-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FDM75lqWpRZKjHhXdrYDPLiRJQaO5IY0TOoI9TfX6dj4ElAeDx7B2z00uOGQlH6H 7tmrgvacz3V1dJgVzKlLsA== 0001004878-98-000010.txt : 19980211 0001004878-98-000010.hdr.sgml : 19980211 ACCESSION NUMBER: 0001004878-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEL SCI CORP CENTRAL INDEX KEY: 0000725363 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 840916344 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11889 FILM NUMBER: 98526608 BUSINESS ADDRESS: STREET 1: 66 CANAL CENTER PLZ STE 510 CITY: ALEXANDRIA STATE: VA ZIP: 22314 BUSINESS PHONE: 7035495293 MAIL ADDRESS: STREET 1: 66 CANAL CENTER PLAZA SUITE 510 CITY: ALEXANDRIA STATE: VA ZIP: 22314 FORMER COMPANY: FORMER CONFORMED NAME: INTERLEUKIN 2 INC DATE OF NAME CHANGE: 19880317 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997. OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________. Commission File Number 0-11503 CEL-SCI CORPORATION Colorado 84-0916344 ============================ State or other jurisdiction (IRS) Employer incorporation Identification Number 66 Canal Center Plaza, Suite 510 Alexandria, Virginia 22314 ----------------------------- Address of principal executive offices (703) 549-5293 ----------------------------- Registrant's telephone number, including area code Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) had been subject to such filing requirements for the past 90 days. Yes ____X_____ No __________ Class of Stock No. Shares Outstanding Date Common 11,268,410 February 9,1998 Page 1 of ___ pages TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Page ---- Balance Sheets 3-4 Statements of Operations 5 Statements of Cash Flow 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis 9 PART II Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 Item 1. FINANCIAL STATEMENTS CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS - ------------------------ ASSETS (unaudited)
December 31, September 30, 1997 1997 ----------------- ----------------- CURRENT ASSETS: Cash and cash equivalents $9,814,546 $3,508,606 Investments, net 5,762,940 745,216 Interest receivable 61,186 106,443 Prepaid expenses 381,490 410,788 Advances to officer/shareholder and employees 157,407 291,781 ----------------- ----------------- Total Current Assets 16,177,569 5,062,834 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $1,189,461 and $1,128,410 730,443 791,964 DEPOSITS 18,178 18,178 PATENT COSTS- less accumulated amortization of $414,899 and $402,025 465,876 461,421 ----------------- ----------------- $17,392,066 $6,334,397 ================= =================
See notes to condensed financial statements. 3 CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS - ------------------------ (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited)
December 31, September 30, 1997 1997 ----------------- ----------------- CURRENT LIABILITIES: Accounts payable $370,006 $481,587 ----------------- ----------------- Total current liabilities 370,006 481,587 DEFERRED RENT 27,030 27,030 ----------------- ----------------- Total liabilities 397,036 508,617 STOCKHOLDERS' EQUITY Preferred stock, Series D, $.01 par value - authorized 10,000 shares; issued and 100 - outstanding 10,000 shares Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 11,268,410 and 10,445,691 shares 112,684 104,457 Additional paid-in capital 57,182,093 44,419,244 Net unrealized loss on equity securities - (3,499) Deficit (40,299,847) (38,694,422) ----------------- ----------------- TOTAL STOCKHOLDERS' EQUITY 16,995,030 5,825,780 ----------------- ----------------- $17,392,066 $6,334,397 ================= =================
See notes to condensed financial statements. 4 CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - --------------------------------- (unaudited)
Three Months Ended December 31, 1997 1996 ----------------- ----------------- REVENUES: Interest income $97,581 $123,670 Other income 2,018 1,375 ----------------- ----------------- TOTAL INCOME 99,599 125,045 EXPENSES: Research and development 1,023,312 683,959 Depreciation and amortization 73,925 74,214 General and administrative 607,787 548,209 ----------------- ----------------- TOTAL OPERATING EXPENSES 1,705,024 1,306,382 ----------------- ----------------- NET LOSS $1,605,425 $1,181,337 ================= ================= LOSS PER COMMON SHARE $0.14 $0.14 ================= ================= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 11,146,683 8,153,409 ================= =================
See notes to condensed financial statements. 5 CEL-SCI CORPORATION - ------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW - --------------------------------- (unaudited)
Three Months Ended December 31, 1997 1996 ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(1,605,425) $(1,181,337) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 73,925 74,214 Amortization of premium (discount) on investments (12,051) (75,120) Unrealized loss on sale of investments (3,499) - Stock issued for services 23,254 - Changes in assets and liabilities, net of effect from purchase of Viral Technologies, Inc.: Decrease (increase) in accounts receivable 45,257 14,966 Decrease (increase) in prepaid expenses 29,298 10,341 Decrease (increase) in advances 702 29,765 Increase (decrease) in other current liabilities - 500,000 Increase (decrease) in accounts payable (111,581) (166,604) ----------------- ----------------- NET CASH USED IN OPERATING ACTIVITIES (1,560,120) (793,775) ----------------- ----------------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments 750,000 2,525,000 Purchase of investments (5,784,737) - Note receivable from employee/shareholder - (300,000) Payment on note receivable from employee/shareholder 135,075 Laboratory construction 471 (8,205) Purchase of research and office equipment - (1,533) Patent costs 17,329 (7,124) ----------------- ----------------- NET CASH USED IN INVESTING ACTIVITY (4,881,862) 2,208,138 ----------------- ----------------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Repurchase of preferred stock - (2,850,000) Issuance of preferred stock 9,500,000 2,850,000 Issuance of convertible debenture - Dividends paid - (98,968) Issuance of common stock 3,247,922 105,880 ----------------- ----------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 12,747,922 6,912 ----------------- ----------------- NET (DECREASE) INCREASE IN CASH 6,305,940 1,421,275 CASH AND CASH EQUIVALENTS: Beginning of period 3,508,606 3,549,810 ----------------- ----------------- End of period $9,814,546 $4,971,085 ================= =================
See notes to condensed financial statements. 6 CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996 (unaudited) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with rules established by the Securities and Exchange Commission for Form 10-Q. Not all financial disclosures required to present the financial position and results of operations in accordance with generally accepted accounting principles are included herein. The reader is referred to the Company's Financial Statements included in the registrant's Annual Report on Form 10-K for the year ended September 30, 1997. In the opinion of management, all accruals and adjustments (each of which is of a normal recurring nature) necessary for a fair presentation of the financial position as of December 31, 1997 and the results of operations for the three-month period then ended have been made. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. Investments 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. Loss per Share Net loss per common share is based on the weighted average number of common shares outstanding during the period. Common stock equivalents, including options to purchase common stock, are excluded from the calculation as they are antidilutive. Long-lived Assets Statement of Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets` and for Long-lived Assets to be Disposed of" is effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's opinion that the adoption of the statement would have no material effect on its Financial Statements. -7- CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996 (unaudited) (continued) B. RELATED PARTY TRANSACTIONS In October, 1996, the Company loaned $300,000 to an officer and shareholder. The loan carried an interest rate of 5% and is due March 31, 1998. Payments have been made on the note and the balance on December 31, 1997 is $151,801. C. STOCKHOLDERS' EQUITY On December 23, 1997, the Company sold 10,000 shares of convertible preferred stock to institutional investors for $10,000,000. Prior to September 19, 1998, the stock is convertible, at the option of the holder, into shares of common stock of the Company at $8.28, a premium to the closing bid stock price of $7.25, the day prior to the closing of the financing. The number of shares issuable upon the conversion of each Series D preferred share is to be determined by dividing $1,000 by $8.28. After a nine month holding period, the preferred stock will be convertible at the lower of $8.28 or the average price of the Company's common stock for any two trading days during the ten trading days preceding the conversion date. Investors also received an aggregate of 1,100,000 four-year warrants to purchase additional shares at $8.625 and $9.315. The Company has filed a registration statement for the resale of the shares of common stock acquired upon conversion of the convertible preferred stock and warrants. D. SUBSEQUENT EVENTS Between January 9 and February 6, 1998, the holders of the Company's outstanding warrants are being given the opportunity to purchase one share of the Company's common stock and one Series A Warrant for $6.00 and five warrants. The Series A warrant, by its original terms, allowed the holder to purchase one additional share of the Company's common stock for $18.00 at any time prior to February 7, 2000. The terms of the offering made by means of the November 14, 1997 Prospectus have been changed as follows: 1. The exercise price of the Series A warrant has been lowered from $18 to $10. 2. The expiration date of the exchange offer has been extended to February 17, 1998. 3. Warrants not exercised by February 17, 1998 may still be exercised at any time prior to March 7, 1998. Holders exercising warrants after February 17, 1998 and before March 7, 1998 will receive, for $6.00 and five warrants, one share of the Company's common stock. However, holders exercising warrants after February 17, 1998 will not receive a Series A warrant. -8- CEL-SCI CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Liquidity and Capital Resources The Company has had only limited revenues from operations since its inception in March 1983. The Company has relied upon proceeds realized from the public and private sale of its Common Stock and short-term borrowings to meet its funding requirements. Funds raised by the Company have been expended primarily in connection with the acquisition of exclusive rights to certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system, the funding of VTI's research and development program, patent applications, the repayment of debt, the continuation of Company-sponsored research and development and administrative costs, and the construction of laboratory facilities. Inasmuch as the Company does not anticipate realizing significant revenues until such time as it enters into licensing arrangements regarding its technology and know-how or until such time it receives permission to sell its product (which could take a number of years), the Company is mostly dependent upon short-term borrowings and the proceeds from the sale of its securities to meet all of its liquidity and capital resource requirements. Effective June 1, 1997, the exercise price of the publicly held warrants, was lowered from $15.00 to $6.00. In addition, the Company changed the terms of the conversion such that only 5 warrants are required to purchase one share. Previously ten warrants had been required. During 1997, the Company issued Preferred Stock. See Footnote C, Stockholders' Equity. Results of Operations Interest income during the three months ending December 31, 1997 reflects interest accrued on investments. Research and development expense has increased due to the preparation for VTI's Phase II Clinical Trials of the HIV vaccine as well as the addition of two clinical trials for Multikine. General and administrative expense has increased due to the additional employees needed for the increased activity level. -9- PART II Item 2. Changes in Securities and Use of Proceeds See Note C to the Company's Notes to Financial Statements. Item 6. (a) Exhibits No exhibits are filed with this document. (b) Reports on Form 8-K The Company filed a report on Form 8-K, dated December 22, 1998, pertaining to the issuance of the Company's Series D Preferred Stock. -9- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CEL-SCI Corporation Date:_______________, 1998 ____________________________ Geert Kersten Chief Executive Officer* *Also signing in the capacity of the Chief Accounting Officer and Principal Financial Officer. EX-27 2
5 0000725363 Cel-Sci Corporation 3-mos SEP-30-1998 DEC-31-1997 9,814,546 5,762,940 218,593 0 0 16,177,569 1,919,904 1,189,461 17,392,066 370,006 0 0 100 112,684 16,882,246 17,392,066 0 99,599 0 1,705,024 0 0 0 (1,605,425) 0 (1,605,425) 0 0 0 (1,605,425) (0.14) (0.14)
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