-----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, QvmTNqnIgFhedXYF5jQaQj3oawYDL7kac0UNaPX3uxdItFUTyipEADKatDcBQaS+ Xx7xC3Yd+o/RttHxQOO+rQ== 0001004878-98-000039.txt : 19980813 0001004878-98-000039.hdr.sgml : 19980813 ACCESSION NUMBER: 0001004878-98-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 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: 98682747 BUSINESS ADDRESS: STREET 1: 66 CANAL CENTER PLZ STE 510 CITY: ALEXANDRIA STATE: VA ZIP: 22314 BUSINESS PHONE: 7035495293 MAIL ADDRESS: STREET 1: 66 CANAL CENTER PLAZA SUITE 510 CITY: ALEXANDRIA STATE: VA ZIP: 22314 FORMER COMPANY: FORMER CONFORMED NAME: INTERLEUKIN 2 INC DATE OF NAME CHANGE: 19880317 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998. 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 8229 Boone Boulevard, Suite 802 Vienna, Virginia 22182 ----------------------------- Address of principal executive offices (703) 506-9460 ----------------------------- 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 11,518,236 July 31, 1998 Page 1 of ___ pages TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Page ---- Balance Sheets 3-4 Statements of Operations 5-6 Statements of Cash Flow 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis 10 PART II Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Item 1. FINANCIAL STATEMENTS CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------ ASSETS (unaudited) June 30, September 30, 1998 1997 CURRENT ASSETS: ================= ================= Cash and cash equivalents $2,500,696 $3,508,606 Investments, net 11,571,262 745,216 Interest receivable 72,813 106,443 Accounts receivable 1,375 Prepaid expenses 398,325 410,788 Advances to officer/shareholder and 112,644 291,781 employees ================= ================= Total Current Assets 14,657,115 5,062,834 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $1,311,563 and $1,128,410 646,716 791,964 DEPOSITS 33,006 18,178 PATENT COSTS- less accumulated amortization of $440,733 and $402,025 450,184 461,421 --------------- ----------------- $15,787,021 $6,334,397 See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------ (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) June 30, September 30, 1998 1997 CURRENT LIABILITIES: ----------------- ----------------- Accounts payable $259,180 $481,587 Total current liabilities 259,180 481,587 DEFERRED RENT - 27,030 ----------------- ----------------- Total liabilities 259,180 508,617 STOCKHOLDERS' EQUITY Preferred stock, Series D, $.01 par value - authorized 10,000 shares; issued and outstanding 100 shares 100 - Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 11,518,236 and 10,445,691 shares 115,182 104,457 Additional paid-in capital 58,559,206 44,419,244 Net unrealized loss on equity securities - (3,499) Deficit (43,146,647) (38,694,422) ----------------- ----------------- TOTAL STOCKHOLDERS' EQUITY 15,527,841 5,825,780 ----------------- ----------------- $15,787,021 $6,334,397 See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS --------------------------------- (unaudited) Nine Months Ended June 30, 1998 1997 REVENUES: ----------------- ----------------- Interest income $475,240 $316,159 Other income 7,468 62,105 ----------------- ----------------- TOTAL INCOME 482,708 378,264 EXPENSES: Research and development 2,729,982 4,795,504 Depreciation and amortization 221,861 236,541 General and administrative 1,983,089 1,799,454 ----------------- ----------------- TOTAL OPERATING EXPENSES 4,934,932 6,831,499 ----------------- ----------------- NET LOSS $4,452,224 $6,453,235 LOSS PER COMMON SHARE $0.39 $0.72 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 11,330,998 8,970,583 See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS ---------------------------------- (unaudited) Three Months Ended June 30, 1998 1997 REVENUES: ----------------- ----------------- Interest Income $194,237 $92,937 Other Income 2,716 58,667 TOTAL INCOME 196,953 151,604 ----------------- ----------------- EXPENSES: Research and development 1,002,321 1,122,561 Depreciation and amortization 73,987 81,222 General and administrative 741,284 661,484 ----------------- ----------------- TOTAL OPERATING EXPENSES 1,817,592 1,865,267 ----------------- ----------------- NET LOSS $1,620,639 $1,713,663 ================= ================= LOSS PER COMMON SHARE $0.14 $0.17 ================= ================= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 11,507,187 9,917,471 See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW --------------------------------- (unaudited) Nine Months Ended June 30, 1998 1997 --------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(4,452,224) $(6,453,235) Adjustments to reconcile net loss to net cash used in operating activities: Research and development expenses related to stock portion of purchase of Cell-Med 150,000 Research and development expenses related to stock portion of Purchase of Multikine rights from Sittona 1,747,651 Depreciation and amortization 221,861 236,541 Amortization of premium (discount) on (237,060) (166,102) investments Unrealized gain (loss) on sale of investments 3,499 13,523 Stock issued for services 23,254 - Stock options issued for services 40,419 - Stock issued to 401K 19,675 - Decrease (increase) in deposits (14,828) - Decrease (increase) in interest receivable 33,630 4,139 Decrease (increase) in accounts receivable (1,375) - Decrease (increase) in prepaid expenses (10,420) (304,106) Decrease (increase) in advances 311,286 134,801 Increase (decrease) in other current - 25,498 liabilities Increase (decrease) in accounts payable (222,407) 6,844 --------------- ------------- NET CASH USED IN OPERATING ACTIVITIES (4,284,690) (4,604,446) --------------- ------------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments 7,700,000 5,620,000 Purchase of investments (18,602,893) (950,000) Note receivable from employee/shareholder - (300,000) Payment on note receivable from 177,610 18,100 employee/shareholder Laboratory construction - (115,790) Purchase of research and office equipment and (37,905) (65,667) leasehold costs Patent costs (27,471) (45,851) --------------- ---------------- NET CASH USED IN INVESTING ACTIVITY (10,790,659) 4,160,792 --------------- ---------------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Repurchase of preferred stock - - Issuance of preferred stock 10,000,000 - Dividends paid - (108,957) Issuance of common stock 4,067,439 403,951 -------------- ---------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 14,067,439 294,994 -------------- ---------------- NET (DECREASE) INCREASE IN CASH (1,007,910) (148,660) CASH AND CASH EQUIVALENTS: Beginning of period 3,508,606 3,549,810 -------------- ---------------- End of period $2,500,696 $3,401,150 ============== ================ See notes to condensed financial statements. CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED June 30, 1998 AND 1997 (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 June 30, 1998 and the results of operations for the nine-month period then ended have been made. Significant accounting policies have been consistently applied in the interim financial statements and the annual financial statements. Investments 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. CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 1998 AND 1997 (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 September 30, 1998. Payments have been made on the note and the balance on June 30, 1998 is $109,265. C. STOCKHOLDERS' EQUITY On December 23, 1997, the Company sold 10,000 shares of Series D convertible preferred stock to institutional investors for $10,000,000. The stock was initially convertible, at the option of the holder, into shares of common stock of the Company at $8.28. The number of shares issuable upon the conversion of each Series D preferred share was to be determined by dividing $1,000 by $8.28. The preferred stock is now 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 filed a registration statement for the resale of the shares of common stock acquired upon conversion of the Series D preferred stock and warrants. D. SERIES A WARRANT OFFER Between January 9, 1998 and February 6, 1998 the holders of the Company's outstanding warrants were given the opportunity to purchase one share of the Company's Common Stock and one Series A Warrant in exchange for $6.00 and five warrants (the "Exchange Offer"). Each Series A Warrant originally 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 expiration date of the Exchange offer was subsequently extended to February 17, 1998 and the exercise price of the Series A Warrants was lowered to $10.00. During the period of the exchange offer, 582,025 warrants were tendered, the Company received proceeds of approximately $698,000, and a total of 116,405 Series A Warrants were issued to the warrant holders participating in the exchange offer. The Company's old warrants expired on July 31, 1998. 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. These warrants expired on July 31, 1998. During 1997, the Company issued Preferred Stock. See Footnote C, Stockholders' Equity. Results of Operations Interest income during the nine months ending June 30, 1998 reflects interest accrued on investments. Interest income has increased over the same period in 1997 due to the investment of the proceeds of the sale of the Series D Preferred Stock. Research and development expense in 1998 is substantially less than it was in 1997 because the 1997 numbers reflect the acquisition of the license for Multikine. General and administrative expenses have increased due to the additional employees needed for the increased activity level. PART II Item 2. Changes in Securities and Use of Proceeds See Notes C and D to the Company's Notes to Financial Statements. Item 6. (a) Exhibits No exhibits are filed with this report. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter ended June 30, 1998. 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:August 11, 1998 /s/ Geert Kersten ------------------------------ Geert Kersten Chief Executive Officer* *Also signing in the capacity of the Chief Accounting Officer and Principal Financial Officer. EX-27 2 FDS --
5 1 1.00 9-MOS SEP-30-1998 JUN-30-1998 1 2,500,696 11,571,262 186,832 0 0 14,657,115 1,958,279 1,311,563 15,787,021 259,180 0 0 100 115,182 15,412,559 15,787,021 0 482,708 0 4,934,932 0 0 0 (4,452,224) 0 (4,452,224) 0 0 0 (4,452,224) (0.39) (0.39)
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