceptance procedures and
services performed concerning a financing. Before BDO Seidman, LLP was engaged
by CEL-SCI to render audit or non-audit services, the engagement was approved by
CEL-SCI's audit committee. CEL-SCI's Board of Directors is of the opinion that
the Audit Related Fees charged by BDO Seidman, LLP are consistent with BDO
Seidman, LLP maintaining its independence from CEL-SCI.

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------

      (a) See the Financial Statements attached to this Report.

(b)   Exhibits                          Page Number
      --------                          -----------

3(a) Articles of Incorporation          Incorporated by reference to Exhibit
                                        3(a) of CEL-SCI's combined Registration
                                        Statement on Form S-1 and Post-Effective
                                        Amendment ("Registration Statement"),
                                        Registration Nos. 2-85547-D and 33-7531.

 (b) Amended Articles                   Incorporated by reference to Exhibit
                                        3(a) of CEL-SCI's Registration Statement
                                        on Form S-1, Registration Nos. 2-85547-D
                                        and 33-7531.



                                       52



 (c) Amended Articles (Name             Filed as Exhibit 3(c) to CEL-SCI's
     change only)                       Registration Statement on Form S-1
                                        Registration Statement (No. 33-34878).

 (d) Bylaws                             Incorporated by reference to  Exhibit
                                        3(b) of CEL-SCI's Registration
                                        Statement on Form S-1, Registration No.
                                        33-7531.

10(d) Employment Agreement with         Incorporated  by reference to Exhibit
      Maximilian de Clara               10(d) filed with  CEL-SCI's 10-K  Report
                                        for the year ended September 30, 2004

10(e) Employment Agreement with         Incorporated by reference to Exhibit
      Geert Kersten                     10(e) of CEL-SCI's Registration
                                        Statement on Form S-3 (Commission File
                                        #106879).

10(q) Common Stock Purchase Agreement   Incorporated by reference to Exhibit
      with Rubicon Group Ltd.           10(q) to CEL-SCI's Registration
                                        statement on Form S-1 (Commission File
                                        No. 333-109070).

10(r) Stock Purchase Warrant issued to  Incorporated by reference to Exhibit
      Rubicon Group Ltd.                10(r) to CEL-SCI's Registration
                                        statement on Form S-1 (Commission File
                                        No. 333-109070).

10(w) Master Production Agreement       Incorporated  by reference to Exhibit
      between Company and Bio           10(w) of CEL-SCI's annual report on Form
      Science Contract Production       10-K for the year ended September
      Corp.                             30, 2003.

10(x) Distribution and Royalty          Incorporated by reference to Exhibit
      Agreement with Eastern Biotech    10(x) to Amendment No. 2 to CEL-SCI's
                                        Registration statement on Form S-3
                                        (Commission File No. 333-106879).

23 (a) Consent of Deloitte & Touche LLP   -------------------------------

23(b) Consent of BDO Seidman, LLP

31    Rule 13a-14(a) Certifications
                                          -------------------------------

32    Section 1350 Certifications
                                          -------------------------------

      (c) No financial statement schedules are filed with this report.

      (d) During the three months ended September 30, 2005 the Company filed the
following reports on Form 8-K:

            Date Filed        Disclosure Item
            ----------        ---------------

             7-19-05          Sale of securities in a private placement.


                                       53
















                CEL-SCI CORPORATION

                Consolidated Financial Statements for the Years
                Ended September 30, 2005, 2004 (as restated), and 2003 (as
                restated), and
                Reports of Independent Registered Public Accounting Firms





CEL-SCI CORPORATION

TABLE OF CONTENTS



                                                                     Page
                                                                     ----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               F-3

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
 ENDED SEPTEMBER 30, 2005, 2004 (AS RESTATED), AND 2003 (AS RESTATED):

  Consolidated Balance Sheets                                         F-4

  Consolidated Statements of Operations                               F-5

  Consolidated Statements of Stockholders' Equity               F-6 - F-7

  Consolidated Statements of Cash Flows                        F-8 - F-11

  Notes to Consolidated Financial Statements                  F-12 - F-44


                                      F - 1





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
CEL-SCI Corporation
Vienna, Virginia

We have audited the accompanying consolidated balance sheet of CEL-SCI
Corporation as of September 30, 2005 and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CEL-SCI Corporation
at December 31, 2005, and the results of its operations and its cash flows for
the year ended December 31, 2005, in conformity with accounting principles
generally accepted in the United States of America.



/s/ BDO SEIDMAN LLP

Bethesda, Maryland
April 6, 2006


                                      F - 2





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
CEL-SCI Corporation
Vienna, Virginia

We have audited the accompanying consolidated balance sheet of CEL-SCI
Corporation and subsidiary (the "Company") as of September 30, 2004, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years ended September 30, 2004 and 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of September 30,
2004, and the results of its operations and its cash flows for the years ended
September 30, 2004 and 2003, in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the 2004 and
2003 consolidated financial statements have been restated.

/s/ DELOITTE & TOUCHE LLP

McLean, Virginia
January 6, 2005 (April 21, 2006 as to the effects of the restatement discussed
in Note 2)

                                      F - 3






CEL-SCI CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2005 AND 2004
- ---------------------------------------------------------------------------

ASSETS                                             2005             2004
                                                                (as restated,
                                                                 see Note 2)

CURRENT ASSETS:
  Cash and cash equivalents                   $  1,957,614      $  4,263,631
  Interest and other receivables                    21,164            21,256
  Prepaid expenses                                 432,652           508,597
  Deposits                                               -            14,828
                                              -------------     -------------

           Total current assets                  2,411,430         4,808,312

RESEARCH AND OFFICE EQUIPMENT--Less
 accumulated depreciation of $1,690,788
 and $1,651,759                                    181,541           233,612

PATENT COSTS--Less accumulated
 amortization of $816,169 and $745,321             484,553           471,886

DEPOSITS                                            14,828                 -
                                              -------------     -------------
                                              $  3,092,352      $  5,513,810
                                              =============     =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                            $     74,354      $    143,300
  Accrued expenses                                  74,619            64,360
  Due to employees                                  22,880             5,320
  Deposits held                                          -             3,000
  Derivative instruments - current portion           1,280                 -
                                              -------------     -------------

           Total current liabilities               173,133           215,980
  Derivative instruments - noncurrent
   portion                                         811,180         1,175,488
  Deposits held                                      3,000                 -
                                              -------------     -------------
           Total liabilities                       987,313         1,391,468

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value--authorized,
   200,000,000 shares; issued and
   outstanding, 74,494,206 and 72,147,367
   shares at September 30, 2005 and 2004,
   respectively                                    744,942           721,474
  Unearned compensation                                  -           (14,237)
  Additional paid-in capital                   100,359,296        99,374,697
  Accumulated deficit                          (98,999,199)      (95,959,592)
                                              -------------     -------------
           Total stockholders' equity            2,105,039         4,122,342
                                              -------------     -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $  3,092,352      $  5,513,810
                                              =============     =============


                See notes to consolidated financial statements.



                                       F-4








CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND
2003
- --------------------------------------------------------------------------------

                                             2005       2004           2003
                                                    (as restated,  (as restated,
                                                      see Note 2)    see Note 2)
                                         ----------  -------------  ------------

GRANT REVENUE AND OTHER                  $  269,925    $  325,479    $  318,304

OPERATING EXPENSES:
  Research and development (excluding
   R&D depreciation of $96,442, $110,297
   and $115,420 respectively,
   included below)                        2,229,729     1,941,630     1,915,501
  Depreciation and amortization             190,420       198,269       199,117
  General and administrative              1,930,543     2,310,279     2,287,019
                                       ------------   -----------    -----------

           Total operating expenses       4,350,692     4,450,178     4,401,637
                                       ------------  ------------  ------------
NET OPERATING LOSS                       (4,080,767)   (4,124,699)   (4,083,333)

GAIN (LOSS) ON DERIVATIVE INSTRUMENTS       363,028     1,174,660    (2,319,005)

OTHER INCOME                                625,472             -             -

OTHER COSTS OF FINANCING                          -             -      (270,664)

INTEREST INCOME                              52,660        51,817        52,502

INTEREST EXPENSE                                  -       (53,855)   (1,365,675)
                                       -----------    -----------   -----------
NET LOSS                                 (3,039,607)   (2,952,077)   (7,986,175)
                                       ============   ============  ===========
NET LOSS PER COMMON SHARE
    BASIC                              $     (0.04)   $     (0.04)  $     (0.16)
    DILUTED                            $     (0.05)   $     (0.06)  $     (0.19)

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING
    BASIC                                72,703,395    67,273,133    50,961,457
    DILUTED                              73,581,925    68,924,099    51,127,439



                See notes to consolidated financial statements.


                                      F-5


CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DEFICIT)
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND
2003
                                                                                                   
- -----------------------------------------------------------------------------------------------------------------------------------
                                           Preferred                              Additional
                                         Series E Stock         Common Stock        Paid-In     Unearned    Accumulated
                                        Shares     Amount    Shares       Amount    Capital   Compensation     Deficit     Total
- -----------------------------------------------------------------------------------------------------------------------------------

BALANCE, October 1, 2002, as
 previously reported                    1,192    $      12  37,255,142  $ 372,551 $80,871,758  $       -   $(80,182,150) $1,062,171

Prior period corrections
 (see Note 2)                          (1,192)         (12)                         1,432,413                (4,839,190) (3,406,789)
                                --------------  ----------- ----------  --------- -----------  ----------  ------------- -----------

BALANCE, October 1, 2002
(as restated, see Note 2)                   -            -  37,255,142    372,551  82,304,171           -   (85,021,340) (2,344,618)

Exercise of warrants (as
 restated, see Note 2)                                       1,435,500     14,355   1,043,327                             1,057,682

Stock issued to employees
 for service                                                 4,409,932     44,099     920,117                               964,216
Stock options issued to
 nonemployees for service                                                               6,727                                 6,727

Stock issued to nonemployees
 for service                                                   559,089      5,591     123,100                               128,691

Conversion of Preferred
 Series E Stock to common stock
 (as restated, see Note 2)                                   1,018,439     10,184     282,339                               292,523
Dividends on Preferred Series
 E Stock paid in common stock
 (as restated, see Note 2)                                      97,389        974      98,650                                99,624
Conversion of Series F convertible
 debt (as restated, see Note 2)                                979,670      9,797     206,525                               216,322
Interest on Series F convertible
 debt paid in common stock (as
 restated, see Note 2)                                          22,608        226         844                                 1,070
Conversion of Series G
 convertible debt (as restated,
 see Note 2)                                                 8,076,420     80,764   2,119,830                             2,200,594
Interest on Series G convertible
 debt paid in common stock (as
 restated, see Note 2)                                         109,428      1,094      31,677                                32,771
Conversion of Series H
 convertible debt (as
 restated, see Note 2)                                       3,003,929     30,039   2,562,145                             2,592,184
Interest on Series H
 convertible debt paid in
 common stock (as restated,
 see Note 2)                                                    80,010        800      56,988                                57,788
Costs for equity related
 transactions                                                                         (40,600)                              (40,600)
Sale of common stock to
 Eastern Biotech (as
 restated, see Note 2)                                       1,100,000     11,000      10,306                                21,306
Exercise of stock options                                        6,667         67       2,133                                 2,200
401(k) contributions paid
 in common stock                                               134,336      1,344      45,707                                47,051
Issuance of common stock
 for equity line of credit
 (as restated, see Note 2)                                   2,877,786     28,778     842,687                               871,465
Net loss (as restated,
   see Note 2)                                                                                               (7,986,175) (7,986,175)
                                --------------  ----------- ----------  --------- -----------  ----------  ------------- -----------
BALANCE, SEPTEMBER 30, 2003
 (as restated, see Note 2)                  -   $        -  61,166,345  $ 611,663 $90,616,673  $        -  $(93,007,515)$(1,779,179)




                See notes to consolidated financial statements.

                                      F-6


CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND
2003
                                                                                                   
- -----------------------------------------------------------------------------------------------------------------------------------
                                           Preferred                              Additional
                                         Series E Stock         Common Stock        Paid-In     Unearned    Accumulated
                                        Shares     Amount    Shares       Amount    Capital   Compensation     Deficit     Total
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2003
 (as restated, see Note 2)                  -   $       -   61,166,345  $ 611,663 $90,616,673  $        -  $(93,007,515)$(1,779,179)

Exercise of warrants (as
 restated, see Note 2)                                         614,520      6,145     893,277                               899,422

Stock issued to employees
 for service                                                   180,959      1,810     169,630     (14,237)                  157,203

Stock issued to nonemployees
 for service                                                     7,414         74       7,859                                 7,933
Conversion of Series H
 convertible debt (as
 restated, see Note 2)                                          179,436     1,794     184,819                               186,613
Interest on Series H
 convertible debt paid in
 common stock (as restated,
 see Note 2)                                                      3,210        32       3,306                                 3,338
Exercise of stock options                                       213,503     2,135     103,731                               105,866
Modification of employee
 stock options                                                                          7,597                                 7,597
401(k) contributions paid
 in common stock                                                  72,495      725      51,751                                52,476
Issuance of common stock
 for equity line of credit
 (as restated, see Note 2)                                       307,082    3,071     341,994                               345,065
Sale of common stock (as
 restated, see Note 2)                                         9,402,403   94,025   6,899,679                             6,993,704
Costs for equity related
 transactions                                                                        (591,611)                             (591,611)
Reclassification of derivative
 instruments to equity (as
 restated, see Note 2)                                                                685,992                               685,992
Net loss (as restated,
 see Note 2)                                                                       (2,952,077)                           (2,952,077)
                                --------------  ----------- ----------  --------- -----------  ----------  ------------- -----------

BALANCE, SEPTEMBER 30, 2004
 (as restated, see Note 2)                  -            -  72,147,367    721,474  99,374,697    (14,237)   (95,959,592)  4,122,342

Stock issued to nonemployees
 for service                                                     8,687         86       4,084                                 4,170
Exercise of stock options                                      200,669      2,007      47,778                                49,785
Issuance of stock options
 to nonemployees                                                                        7,972                                 7,972
401(k) contributions paid
 in common stock                                               144,469      1,445      77,423                                78,868
Issuance of common stock
 for equity line of credit                                     743,014      7,430     359,842                               367,272
Expense of unearned compensation                                                                  14,237                     14,237
Private placement                                            1,250,000     12,500     487,500                               500,000
Net loss                                                                                                     (3,039,607) (3,039,607)
                                --------------  ----------- ----------  --------- -----------  ----------  ------------- -----------
BALANCE, SEPTEMBER 30, 2005                 -   $        -  74,494,206  $ 744,942 $100,359,296 $       -   $(98,999,199) $2,150,039
                                ==============  =========== ==========  ========= ============ ==========  ============= ===========




                See notes to consolidated financial statements.

                                      F-7





CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003
- --------------------------------------------------------------------------------
                                                                      

                                                     2005         2004         2003
                                                                  (as          (as
                                                               restated,    restated,
                                                              see Note 2)  see Note 2)

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                     $ (3,039,607) $ (2,952,077) $ (7,986,175)
  Adjustments to reconcile net
  loss to net cash used for
  operating activities:
   Depreciation and amortization                    190,420       198,269       199,117
   Issuance of stock options to
    nonemployees for services                         7,972             -         6,727
   Issuance of common stock for services              4,170       165,136     1,092,907
   Modification of stock options                          -         7,597             -
   Common stock contributed to 401(k) plan           78,868        52,476        47,051
   Decrease in unearned compensation                 14,237             -             -
   Impairment loss on abandonment of patents          3,716        43,351         9,828
   (Gain) loss on retired equipment                   1,806             -        (5,913)
   Gain on sale of equipment                              -             -       (26,463)
   Amortization of deferred financing costs               -        16,243       385,170
   Amortization of discount on note payable               -             -        37,500
   Accretion of Series E Stock to
    redemption value                                      -             -        98,791
   Debt issuance discount charged to
    interest expense                                      -             -       699,802
   Amortization of discount on
    convertible note                                      -        22,082        62,025
   (Gain) loss on derivative instruments           (363,028)   (1,174,660)    2,319,005
   Other costs of financing, noncash
    expenses                                              -             -       270,664
   Changes in assets and liabilities:
    Decrease (increase) in interest
     and other receivables                               92        25,795       (15,574)
    Decrease (increase) in prepaid
     expenses                                        75,945      (151,066)       87,752
    Decrease in accounts payable                    (71,782)     (385,952)      (65,548)
    Increase (decrease) in accrued
     expenses                                        10,259       (30,055)       59,195
    Increase (decrease) in due to
     employees                                       17,560      (221,795)      197,523
    Increase in deposits held                             -             -         3,000
    Decrease in deferred rent                             -        (5,540)      (15,192)
                                               -------------  ------------  ------------

      Net cash used for operating activities     (3,069,372)   (4,390,196)   (2,538,808)
                                               -------------  ------------  ------------

CASH FLOWS  USED FOR INVESTING ACTIVITIES:
  Proceeds from disposal of equipment                     -             -         7,812
  Purchases of equipment                            (65,736)      (52,175)       (6,905)
  Expenditures for patent costs                     (87,966)     (121,430)      (93,509)
                                               -------------  ------------  ------------

  Net cash used for  investing activities          (153,702)     (173,605)      (92,602)
                                               -------------  ------------  ------------



                                                                     (Continued)
                See notes to consolidated financial statements.


                                      F-8



CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003
- --------------------------------------------------------------------------------
                                                                      

                                                     2005         2004         2003
                                                                  (as          (as
                                                               restated,    restated,
                                                              see Note 2)  see Note 2)

CASH FLOWS PROVIDED BY
  FINANCING  ACTIVITIES:
  Proceeds from issuance of common stock           500,000      7,799,970    500,000
  Proceeds from exercise of warrants                     -        291,222    269,382
  Draw-downs on equity line of credit              367,272        340,000    725,000
  Proceeds from exercise of stock options           49,785        105,866      2,200
  Proceeds from short-term loan                          -              -     25,000
  Payment on short-term loan                             -              -    (25,000)
  Payments on notes payable                              -       (871,322)  (276,122)
  Proceeds from convertible debt                         -              -  1,350,000
  Costs for convertible debt transactions                -              -   (224,419)
  Costs for equity related transactions                  -       (591,611)   (40,600)
                                              -------------   ------------ -----------

    Net cash provided by financing activities      917,057      7,074,125   2,305,441
                                               -------------  ------------  ------------

NET (DECREASE) INCREASE IN CASH                 (2,306,017)     2,510,324    (325,969)

CASH, BEGINNING OF YEAR                          4,263,631      1,753,307   2,079,276
                                               -------------  ------------  ------------

CASH, END OF YEAR                              $ 1,957,614    $ 4,263,631  $1,753,307
                                               =============  ============ =============



                                                                     (continued)

                See notes to consolidated financial statements.


                                      F-9


CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003
- --------------------------------------------------------------------------------
                                                                      

                                                     2005         2004         2003
                                                                  (as          (as
                                                               restated,    restated,
                                                              see Note 2)  see Note 2)
                                                  ----------- ------------ -------------

CONVERSION OF PREFERRED STOCK INTO COMMON STOCK:
  Decrease in preferred stock                     $        -   $        -   $  (292,523)
  Increase in common stock                                 -            -        10,184
  Increase in additional paid-in capital                   -            -       282,339
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $         -
                                                  =========== ============ =============
COMMON STOCK IN LIEU OF CASH DIVIDENDS AND INTEREST
  ON PREFERRED STOCK:
  Decrease in accrued liabilities                 $        -   $        -   $   (99,625)
  Increase in common stock                                 -            -           974
  Increase in additional paid-in capital                   -            -        98,651
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $         -
                                                  =========== ============ =============
CONVERSION OF CONVERTIBLE DEBT INTO COMMON STOCK:
  Decrease in convertible debt                    $        -   $ (186,613)  $(5,009,100)
  Increase in common stock                                 -        1,794       120,600
  Increase in additional paid-in capital                   -      184,819     4,888,500
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $         -
                                                  =========== ============ =============
CONVERSION OF INTEREST ON CONVERTIBLE DEBT
  INTO COMMON STOCK:
  Decrease in accrued liabilities                 $        -   $   (3,338)  $    (91,629)
  Increase in common stock                                 -           32          2,120
  Increase in additional paid-in capital                   -        3,306         89,509
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $          -
                                                  =========== ============ =============
MODIFICATION OF CAMBREX NOTE:
  Increase in derivative instruments              $        -   $        -   $     84,107
  Decrease in Cambrex note                                 -            -        (84,107)
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $          -
                                                  =========== ============ =============
EXERCISE OF WARRANTS
  Decrease in derivative instruments              $        -   $  (77,900)  $   (788,300)
  Increase in additional paid-in capital                   -       77,900        788,300
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $          -
                                                  =========== ============ =============
SETTLEMENT OF DERIVATIVE INSTRUMENTS ON DRAW DOWNS
  OF EQUITY LINES OF CREDIT
  Decrease in derivative instruments              $        -   $   (5,065)  $  (146,465)
  Increase in additional paid-in capital                   -        5,065       146,465
                                                  ----------- ------------ -------------
                                                  $        -   $        -   $         -
                                                  =========== ============ =============




See notes to consolidated financial statements.                   (continued)


                                      F-10

                See notes to consolidated financial statements.



CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003
- --------------------------------------------------------------------------------
                                                                         

SUPPLEMENTAL INFORMATION ON NONCASH TRANSACTIONS        2005          2004         2003
                                                                      (as          (as
                                                                   restated,    restated,
                                                                  see Note 2)  see Note 2)
                                                     ------------ --------------------------

ISSUANCE OF WARRANTS ON SALE OF COMMON STOCK
  Increase in derivative instruments                 $         -  $  806,266      478,694
  Decrease in additional paid-in capital                       -    (806,266)    (478,694)
                                                     ------------ ------------ ------------
                                                     $         -  $        -   $        -
                                                     ============ ============ ============

EQUIPMENT COSTS INCLUDED IN ACCOUNTS PAYABLE:
  Increase in research and office equipment          $      (268) $  (31,728)  $      (157)
  Increase in accounts payable                               268      31,728           157
                                                     ------------ ------------ ------------
                                                     $         -  $        -   $         -
                                                     ============ ============ ============

PATENT COSTS INCLUDED IN ACCOUNTS PAYABLE:
  Increase in patent costs                           $    (2,568) $  (15,539)  $   (11,659)
  Increase in accounts payable                             2,568      15,539        11,659
                                                     ------------ ------------ ------------

                                                     $         -  $        -   $         -
                                                     ============ ============ ============

SURRENDER OF DEPOSIT AND SALE OF EQUIPMENT TO
REDUCE NOTE PAYABLE:
  Decrease in deposits                               $         -  $        -   $   125,000
  Decrease in research equipment, net                          -           -       100,000
  Decrease in notes payable                                    -           -      (225,000)
                                                     ------------ ------------ ------------

                                                     $         -  $        -   $         -
                                                     ============ ==========================
CONVERSION OF ACCOUNTS PAYABLE INTO NOTES PAYABLE:
  Decrease in accounts payable                       $         -  $        -   $  (199,928)
  Increase in notes payable                                    -           -       199,928
                                                     ------------ ------------ ------------
                                                     $         -  $        -   $         -
                                                     ============ ============ ============
RECLASS OF INVENTORY TO EQUIPMENT:
  Decrease in inventory                              $         -  $        -   $     6,839
  Increase in research equipment                               -           -        (6,839)
                                                     ------------ ------------ ------------
                                                     $         -  $        -   $         -
                                                     ============ ============ ============

CASHLESS EXERCISE OF WARRANTS:
  Decrease in derivative instruments                 $         -  $ (530,300)  $         -
  Increase in common stock                                     -       3,698             -
  Increase in additional paid-in capital                       -     526,602             -
                                                     ------------ ------------ ------------
                                                     $         -  $        -   $         -
                                                     ============ ============ ============

RECLASSIFICATION OF DERIVATIVE INSTRUMENTS
  Decrease in derivative instruments                 $         -  $ (685,992)  $         -
  Increase in additional paid-in capital                       -     685,992             -
                                                     ------------ ------------ ------------
                                                     $         -  $        -   $         -
                                                     ============ ============ ============



See notes to consolidated financial statements.


                                      F-11






CEL-SCI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2005, 2004 and 2003
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   CEL-SCI Corporation (the "Company") was incorporated on March 22, 1983, in
   the state of Colorado, to finance research and development in biomedical
   science and ultimately to engage in marketing and selling products.

   Significant accounting policies are as follows:

     a.   Principles of  Consolidation--The  consolidated  financial  statements
          include the accounts of the Company and its wholly  owned  subsidiary,
          Viral Technologies,  Inc. (VTI). VTI discontinued its research efforts
          in  2000  due  to  a  lack  of  government  funding.  All  significant
          intercompany transactions have been eliminated upon consolidation.

     b.   Cash and Cash  Equivalents--For  purposes  of the  statements  of cash
          flows, cash and cash equivalents  consists principally of unrestricted
          cash on  deposit  and  short-term  money  market  funds.  The  Company
          considers all highly liquid investments with a maturity when purchased
          of less than three  months,  and those  investments  that are  readily
          convertible to known amounts of cash and are so close to maturity that
          they bear no interest rate risk, as cash and cash equivalents.

     c.   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.  For the years ended  September 30, 2005, 2004
          and 2003 there were no realized or unrealized gains or losses.

     d.   Prepaid   Expenses--The   majority  of  prepaid  expenses  consist  of
          manufacturing  production  advances and bulk  purchases of  laboratory
          supplies to be consumed in the  manufacturing of the Company's product
          for  clinical  studies.  During the year  ended  September  30,  2004,
          $43,184 in expired (but still  useable)  inventory was returned to the
          vendor and replaced by the vendor at no cost.

     e.   Research  and  Office  Equipment--Research  and  office  equipment  is
          recorded at cost and depreciated using the  straight-line  method over
          estimated useful lives of five to seven years.  Leasehold improvements
          are depreciated  over the shorter of the estimated  useful life of the
          asset or the terms of the lease.  Repairs and maintenance which do not
          extend the life of the asset are expensed when incurred.

     f.   Patents--Patent  expenditures  are capitalized and amortized using the
          straight-line method over 17 years. In the event changes in technology
          or  other  circumstances  impair  the  value  or life  of the  patent,
          appropriate  adjustment in the asset value and period of  amortization

                                      F-12



          is made.  An  impairment  loss is  recognized  when  estimated  future
          undiscounted  cash flows expected to result from the use of the asset,
          and from  disposition,  is less than the carrying  value of the asset.
          The  amount  of the  impairment  loss is the  difference  between  the
          estimated fair value of the asset and its carrying  value.  During the
          years ended  September 30, 2005,  2004 and 2003, the Company  recorded
          patent impairment charges of $3,716, $43,351 and $9,828, respectively,
          for the net book value of  patents  abandoned  during the year.  These
          amounts are included in general and administrative expenses.

     g.   Derivative Instruments--The Company enters into financing arrangements
          that  consist of  freestanding  derivative  instruments  or are hybrid
          instruments that contain  embedded  derivative  features.  The Company
          accounts  for  these  arrangement  in  accordance  with  Statement  of
          Financial  Accounting  Standards No. 133,  "Accounting  for Derivative
          Instruments  and Hedging  Activities",  ("SFAS No.  133") and Emerging
          Issues  Task  Force  Issue  No.  00-19,   "Accounting  for  Derivative
          Financial  Instruments  Indexed  to,  and  Potentially  Settled  in, a
          Company's   Own   Stock",   ("EITF   00-19"),   as  well  as   related
          interpretations  of these  standards.  In accordance  with  accounting
          principles   generally   accepted  in  the  United  States   ("GAAP"),
          derivative instruments and hybrid instruments are recognized as either
          assets or liabilities  in the statement of financial  position and are
          measured at fair value with gains or losses  recognized in earnings or
          other  comprehensive  income depending on the nature of the derivative
          or hybrid instruments.  Embedded  derivatives that are not clearly and
          closely  related to the host contract are bifurcated and recognized at
          fair value with changes in fair value  recognized  as either a gain or
          loss in earnings if they can be reliably measured. When the fair value
          of embedded  derivative  features  can not be reliably  measured,  the
          Company  measures  and reports the entire  hybrid  instrument  at fair
          value with changes in fair value  recognized  as either a gain or loss
          in  earnings.  The  Company  determines  the fair value of  derivative
          instruments  and hybrid  instruments  based on  available  market data
          using appropriate valuation models, giving consideration to all of the
          rights and  obligations of each  instrument and precluding the use the
          "blockage"  discounts or premiums in  determining  the fair value of a
          large  block  of  financial   instruments.   Fair  value  under  these
          conditions does not necessarily  represent fair value determined using
          valuation  standards that give consideration to blockage discounts and
          other  factors  that  may be  considered  by  market  participants  in
          establishing fair value.

     h.   Research  and   Development   Grant   Revenues--The   Company's  grant
          arrangements  are handled on a  reimbursement  basis.  Grant  revenues
          under the  arrangements are recognized as grant revenue when costs are
          incurred.

     i.   Research and Development  Costs--Research and development expenditures
          are  expensed  as  incurred.  The  Company  has an  agreement  with an
          unrelated  corporation  for the production of Multikine,  which is the
          Company's only product source.  Total research and development  costs,
          excluding depreciation, were $2,326,171, $2,051,927 and $2,030,921 for
          the years ended September 30, 2005, 2004 and 2003.

     j.   Other  Costs of  Financing--Other  costs of  financing  represent  the
          excess fair value of warrants  issued in  conjunction  with  financing
          arrangements  where  the  warrants  are  required  to be  recorded  as
          derivatives over the proceeds of the financing received at issuance.

                                      F-13




     k.   Net Loss Per Common  Share--Net  loss per common  share is computed by
          dividing the net loss by the weighted  average number of common shares
          outstanding  during the  period.  Potentially  dilutive  common  stock
          equivalents,  including convertible preferred stock,  convertible debt
          and  options  to  purchase  common  stock,   were  excluded  from  the
          calculation for all periods presented as they were antidilutive.

     l.   Income  Taxes--Income  taxes  are  accounted  for  using the asset and
          liability  method under which  deferred tax  liabilities or assets are
          determined based on the difference between the financial statement and
          tax basis of assets and liabilities (i.e.,  temporary differences) and
          are  measured  at the  enacted  tax  rates.  Deferred  tax  expense is
          determined by the change in the liability or asset for deferred taxes.
          The difference in the Company's U.S. Federal statutory income tax rate
          and the Company's effective tax rate is primarily  attributable to the
          recording  of a  valuation  allowance  due to the  uncertainty  of the
          amount of future tax benefits that will be realized because it is more
          likely than not that future  taxable  income will not be sufficient to
          realize such tax benefits.

     m.   Use  of   Estimates--The   preparation  of  financial   statements  in
          conformity with accounting principles generally accepted in the United
          States  of  America   requires   management  to  make   estimates  and
          assumptions that affect the reported amounts of assets and liabilities
          and disclosure of contingent assets and liabilities at the date of the
          financial statements and the reported amounts of revenues and expenses
          during the reporting  period.  Actual  results could differ from those
          estimates.  Accounting  for  derivatives  is based upon  valuations of
          derivative  instrument  determined using various valuation  techniques
          including the  Black-Scholes and binomial pricing  methodologies.  The
          Company considers such valuations to be significant estimates.

     n.   Recent  Accounting  Pronouncements--In  November  2004  the  Financial
          Accounting  Standards  Board  ("FASB")  issued  Statement of Financial
          Accounting  Standards ("SFAS") No. 151, "Inventory Costs, an amendment
          of  Accounting  Research  Bulletin  (ARB)  43,  Chapter  4,  Inventory
          Pricing". This statement amends ARB 43, Chapter 4 "Inventory Pricing",
          to clarify  accounting for abnormal amounts of idle facility  expense,
          freight,  handling  costs and wasted  material.  SFAS No. 151 requires
          that  those  items be  recognized  as  current-period  charges  in all
          circumstances.  SFAS No. 151 is effective  for fiscal years  beginning
          after June 15, 2005. The Company does not believe that the adoption of
          SFAS No. 151 will have a material  effect on its  financial  position,
          results of operations or cash flows.

          In December 2004 the FASB issued SFAS No. 123R, "Share-Based Payment".
          SFAS No. 123R requires companies to recognize  compensation expense in
          an amount equal to the fair value of the  share-based  payment  (stock
          options and restricted stock) issued to employees. 123R applies to all
          transactions involving issuance of equity by a Company in exchange for
          goods and services,  including  transactions with employees.  SFAS No.
          123R is  effective  for the first  fiscal  period in the  fiscal  year
          beginning  after June 15,  2005.  The Company has not  determined  the
          impact of adopting SFAS No. 123R.

          On December  16,  2004,  the FASB issued  SFAS No. 153,  "Exchange  of
          Nonmonetary  Assets",  an amendment  of  Accounting  Principles  Board
          ("APB")  Opinion  No.  29,  which  differed  from  the   International
          Accounting   Standards  Board's  ("IASB")  method  of  accounting  for
          exchanges of similar productive assets. Statement No. 153 replaces the
          exception  from fair value  measurement  in APB No. 29, with a general
          exception from fair value  measurement  for exchanges of  non-monetary
          assets that do not have commercial  substance.  The Statement is to be

                                      F-14



          applied prospectively and is effective for nonmonetary asset exchanges
          occurring in fiscal periods beginning after June 15, 2005. The Company
          does not believe that SFAS No. 153 will have a material  impact on its
          results of operations or cash flows.

          In March 2005, the FASB issued FIN No. 47, "Accounting for Conditional
          Asset Retirement Obligations - an Interpretation of FASB Statement No.
          143". The  interpretation  clarifies  terms used in FASB Statement No.
          143 and is  effective no later than the end of fiscal  periods  ending
          after  December 15, 2005. The Company does not believe that FIN No. 47
          will have a  material  impact on its  results  of  operations  or cash
          flows.

          In February 2006, the FASB issued SFAS No. 155, "Hybrid  Instruments".
          The statement  amends SFAS No. 133 and SFAS No. 140,  "Accounting  for
          Transfers and  Servicing of Financial  Assets and  Extinguishments  of
          Liabilities".   The  statement  also  resolves  issues   addressed  in
          Statement 133 Implementation  Issue No. D1,  "Application of Statement
          133 to  Beneficial  Interests in  Securitized  Financial  Assets." The
          statement:   a)  permits  fair  value  remeasurement  for  any  hybrid
          financial   instrument  that  contains  an  embedded  derivative  that
          otherwise would require bifurcation,  b) clarifies which interest-only
          strips and  principal-only  strips are not subject to the requirements
          of SFAS No. 133, c) establishes a requirement to evaluate interests in
          securitized   financial   assets  to  identify   interests   that  are
          freestanding derivatives or that are hybrid financial instruments that
          contain an embedded  derivative  requiring  bifurcation,  d) clarifies
          that  concentrations  of credit risk in the form of subordination  are
          not embedded derivatives, and e) amends Statement 140 to eliminate the
          prohibition  on a  qualifying  special  purpose  entity from holding a
          derivative financial instrument that pertains to a beneficial interest
          other than another derivative financial  instrument.  CEL-SCI does not
          believe  that SFAS No. 155 will have a material  impact on its results
          of operations or cash flows.

     o.   Stock-Based  Compensation--  In October 1996, the FASB issued SFAS No.
          123,  "Accounting  for  Stock-Based   Compensation".   This  statement
          encourages  but does not require  companies  to account  for  employee
          stock  compensation  awards based on their estimated fair value at the
          grant date with the resulting cost charged to operations.  The Company
          has  elected to  continue  to  account  for its  employee  stock-based
          compensation using the intrinsic value method prescribed in Accounting
          Principles  Board No. 25,  "Accounting  for Stock Issued to Employees,
          and related  Interpretations".  In December 2002, the FASB issued SFAS
          No. 148,  "Accounting  for  Stock-Based  Compensation - Transition and
          Disclosure"  which amends SFAS No. 123. SFAS 148 provides  alternative
          methods of transition  for a voluntary  change to the fair value based
          method  of  accounting  for  stock-based  employee   compensation  and
          requires more prominent and more frequent disclosures in the financial
          statements of the effects of stock-based compensation.  The provisions
          of SFAS 148 are effective  for fiscal years ending after  December 15,
          2002.  The Company has elected to continue to account for its employee
          stock-based  compensation  using the intrinsic  value  method.  If the
          Company had elected to  recognize  compensation  expense  based on the
          fair value of the awards  granted,  consistent  with the provisions of
          SFAS No. 123,  the  Company's  net loss and net loss per common  share
          would have been increased to the pro forma amounts indicated below:


                                      F-15



                                               Year ended September 30,
                                          2005            2004          2003
                                        ---------      ---------      --------
Net loss:
  As reported                         $ (3,039,607)  $ (2,952,077) $ (7,986,175)
Add: Compensation expense for
 stock-based performance awards
 included in reported net loss,
 net of related tax effects                      -         63,755        48,437
Subtract:  Total stock-based
 employee compensation expense
 determined under fair-value
 based method for all awards,
 net of related tax effects               (575,716)     (1,106,271)  (1,019,513)
                                     ---------------  ------------- ------------
  Pro forma net loss                 $  (3,615,323)   $ (3,994,593)  (8,957,251)
                                     ===============  ============= ============
Net loss per common share:
  As reported                        $       (0.04)   $      (0.04) $     (0.16)
  Pro forma                          $       (0.05)   $      (0.06) $     (0.18)

   The weighted average fair value at the date of grant for options granted
   during fiscal years 2005, 2004 and 2003 was $0.48, $0.48, and $0.22 per
   option, respectively.

   The fair value of each option grant is estimated on the date of grant using
   the Black-Scholes option-pricing model with the following assumptions:

                                            2005          2004          2003
                                            ----          ----          ----

      Expected stock risk volatility         74%            88%          77%
      Risk-free interest rate              4.21%     3.13-4.25%        3.12%
      Expected life options              5 Years        5 Years      5 Years
      Expected dividend yield                  -              -            -

   The effects of applying SFAS No. 123 in this pro forma disclosure are not
   necessarily indicative of the effect on future amounts.

   The Company's stock options are not transferable, and the actual value of the
   stock options that an employee may realize, if any, will depend on the excess
   of the market price on the date of exercise over the exercise price. The
   Company has based its assumption for stock price volatility on the variance
   of monthly closing prices of the Company's stock. The risk-free rate of
   return used for fiscal years 2005 and 2004 equals the yield on five-year
   zero-coupon U.S. Treasury issues on the grant date. The risk-free rate of
   return used for fiscal year 2003 equals the yield on one to six year
   zero-coupon U.S. Treasury issues on the date of grant. No discount was
   applied to the value of the grants for non-transferability or risk of
   forfeiture.


                                      F-16




2.    RESTATEMENT OF FINANCIAL STATEMENTS

   Subsequent to the issuance of the Company's September 30, 2004 consolidated
   financial statements, the Company determined that it had erroneously
   accounted for certain financial instruments, including free-standing and
   embedded derivatives within such instruments, issued by the Company from
   fiscal year 1992 through November 2003. Specifically, the instruments
   erroneously accounted for were: the Series E Preferred Stock, the Cambrex
   Convertible Note Payable, Series F, G and H Convertible Debt, the equity line
   of credit agreements, as well as Series I and J warrants and various other
   warrants. The Company has concluded that these instruments were either
   freestanding derivative instruments in their entirety, or contained embedded
   derivatives, and should have been accounted for under SFAS No. 133 and EITF
   00-19, as well as related interpretations of these standards. All such
   derivatives were required to be recognized as either assets or liabilities in
   the statement of financial position and measured at fair value in the
   statement of operations, unless a scope exception applied. The Company's
   assessment of each instrument is as follows:

   Series E Convertible Preferred Stock ("Series E Stock") and Series E Callable
   and Non-Callable Stock Purchase Warrants -The Company issued Series E
   Convertible Preferred Stock, with detachable Series E Callable Stock Purchase
   Warrants, and contingently issuable Series E Non-Callable Stock Purchase
   Warrants in August 2001, in exchange for shares of common stock and other
   warrants. The Series E Stock was originally accounted for at par value as an
   equity restructuring. In connection with the restructuring, the Company
   determined the total implied value of the equity securities received and
   allocated the proceeds between the Series E Stock and Callable Warrants based
   on their relative fair values. The Company also calculated a beneficial
   conversion discount, which included the fair value of the Non-Callable
   Warrants, as they were to be issued on the Automatic Conversion Date. This
   discount was accreted to additional paid-in capital over the two-year period
   to the Automatic Conversion Date, and was adjusted for conversions of the
   Series E Stock to common stock. Periodic accretion was recognized as a deemed
   dividend to the holders of the Series E Stock. Dividends, which accrued on
   the preferred stock at a rate of 6% per annum, were recorded as additional
   paid-in capital.

   The Company has now determined that the Series E Stock was a hybrid
   instrument that had characteristics of a debt host agreement and contained
   embedded derivative features that had characteristics and risks that were not
   clearly and closely associated with the debt host. Certain of the embedded
   derivatives could not be reliably measured and therefore, the Series E Stock
   should have been recorded as a liability at the fair value of the hybrid
   instrument with changes in fair value recognized in earnings as either a gain
   or loss. The Series E Stock was immediately convertible into a variable
   number of shares of common stock at a fixed percentage of stated value. The
   fixed percentage doubled after the passage of two years. The Company
   determined that the Series E Stock should have been recorded at the fair
   value of the common shares into which it was convertible. The Series E Stock
   should also have been accreted to the percentage the stock was convertible
   into after two years. The accretion and dividends recorded on the stock
   should have been recorded as interest expense, consistent with the
   classification of a debt host.

   The Company has also now determined that the Series E Callable Warrants and
   Non-Callable Warrants were freestanding derivative instruments while
   outstanding, because the Company was required to maintain an effective
   registration statement covering the underlying shares. As freestanding


                                      F-17



   derivative instruments, the warrants should have been carried at fair value
   with changes in fair value recognized in earnings as either a gain or loss.

   Series F, G, and H Convertible Notes and Warrants- The Company issued Series
   F, G and H convertible notes and detachable stock purchase warrants in fiscal
   years 2002 and 2003. The proceeds from the notes were originally allocated
   between the notes and warrants based on the relative fair value of the notes
   and the warrants. The fair value of the warrants, as well as the beneficial
   conversion feature related to the notes, were recorded as discounts on the
   notes and amortized to interest expense over the term of the notes and
   accelerated on a pro-rata basis as the notes were converted.

   The Company has now determined that each of the Series F, G, and H Notes were
   hybrid instruments that had the characteristics of a debt host agreement and
   that contained embedded derivative features that should have been bifurcated
   and accounted for separately. The Company determined that certain of the
   embedded derivatives could not be reliably measured and therefore, the notes
   should have been recorded at the fair value of the hybrid instrument as a
   derivative liability with changes in fair value recognized in earnings as
   either a gain or loss. As the notes were immediately convertible into a
   variable number of shares based on a discount applied to the lowest three
   trading prices in a set period preceding the date of conversion, the Company
   determined that it should have recorded the notes at the fair value of the
   common shares into which the notes were convertible. The notes also bore
   interest that was convertible into a variable number of common shares at a
   fixed percentage. The Company has now determined that it should have accrued
   interest on the notes at the fair value of the shares into which the interest
   was convertible.

   The Company has now determined that the Series F, G and H warrants were
   freestanding derivative instruments because exercise of the individual
   warrants was required to be settled in registered shares, at issuance the
   number of potentially issuable shares of common stock required to satisfy
   exercise of the warrants and all other commitments that may require issuance
   of common stock was not determinable, and under certain circumstances the
   holders could require the Company to settle the warrants in cash. As
   freestanding derivative instruments, the warrants should have been carried at
   fair value with changes in fair value recognized in earnings as either a gain
   or loss.

   Cambrex Note - The Company issued a convertible note to Cambrex which was
   convertible into a variable number of shares at a fixed percentage discount
   in December 2003. The Company had originally recorded a beneficial conversion
   feature as a discount on the note, which was amortized to interest expense
   over the term of the note and also accelerated on a pro-rata basis as the
   note was repaid.

   The Company has now determined that the Cambrex note was a hybrid instrument
   that had the characteristics of a debt host agreement and that contained an
   embedded derivative conversion feature that should have been bifurcated and
   accounted for separately as an embedded derivative as it was not clearly and
   closely related to the debt host. The conversion feature should have been
   carried at fair value with changes in fair value recognized in earnings as
   either a gain or loss in earnings.

   2001 and 2003 Equity Lines of Credit and Stock Purchase Warrants- In April
   2001 and September 2003, the Company entered into two equity lines of credit


                                      F-18




   with detachable stock purchase warrants. The lines of credit were originally
   accounted for only upon the issuance of common stock by recording shares
   issued at at the fair value of the common stock drawn. The warrants were
   recorded as additional paid-in capital as a cost of obtaining equity
   financing.

   The Company has now determined that both equity lines of credit are
   freestanding derivative instruments because, under certain conditions, the
   Company could be required to compensate the investor for any decreases in the
   common stock price during the terms of the agreements. As freestanding
   derivative instruments, these equity lines of credit should have been carried
   as an asset or liability at fair value with changes in fair value recognized
   in earnings as either a gain or loss.

   The Company has now determined that the warrants issued with both equity
   lines of credit are freestanding derivative instruments. Warrants issued with
   the 2001 Equity Line of Credit should have been accounted for as derivative
   liabilities because the common shares underlying the warrants are required to
   be registered. Warrants issued with the 2003 Equity Line of Credit should
   have been accounted for as derivative liabilities because, under certain
   conditions, the Company could be required to compensate the investor for any
   decreases in the common stock price underlying the warrants during the term
   of the agreement.

   Series I Warrants - In May 2003, the Company issued Series I stock purchase
   warrants in conjunction with the sale of common stock. The proceeds from the
   sale of common shares and warrants was originally allocated between the
   shares and warrants based on relative fair value, with the value of the
   warrants recorded as additional paid-in capital as a cost of obtaining equity
   financing.

   The Company has now determined that these warrants were freestanding
   derivative instruments because exercise of the individual warrants was
   required to be settled in registered shares, at issuance the number of
   potentially issuable shares of common stock required to satisfy exercise of
   the warrants and all other commitments that may require issuance of common
   stock was not determinable, and under certain circumstances the holders could
   require the Company to settle the warrants in cash. As freestanding
   derivative instruments, the warrants should have been carried at fair value
   with changes in fair value recognized in earnings as either a gain or loss.

   Series J Warrants - In December 2003, the Company issued Series J stock
   purchase warrants in conjunction with the sale of common stock. The proceeds
   from the sale of common shares and warrants was originally allocated between
   the shares and warrants based on relative fair value, with the value of the
   warrants recorded as additional paid-in capital as a cost of obtaining equity
   financing.

   The Company has now determined that the Series J warrants were freestanding
   derivative instrument from the date of issuance, December 2003, until the
   shares were registered in May 2004, because the warrants were required to be
   settled in registered shares.

   Other Warrants - The Company issued certain other warrants in connection with
   equity financings that closed during fiscal years 1992 through 2001. These
   warrants were originally recorded as additional paid-in capital as costs of
   obtaining equity funding.

   The Company has now determined that these warrants were freestanding
   derivative instruments during the period August 16, 2001 through October 2,
   2003, because as of August 16, 2001 there were not sufficient authorized and

                                      F-19





   unissued shares of common stock to satisfy exercise of the warrants, as the
   number of shares that could potentially be issued to satisfy all other
   commitments that may require the issuance of common stock was not
   determinable. As freestanding derivative instruments, the warrants should
   have been recorded at fair value with changes in fair value recognized in
   earnings as either a gain or loss in earnings. Warrants still outstanding
   were reclassified to equity on October 2, 2003, as there were sufficient
   authorized and unissued shares to satisfy all other commitments that may
   require the issuance of common stock at that date.

   As a result, the accompanying consolidated financial statements as of
   September 30, 2004 and for the years ended September 30, 2004 and 2003 have
   been restated from amounts previously reported to correct the accounting for
   these transactions. The following is a summary of the effects of the
   restatement on the Company's consolidated financial statements.

                                               As previously
                                                  reported         As restated
                                               --------------      -----------
Year ended September 30, 2004
- ---------------------------------------
Gain (loss) on derivative instruments          $          -        $  1,174,660
Interest expense                                   (126,840)            (53,855)
Net loss                                         (4,199,722)         (2,952,077)
Net loss attributable to common
 shareholders                                    (4,199,722)         (2,952,077)
Loss per common share - basic                         (0.06)              (0.04)
Loss per common share - diluted                       (0.06)              (0.06)

Year ended September 30, 2003
- ---------------------------------------
Gain (loss) on derivative instruments          $          -        $ (2,319,005)
Other costs of financing                                  -            (270,664)
Interest expense                                 (2,340,667)         (1,365,675)
Net loss                                         (6,371,498)         (7,986,175)
Accrued dividends on preferred stock                (32,101)                  -
Accretion of beneficial conversion
 feature on preferred stock                         (76,720)                  -
Net loss attributable to common
 shareholders                                    (6,480,319)         (7,986,175)
Loss per common share - basic                         (0.13)              (0.16)
Loss per common share - diluted                       (0.13)              (0.19)

As of September 30, 2004
- ---------------------------------------
Derivative instruments - noncurrent            $          -        $  1,175,488
Total liabilities                                   215,981           1,391,468
Additional paid-in capital                       95,343,962          99,374,697
Accumulated deficit                             (90,753,370)        (95,959,592)
Total stockholders' equity                        5,297,829           4,122,342
Total liabilities and stockholders' equity        5,513,810           5,513,810


                                      F-20





                                               As previously
                                                  reported         As restated
                                               --------------      -----------
Year ended September 30, 2004
- ---------------------------------------
Cash flow from operating activities
  Net loss                                     $ (4,199,722)      $  (2,952,077)
  Adjustments to reconcile net loss
   to net cash used for operating
   activities:
  Repricing of stock options                              -               7,597
  Amortization of discount on
   note payable                                      30,916                   -
  Amortization of discount on
   convertible note                                  67,118              22,082
  (Gain) loss on derivative
   instruments                                            -          (1,174,660)
  Changes in assets and liabilities:
    Increase (decrease) in accrued expenses         (33,022)            (30,055)
      Net cash used for operating activities     (4,397,793)         (4,390,196)
 Cash flow from financing activities
  activities
   Proceeds from exercise of stock options          113,463             105,866
     Net cash provided by financing activities    7,081,722           7,074,125

Year ended September 30, 2003
- ---------------------------------------
Cash flow from operating activities
  Net loss                                    $  (6,371,498)       $ (7,986,175)
  Adjustments to reconcile net loss
   to net cash used for operating
   activities:
    Amortization of discount on note
     payable                                        113,300              37,500
    Accretion of Series E Stock to
     redemption value                                     -              98,791
    Debt issuance discount charged to
     interest expense                                     -             699,802
    Amortization of discount on
     convertible note                             1,738,241              62,025
    (Gain) loss on derivative
     instruments                                          -           2,319,005
    Other costs of financing, noncash
     expenses                                             -             270,664
    Changes in assets and liabilities:
      Decrease in accounts payable                  (65,548)            (65,548)
      Increase (decrease) in accrued expenses        80,764              59,195



   The effects of the restatement on the accounting for certain noncash
   transactions are reflected in the supplementary information on noncash
   transactions in the accompanying consolidated statements of cash flows.


                                      F-21





3.    OPERATIONS AND FINANCING

   The Company has incurred significant costs since its inception in connection
   with the acquisition of certain patented and unpatented proprietary
   technology and know-how relating to the human immunological defense system,
   patent applications, research and development, administrative costs,
   construction of laboratory facilities, and clinical trials. The Company has
   funded such costs with proceeds realized from the public and private sale of
   its common and preferred stock. The Company will be required to raise
   additional capital or find additional long-term financing in order to
   continue with its research efforts. The Company expects to receive additional
   funding from private investors subsequent to September 30, 2005; however,
   there can be no assurances that the Company will be able to raise additional
   capital or obtain additional financing. To date, the Company has not
   generated any revenue from product sales. The ability of the Company to
   complete the necessary clinical trials and obtain FDA approval for the sale
   of products to be developed on a commercial basis is uncertain.

   The Company plans to seek continued funding of the Company's development by
   raising additional capital. In fiscal year 2003, the Company reduced its
   discretionary expenditures. Fiscal year 2005 expenditures remained in line
   with fiscal year 2004 expenditures. If necessary, the Company plans to
   further reduce discretionary expenditures in fiscal year 2006; however such
   reductions would further delay the development of the Company's products. It
   is the opinion of management that sufficient funds will be available from
   external financing and additional capital and/or expenditure reductions in
   order to meet the Company's liabilities and commitments as they come due
   during fiscal year 2006. Ultimately, the Company must complete the
   development of its products, obtain the appropriate regulatory approvals and
   obtain sufficient revenues to support its cost structure.

4.   RESEARCH AND OFFICE EQUIPMENT

   Research and office equipment at September 30, 2005 and 2004, consists of the
following:

                                                 2005         2004
                                                ------       ------


Research equipment                            $ 1,718,895   $1,619,780
Furniture and equipment                           110,393      222,549
Leasehold improvements                             43,041       43,041
                                              -----------   ----------
                                                1,872,329    1,885,370

Less:  Accumulated depreciation  and
       amortization                            (1,690,788)  (1,651,758)
                                              -----------   ----------

Net research and office equipment             $   181,541   $  233,612
                                              ===========   ==========


                                      F-22





5. INCOME TAXES

   At September 30, 2005 the Company had a federal net operating loss
   carryforward of approximately $80.3 million expiring from 2006 through 2025.
   The Company has deferred tax assets of approximately $32.4 million and $30.8
   million at September 30, 2005 and 2004, respectively. The deferred tax assets
   are principally a result of the net operating loss carryforwards.

   At both September 30, 2005 and 2004, the Company has recognized a valuation
   allowance to the full extent of its deferred tax assets. In assessing the
   realization of the deferred tax assets, management considered whether it was
   more likely than not that some portion or all of the deferred tax asset will
   be realized. The ultimate realization of the deferred tax assets are
   dependent upon the generation of future taxable income. Management has
   considered the history of the Company's operating losses and believes that
   the realization of the benefit of the deferred tax assets cannot be
   determined. In addition, under the Internal Revenue Code Section 382, the
   Company's ability to utilize these net operating loss carryforwards may be
   limited or eliminated in the event of a change in ownership. Internal Revenue
   Code Section 382 generally defines a change in ownership as the situation
   where there has been a more than 50 percent change in ownership of the value
   of the Company within the last three years.

   The Company's effective tax rate is different from the applicable federal
   statutory tax rate. The reconciliation of these rates for the years ended
   September 30 is as follows:


                                                2005        2004       2003
                                                ----        ----       ----

Expected statutory rate                        (35.0%)     (35.0%)    (34.0%)
State tax rate, net of federal benefit          (3.9%)      (3.9%)     (4.0%)
Nondeductible interest                           0.0%        0.3%       4.2%
Nondeductible (nontaxable) derivative
 losses (gains)                                 (4.6%)     (15.5%)     11.0%
Other nondeductible expenses                    15.2%        0.2%       1.4%
Increase in valuation allowance                 28.3%       53.9%      21.4%
                                              -------     --------   --------
Effective tax rate                               0.0%        0.0%       0.0%
                                              =======     ========   ========


                                      F-23





6. STOCK OPTIONS, BONUS PLAN AND WARRANTS

   Non-Qualified Stock Option Plan--At September 30, 2005, the Company has
   collectively authorized the issuance of 9,760,000 shares of common stock
   under the Non-Qualified Stock Option Plan. Options typically vest over a
   three-year period and expire no later than ten years after the grant date.
   Terms of the options are to be determined by the Company's Compensation
   Committee, which administers all of the plans. The Company's employees,
   directors, officers, and consultants or advisors are eligible to be granted
   options under the Non-Qualified Stock Option Plan.

   Information regarding the Company's Non-Qualified Stock Option Plan is
   summarized as follows:
                                        Outstanding             Exercisable
                                    --------------------   ---------------------
                                                Weighted                Weighted
                                                Average                  Average
                                                Exercise                Exercise
                                     Shares     Price      Shares        Price
                                    -------     --------   ------       --------


   Options outstanding,
       October 1, 2002             4,073,434      $ 1.10   3,159,938   $  1.25

      Options granted              2,582,165       0.22
      Options exercised               (6,667)      0.33
      Options forfeited             (194,959)      1.44
                                ------------

   Options outstanding,
       September 30, 2003          6,453,973       0.74    3,319,317      1.18

       Options granted               670,000      0.61
       Options exercised            (198,503)     0.43
       Options forfeited             (26,332)     0.28
                               -------------

   Options outstanding,
       September 30, 2004          6,899,138      0.74     4,288,847      0.98
                                 -----------

      Options granted                278,000      0.48
        Options exercised           (174,001)     0.24
        Options forfeited           (787,774)     1.35
                              --------------

   Options outstanding,
       September 30, 2005          6,215,363      0.66     4,642,893      0.76
                                 ===========

                                      F-24





   At September 30, 2005, options outstanding and exercisable were as follows:

                                                                

                                                                               Weighted
                                  Weighted        Weighted                     Average
   Range of                        Average         Average                     Exercise
   Exercise           Number    Exercise Price    Remaining        Number       Price
    Prices         Outstanding   Outstanding   Contractual Life  Exercisable  Exercisable
   -------         -----------  -------------- ----------------  -----------  -----------

  $0.16 - $0.24     2,282,996      $ 0.22         7.49 years      1,445,184    $   0.22
  $0.33 - $0.50       659,666        0.40         8.04 years        371,666        0.33
  $0.54 - $0.81       961,500        0.59         8.19 years        514,842        0.57

  $1.05 - $1.58     1,976,266        1.07         3.02 years   1,976,266           1.07
  $1.67 - $2.51       310,835        1.93         3.24 years     310,835           1.93
  $3.25 - $4.88        23,300        3.29         1.76 years      23,300           3.29
  $6.25 - $9.38           800        6.25         3.00 years         800           6.25





   During March 2000, the Company agreed to restore and vest 40,000 options at
   prices ranging from $5.25 to $5.62, to one former Director and one Director
   as part of a settlement agreement. The options will expire on September 25,
   2006. As of September 30, 2005, 20,000 options had been exercised.

   In July 2001, the Company repriced 1,298,098 outstanding employee and
   director stock options under the Nonqualified Plans that were priced over
   $2.00 down to $1.05. In accordance with FASB Interpretation No. 44 (FIN 44),
   such repriced options are considered to be variable options. Changes in the
   fair market value of the Company's stock may result in future charges to
   compensation expense. There was no expense recorded during the years ended
   September 30, 2005, 2004 and 2003 because the exercise price of the options
   exceeded the fair market value of the Company's common stock. As of September
   30, 2005, 777,266 of these options remain outstanding.

   In November 2001, the Company extended the expiration date on 242,000 options
   at $1.05 from the Nonqualified Plans. The options were to expire between June
   2002 and October 2002 and were extended by one year to June 2003 through
   October 2003. The options had originally been granted between October 1989 to
   December 1995. These dates were considered a new measurement date with
   respect to all of the modified options. In addition, in February, April, and
   July 2002, the Company modified options outstanding to employees who had been
   terminated in conjunction with their change in employee status so that all
   options vested on the date of termination. These dates were considered a new
   measurement date with respect to all of the newly vested options. At each of
   the dates of modification, the exercise price of the options exceeded the
   fair market value of the Company's common stock and no compensation expense
   was recorded.

                                      F-25




   In November 2002 and March 2003, the Company extended the expiration date on
   897,000 options from the Nonqualified Stock Option Plan with exercise prices
   ranging from $1.05 to $1.94. The options originally would have expired from
   January 2003 to October 2003, but were extended to expiration dates ranging
   from January 2005 to October 2005. Each of these extension dates was
   considered a new measurement date. At each of the dates of modification, the
   exercise price of the options exceeded the fair market value of the Company's
   common stock and no compensation expense was recorded.

   In June 2004, the vesting of 10,700 nonqualified stock options was
   accelerated for an employee leaving the Company. Compensation expense of
   $7,597 was recorded for the modification.

   In April 2005, the Company extended the expiration date on 1,625,333 options
   from the Nonqualified Stock Option Plan with exercise prices ranging from
   $1.05 to $1.94. The options originally would have expired from June 2005 to
   October 2005 and were extended for three years to expiration dates ranging
   from June 2008 to October 2008. This extension was considered a new
   measurement date with respect to the modified options. At the date of
   modification, the exercise price of the options exceeded the fair market
   value of the Company's common stock and no compensation expense was recorded.
   As of September 30, 2005, all of these options remain outstanding.

   Incentive Stock Option Plan--At September 30, 2005, the Company has
   collectively authorized the issuance of 6,100,000 shares of common stock
   under the Incentive Stock Option Plan. Options vest after a one-year to
   three-year period and expire no later than ten years after the grant date.
   Terms of the options are to be determined by the Company's Compensation
   Committee, which administers all of the plans. Only the Company's employees
   and directors are eligible to be granted options under the Incentive Plan.

   Information regarding the Company's Incentive Stock Option Plan is summarized
as follows:

                                        Outstanding             Exercisable
                                    --------------------   ---------------------
                                                Weighted                Weighted
                                                Average                  Average
                                                Exercise                Exercise
                                     Shares     Price      Shares        Price
                                    -------     --------   ------       --------


       Options outstanding,
             October 1, 2002        1,251,100     $1.62   1,062,769      $1.69

         Options granted            2,550,000      0.22
         Options exercised                  -
         Options forfeited                  -
                                 -------------

       Options outstanding,
            September 30, 2003      3,801,100      0.68    1,162,768      1.65

         Options granted              100,000      1.13
         Options exercised            (15,000)     1.05


                                      F-26



         Options forfeited            (53,000)     1.15
                                 -------------

       Options outstanding,
           September 30, 2004       3,833,100      0.68    2,006,435      1.05

         Options granted              170,000      0.48
         Options exercised            (26,667)     0.22
         Options forfeited             (3,800)     2.16
                                -------------

       Options outstanding,
           September 30, 2005       3,972,633      0.68    2,885,968      0.81
                                =============

   At September 30, 2005, options outstanding and exercisable were as follows:

                                                                

                                                                               Weighted
                                  Weighted        Weighted                     Average
   Range of                        Average         Average                     Exercise
   Exercise           Number    Exercise Price    Remaining        Number       Price
    Prices         Outstanding   Outstanding   Contractual Life  Exercisable  Exercisable
   -------         -----------  -------------- ----------------  -----------  -----------

$0.22 - $0.33       2,523,333     $    0.22       7.50 years      1,673,334    $   0.22

$0.48 - $0.72         170,000          0.48       9.98 years              0        0.00

$1.00 - $1.50       1,038,766          1.08       3.78 years        972,100        1.08

$1.85 - $2.78          81,167          2.00       1.87 years         81,167        2.00

$2.87 - $4.31          28,667          3.38       0.58 years         28,667        3.38

$4.50 - $6.75         129,600          5.06       2.69 years        129,600        5.06

$9.00 - $13.50          1,100         10.09       0.73 years          1,100       10.09





   During fiscal year 2001, the Company extended the expiration date on 50,000
   options at $2.87 from the Incentive Stock Option Plan. The options were to
   expire November 1, 2001, and were extended to November 1, 2002. The options
   had originally been granted in November 1991. November 1, 2001 was considered
   a new measurement date; however, the exercise price on all the options
   modified exceeded the fair market value of the Company's common stock, and
   therefore, no compensation expense was recorded. In March 2003, the options
   were further extended to November 1, 2005. There was no compensation expense
   recorded because the exercise price on these options exceeded the fair market
   value of the Company's common stock.

   In July 2001, the Company repriced 816,066 outstanding employee and director
   stock options under the Incentive Stock Option Plan that were priced over
   $2.00 down to $1.05. In accordance with FIN 44, such repriced options are

                                      F-27



   considered to be variable options. No expense was recorded during the years
   ended September 30, 2003, 2004 or 2005 related to these options because the
   exercise price of these options exceeded the fair market value of the
   Company's common stock. As of September 30, 2005, 748,766 of these options
   remain outstanding. Changes in the fair market value of the Company's common
   stock may result in future changes in compensation expenses.

   In November 2001, the Company extended the expiration date on 56,000 options
   at $1.05 from the Incentive Stock Option Plan. The options were to expire
   between November 2002 and December 2002, and were extended by one year to
   November 2003 and December 2003. The options had originally been granted
   between November 1999 and December 1992. This date was considered a new
   measurement date with respect to the modified options. At each of the dates
   of modification, the exercise price of the options exceeded the fair market
   value of the Company's common stock and no compensation expense was recorded.

   In March 2003, the Company extended the expiration date on 105,500 options
   from the Incentive Stock Option Plan with exercise prices ranging from $1.05
   to $1.94. The options originally would have expired from August 2003 to March
   2004 but were extended to expiration dates ranging from August 2005 to March
   2006. This was considered a new measurement date with respect to all of the
   modified options. At each of the dates of modification, the exercise price of
   the options exceeded the fair market value of the Company's common stock and
   no compensation expense was recorded.

   In April 2005, the Company extended the expiration date on 128,100 options
   from the Incentive Stock Option Plan with exercise prices ranging from $1.05
   to $1.94. The options originally would have expired from July 2005 to
   December 2005 and were extended for three years to expiration dates ranging
   from July 2008 to December 2008. This was considered a new measurement date
   with respect to all of the modified options. At each of the dates of
   modification, the exercise price of the options exceeded the fair market
   value of the Company's common stock and no compensation expense was recorded.
   As of September 30, 2005, all options remain outstanding.

   Other Options and Warrants--In connection with the 1992 public offering,
   5,175,000 Public Warrants were issued. Every ten warrants entitled the holder
   to purchase one share of common stock at a price of $15.00 per share.
   Subsequently, the expiration date of the warrants was extended to February
   1998. Effective June 1, 1997, the exercise price of warrants was lowered from
   $15 to $6 and only five warrants, rather than 10 warrants, were required to
   purchase one share of common stock. Warrant holders who tendered five
   warrants and $6.00 between January 9, 1998, and February 7, 1998, would
   receive one share of the Company's common stock and one New Warrants. The New
   Warrants would permit the holder to purchase one share of the Company's
   common stock at a price of $10.00 per share prior to February 7, 2000. During
   fiscal year 1998, the expiration date of the Public Warrants was extended to
   July 31, 1998, and 582,025 Public warrants were tendered for 116,405 common
   shares and 116,405 New Warrants. All remaining Public Warrants expired as of
   September 30, 1999. In January 2001, the Company extended the expiration date
   on the 116,405 New Warrants to August 2001 and repriced them from $10.00 to
   $3.00 per share. In July 2001, the Company extended the expiration date
   further to February 2002. On August 16, 2001, the New Warrants no longer met
   the requirements for equity classification, because there were not sufficient
   authorized and unissued shares of the Company's common stock to satisfy

                                      F-28




   exercise of the warrants, as the number of potentially issuable shares of
   common stock required to satisfy all other commitments that may require the
   issuance of common stock was not determinable. The fair value of the warrants
   as of August 16, 2001, of $12,157 was reclassified from equity to a
   liability. During the year ended September 30, 2003, the Company recognized a
   gain on derivative of $4 arising from changes in the fair value of the
   warrants. All New Warrants expired on February 6, 2003.

   During fiscal year 1999, the Company granted a consultant options to purchase
   a total of 50,000 shares of the Company's common stock. The fair value of the
   options is expensed over the life of the consultant's contract. All 50,000
   options became exercisable during fiscal year 1999 at $2.50 per share. All
   options expired unexercised February 4, 2004.

   During fiscal year 2001, the Company granted options to consultants to
   purchase a total of 180,000 shares of the Company's common stock at exercise
   prices ranging from $1.05 to $1.63 expiring from June to July of 2006. As of
   September 30, 2005, all of these options were outstanding.

   In connection with the April 2001 Equity Line of Credit stock sale agreement
   discussed in Note 13, the Company issued 200,800 common stock purchase
   warrants. Each warrant entitled the holder to purchase one share of common
   stock at $1.64 per share. The warrants represented derivative instruments and
   were recorded as a liability upon issuance, as the common shares underlying
   the warrants were required to be registered. The fair value of the warrants
   totaling $235,562 was recorded as a derivative liability and a cost of
   financing. For the years ended September 30, 2004 and 2003, the Company
   recognized a gain of $36,597 and a loss of $34,307, respectively, resulting
   from changes in fair value of the warrants. The warrants expired unexercised
   in April 2004.

   In August 2001, the Company issued 272,108 common stock purchase warrants in
   connection with a private offering of common stock as discussed in Note 14.
   Each warrant entitled the holder to purchase one share of common stock at
   $1.75 per share. The warrants would have expired in July 2004, but were
   extended to July 2007. At issuance the warrants did not meet the requirements
   for equity classification because there were not sufficient authorized and
   unissued shares of the Company's common stock to satisfy exercise of the
   warrants, as the number of potentially issuable shares of common stock
   required to satisfy all other commitments that may require the issuance of
   common stock was not determinable. The fair value of the warrants totaling
   $286,617 was recorded as a liability and offset against the proceeds from the
   sale of stock as a cost of obtaining equity capital. On October 2, 2003, as
   there were sufficient unauthorized and unissued shares to satisfy all other
   commitments that may require the issuance of common stock, the fair value of
   the warrants of $111,418 was reclassified from liabilities to equity. During
   the years ended September 30, 2004 and 2003, the Company recognized losses of
   $38,561 and $68,245, respectively, arising from changes in the fair value of
   the warrants. As of September 30, 2005, 272,108 warrants remain outstanding.

   In October 2001, the Company issued 150,000 shares of common stock in a
   private offering for proceeds of $150,000. The investor also received
   warrants which entitled the holder to purchase 75,000 shares of common stock
   at $1.50 per share, expiring October 2004. Upon issuance, the warrants did
   not meet the requirements for equity classification because there were not
   sufficient authorized and unissued shares of the Company's common stock to


                                      F-29



   satisfy exercise of the warrants, as the number of potentially issuable
   shares of common stock required to satisfy all other commitments that may
   require the issuance of common stock was not determinable. Accordingly, the
   warrants were accounted for as freestanding derivative instruments from the
   date of issuance. Changes in the fair value of the warrants was recognized in
   earnings as either a gain or loss in such period as the change occurred. The
   warrants had a fair value of the warrants at issuance of $88,045 was recorded
   as a liability and offset against proceeds from the sale of stock as a cost
   of obtaining equity capital. On October 2, 2003, as there were sufficient
   unauthorized and unissued shares to satisfy all other commitments that may
   require the issuance of common stock, the fair value of the warrants of
   $37,236 was reclassified from liabilities to equity. During the years ended
   September 30, 2004 and 2003, the Company recognized losses of $12,031 and
   $23,415, respectively, arising from changes in the fair value of the
   warrants.

   Series E Callable Warrants were issued in connection with the issuance of
   Series E Preferred Stock in August 2001. The Series E Callable Warrants
   allowed the holders to purchase up to 815,351 shares of the Company's common
   stock at a price of $1.19 per share expiring August 16, 2004. During the year
   ended September 30, 2004, 244,724 warrants were exercised for proceeds of
   $291,222. Upon issuance, the warrants did not meet the requirements for
   equity classification because the Company was required to maintain an
   effective registration statement covering the underlying shares. Accordingly,
   the Series E Callable Warrants were accounted for as freestanding derivative
   instruments from the date of issuance. As there were no proceeds associated
   with the issuance of the Series E Preferred Stock, the fair value of the
   warrants totaling $119,434 was recorded as a liability and charged to other
   costs of financing. For the years ended September 30, 2004 and 2003, the
   Company recognized a gain of $59,156 and a loss of $125,204, respectively,
   arising from changes in fair value of the warrants.

   In August 2003, in accordance with the Series E Stock agreement discussed in
   Note 14 the Company issued 23,758 of Series E Non-Callable Warrants to
   purchase shares of common stock at a price of $0.77 per share expiring August
   16, 2006. The Series E Non-Callable Warrants are exercisable at any time
   prior to August 17, 2006 and, upon issuance, did not meet the requirements
   for equity classification because the Company was required to maintain an
   effective registration statement covering the underlying shares. Accordingly,
   the Series E Non-Callable Warrants were accounted for as freestanding
   derivative instruments from date of issuance. As there were no proceeds from
   the issuance, the fair value of the warrants totaling $12,374 was recorded as
   a liability and charged to other costs of financing. For the years ended
   September 30, 2005, 2004 and 2003, the Company recognized a gain of $5,042, a
   gain of $9,363 and a loss of $3,311, respectively, arising from changes in
   fair value of the warrants.

   Series F Warrants were issued in connection with the issuance of convertible
   debt in December 2001. The Series F Warrants allowed the holders to purchase
   up to 960,000 shares of the Company's common stock at $0.76 per share for
   seven years from date of issuance. The warrant price was adjustable if the
   Company sold any additional shares of its common stock or convertible
   securities for less than fair market value or at an amount lower than the
   exercise price of the Series F Warrants. The exercise price was adjusted
   every three months to an amount equal to 110% of the conversion price on such
   date, provided that the adjusted price was lower than the exercise price on
   that date. During the year ended September 30, 2003, 435,500 warrants were
   exercised for proceeds of $66,632. During the year ended September 30, 2004,

                                      F-30



   420,000 warrants were exercised in a cashless exercise. As of September 30,
   2004 there were no remaining Series F warrants outstanding. Upon issuance,
   the warrants did not meet the requirements for equity classification because
   exercise of the individual warrants was required to be settled in registered
   shares, at issuance the number of potentially issuable shares of common stock
   required to satisfy exercise of the warrants and all other commitments that
   may require issuance of common stock was not determinable, and under certain
   circumstances the holders could require the Company to settle the warrants in
   cash. Accordingly, the Series F Warrants were accounted for as a derivative
   liability and a discount on the debt which was immediately accreted to
   interest expense. At each subsequent period, through November 19, 2003, when
   all Series F warrants had been exercised, the warrants were marked to market
   with changes in fair value recognized in earnings as gains or losses on
   derivatives. During the years ended September 30, 2004 and 2003, the Company
   recognized losses of $167,000 and $394,500, respectively, arising from
   changes in the fair value of the Series F Warrants.

   Series G Warrants were issued in connection with the issuance of convertible
   debt in July 2002. The Series G Warrants allowed the holders to purchase up
   to 900,000 shares of the Company's common stock at a price equal to $0.25 per
   share at any time prior to July 12, 2009. If the Company sells any additional
   shares of common stock, or any securities convertible into common stock at a
   price below the then applicable warrant exercise price, the warrant exercise
   price will be lowered to the price at which the shares were sold or the
   lowest price at which the securities were convertible, as the case may be.
   The warrant exercise price is adjusted every three months to an amount equal
   to 110% of the Series G note conversion price on such date, provided that the
   adjusted price is lower than the warrant exercise price on that date. If the
   warrant exercise price is adjusted, the number of shares of common stock
   issuable upon the exercise of the warrant would be increased by the product
   of the number of shares of common stock issuable upon the exercise of the
   warrant immediately prior to the sale multiplied by the percentage by which
   the warrant exercise price was reduced. In accordance with the terms of the
   warrants, the exercise price was adjusted to $0.18 on December 9, 2002. The
   exercise price was adjusted to $0.145 on March 9, 2003. In accordance with
   the terms of the warrants, there were no further adjustments since the price
   would have been higher. During the year ended September 30, 2003, 450,000
   warrants were exercised for proceeds of $65,250. Upon issuance, the warrants
   did not meet the requirements for equity classification because exercise of
   the individual warrants was required to be settled in registered shares, at
   issuance the number of potentially issuable shares of common stock required
   to satisfy exercise of the warrants and all other commitments that may
   require issuance of common stock was not determinable, and under certain
   circumstances the holders could require the Company to settle the warrants in
   cash. Accordingly, the Series G warrants were recorded at fair value as a
   derivative liability and a discount on debt which was immediately accreted to
   interest expense. Subsequent changes in fair value are recognized in earnings
   as either a gain or loss. As of September 30, 2005, 450,000 Series G Warrants
   remain outstanding. As of September 30, 2005 and 2004, the fair value of the
   Series G warrants was $186,200 and $235,100, respectively. During the years
   ended September 30, 2005, 2004 and 2003, the Company recognized a gain of
   $48,900, a gain of $172,100, and a loss of $468,300, respectively, arising
   from changes in the fair value of the Series G warrants.

   Series H Warrants were issued in connection with the issuance of convertible
   debt in January 2003. The Series H Warrants allowed the holders to purchase
   up to 1,100,000 shares of the Company's common stock at a price equal to

                                      F-31



   $0.25 per share at any time prior to January 7, 2010. If the Company sells
   any additional shares of common stock, or any securities convertible into
   common stock at a price below the then applicable exercise price of the
   Series H warrants, the exercise price of the Series H warrants will be
   lowered to the price at which the shares were sold or the lowest price at
   which the securities are convertible. If the exercise price of the Series H
   warrants is adjusted, the number of shares of common stock issuable upon the
   exercise of the Series H warrants will be increased by the product of the
   number of shares of common stock issuable upon the exercise of the warrant
   immediately prior to the sale multiplied by the percentage by which the
   warrant exercise price is reduced. However, neither the exercise price nor
   the shares issuable upon the exercise of the Series H warrants will be
   adjusted as the result of shares issued in connection with a permitted
   financing, as defined in the agreement. Every three months after June 26,
   2003, the exercise price of the Series H warrants will be adjusted to an
   amount equal to 110% of the Series H notes conversion price on such date,
   provided that the adjusted price is lower than the warrant exercise price on
   that date. During the year ended September 30, 2003, 550,000 warrants were
   exercised at $0.25 for proceeds of $137,500. Upon issuance, the warrants did
   not meet the requirements for equity classification because exercise of the
   individual warrants was required to be settled in registered shares, at
   issuance the number of potentially issuable shares of common stock to satisfy
   exercise of the warrants and all other commitments that may require issuance
   of common stock was not determinable, and under certain circumstances the
   holders could require the Company to settle the warrants in cash.
   Accordingly, the Series H warrants were initially recorded at fair value as a
   derivative liability and a discount on debt which was immediately accreted to
   interest expense. Subsequent changes in fair value are recognized in earnings
   as either a gain or loss in the period such change occurs. As of September
   30, 2005, 550,000 Series H Warrants remain. As of September 30, 2005 and
   2004, the fair value of the Series H warrants was $223,500 and $290,800,
   respectively. During the years ended September 30, 2005, 2004 and 2003, the
   Company recognized a gain of $67,300, a gain of $193,500, and loss of
   $697,100, respectively, arising from changes in the fair value of the Series
   H warrants.

   Warrants were issued in connection with obtaining an equity line of credit in
   September 2003, discussed in Note 13. There were 395,726 warrants issued at
   an exercise price of $0.83, which expire in September 2008. Upon issuance,
   the warrants did not meet the requirements for equity classification because,
   under certain conditions, the Company could be required to compensate the
   investor for any decreases in the common stock price underlying the warrants
   and are therefore accounted for as a derivative liability. Subsequent changes
   in fair value are recognized in earnings as either a gain or loss in the
   period such change occurs. The warrants were initially classified in
   liabilities upon issuance at fair value of $258,290, as determined using the
   Black-Scholes pricing methodology and the Company recognized a charge of
   $258,290 which was included in other costs of financing as there were no
   proceeds from the issuance of the agreement. As of September 30, 2005 and
   2004, the fair value of the warrants was $93,745 and $165,359, respectively.
   During the years ended September 30, 2005, 2004 and 2003, the Company
   recognized a gain of $71,613, a gain of $151,943, and a loss of $59,012,
   respectively, arising from changes in the fair value of the warrants.

   In May 2003, 30,000 options were issued to a consultant at a price of $0.41
   per share. The options vest over a three year period and expire in May 2013.
   The compensation expense for these options was determined using the Black

                                      F-32



   Scholes pricing methodology with the following assumptions:

         Expected stock risk volatility       84%
         Risk-free interest rate             2.0%
         Expected life of warrant         3 Years
         Expected dividend yield              -0-

   The fair value of the options was recorded as a general and administrative
   expense. Compensation expense of $6,727 was recorded for the year ended
   September 30, 2003.

   In connection with an agreement with a private investor in May 2003,
   1,100,000 Series I Warrants were issued with an exercise price of $0.47. The
   warrants were to initially expire May 30, 2006. In accordance with the terms
   of the agreement, the warrant expiration was extended to May 30, 2008 on
   September 30, 2003. Upon issuance, the warrants did not meet the requirements
   for equity classification because exercise of the individual warrants was
   required to be settled in registered shares, at issuance the number of
   potentially issuable shares of common stock required to satisfy exercise of
   the warrants and all other commitments that may require issuance of common
   stock was not determinable, and under certain circumstances the holders could
   require the Company to cash settle the warrants and are therefore accounted
   for as freestanding derivative liabilities. Subsequent changes in fair value
   are recognized in earnings as either a gain or loss. The fair value of the
   warrants of $478,694 was recorded as a liability and offset against the
   proceeds from the sale of stock as a cost of obtaining equity capital. As of
   September 30, 2005 and 2004, the fair value of the warrants was $307,734 and
   $477,904, respectively. For the years ended September 30, 2005, 2004 and
   2003, the Company recognized a loss of $170,173, a gain of $426,232 and a
   loss of $425,445, respectively, arising from changes in fair value of the
   warrants.

   On December 1, 2003, CEL-SCI sold 2,999,964 shares of its common stock, to a
   group of private institutional investors for approximately $2,550,000, or
   $0.85 per share. As part of this transaction, the investors in the private
   offering received Series J Warrants which allow the investors to purchase
   991,003 shares of CEL-SCI's common stock exercisable at a price of $1.32 per
   share exercisable at any time prior to December 1, 2006. Additionally, an
   investment broker received warrants totaling 5% of the investment of its
   clients in the common stock of the Company at $1.32 per share at any time
   prior to December 1, 2006. Upon issuance, the warrants did not meet the
   requirements for equity classification until the shares were registered in
   May 2004, because the warrants are required to be settled in registered
   shares and were therefore accounted for as freestanding derivative
   instruments. The fair value of the warrants of $806,266 was recorded as a
   liability and offset against the proceeds from the sale as a cost of
   obtaining equity capital. Subsequent changes in fair value were recognized in
   earnings as either a gain or loss. On May 8, 2004 the criteria for equity
   classification were met, as a registration statement covering the underlying
   common shares was declared effective, and the fair value of the warrants
   totaling $537,338 was reclassified from liabilities to equity. For the year
   ended September 30, 2004, the Company recognized a gain of $268,928 arising
   from changes in fair value of the warrants.

   On May 4, 2004, the Company sold 6,402,439 shares of its common stock to a
   group of private institutional investors for $5,250,000 and total offering
   costs of $498,452. As part of this transaction, the investors in the private
   offering received warrants which allow the investors to purchase 76,642


                                      F-33



   shares of the Company's common stock at a price of $1.37 per share at any
   time prior to May 4, 2009. These warrants were valued at $38,127. This fair
   value was determined using the Black-Scholes pricing methodology with the
   following assumptions:

          Expected stock risk volatility     87%
          Risk-free interest rate          2.00%
          Expected life of options       3 Years
          Expected dividend yield            -0-

   In February 2005, the Company granted a consultant options to purchase 15,000
   shares of the Company's common stock at a price of $0.73 per share. The
   options vest over a three year period and expire in February 2015. The
   compensation expense for these options was determined using the Black Scholes
   pricing methodology with the following assumptions:

         Expected stock risk volatility       93%
         Risk-free interest rate            3.89%
         Expected life of warrant         5 Years
         Expected dividend yield              -0-

   The fair value of the options was recorded as general and administrative
   expense. Compensation expense of $7,972 was recorded for the year ended
   September 30, 2005.

   On July 18, 2005, CEL-SCI sold 1,250,000 shares of its common stock and
   375,000 warrants to one investor for $500,000. Each warrant entitles the
   holder to purchase one share of CEL-SCI's common stock at a price of $0.65
   per share at any time prior to July 18, 2009. The shares of common stock and
   warrants are "restricted" securities as defined in Rule 144 of the Securities
   and Exchange Commission. The warrants were valued at $155,671. The value was
   determined using the Black Scholes pricing methodology with the following
   assumptions:

         Expected stock risk volatility       75%
         Risk-free interest rate            3.92%
         Expected life of warrant         5 Years
         Expected dividend yield              -0-

   Stock Bonus Plan -- At September 30, 2005, the Company had been authorized to
   issue up to 3,940,000 shares of common stock under the Stock Bonus Plan. All
   employees, directors, officers, consultants, and advisors are eligible to be
   granted shares. During the year ended September 30, 2003, 134,336 shares with
   a fair value of $47,051 were issued under the Plan and recorded in the
   consolidated statement of operations. During the year ended September 30,
   2004, 72,495 shares were issued under the Plan with a fair value of $52,476.
   During the year ended September 30, 2005, 144,469 shares were issued to the
   Company's 401(k) plan for a cost of $78,868.

   Stock Compensation Plan-- During the year ended September 30, 2005, 1,500,000
   shares were authorized for use in the Company's stock compensation plan.
   During the year ended September 30, 2004, 1,000,000 shares were authorized
   for use in the Company's stock compensation plan. Of these shares, 25,050
   shares were issued during the year ended September 30, 2004 as compensation
   in lieu of salary increases extending through August 31, 2005. The shares


                                      F-34



   were issued at $0.62 per share for a total cost of $15,531. Of this, $14,237
   was recorded as unearned compensation in the consolidated balance sheet
   during the year ended September 30, 2004. This amount was recorded as expense
   during the year ended September 30, 2005.

7.    EMPLOYEE BENEFIT PLAN

   The Company maintains a defined contribution retirement plan, qualifying
   under Section 401(k) of the Internal Revenue Code, subject to the Employee
   Retirement Income Security Act of 1974, as amended, and covering
   substantially all Company employees. Each participant's contribution is
   matched by the Company with shares of common stock that have a value equal to
   100% of the participant's contribution, not to exceed the lesser of $10,000
   or 6% of the participant's total compensation. The Company's contribution of
   common stock is valued each quarter based upon the closing bid price of the
   Company's common stock. The expense for the years ended September 30, 2005,
   2004, and 2003, in connection with this Plan was $79,406, $56,158, and
   $48,437, respectively.

8. OPTIONAL SALARY ADJUSTMENT PLAN

   In July 2001, the Company adopted an "Optional Salary Adjustment Plan" (the
   "Plan"). In accordance with the Plan, employees received 40,000 stock options
   for each salary increment of $6,000 that they elect to forgo. The total
   amount of options to be granted under the Plan is limited to 1,200,000.
   During the years ended September 30, 2005, 2004 and 2003, there were no
   options issued in lieu of compensation.

9. COMMITMENTS AND CONTINGENCIES

   Operating Leases-The future minimum annual rental payments due under
   noncancelable operating leases for office and laboratory space are as
   follows:

            Year Ending September 30,
            ------------------------
                    2006                        $156,067
                    2007                         132,719
                    2008                          71,136
                    2009                          29,640
                    2010                               -
                                               ----------

               Total minimum lease payments     $389,562
                                               ==========

   Rent expense for the years ended September 30, 2005, 2004, and 2003, was
   $253,180, $282,138 and $276,564, respectively. Minimum payments have not been
   reduced by minimum sublease rental receivable under future cancelable
   subleases.

   Employment Contracts--In April 2005 the Company entered into a three year
   employment agreement with its President and Chairman of the Board which
   expires April 30, 2008. The employment agreement provides that CEL-SCI will
   pay him an annual salary of $363,000 during the term of the agreement. In the
   event that there is a material reduction in his authority, duties or
   activities, or in the event there is a change in the control of the Company,
   then the agreement allows him to resign from his position at the Company and

                                      F-35




   receive a lump-sum payment from CEL-SCI equal to 18 months salary. For
   purposes of the employment agreement, a change in the control of CEL-SCI
   means the sale of more than 50% of the outstanding shares of CEL-SCI's Common
   Stock, or a change in a majority of CEL-SCI's directors.

   Effective September 1, 2003, the Company entered into a three-year employment
   agreement with its Chief Executive and Financial Officer. The employment
   agreement provides that during the term of the employment agreement the
   Company will pay him an annual salary of $370,585. In the event there is a
   change in the control of the Company, the agreement allows him to resign from
   his position at the Company and receive a lump-sum payment from the Company
   equal to 24 months of salary. For purposes of the employment agreement a
   change in the control of the Company means: (1) the merger of the Company
   with another entity if after such merger the shareholders of the Company do
   not own at least 50% of voting capital stock of the surviving corporation;
   (2) the sale of substantially all of the assets of the Company; (3) the
   acquisition by any person of more than 50% of the Company's common stock; or
   (4) a change in a majority of the Company's directors which has not been
   approved by the incumbent directors.

10. CAMBREX NOTE

   On November 15, 2001, the Company signed an agreement with Cambrex Bio
   Science, Inc., (Cambrex) in which Cambrex provided manufacturing space and
   support to the Company during November and December 2001 and January 2002. In
   exchange, the Company signed a $1,172,517 note, which included imputed
   interest of $300,000. In December 2001, the note was amended to extend the
   due date to January 2, 2003. Unpaid principal began accruing interest on
   November 16, 2002, at the Prime Rate plus 3%. The note was collateralized by
   certain equipment. The imputed interest on this note was capitalized and was
   expensed over the life of the loan. In December 2002, the Company negotiated
   an extension of the note with Cambrex. Per the agreement, the Company gave
   Cambrex certain equipment and surrendered a security deposit, which reduced
   the amount owed by $225,000. The remaining balance was payable pursuant to a
   note due January 2, 2004. In addition, the agreement required the Company to
   pay $150,000 from the Series H convertible debt and 10% of all other future
   financing transactions, including draws on the equity line-of-credit. There
   were also conversion features added with the amendment allowing Cambrex to
   convert either all or part of the note into shares of the Company's common
   stock. The principal balance of the note and any accrued interest were
   convertible into common stock at 90% of the average of the closing prices of
   the common stock for the three trading days immediately prior to the
   conversion date, subject to a floor of $0.22 per share. During the year ended
   September 30, 2003, the Company paid down the note by $485,524. The Company
   also recorded interest expense of $49,486 and amortized the remaining
   discount of $37,500 relating to the imputed interest.

   The Company accounted for the amendment of the Cambrex note in December 2002
   as a modification of the existing note under EITF 96-19, "Debtor's Accounting
   for a Modification or Exchange of Debt Instruments". No gain or loss was
   recorded at the time of the amendment. The Cambrex note was accounted for as
   a hybrid instrument that had the characteristics of a debt host agreement and
   contained an embedded conversion feature that was not clearly and closely
   related to the debt host, and required bifurcation. The Company recorded a
   liability of $84,107, the fair value of the embedded derivative feature in

                                      F-36



   connection with the December 2002 note modification, with a corresponding
   offset to the note payable as a discount. The discount was amortized to
   interest expense over the term of the note. As of September 30, 2003, the
   remaining unamortized discount of $22,082 was amortized and recorded as
   interest expense through December 23, 2003, when the note was paid in full.
   During the years ended September 30, 2004 and 2003, the Company recognized a
   gain of $72,785 and $11,322 resulting from changes in fair value of the
   derivative liability. The Company also recognized additional interest expense
   of $22,082 and $99,525, for the years ended September 30, 2004 and 2003, from
   amortization of the discounts.

11. COVANCE NOTE

   On October 8, 2002, the Company signed an agreement with Covance AG
   (Covance), a Swiss Corporation. Pursuant to the agreement, amounts owed to
   Covance totaling $199,928 as of June 30, 2003 were converted to a note
   payable. The note was payable on January 2, 2004. Interest was payable at an
   annual rate of 8%. Until the entire amount was paid to Covance, Covance was
   entitled to receive 2% of any draw-down of the Company's equity credit line,
   2% of any net funds received from outside financings of less than $1 million,
   3% of any net funds received from outside financings greater than $1 million
   but less than $2 million and 4% of any net funds received from outside
   financings greater than $2 million. During the year ended September 30, 2003,
   the Company paid $15,598 on the note payable to Covance in accordance with
   the agreement. In December 2003, the note was repaid along with accrued
   interest of $2,581.

12.   CONVERTIBLE DEBT

   As of September 30, 2005, there is no outstanding convertible debt.

   In December 2001, the Company sold Series F Notes and Series F warrants, to a
   group of private investors for proceeds of $1,600,000, less transaction costs
   of $276,410. The notes bore interest at 7% per year and were due and payable
   December 31, 2003. The notes contained features that constituted embedded
   derivatives, certain of which could not be reliably measured. As a result,
   the Company accounted for the entire instrument at fair value. The Series F
   Notes were immediately convertible into a variable number of shares based on
   76% applied to the average of the lowest three trading prices in a twenty day
   period immediately preceding such conversion. The Company determined the fair
   value of the notes for accounting purposes was equal to the fair value of the
   shares into which it was convertible at each measurement date. No additional
   value has been ascribed to the other embedded derivative features of the
   Series F Notes in determining fair value of the Series F Notes as the Company
   believes that the value of such features can not be reasonably estimated or
   reliably measured due to the contingent nature of their occurrence. The notes
   were recorded at the fair value of 131.58%, and accordingly, the discount
   associated with the warrants was immediately accreted to interest expense.
   The Company has also accrued interest on the notes at a rate of 9.2%
   representing the stated 7% interest rate adjusted for the 76% rate at which
   the interest was convertible into common shares. During the year ended
   September 30, 2003 the Company recognized a loss of $43,923 arising from
   changes in the fair value of the Series F Notes. As of November 30, 2002, all
   convertible debt had been converted into a total of 6,592,461 shares of
   common stock. The Series F Warrants are discussed in Note 6.

                                      F-37





   In July and September 2002, CEL-SCI sold Series G Notes, plus Series G
   Warrants, to a group of private investors for $1,300,000. The notes bore
   interest at 7% per year and were due and payable in July and September 2004.
   The notes contained features that constituted embedded derivatives, certain
   of which could not be reliably measured. As a result, the Company accounted
   for the entire instrument at fair value. The Series G Notes were immediately
   convertible into a variable number of shares based on a factor of 76% applied
   to the average of the lowest three trading prices in a fifteen day period
   immediately preceding such conversion. The Company determined the fair value
   of the notes for accounting purposes was equal to the fair value of the
   shares into which it was convertible at each measurement date. No additional
   value has been ascribed to the other embedded derivative features of the
   Series G Notes in determining fair value of the Series G Notes as the Company
   believes that the value of such features can not be reasonably estimated or
   reliably measured due to the contingent nature of their occurrence. The notes
   were recorded at the fair value of 131.58%, and accordingly, the discount
   associated with the warrants was immediately accreted to interest expense.
   The Company has also accrued interest on the notes at a rate of 9.2%
   representing the stated 7% interest rate adjusted for the 76% rate at which
   the interest was convertible into common shares. During the year ended
   September 30, 2003, the Company recognized a loss of $701,001 arising from
   changes in the fair value of the Series G Notes. As of June 30, 2003 all of
   the Series G Notes had been converted into 8,390,746 shares of CEL-SCI's
   common stock. The Series G Warrants are discussed in Note 6.

   In January and July 2003, CEL-SCI sold Series H Notes, plus Series H
   Warrants, to a group of private investors for $1,350,000. The notes bore
   interest at 7% per year and were due and payable in January and July 2005.
   The notes contained features that constituted embedded derivatives, certain
   of which could not be reliably measured. Because certain of the embedded
   derivatives could not be reliably measured, the Company accounted for the
   entire instrument at fair value. The Series H Notes were immediately
   convertible into a variable number of shares based on a factor of 76% applied
   to the average of the lowest three trading prices in a fifteen day period
   immediately preceding such conversion. The Company determined the fair value
   of the notes for accounting purposes was equal to the fair value of the
   shares into which it was convertible at each measurement date. No additional
   value has been ascribed to the other embedded derivative features of the
   Series H Notes in determining fair value of the Series H Notes as the Company
   believes that the value of such features can not be reasonably estimated or
   reliably measured due to the contingent nature of their occurrence. The notes
   were recorded at the fair value of 131.58%, and accordingly, the discount
   associated with the warrants was immediately accreted to interest expense.
   The Company has also accrued interest on the notes at a rate of 9.2%
   representing the stated 7% interest rate adjusted for the 76% rate at which
   the interest was convertible into common shares. On May 30, 2003, fair value
   for accounting purposes was adjusted to 142.86% of outstanding face value due
   to a change in the discount factor used to compute the conversion price of
   the Series H Notes, triggered by the failure of the Company to have a
   registration statement declared effective. During the years ended September
   30, 2004 and 2003, the Company recognized a gain of $6,703 and a loss of
   $947,963, respectively, arising from changes in the fair value of the Series
   H Notes. As of October 2, 2003 all of the Series H Notes had been converted
   into 3,233,229 shares of CEL-SCI's common stock. The Series H Warrants are
   discussed in Note 6.

                                      F-38




13. EQUITY LINES OF CREDIT

   In April 2001, the Company entered into the 2001 Equity Line of Credit that
   allowed the Company at its discretion to sell up to $10 million of common
   stock in increments of a minimum of $100,000 and a maximum of $2 million for
   general operating requirements. The Company was restricted from entering into
   any other equity line of credit arrangement and the agreement expired in June
   2003. As discussed in Note 6, the Company issued 200,800 warrants to the
   issuer pursuant to this agreement. The Company accounted for the 2001 Equity
   Line of Credit as a freestanding derivative instrument as the Company could
   be required to compensate the investor for any decreases in the price of the
   Company's common stock during the term of the agreement. For the year ended
   September 30, 2003, the Company recognized a loss of $146,465 resulting from
   changes in fair value of the 2001 Equity Line of Credit.

   In September 2003, the Company entered into the 2003 Equity Line of Credit
   that allows the Company at its discretion to sell up to $10 million of common
   stock in increments of a minimum of $100,000 and a maximum amount that can be
   drawn down at any one time that will be determined at the time of the
   drawdown request, using a formula contained in the agreement. The Company is
   restricted from entering into any other equity line of credit arrangement
   until the earlier of the expiration of the agreement or two years from the
   date of registration of the shares underlying the agreement. As discussed in
   Note 6, the Company issued 395,726 warrants to the issuer at a price of $0.83
   exercisable through September 16, 2008. The Company accounted for the 2003
   Equity Line of Credit as a freestanding derivative instrument as the Company
   could be required to compensate the investor for any decreases in the price
   of the Company's common stock during the term of the agreement. The Company
   determined that the instrument had no fair value as of September 30, 2005 and
   2004. For the years ended September 30, 2005 and 2004, the Company recognized
   a gain of $16,223 and a loss of $5,065, respectively resulting from changes
   in fair value of the 2003 Equity Line of Credit. Expenses of $40,600 were
   charged to additional paid-in capital as a cost of equity related transaction
   during the year ended September 30, 2003. During the year ended September 30,
   2005, the Company sold 743,014 shares of its common stock pursuant to this
   agreement for gross proceeds of $366,238, net of related costs of $1,035.
   During the year ended September 30, 2004, the Company sold 307,082 shares of
   its common stock pursuant to this agreement for gross proceeds of $340,000,
   net of related costs of $4,090. During the year ended September 30, 2003, the
   Company sold 2,877,786 shares of its common stock pursuant to this agreement
   for net proceeds of $725,000.

14.   STOCKHOLDERS' EQUITY

   In October 2001, the Company issued 150,000 shares of common stock in a
   private offering for proceeds of $150,000. The investor also received
   warrants which entitled the holder to purchase 75,000 shares of common stock
   at $1.50 per share. These warrants expired unexercised October 5, 2004 and
   are discussed in Note 6.

   In May 2003, the Company sold 1,100,000 shares of common stock and an
   additional 1,100,000 warrants to purchase common stock in conjunction with a
   marketing agreement. The Company received proceeds of $500,000 for the stock
   and warrants. The warrants are exercisable at a price of $0.47 per share. The
   warrants initially expired May 30, 2006. In accordance with the terms of the

                                      F-39




   agreement, the expiration was extended to May 30, 2008. The warrants are
   discussed in Note 6.

   On December 1, 2003, CEL-SCI sold 2,999,964 shares of its common stock, to a
   group of private institutional investors for approximately $2,550,000, or
   $0.85 per share. There were associated costs of $93,159. As part of this
   transaction, the investors in the private offering received Series J Warrants
   which allow the investors to purchase 991,003 shares of CEL-SCI's common
   stock at a price of $1.32 per share at any time prior to December 1, 2006.
   See discussion of accounting for the Series J Warrants in Note 6.

   On May 4, 2004, the CEL-SCI sold 6,402,439 shares of its common stock to a
   group of private institutional investors at $0.82 per share for $5,250,000
   and associated costs of $498,452. As part of this transaction, the investment
   banker of the private offering received warrants which allow the investors to
   purchase 76,642 shares of CEL-SCI's common stock at a price of $1.37 per
   share at any time prior to May 4, 2009. See discussion of accounting for
   warrants in Note 6.

   On July 18, 2005, CEL-SCI sold 1,250,000 shares of its common stock and
   375,000 warrants to one investor for $500,000. Each warrant entitles the
   holder to purchase one share of CEL-SCI's common stock at a price of $0.65
   per share at any time prior to July 18, 2009. The shares of common stock and
   warrants are "restricted" securities as defined in Rule 144 of the Securities
   and Exchange Commission.

15. SERIES E PREFERRED STOCK

   During August 2001, three private investors exchanged shares of the Company's
   common stock and remaining Series D Warrants for 6,288 shares of the
   Company's Series E preferred stock ("Series E Stock"). These investors also
   exchanged their Series A and Series C Warrants for new Series E Callable
   Warrants discussed in Note 6. During the year ended September 30, 2002, 4,671
   shares of the Series E Stock were converted into 4,282,150 shares of common
   stock. During the year ended September 30, 2003, 1,192 shares of the Series E
   Stock were converted into 1,018,439 shares of common stock. As of September
   30, 2003, there were no shares of Series E Preferred stock remaining. The
   Series E Stock contained features that constituted embedded derivatives,
   certain of which could not be reliably measured. As a result, Company
   recorded the entire instrument at fair value. The Series E Stock was recorded
   at 107.53% of outstanding stated value. This represents the estimated fair
   value of the common shares that were deliverable upon conversion. The Series
   E Stock was immediately convertible into a variable number of shares based on
   a factor of 93% applied to the volume weighted average price for a period of
   five days preceding such conversion. No additional value has been ascribed to
   the other embedded derivative features of the Series E Stock in determining
   fair value of the Series E Stock as the Company believes that the value of
   such features can not be reasonably estimated or reliably measured due to the
   contingent nature of their occurrence. Additionally, the Company accreted the
   accounting fair value of the Series E Stock from 107.53% of stated value to
   215.06% of stated value over a two-year period through August 16, 2003,
   since, as of that date, the Company was required to deliver to holders of
   Series E Stock shares of common stock having a value of 215.06% of stated
   value under the automatic conversion provisions of the Series E Stock. During
   the year ended September 30, 2003, the Company recognized a gain of
   $1,807,859 arising from changes in the fair value of the Series E Stock. The
   Company also incurred $109,580 of interest expense on the Series E Stock

                                      F-40



   representing accretion of $98,791 and dividends classified as interest
   expense of $10,789. During the year ended September 30, 2003, $99,624 in
   accrued dividends and interest were converted into 97,389 shares of common
   stock. All outstanding shares of the Company's Series E Preferred Stock, 39
   shares, were automatically converted on August 17, 2003, into 47,531 common
   shares. In addition, on August 17, 2003, the Company issued 23,758 Series E
   Non-Callable common stock purchase warrants. See Note 6 for further
   discussion of the Series E Non-Callable Warrants.

16.   NET LOSS PER COMMON SHARE

   Basic earnings per share (EPS) excludes dilution and is computed by dividing
   net income by the weighted average of common shares outstanding for the
   period. Diluted EPS reflects the potential dilution that could occur if
   securities or other common stock equivalents (convertible preferred stock,
   convertible debt, warrants to purchase common stock and common stock options)
   were exercised or converted into common stock. The following table provides a
   reconciliation of the numerators and denominators of the basic and diluted
   per-share computations.

                                           2005          2004          2003
                                      -------------  ------------  ------------

Net loss - basic                      $(3,039,607)   $(2,952,077)  $(7,986,175)
Add: Interest on convertible
 preferred stock                                -              -        75,574
     Interest on convertible debt               -         12,950             -
     Gain on derivative instruments      (286,373)    (1,033,418)   (1,807,859)
                                      -------------  ------------  ------------
Net loss - diluted                    $(3,325,980)   $(3,972,545)  $(9,718,460)
                                      =============  ============  ============
Weighted average number of
 shares - basic                        72,703,395     67,273,133    50,961,457
Incremental shares from:
  Warrants                                878,530      1,461,552             -
  Convertible preferred stock                   -              -       165,982
  Convertible debt                              -        189,414             -
                                      -------------  ------------  ------------
Weighted average number of
 shares - diluted                      73,581,925     68,924,099    51,127,439
                                      =============  ============  ============

Earnings per share - basic            $     (0.04)   $     (0.04)  $     (0.16)
Earnings per share - diluted          $     (0.05)   $     (0.06)  $     (0.19)

   Excluded from the above computations of weighted-average shares for diluted
   net loss per share were options and warrants to purchase 10,787,480,
   13,429,012 and 14,689,497 shares of common stock as of September 30, 2005,
   2004 and 2003, respectively and convertible notes and accrued interest which
   are convertible to 4,236,901 shares of common stock as of September 30, 2003.
   These securities were excluded because their inclusion would have an
   anti-dilutive effect on net loss per share.


                                      F-41



17.  SEGMENT REPORTING

   SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
   Information" establishes standards for reporting information regarding
   operating segments in annual financial statements and requires selected
   information for those segments to be presented in interim financial reports
   issued to stockholders. SFAS No. 131 also establishes standards for related
   disclosures about products and services and geographic areas. Operating
   segments are identified as components of an enterprise about which separate
   discrete financial information is available for evaluation by the chief
   operating decision maker, or decision-making group, in making decisions how
   to allocate resources and assess performance. The Company's chief decision
   maker, as defined under SFAS No. 131, is the Chief Executive Officer. To
   date, the Company has viewed its operations as principally one segment, the
   research and development of certain drugs and vaccines. As a result, the
   financial information disclosed herein, materially represents all of the
   financial information related to the Company's principal operating segment.

18.   SUBSEQUENT EVENTS

   In order to provide a possible source of funding for CEL-SCI's current
   activities and for the development of its current and planned products,
   CEL-SCI entered into an equity line of credit agreement with Jena Holdings
   LLC on October 31, 2005.

   Under the equity line of credit agreement, Jena Holdings LLC has agreed to
   provide CEL-SCI with up to $5,000,000 of funding for a two year period which
   will begin on the date that a registration statement filed by CEL-SCI to
   register the shares to be sold to Jena Holdings LLC is declared effective by
   the Securities and Exchange Commission. During this two year period, CEL-SCI
   may request a drawdown under the equity line of credit by selling shares of
   its common stock to Jena Holdings LLC, and Jena Holdings LLC will be
   obligated to purchase the shares. The minimum amount CEL-SCI can draw down at
   any one time is $100,000, and the maximum amount CEL-SCI can draw down at any
   one time will be determined at the time of the drawdown request using a
   formula contained in the equity line of credit agreement. CEL-SCI may request
   a drawdown once every 22 trading days, although CEL-SCI is under no
   obligation to request any drawdowns under the equity line of credit.

   During the 22 trading days following a drawdown request, CEL-SCI will
   calculate the amount of shares it will sell to Jena Holdings LLC and the
   purchase price per share. The purchase price per share of common stock will
   be based on the daily volume weighted average price of CEL-SCI's common stock
   during each of the 22 trading days immediately following the drawdown date,
   less a discount of 11%.

   As consideration for extending the equity line of credit, CEL-SCI granted
   Jena Holdings LLC warrants to purchase 271,370 shares of common stock at a
   price of $0.55 per share at any time prior to October 24, 2010.

   CEL-SCI will be registering the shares of common stock issuable to Jena
   Holdings under the equity line of credit, as well as 271,370 shares
   underlying the warrants that CEL-SCI granted to Jena Holdings LLC.

                                      F-42





19.  QUARTERLY INFORMATION (UNAUDITED)

   The following quarterly data are derived from the Company's Consolidated
   Statements of Operations and have been restated to reflect the effect of
   adjustments discussed in Note 2 to the consolidated financial statements.


Financial Data

Fiscal 2004
                                                                         

                                      Three       Three       Three       Three
                                     months      months      months      months
                                      ended       ended       ended       ended    Year ended
                                    December                            September   September
                                       31,      March 31,   June 30,       30,         30
                                      2003        2004        2004        2004        2004
                                   ------------------------------------------------------------

Revenue                            $ 73,235    $  99,214    $  81,532   $  71,498   $ 325,479

Operating expenses                1,063,715    1,313,234      988,965   1,084,264   4,450,178
Nonoperating (expense) income
 as previously reported            (115,613)       8,747       13,823      18,020     (75,023)
Nonoperating (expense) income
(as restated, see Note 2)          (390,953)    (190,956)   1,261,080     493,451   1,172,622

Net loss as previously reported  (1,106,093)  (1,205,273)    (893,610)   (994,746) (4,199,722)
Net income (loss) (as restated,
 see Note 2)                     (1,381,433)  (1,404,976)     353,647    (519,315) (2,952,077)
Net loss attributable to common
 shareholders as previously
 reported                        (1,106,093)  (1,205,273)    (893,610)   (994,746) (4,199,722)
Net income (loss) attributable
 to common shareholders
 (as restated, see Note 2)       (1,381,433)  (1,404,976)     353,647    (519,315) (2,952,077)
Loss per common share - basic
 as previously reported               (0.02)       (0.02)       (0.01)      (0.01)      (0.06)
Income (loss) per common share
 - basic (as restated,
 see Note 2)                          (0.02)       (0.02)        0.01       (0.01)      (0.04)
Loss per common share - diluted
 as previously reported               (0.02)       (0.02)       (0.01)      (0.01)      (0.06)
Income ( loss) per common share
 - diluted (as restated,
 see Note 2)                          (0.02)       (0.02)       (0.01)      (0.01)      (0.06)





Fiscal 2005
                                                                         

                                      Three       Three       Three       Three
                                     months      months      months      months
                                      ended       ended       ended       ended    Year ended
                                    December                            September   September
                                       31,      March 31,   June 30,       30,         30
                                      2004        2005        2005        2005        2005
                                   ------------------------------------------------------------

Revenue                            $  75,507   $  109,785   $   38,103   $  46,530   $  269,925

Operating expenses                 1,289,997    1,198,617    1,022,474     839,604    4,350,692
Nonoperating (expense) income
  as previously reported              17,820       14,474       11,015           *            *
Nonoperating (expense) income
 (as restated, see Note 2)           (14,953)     (60,608)     330,585     786,136    1,041,160
Net loss as previously reported   (1,196,670)  (1,074,358)    (973,356)          *            *
Net income (loss) (as restated,
see Note 2)                       (1,229,443)  (1,149,440)    (653,786)     (6,938)  (3,039,607)
Net loss attributable to
 common shareholders as
 previously reported              (1,196,670)  (1,074,358)    (973,356)          *            *
Net income (loss) attributable
 to common shareholders
 (as restated, see Note 2)        (1,229,443)  (1,149,440)    (653,786)     (6,938)  (3,039,607)
Loss per common share - basic
 as previously reported                (0.02)       (0.01)       (0.01)          *            *
Income ( loss) per common share
 - basic (as restated,
 see Note 2)                           (0.02)       (0.02)       (0.01)          -        (0.04)
Loss per common share - diluted
 as previously reported                (0.02)       (0.01)       (0.01)          *            *
Income ( loss) per common share
 - diluted (as restated,
 see Note 2)                           (0.02)       (0.02)       (0.01)          -        (0.05)




* Amounts for the three months ended September 30, 2005 and for the year ended
September 30, 2005 have not been previously reported or restated.





                                   SIGNATURES


      In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 21st day of April 2006.

                               CEL-SCI CORPORATION


                                     By:
                                          ------------------------------
                                         Maximilian de Clara, President


                                     By:
                                         -------------------------------
                                         Geert R. Kersten, Chief Executive,
                                         Principal Accounting Officer and
                                         Principal Financial Officer

      Pursuant to the requirements of the Securities Act of l934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

Signature                        Title                Date


                               Director            April  21, 2006
- ----------------------
Maximilian de Clara


                               Director            April 21, 2006
- ----------------------
Geert R. Kersten


                               Director            April 21, 2006
- ----------------------
Alexander G. Esterhazy


                               Director            April 21, 2006
- ----------------------
C. Richard Kinsolving


                               Director            April 21, 2006
- ----------------------
Dr. Peter R. Young






























                               CEL-SCI CORPORATION

                                    FORM 10-K

                                    EXHIBITS

EX-23

                                   EXHIBIT 23





CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Numbers
333-27579, 333-03750, 333-57649, 333-69678, 333-84756, 333-31652 and 333-117088
of CEL-SCI Corporation on Form S-8, of our report dated January 6, 2005 (April
21, 2006 as to the effects of the restatement discussed in Note 2) (which report
expresses an unqualified opinion and includes an explanatory paragraph relating
to the restatement of the 2004 and 2003 financial statements) appearing in this
Annual Report on Form 10-K of CEL-SCI Corporation for the year ended September
30, 2005.

/s/ DELOITTE & TOUCHE LLP

McLean, Virginia
April 21, 2006








CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 333-27579, 333-03750, 333-57649, 333-69678,
333-84756, 333-31652 and 333-117088) of CEL-SCI Corporation of our report dated
April 6, 2006, relating to the consolidated financial statements, which appears
in this Form 10-K.

/s/ BDO SEIDMAN, LLP

Bethesda, Maryland
April 21, 2006

EX-31

                                   EXHIBIT 31





                                 CERTIFICATIONS

I, Geert Kersten, of CEL-SCI Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of CEL-SCI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

      a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or cause such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of the internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other
employees who have significant role in the registrant's internal control over
financial reporting.


April 21, 2006                            /s/ Geert R. Kersten
                                          ------------------------------
                                          Geert R. Kersten
                                          Chief Executive Officer




                                 CERTIFICATIONS

I, Geert Kersten, of CEL-SCI Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of CEL-SCI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

      a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or cause such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of the internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other
employees who have significant role in the registrant's internal control over
financial reporting.


April 21, 2006                            /s/ Geert R. Kersten
                                          ------------------------------
                                          Geert R. Kersten
                                          Principal Accounting and Financial
                                          Officer

EX-32

                                   EXHIBIT 32










      In connection with the Annual Report of CEL-SCI Corporation (the
"Company") on Form 10-K for the period ending September 30, 2005 as filed with
the Securities and Exchange Commission (the "Report"), Geert Kersten, the Chief
Executive and Principal Financial Officer of the Company, certifies, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to the best of his knowledge:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects the financial condition and results of the Company.


                                       By:  /s/ Geert Kersten
                                            ----------------------------------
                                            Geert Kersten, Chief Executive and
                                            Principal Financial Officer
April 21, 2006