-----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, Ak1LktpLzp2U0KRdHxUwdPqedGMjZQW2C+LxyGVFumx5+/+QjAwWDmUrThms9mj+ WS22aR/45mNN9IM0jZKG9w== 0001004878-99-000033.txt : 19990817 0001004878-99-000033.hdr.sgml : 19990817 ACCESSION NUMBER: 0001004878-99-000033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 333-72415 FILM NUMBER: 99690817 BUSINESS ADDRESS: STREET 1: 8229 BOONE BLVD STE 510 CITY: VIENNA STATE: VA ZIP: 22182 BUSINESS PHONE: 7035495293 MAIL ADDRESS: STREET 1: 8229 BOONE BLVD STE 802 CITY: VIENNA STATE: VA ZIP: 22182 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, 1999. 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 16,351,446 Aug 9, 1999 Page 1 of 12 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, 1999 1998 ------- ------------- CURRENT ASSETS: Cash and cash equivalents $ 2,496,167 $ 2,813,225 Investments, net 4,788,709 9,675,311 Interest and other receivables 69,397 69,809 Prepaid expenses 544,464 723,834 Advances to officer/shareholder and employees 26,816 70,982 ------------- ------------- Total Current Assets 7,925,553 13,353,161 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $1,509,966 and $1,352,165 504,092 619,496 DEPOSITS 14,828 14,828 PATENT COSTS- less accumulated amortization of $496,276 and $454,328 494,135 444,328 ------------ -------------- $ 8,938,608 $14,431,813 =========== =========== See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) June 30, September 30, 1999 1998 ------- ----------- CURRENT LIABILITIES: Accounts payable $198,359 $427,147 --------- -------- Total current liabilities 198,359 427,147 DEFERRED RENT 29,382 29,382 ---------- --------- Total liabilities 227,741 456,529 STOCKHOLDERS' EQUITY Preferred stock, Series D, $.01 par value - authorized 10,000 shares; issued and outstanding 779 and 9,002 shares 8 90 Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 16,351,446 and 11,972,695 shares 163,514 119,726 Additional paid-in capital 59,123,522 59,040,864 Net unrealized loss on equity securities (115,191) (48,291) Deficit (50,460,986) (45,137,105) ------------- ------------- TOTAL STOCKHOLDERS' EQUITY 8,710,867 13,975,284 ------------- ----------- $8,938,608 $14,431,813 See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Nine Months Ended June 30, 1999 1998 REVENUES: (As restated, See Note D) Interest income $ 316,194 $ 475,240 Other income 59,332 7,468 ----------- ------------ TOTAL INCOME 375,526 482,708 EXPENSES: Research and development 3,269,931 2,729,982 Depreciation and amortization 199,749 221,861 General and administrative 2,229,726 1,983,089 ---------- --------- TOTAL OPERATING EXPENSES 5,699,406 4,934,932 ---------- --------- NET LOSS 5,323,880 4,452,224 ACCRETION OF PREFERRED STOCK DIVIDENDS - 1,980,000 ------------ ---------- NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $5,323,880 $6,432,224 =========== ========== LOSS PER COMMON SHARE (BASIC) $ 0.39 $ 0.57 ============== ============ LOSS PER COMMON SHARE (DILUTED) $ 0.39 $ 0.57 ============= ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 13,786,779 11,330,998 =========== ========== See notes to condensed financial statements. CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended June 30, 1999 1998 REVENUES: (As restated, See Note D) Interest income $ 72,328 $ 194,237 Other Income 12,555 2,716 --------- ----------- TOTAL INCOME 84,883 196,953 EXPENSES: Research and development 1,027,401 1,002,321 Depreciation and amortization 66,744 73,987 General and administrative 673,076 741,284 ---------- ---------- TOTAL OPERATING EXPENSES 1,767,221 1,817,592 ------------ ----------- NET LOSS $ 1,682,338 $ 1,620,639 =========== =========== LOSS PER COMMON SHARE (BASIC) $ 0.11 $ 0.14 ================ ================ LOSS PER COMMON SHARE (DILUTED) $ 0.11 $ 0.14 ================ ================ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING $15,742,037 $11,507,187 =========== =========== See notes to condensed financial statements CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (unaudited) Nine Months Ended June 30, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(5,323,880) $(4,452,224) Adjustments to reconcile net loss to net cash used in operating activities: -- Depreciation and amortization 199,749 221,861 Amortization of premium (discount) on investments - (237,060) Unrealized gain (loss) on investments (66,900) 3,499 Stock issued for services - 23,254 Stock options issued for services 61,149 40,419 Stock issued to 401K 65,215 19,675 Decrease (increase) in deposits - (14,828) Decrease (increase) in receivables 412 32,255 Decrease (increase) in prepaid expenses 179,370 (10,420) Decrease (increase) in advances (26,816) 311,286 Increase (decrease) in accounts payable (228,788) (222,407) ------------- ------------- NET CASH USED IN OPERATING ACTIVITIES (5,140,489) (4,284,690) ------------ ------------ CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments 4,886,602 7,700,000 Purchase of investments - (18,602,893) Note receivable from employee/shareholder - - Payment on note receivable from employee/shareholder 70,982 177,610 Purchase of research and office equipment (42,398) (37,905) Patent costs (91,755) (27,471) NET CASH USED IN INVESTING ACTIVITY 4,823,431 (10,790,659) ---------- ------------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Issuance of preferred stock - 10,000,000 Issuance of common stock - 4,067,439 ------------- ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES - 14,067,439 ------------- ----------- NET (DECREASE) INCREASE IN CASH (317,058) (1,007,910) CASH AND CASH EQUIVALENTS: Beginning of period 2,813,225 3,508,606 ------------ ------------ End of period $ 2,496,167 $ 2,500,696 ============ ============ See notes to condensed financial statements. CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (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 June 30, 1999 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 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. CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (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 was 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. 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 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 June 30, 1999, 4,568 shares of the Series D preferred stock were converted into 2,010,170 shares of common stock. D. RESTATEMENT Subsequent to the issuance of the Company's report on Form 10-Q for the quarter ended December 31, 1997, the Company determined that the application of a technical accounting treatment required the loss per share calculation to include the impact of $1,980,000 for the accretion of Series D Preferred Stock warrants for the three months ended December 31, 1997. The effect of the accretion is a non-cash charge to additional paid-in capital and does not impact the previously reported net loss for the three months ended December 31, 1997, nor does it result in a net change to stockholders' equity at September 30, 1997 or December 31, 1997. The effect of the restatement was to increase net loss attributable to common stockholders and net loss per share for the three months ended December 31, 1997. The effect of the change is shown on the income statement for the nine months ended June 30, 1999 and 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. Results of Operations Interest income during the nine months ending June 30, 1999 reflects interest accrued on investments. Interest income has decreased as the Company uses the proceeds of the sale of the Series D Preferred Stock. Research and development expense in 1999 was higher than in 1998 because the Company is running more and larger clinical trials. General and administrative expenses have increased due to the addition of more employees needed for the increased activity level. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS The Company's cash flow and earnings are subject to fluctuations due to changes in interest rates in its investment portfolio of debt securities, to the fair value of equity instruments held, and, to an immaterial extent, to foreign currency exchange rates. The Company maintains an investment portfolio of various issuers, types and maturities. These securities are generally classified as available-for-sale and, consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported as a separate component of stockholders' equity. Other-than-temporary losses are recorded against earnings in the same period the loss was deemed to have occurred. The Company does not currently hedge this exposure and there can be no assurance that other-than-temporary losses will not have a material adverse impact on the Company's results of operations in the future. 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, 1999. 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:_______________, 1999 ____________________________ Geert Kersten Chief Executive Officer* *Also signing in the capacity of the Chief Accounting Officer and Principal Financial Officer. EX-27 2 FDS --
5 0000725363 Cel-Sci Corporation 1 US Dollars 9-MOS SEP-30-1999 OCT-1-1998 JUN-30-1999 1.000 2,496,167 4,788,709 96,213 0 0 7,925,553 2,014,058 1,509,966 8,938,608 198,359 0 0 8 163,514 8,547,373 8,938,608 0 375,526 0 5,699,406 0 0 0 (5,323,880) 0 (5,323,880) 0 0 0 (5,323,880) (0.39) (0.39)
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