-----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, DlgUUAsKG5QHjl2uNTGty5bcJwtBZtdm3pbubu97eqKosBGgwF2+qSoCW6Aw5Jhx 3pN8fqMmfeGwS1lwaQHoYg== 0001004878-99-000012.txt : 19990217 0001004878-99-000012.hdr.sgml : 19990217 ACCESSION NUMBER: 0001004878-99-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 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: 99539913 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, 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 14,279,027 February 8, 1999 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 September 31, 30, 1998 1998 ------------- -------------- CURRENT ASSETS: Cash and cash equivalents $2,511,702 $2,813,225 Investments, net 9,675,311 8,389,198 Interest and other receivables 68,553 69,809 Prepaid expenses 653,822 723,834 Advances to officer/shareholder 52,567 70,982 and employees ------------- -------------- Total Current Assets 11,675,842 13,353,161 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $1,404,522 and $1,352,165 599,026 619,496 DEPOSITS 14,828 14,828 PATENT COSTS- less accumulated amortization of $467,904 and $454,328 454,408 444,328 ------------- -------------- $12,744,104 $14,431,813 ============= ============== See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------ (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) December 31, September 30, 1998 1998 ------------- -------------- CURRENT LIABILITIES: Accounts payable $298,896 $427,147 ------------- -------------- Total current liabilities 298,896 427,147 DEFERRED RENT 29,382 29,382 ------------- -------------- Total liabilities 328,278 456,529 STOCKHOLDERS' EQUITY Preferred stock, Series D, $.01 par value - authorized 10,000 shares; issued and outstanding 71 90 7,084 and 9,002 shares Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 12,796,979 and 11,972,695 shares 127,970 119,726 Additional paid-in capital 59,054,193 59,040,864 Net unrealized loss on equity (111,110) (48,291) securities Deficit (46,655,298) (45,137,105) ------------- -------------- TOTAL STOCKHOLDERS' EQUITY 12,415,826 13,975,284 ------------- -------------- $12,744,104 $14,431,813 ============= ============== See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS --------------------------------- (unaudited) Three Months Ended December 31, 1998 1997 ------------- -------------- REVENUES: Interest income $156,046 $97,581 Other income 39,667 2,018 ------------- -------------- TOTAL INCOME 195,713 99,599 EXPENSES: Research and development 941,948 1,023,312 Depreciation and amortization 65,932 73,925 General and administrative 706,024 607,787 ------------- -------------- TOTAL OPERATING EXPENSES 1,713,904 1,705,024 ------------- -------------- NET LOSS $1,518,191 $1,605,425 ============= ============== LOSS PER COMMON SHARE (BASIC) $0.13 $0.32 ============= ============== LOSS PER COMMON SHARE (DILUTED) $0.13 $0.32 ============= ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 11,615,914 11,146,683 ============= ============== See notes to condensed financial statements. CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW --------------------------------- (unaudited) Three Months Ended December 31, 1998 1997 ------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(1,518,191) $(1,605,425) Adjustments to reconcile net loss to net cash used in operating activities: - Depreciation and amortization 65,932 73,925 Amortization of premium - (12,051) (discount) on investments Unrealized gain (loss) on - (3,499) investments Stock issued for services - 23,254 Stock options issued for services - - Decrease (increase) in interest 1,256 45,257 receivable Decrease (increase) in prepaid 70,013 29,298 expenses Decrease (increase) in advances (52,395) 702 Increase (decrease) in other - - current liabilities Increase (decrease) in accounts (128,251) (111,581) payable ------------- -------------- NET CASH USED IN OPERATING (1,561,636) (1,560,120) ACTIVITIES ------------- -------------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments 1,294,101 750,000 Purchase of investments - (5,784,737) Note receivable from - - employee/shareholder Payment on note receivable from - 135,075 employee/shareholder Laboratory construction - 471 Purchase of research and office (31,887) - equipment Patent costs (23,654) 17,329 ------------- -------------- NET CASH USED IN INVESTING ACTIVITY 1,238,560 (4,881,862) ------------- -------------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Repurchase of preferred stock - - Issuance of preferred stock - 9,500,000 Dividends paid - - Issuance of common stock 21,553 3,247,922 ------------- -------------- NET CASH PROVIDED BY FINANCING 21,553 12,747,922 ACTIVITIES ------------- -------------- NET (DECREASE) INCREASE IN CASH (301,523) 6,305,940 CASH AND CASH EQUIVALENTS: Beginning of period 2,813,225 3,508,606 ------------- -------------- End of period $2,511,702 $9,814,546 ============= ============== CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS THREE MONTHS ENDED DECEMBER 31, 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, 1998. 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, 1998 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 computed by dividing the net loss, after increasing the loss for the effect of any preferred stock dividends, by the weighted average number of common shares outstanding during the period. Common stock equivalents, including options to purchase common stock, were excluded from the calculation. Long-lived Assets Statement of Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of" is effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's opinion that the adoption of the statement would have no material effect on its Financial Statements. CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS THREE MONTHS ENDED DECEMBER 31, 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. The final payment on the note was made in October 1998. 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. Each share of the Series D Preferred Stock is convertible, at the option of the holder, into shares of common stock of the Company in an amount determined by dividing $1,000 by the lower of $8.28 or the average price of the Company's common stock for any two consecutive 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. During the quarter ended December 31, 1998, 1,918 shares of the Series D preferred stock were converted into 828,338 shares of common stock. D. COMPREHENSIVE LOSS In fiscal 1999, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 130 "Reporting Comprehensive Income" which was effective for fiscal years beginning after December 15, 1997. Comprehensive income(loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company's source of other comprehensive loss, other than net losses, is from unrealized gain or loss on investments. The components of comprehensive income (loss) are as follows: Three months ended Three months ended December 31, 1998 December 31, 1997 Net Loss $1,518,191 $1,605,425 Other Comprehensive Income: Unrealized Loss (Gain) from Investments 62,819 (3,499) ------ ------- Comprehensive Loss $1,581,010 $1,601,926 ========== ========== 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. Results of Operations Interest income during the three months ending December 31, 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 was similar to 1997. General and administrative expenses have increased due to the addition of more employees needed for the increased activity level. Year 2000 The Company is in the process of modifying its computer hardware and software systems to recognize the year 2000. The Company expects these modifications to be substantially complete by early 1999. The Company does not expect these modifications to have a significant effect on its operations and the costs of modification are expected to be insignificant. In addition, the Company is evaluating significant vendors and other third parties which could have an effect on the Company's operations to ensure year 2000 compliance. If the Company's computer systems fail during the year 2000, the Company may need to have independent laboratories perform some of research that is presently being conducted by the Company's laboratory. Since the Company expects its computer systems to be compliant with the year 2000 by early 1999, the Company has not developed any contingency plans in the event the Company's computer systems fail to be year 2000 compliant. 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 December 31, 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: February 11, 1999 /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 U.S. Dollars 3-mos sep-30-1999 DEC-31-1998 1.00 2,511,702 8,389,198 121,120 0 0 11,675,842 2,003,548 1,404,522 12,744,104 298,896 0 0 71 127,970 12,287,785 12,744,104 0 195,713 0 1,713,904 0 0 0 (1,518,191) 0 (1,518,191) 0 0 0 (1,518,191) (0.13) (0.13)
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