As filed with the Securities and Exchange Commission on , 1996.
Registration No. 333-01161
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
Registration Statement
Under
THE SECURITIES ACT OF 1933
CEL-SCI Corporation
(Exact name of registrant as specified in charter)
Colorado
(State or other jurisdiction of incorporation)
66 Canal Center Plaza, Suite 510
Alexandria, Virginia 223l4
84-09l6344 (703) 549-5293
(IRS Employer I.D. (Address, including zip code, and telephone
number
Number) including area of principal executive
offices)
Geert Kersten
66 Canal Center Plaza, Suite 510
Alexandria, Virginia 223l4
(703) 549-5293
(Name and address, including zip code, and
telephone number, including area code, of agent for
service)
Copies of all communications, including all communications
sent to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
Page 1 of Pages
Exhibit Index Begins on Page
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Unit (1) Price Fee
Common Stock (2) 1,389,000 $6.60 $9,167,400 $3,162
Common Stock (3) 15,355 $6.60 $ 101,343 $ 35
Total 1,404,355 $9,268,743 $3,197
(1) Offering price computed in accordance with Rule 457(c).
(2) Shares of Common Stock are offered as a result of the conversion
of the Company's Series B Preferred Stock into shares of common
stock.
(3) Shares of Common Stock issuable upon the exercise of Sales Agent
Warrants. The Sales Agent's Warrants were issued in connection
with the Company's sale of the Series B Preferred Stock.
Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for
issuance upon the conversion of the Series B Preferred Stock or upon
the exercise of the Sales Agent's Warrants as a result of any
adjustment in the number of securities issuable by reason of the anti-
dilution provisions of the Series B Preferred Stock or the Sales
Agent's Warrants.
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
l933 or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
CEL-SCI CORPORATION
CROSS REFERENCE SHEET
Item in Form S-3 Location in Prospectus
Item 1 Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus .............................. Facing Page; Outside
Front Cover Page
Item 2 Inside Front and Outside Back Cover
Pages of Prospectus ..................... Inside Front Cover Page;
Outside Back Cover Page
Item 3 Summary Information, Risk Factors and
Ratio of Earnings to Fixed Changes ...... Prospectus Summary; Risk
Factors
Item 4 Use of Proceeds ......................... Not Applicable.
Item 5 Determination of Offering Price ......... Selling Shareholders
Item 6 Dilution ................................ Dilution
Item 7 Selling Security Holders ................ Selling Shareholders
Item 8 Plan of Distribution .................... Selling Shareholders
Item 9 Description of Securities to be
Registered .............................. Description of
Securities
Item l0 Interest of Named Experts and Counsel ... Experts
Item 11 Material Changes ........................ Prospectus Summary
Item 12 Incorporation of Certain Information by
Reference ............................... Documents Incorporated
by Reference
Item l3. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ............................. Indemnification
PROSPECTUS CEL-SCI CORPORATION
Common Stock
This Prospectus relates to the offer and sale of up to 1,022,000
shares of Common Stock by the holders of the Company's Series B Preferred
Stock (the "Preferred Stock") if and when the holders of the Series B
Preferred Stock elect to convert the Preferred Stock into shares of the
Company's Common Stock. The holders of the Preferred Stock may resell the
shares they receive upon conversion from time to time in the public market.
The holders of the Preferred Stock, to the extent they convert the Preferred
Stock into shares of Common Stock, are sometimes referred to in this
Prospectus as the "Selling Shareholders".
This Prospectus also relates to the sale of up to 15,355 shares of
common stock issuable upon the exercise of certain Sales Agent Warrants. The
Sales Agent's Warrants were issued in connection with the Company's August
1996 offering of 5,000 shares of the Company's Series B Preferred Stock. The
warrants are exercisable at a price of $6.51 per share. The holders of the
Sales Agent's Warrants, to the extent they exercise the Sales Agent's
Warrants and receive shares of Common Stock, are also referred to in this
Prospectus as the "Selling Shareholders".
The Company will not receive any proceeds from the resale of the
shares by the Selling Shareholders. The Selling Shareholders have advised
the Company that they will offer the shares through broker/dealers at market
prices with customary commissions being paid by the Selling Shareholders.
The costs of registering the shares offered by the Selling Shareholders are
being paid by the Company. The Selling Shareholders will pay all other costs
of the sale of the shares offered by them. See "Selling Shareholders".
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. FOR A DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS, SEE "RISK FACTORS" AND "DILUTION". THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
On October , 1996 the closing prices of the Company's Common
Stock and Warrants on the NASDAQ System were $ and $ ,
respectively. See "Market Information".
The Date of this Prospectus is October , 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of l934 and in accordance therewith is
required to file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Copies of
any such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facility
maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. and at the Commission's Regional offices in New York
(7 World Trade Center, Suite 1300, New York, New York 10048) and
Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511). Copies of such material can be
obtained from the Public Reference Section of the Commission at its
office in Washington, D.C. 20549 at prescribed rates. Certain
information concerning the Company is also available at the Internet
Web Site maintained by the Securities and Exchange Commission at
www.sec.gov. The Company has filed with the Commission a Registration
Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the Units offered
hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the
Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide, without charge, to each person to
whom a copy of this Prospectus is delivered, including any beneficial
owner, upon the written or oral request of such person, a copy of any
or all of the documents incorporated by reference herein (other than
exhibits to such documents, unless such exhibits are specifically
incorporated by reference into this Prospectus). Requests should be
directed to:
CEL-SCI Corporation
66 Canal Center Plaza, Suite 510
Alexandria, VA 22314
(703) 549-5293
Attention: Secretary
The following documents filed with the Commission by the
Company (Commission File No. 0-11503) are hereby incorporated by
reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K/A for the
fiscal year ended September 30, 1995; and
(2) The Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended December 31, 1995, March 31, 1996 and June 30,
1996.
(3) The Company's Proxy Statement relating to the June 14,
1996 Annual Meeting of Shareholders.
All documents filed with the Commission by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination
of the offering registered hereby shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
PROSPECTUS SUMMARY
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.
The Company
CEL-SCI Corporation (the "Company") was formed as a Colorado
corporation in 1983. The Company is involved in the research and
development of certain drugs and vaccines. The Company's first
product, MULTIKINETM, manufactured using the Company's proprietary
cell culture technologies, is a combination, or "cocktail", of natural
human interleukin-2 ("IL-2") and certain lymphokines and cytokines.
MULTIKINE is being tested to determine if it is effective in improving
the immune response of advanced cancer pantients. The Company's
second product, HGP-30, is being tested to determine if it is an
effective treatment/ vaccine against the AIDS virus. In addition, the
Company recently acquired a new patented T-cell Modulation Process
which uses "heteroconjugates" to direct the body to chose a specific
immune response. The Company intends to use this new technology to
improve the cellular immune response of persons vaccinated with HGP-30
and to develop a potential tuberculosis ("TB") treatment/vaccine.
Before human testing can begin with respect to a drug or
biological product, preclinical studies are conducted in laboratory
animals to evaluate the potential efficacy and the safety of a
product. Human clinical studies generally involve a three-phase
process. The initial clinical evaluation, Phase I, consists of
administering the product and testing for safe and tolerable dosage
levels. Phase II trials continue the evaluation of immunogenicity and
determine the appropriate dosage for the product, identify possible
side effects and risks in a larger group of subjects, and provide
preliminary indications of efficacy. Phase III trials consist of
testing for actual clinical efficacy for safety within an expanded
group of patients at geographically dispersed test sites. See
"Business Government Regulation" for a more detailed description of
the foregoing.
Between 1983 and 1986 the Company was primarily involved in
funding pre-clinical and Phase I clinical trials of MULTIKINE. These
trials were conducted at St. Thomas's Hospital Medical School in
London, England pursuant to authority granted by England's Department
of Health and Social Security. In July, 1991 physicians at a southern
Florida medical institution began human clinical trials using
MULTIKINE. The focus of these trials was the treatment of metastatic
malignant melanoma and unresectable head and neck cancer using
MULTIKINE. The clinical trials in Florida were conducted pursuant to
approvals obtained by the medical institution from the Florida
Department of Health and Rehabilitative Services.
In March 1995, the Canadian Health Protection Branch, Health
and Welfare Ministry gave clearance to the Company to start a phase
I/II cancer study using Multikine. The study, which will enroll up to
30 head and neck cancer patients who have failed conventional
treatments, will be conducted at several sites in the United States
and Canada and is designed to evaluate safety, tumor responses and
immune responses in patients treated with multiple courses of
Multikine. The length of time that each patient will remain on the
investigational treatment will depend on the patient's response to
treatment. In May l995, the U.S. Food and Drug Administration (FDA)
authorized the export of the Company's Multikine drug to Canada for
purposes of this study.
In February 1996 the FDA authorized the Company to conduct
two human clinical studies using MULTIKINE and focusing on prostate
and head and neck cancer. The prostate study is being conducted at
Jefferson Hospital in Philadelphia, Pennsylvania and will involve up
to 15 prostate cancer patients who have failed on hormonal therapy.
The head and neck cancer study will involve up to 30 cancer patients
who have failed using conventional therapies. The head and neck
cancer study in the U.S. is being conducted in conjunction with the
Company's Canadian head and neck cancer study.
Viral Technologies, Inc. ("VTI"), a wholly-owned subsidiary
of the Company, is engaged in the development of a possible
treatment/vaccine for AIDS. VTI's technology may also have application
in the treatment of AIDS-infected individuals and the diagnosis of
AIDS. VTI's AIDS treatment/ vaccine, HGP-30, has completed certain
Phase I human clinical trials. In the Phase I trials, the vaccine was
administered to volunteers who were not infected with the HIV virus in
an effort to determine safe and tolerable dosage levels.
In April 1995 VTI, with the approval of the California
Department of Health Services Food and Drug Branch (FDB), began
another clinical trial in California using volunteers who received two
vaccinations. The volunteers receiving the two lowest dosage levels
were asked to donate blood for a SCID mouse HIV challenge study. The
SCID mouse is considered to be the best available animal model for HIV
because it lacks its own immune system and therefore permits human
cell growth. White blood cells from the five (5) vaccinated
volunteers and from normal donors were injected into groups of SCID
mice. They were then challenged with high levels of a different
strain of the HIV virus than the one from which HGP-30 is derived.
Infection by virus was determined and confirmed by two different
assays, p24 antigen, a component of the virus core, and reverse
transcriptase activity, an enzyme critical to HIV replication.
Approximately 78% of the SCID mice given blood from vaccinated
volunteers showed no HIV infection after virus challenge as compared
to 13% of the mice given blood from unvaccinated donors.
In December l987, VTI signed a licensing agreement with
Nippon Zeon Co., Ltd. ("Nippon Zeon"), a Japanese chemical
manufacturer, granting Nippon Zeon exclusive rights to VTI's prototype
AIDS vaccine and improvements in the Pacific Area. Under the
agreement, VTI received an initial licensing payment, as well as a pre-
commercialization payment, and was also entitled to receive additional
pre-commercialization payments dependent upon receipt of certain
regulatory approvals. In l995 Nippon Zeon released its rights to
VTI's technology in consideration for VTI's agreement to pay Nippon
Zeon a royalty on sales of products made with VTI's technology in the
licensed area. In July l996 Nippon Zeon agreed to surrender its
royalty rights, as well as any other rights it may have had to VTI's
technology, in exchange for 45,000 shares of the Company's common
stock.
In January 1996 the Company acquired a new patented T-cell
Modulation Process which uses "heteroconjugates" to direct the body to
chose a specific immune response. The ability to generate a specific
immune response is important because many diseases are often not
combatted 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.
The Company intends to use this new technology to improve the
cellular immune response of VTI's HIV HGP-30 immunogen which is
currently in two clinical studies. In addition, the Company intends
to use the technology to develop a potential Tuberculosis (TB)
vaccine/treatment. TB is the largest killer of all infectious
diseases worldwide and new strains of drug resistant TB are emerging
daily. The technology is also a potential platform technology which
could also work with many other peptides. Using this new technology,
the Company is currently conducting in vitro laboratory and in vivo
animal studies.
The T-Cell Modulation Process was acquired from Cell-Med,
Incorporated ("CELL-MED") in consideration for the Company's agreement
to pay certain liabilities of CELL-MED in the amount of approximately
$6,000. If the Company elects to retain ownership in the technology
after March 30, 1997, the Company must pay CELL-MED $200,000, plus
additional payments ranging between $100,000 and $600,000, depending
upon the Company's ability to obtain regulatory approval for clinical
studies using the technology. In addition, should the Company receive
FDA approval for the sale of any product incorporating the technology,
the Company is obligated to pay CELL-MED an advance royalty of
$500,000, a royalty of 5% of the sales price of any product using the
technology, plus 15% of any amounts the Company receives as a result
of sublicensing the technology. So long as the Company retains rights
in the technology, the Company has also agreed to pay the future costs
associated with pursuing and or maintaining CELL-MED's patent and
patent applications relating to the technology. As of February 29,
1996, CELL-MED had been issued patents in Australia and from the
European Patent Office covering the technology and had several U.S.
and foreign patent applications pending.
All of the Company's products are in the early stages of
development. The Company does not expect to develop commercial
products for several years, if at all. The Company has had operating
losses since its inception, has an accumulated deficit of
approximately $28,500,000 at June 30, 1996, and expects to incur
substantial losses for the foreseeable future.
In March 1996 the Company sold $l,250,000 of Convertible Notes
("Notes") to two persons. The Notes were convertible from time to
time in whole or in part, into shares of the Company's Common Stock.
The conversion price was the lesser of (i) $5 per share or (ii) 80% of
the average closing bid price of the Company's Common Stock during the
five trading days immediately preceding the date of such conversion.
The Notes were payable on December 1, 1996 and accrued interest at 10%
per annum. All of the Notes have since been converted into 250,000
shares of the Company's Common Stock.
In May 1996 the Company sold 3,500 shares of its Series A
Preferred Stock (the "Preferred Shares") for $3,500,000 or $1,000 per
share. At the purchasers' option, up to 1,750 Preferred Shares were
convertible, on or after 60 days from the closing date of the purchase
of such shares (the "Closing"), into shares of the Company's Common
Stock on the basis of one share of Preferred Stock for shares of
Common Stock equal in number to the amount determined by dividing
$1,000 by 85% of the Closing Price of the Company's Common Stock. All
Preferred Shares were convertible, on or after 90 days from the
Closing, on the basis of one share of Preferred Stock for shares of
the Company's Common Stock equal in number to the amount determined by
dividing $1,000 by 83% of the Closing Price of the Company's Common
Stock. The term "Closing Price" was defined as the average closing
bid price of the Company's Common Stock over the five-day trading
period ending on the day prior to the conversion of the Preferred
Stock. All outstanding shares of the Series A Preferred Stock have
since been converted into 632,041 shares of the Company's Common
Stock. The shares issued upon the conversion of the Series A
Preferred Stock are being offered for public sale by means of a
separate registration statement.
The Company's executive offices are located at 66 Canal
Center Plaza, Suite 510, Alexandria, Virginia 22314, and its
telephone number is (703) 5495293.
THE OFFERING
Securities Offered: Up to 1,022,000 shares of Common Stock are
offered for public sale by the holders of the
Company's Series B Preferred Stock if and when
the holders of the Preferred Stock elect to
convert the Preferred Stock into shares of the
Company's Common Stock. An additional 15,355
shares of common stock are offered for public
sale upon the exercise of Sales Agent Warrants
which were issued in connection with the
Company's August 1996 private offering of the
Series B Preferred Stock. The holders of the
Preferred Stock and the Sales Agent's
Warrants, to the extent they convert the
Preferred Stock into Common Stock or exercise
the Sales Agent's Warrants, may resell the
shares they receive upon conversion or
exercise from time to time in the public
market. The holders of the Preferred Stock
and the Sales Agent's Warrants are sometimes
referred to in this Prospectus as the "Selling
Shareholders". The Company will not receive
any proceeds from the sale of the shares
offered by the Selling Shareholders. See
"Selling Shareholders".
Common Stock Outstand-
ing Prior To and After
Offering: As of October 15, 1996, the Company had
8,070,413 shares of Common Stock issued and
outstanding. Assuming all the shares of the
Series B Preferred Stock are converted to
shares of the Company's Common Stock and all
of the Sales Agent's Warrants are exercised,
there will be 9,107,768 shares of Common Stock
issued and outstanding. The number of
outstanding shares before and after this
Offering does not give effect to shares
which may be issued upon the exercise and/or
conversion of options, warrants or other
convertible securities previously issued by
the Company. See "Dilution and Comparative
Share Data", "Selling Shareholders" and
"Description of Securities".
Risk Factors: The purchase of the Securities offered by this
Prospectus involves a high degree of risk. Risk
factors include the following: lack of revenues
and history of loss, need for additional capital,
government regulation, need for FDA approval, and
dilution. See "Risk Factors."
NASDAQ Symbols: Common Stock: CELI
Warrants: CELIW
Summary Financial Data
For the Years Ended September 30,
1995 1994 1993 1992 1991
Investment Income &
Other Revenues $423,765 $624,670 $997,964 $434,180 $35,972
Expenses:
Research and
Development 1,824,661 2,896,109 1,307,042 481,697 108,771
Depreciation
and
Amortization 262,705 138,755 55,372 33,536 32,582
General and
Adminis-
trative 1,713,912 1,621,990 1,696,119 1,309,475 795,015
Equity in loss
of joint
venture 501,125 394,692 344,423 260,388 290,166
Net Loss $(3,878,638)$(4,426,876)$(2,404,992)$(1,650,916)$(1,190,562)
Loss per
common share $(0.89) $(1.06) $(0.58) $(0.42) $(0.35)
Weighted average
common shares
outstanding 4,342,628 4,185,240 4,155,431 3,953,233 3,400,546
Nine Months Ended June 30,
1996 1995
Investment Income & Other Revenues $ 188,256 $ 313,005
Expenses:
Research and Development 2,350,600 1,383,978
Depreciation and Amortization 208,912 201,197
General and Administrative 2,113,884 1,268,677
Equity in loss of joint venture 3,772 395,224
Net Loss $(4,488,912) $(3,249,076)
Loss per common share $(0.74) $(0.70)
Weighted average common shares
outstanding 6,086,492 4,194,563
Balance Sheet Data:
September 30,
1995 1994 1993 1992 1991
Working Capital $3,983,699 $5,795,191 $10,296,472 $13,043,012 $682,831
Total Assets 6,359,011 8,086,670 11,633,090 13,769,504 1,611,899
Total
Liabilities 1,516,978 1,407,602 688,231 467,086 672,595
Shareholders'
Equity 4,842,033 6,679,068 10,944,859 13,302,4l8 939,304
June 30, 1996
Working Capital $6,979,975
Total Assets $8,723,934
Total Liabilities $1,191,000
Shareholders' Equity $7,532,934
No dividends have been declared by the Company since its
inception.
RISK FACTORS
An investment in the Company's Securities involves a high
degree of risk. Prospective investors are advised that they may lose
all or part of their investment. Prospective investors should
carefully review the following risk factors.
Lack of Revenues and History of Loss. The Company has had
only limited revenues since it was formed in 1983. Since the date of
its formation and through June 30, 1996, the Company has incurred net
losses of approximately $28,500,000. During the years ended September
30, 1993, 1994 and 1995 the Company suffered losses of $2,404,992,
$4,426,876 and $3,878,638 respectively. The Company has relied
principally upon the proceeds of public and private sales of
securities to finance its activities to date. All of the Company's
potential products are in the early stages of development, and any
commercial sale of these products will be many years away.
Accordingly, the Company expects to incur substantial losses for the
foreseeable future.
Need for Additional Capital. 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. The different steps necessary to obtain regulatory
approval, especially that of the Food and Drug Administration ("FDA"),
involve significant costs. The Company expects that it will need
additional financing in order to fund the costs of future clinical
trials, related research, and general and administrative expenses.
The Company may be forced to delay or postpone development and
research expenditures if the Company is unable to secure adequate
sources of funds. These delays in development may have an adverse
effect on the Company's ability to produce a timely and competitive
product. There can be no assurance that the Company will be able to
obtain additional funding from other sources.
Viral Technologies, Inc. ("VTI"), a wholly-owned subsididary
of the Company, is dependent upon funding from the Company for its
operations and research programs.
Cost Estimates. The Company's estimates of the costs
associated with future clinical trials and research may be
substantially lower than the actual costs of these activities. If the
Company's cost estimates are incorrect, the Company will need
additional funding for its research efforts.
Government Regulation FDA Approval. Products which may be
developed by the Company or Viral Technologies, Inc. (or which may be
developed by affiliates or licensees) will require regulatory
approvals prior to sale. In particular, therapeutic agents 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. The process of obtaining FDA and
corresponding foreign approvals is costly and time consuming,
particularly for pharmaceutical products such as those which might
ultimately be developed by the Company, Viral Technologies, Inc. or
its licensees, and there can be no assurance that such approvals will
be granted. Any failure to obtain or any delay in obtaining such
approvals may adversely affect the ability of potential licensees or
the Company to successfully market any products developed. Also, the
extent of adverse government regulations which might arise from future
legislative or administrative action cannot be predicted. The
clinical trial which the Company's affiliate, Viral Technologies,
Inc., is conducting in California is regulated by government agencies
in California and obtaining approvals from states for clinical trials
is likewise expensive and time consuming.
Dependence on Others to Manufacture Product. The Company has
an agreement with an unrelated corporation for the production, until
1997, of MULTIKINE for research and testing purposes. At present,
this is the Company's only source of MULTIKINE. If this corporation
could not, for any reason, supply the Company with MULTIKINE, the
Company estimates that it would take approximately six to ten months
to obtain supplies of MULTIKINE under an alternative manufacturing
arrangement. The Company does not know what cost it would incur to
obtain this alternative source of supply.
Licensed Technology Potential Conflicts of Interest. The
Company's clinical studies and research have been focused on
compounds, compositions and processes which were licensed to the
Company by Sittona Company, B.V. ("Sittona") in 1983. Maximilian de
Clara, the Company's president and a director, acquired control of
Sittona in 1985. Any commercial products developed by the Company and
based upon the technology licensed by Sittona will belong to Sittona,
subject to the Company's right to manufacture and sell such products
in accordance with the terms of the licensing agreement. The
Company's license remains in effect until the expiration or
abandonment of all patent rights or until the compounds, compositions
and processes subject to the license enter into the public domain,
whichever is later. The license may be terminated earlier for other
reasons, including the insolvency of the Company. Accordingly, a
conflict of interest may arise between the Company and Mr. de Clara
concerning the Company's continued rights to the licensed technology.
Any future transactions between the Company and Sittona will be
subject to the review and approval by a majority of the Company's
disinterested directors.
Technological Change. The biomedical field in which the
Company is involved is undergoing rapid and significant technological
change. The successful development of therapeutic agents and
diagnostic products from the compounds, compositions and processes
licensed to the Company, through Company 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. There can be no assurance that the Company
will achieve or maintain such a competitive position or that other
technological developments will not cause the Company's proprietary
technologies to become uneconomical or obsolete.
Patents. Since 1983 the Company, on behalf of the owners of
the compounds, compositions and processes licensed to the Company, has
filed applications for United States and foreign patents covering
certain aspects of the technology. Although the Company has paid the
costs of applying for and obtaining patents, the technology covered by
the patents is not owned by the Company, but by an affiliated party
which has licensed the technology to the Company. As of the date of
this Prospectus nine patents have been issued in the United States and
three patents have been issued in Europe. 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 the owners of the patents and the Company.
Disputes may arise between the owners of the patents or the Company
and others as to the scope, validity and ownership rights of these or
other patents. Any defense of the patents could prove costly and time
consuming and there can be no assurance that the Company or the owners
of the patents 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 the Company. The scope and validity of such patents, if any, the
extent to which the Company or the owners of the patents 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
the Company relies upon unpatented proprietary technology, there is no
assurance that others may not acquire or independently develop the
same or similar technology. The first patent licensed to the Company
will expire in the year 2000. Since the Company's Investigational New
Drug application relating to MULTIKINE has only recently been cleared
by the FDA, and since the Company does not know if it will ever be
able to sell Multikine on a commercial basis, the Company cannot
predict what effect the expiration of this patent will have on the
Company. Notwithstanding the above, the Company believes that later
issued patents will protect the technology associated with Multikine
past the year 2000.
Product Liability Insurance. Although the Company has
product liability insurance for MULTIKINE and its HGP-30 vaccine, the
successful prosecution of a product liability case against the Company
could have a materially adverse effect upon its business if the amount
of any judgment exceeds the Company's insurance coverage.
Dependence on Management and Scientific Personnel. The
Company is dependent for its success on the continued availability of
its executive officers. The loss of the services of any of the
Company's executive officers could have an adverse effect on the
Company's business. The Company does not carry key man life insurance
on any of its officers. The Company's future success will also depend
upon its ability to attract and retain qualified scientific personnel.
There can be no assurance that the Company will be able to hire and
retain such necessary personnel.
Options, Warrants and Convertible Securities. The Company
has issued options, warrants and other convertible securities
("Derivative Securities") which allow the holders to acquire
additional shares of the Company's Common Stock. In some cases the
Company has agreed that, at its expense, it will make appropriate
filings with the Securities and Exchange Commission so that the
securities underlying certain Derivative Securities will be available
for public sale. Such filings could result in substantial expense to
the Company and could hinder future financings by the Company.
For the terms of these Derivative Securities, the holders
thereof will have an opportunity to profit from any increase in the
market price of the Company's Common Stock without assuming the risks
of ownership. Holders of such Derivative Securities may exercise
and/or convert them at a time when the Company could obtain additional
capital on terms more favorable than those provided by the Derivative
Securities. The exercise or conversion of the Derivative Securities
will dilute the voting interest of the owners of presently outstanding
shares of the Company's Common Stock and may adversely affect the
ability of the Company to obtain additional capital in the future.
The sale of the shares of Common Stock issuable upon the exercise or
conversion of the Derivative Securities could adversely affect the
market price of the Company's stock. See "Dilution and Comparative
Share Data".
Competition. The competition in the research, development
and commercialization of products which may be used in the prevention
or treatment of cancer and AIDS is intense. Major pharmaceutical and
chemical companies, as well as specialized genetic engineering firms,
are developing products for these diseases. Many of these companies
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, both
smaller companies and non-profit institutions are active in research
relating to cancer and AIDS and are expected to become more active in
the future.
The clinical trials sponsored to date by the Company and VTI
have not been approved by the FDA, but rather have been conducted
pursuant to approvals obtained from regulatory agencies in England,
Canada and certain states. Since the results of these clinical trials
may not be accepted by the FDA, companies which are conducting
clinical trials approved by the FDA may have a competitive advantage
in that the products of such companies are further advanced in the
regulatory process than those of the Company or VTI.
Lack of Dividends. There can be no assurance the Company
will be profitable. At the present time, the Company intends to use
available funds to finance the Company's operations. Accordingly,
while payment of dividends rests within the discretion of the Board of
Directors, no dividends have been declared or paid by the Company.
The Company does not presently intend to pay dividends and there can
be no assurance that dividends will ever be paid. Pursuant to the
terms of a loan agreement with a bank, the Company may not pay any
dividends without the consent of the bank.
Dilution. Persons purchasing the securities offered by this
Prospectus will suffer an immediate dilution in the per share net
tangible book value of their Common Stock. See "Dilution and
Comparative Share Data."
Preferred Stock. The Company's Articles of Incorporation
authorize the Company's Board of Directors to issue up to 200,000
shares of Preferred Stock. The provisions in the Company's Articles
of Incorporation relating to the Preferred Stock allow the Company's
directors to issue Preferred Stock with multiple votes per share and
dividends rights which would have priority over any dividends paid
with respect to the Company's Common Stock. The issuance of Preferred
Stock with such rights may make the removal of management difficult
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.
DILUTION AND COMPARATIVE SHARE DATA
As of October 15, 1996, the present shareholders of the
Company owned 8,070,413 shares of Common Stock, which had a net
tangible book value of approximately $1.41 per share. The following
table illustrates the comparative stock ownership of the other
stockholders of the Company, as compared to the investors in this
Offering, assuming all shares offered are sold.
Shares outstanding (1) 8,070,413
Shares to be issued upon conversion of
Series B Preferred Stock, based upon
closing price of the Company's common
stock on October 15, 1996 ($5.62) 1,022,000
Shares to be issued upon exercise of
Sales Agent's Warrants 15,355
Shares outstanding (pro forma basis) (1) 9,107,768
Net tangible book value per share
$1.41
Equity ownership by present shareholders
after this offering
89%
Equity ownership by investors in this Offering
11%
(1) Amount excludes shares which may be issued upon the
exercise and/or conversion of options, warrants and
other convertible securities previously issued by the
Company. See table below.
The purchasers of the securities offered by this
Prospectus will suffer an immediate dilution if the price
paid for the securities offered is greater than the net
tangible book value of the Company's Common Stock.
"Net tangible book value" is the amount that results
from subtracting the total liabilities and intangible
assets of the Company from its total assets. "Dilution"
is the difference between the offering price and the net
tangible book value of shares immediately after the
Offering.
The following table reflects the additional
shares which may be issued as the result of the exercise
of outstanding options and warrants or the conversion of
other securities issued by the Company.
Number
of
Note
Shares
Referen
ce
Outstanding as of October 15, 1996
8,070,413
Shares Subject to this Offering:
Shares issuable upon conversion of
the Series B preferred stock
1,022,000 A
Shares issuable upon exercise of
Sales Agent's Warrants 15,355
B
Shares outstanding (pro forma basis)
9,107,768
Other Shares Which May Be Issued:
Shares issuable upon exercise of
warrants issued to Selling Agent, or its
assigns, in connection with the Company's
June and September 1995 Private Offerings
65,220 C
Shares issuable upon exercise of
warrants sold in Company's 1992
Public Offering
517,500 D
Shares issuable upon exercise of
warrants sold to Underwriter in connection
with Company's 1992 Public Offering
90,000 E
Shares issuable upon exercise of
options granted to Company's officers,
directors, employees and consultants
981,926 F
10,762,414
A. In August 1996 the Company sold, in a private
transaction, 5,000 shares of its Series B Preferred
Stock (the "Preferred Shares") for $5,000,000 or
$1,000 per share. At the purchasers' option, up to
2,500 Preferred Shares are convertible, on or after
ten days from the date of this Prospectus (the
"Effective Date"), into shares of the Company's Common
Stock on the basis of one share of Preferred Stock for
shares of Common Stock equal in number to the amount
determined by dividing $1,000 by 87% of the Closing
Price of the Company's Common Stock. All Preferred
Shares are convertible, on or after 40 days from the
Effective Date, on the basis of one share of Preferred
Stock for shares of the Company's Common Stock equal
in number of the amount determined by dividing $1,000
by 85% of the Closing Price of the Company's Common
Stock. The term "Closing Price" is defined as the
average closing bid price of the Company's Common
Stock over the five-day trading period ending on the
day prior to the conversion of the Preferred Stock.
Notwithstanding the above, the conversion price may
not be less than $3.60 nor more than $14.75. The
Preferred Shares, if issued, are entitled to a
quarterly dividend of $17.50 per share. Any Preferred
Shares which are outstanding on the second anniversary
of the Effective Date will be automatically converted
into shares of the Company's Common Stock. The
Preferred Shares have a liquidation preference over
the Company's Common Stock. The shares issuable upon
the conversion of the Preferred Stock are offered by
means of this Prospectus. See "Selling Shareholders."
B. In connection with the Company's August 1996 Private
Offering, Shoreline Pacific Institutional Finance, the
Sales Agent for such offering, received a commission
as well as warrants to purchase 15,355 shares of the
Company's Common Stock at $6.51 per share. The shares
of Common Stock issuable upon the exercise of the
Sales Agent's Warrants are being offered by means of
this Prospectus. See "Selling Shareholders".
C. In connection with the Company's June and
September Private Offerings, Neidiger/Tucker/Bruner,
Inc., the Sales Agent for these offerings, received a
commission, a non-accountable expense allowance and
warrants to purchase (i) 57,500 shares of the
Company's Common Stock at $2.00 per share, (ii) 57,500
shares at $2.40 per share, and (ii) an additional
115,000 shares at $3.25 per share. Prior to the date
of this Prospectus the Sales Agent (and/or its
assigns) collectively exercised Warrants pertaining to
164,780 shares of the Company's Common Stock. By
means of a separate Registration Statement, the shares
of Common Stock issuable upon the exercise of the
remaining Warrants issued to the Sales Agent have been
registered for public sale.
D. See "Description of Securities".
E. The Underwriter's Warrants provide that the Company,
at its expense, will make appropriate filings with the
Securities and Exchange Commission so that the
securities underlying the Underwriter's Warrants will
be available for public sale.
F. The options are exercisable at prices ranging from
$2.87 to $19.70 per share. The Company may also grant
options to purchase 1,117,407 additional shares under
its Incentive Stock Option and Non-Qualified Stock
Option Plans.
SELLING SHAREHOLDERS
In August 1996 the Company sold 5,000 shares of its
Series B Preferred Stock (the "Preferred Shares") for
$5,000,000 or $1,000 per share. At the purchasers'
option, the Preferred Shares are convertible from time to
time, in whole or in part, into shares of the Company's
Common Stock upon certain terms. See "Description of
Securities". The shares issuable upon the conversion of
the Series B Preferred Shares are being offered by means
of this Prospectus.
In connection with the Company's August 1996 offering
of 5,000 shares of Series B Preferred Stock, Shoreline
Pacific Institutional Finance, the Sales Agent for such
offering, received a commission as well as warrants to
purchase 15,355 shares of the Company's Common Stock at
$6.51 per share. Shoreline Pacific, Inc. subsequently
assigned the Sales Agent's Warrants to certain persons
named below. The shares issuable upon the exercise of the
Sales Agent's Warrants are also being offered for public
sale by means of this Prospectus.
The holders of the Preferred Shares and the Sales
Agent's Warrants, to the event they convert their
Preferred Shares into shares of Common Stock or exercise
their warrants, are sometimes referred to in this
Prospectus as the "Selling Shareholders". The Company
will not receive any proceeds from the sale of the shares
by the Selling Shareholders.
The names and addresses of the Selling Shareholders are:
Shares Which
may be Acquired Shares to
Share
Shares Upon Conver be Sold in
Owner-
Presently sion of Pre This
ship After
Name Owned ferred Shares Offering
(3) Offering
Infinity Investors Ltd. - 511,140 (1) 511,140
- -
Professional Edge - 102,200 (1) 102,200
- -
Fund L.P.
Pro Futures Special - 102,200 (1) 102,200
- -
Equities Fund, L.P.
Seacrest Capital Limited - 102,200 (1) 102,200
- -
Baskerville Trading - 102,200 (1) 102,200 -
Corporation
Buchanan Partners Ltd. - 51,030 (1) 51,030 -
The Buchanan Fund - 51,030 (1) 51,030 -
Harlan Kleiman 10,748 (2) 10,748 -
Robert Schacter 3,225 (2) 3,225 -
Timothy Holmes 1,228 (2) 1,228 -
Joseph Gil 154 (2) 154 -
1,037,355 1,037,355
(1) Represents shares issuable upon the conversion of the
Series B Preferred Stock based upon the closing price
of the Company's Common Stock on October 15, 1996
($5.62). The actual number of shares to be issued
upon the conversion of the Preferred Shares will
depend upon the price of the Company's Common Stock at
the time of conversion. See "Description of
Securities."
(2) Represents shares issuable upon the exercise of the
Sales Agent's
Warrants.
(3) Assumes all shares owned, or which may be acquired, by
the Selling Shareholders, are sold to the public by
means of this Prospectus.
Manner of Sale. The shares of
Common Stock owned, or which may be acquired, by the
Selling Shareholders may be offered and sold by means of
this Prospectus from time to time as market conditions
permit in the over-thecounter market, or otherwise, at
prices and terms then prevailing or at prices related to
the then-current market price, or in negotiated
transactions. These shares may be sold by one or more of
the following methods, without limitation: (a) a block
trade in which a broker or dealer so engaged will attempt
to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the
broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a
broker/dealer. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other
brokers or dealers to participate. Such brokers or
dealers may receive commissions or discounts from Selling
Shareholders in amounts to be negotiated.
The Selling Shareholders and any broker/dealers
who act in connection with the sale of the Shares
hereunder may be deemed to be "underwriters" within the
meaning of 2(11) of the Securities Acts of 1933, and any
commissions received by them and profit on any resale of
the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act. The
Company has agreed to indemnify the Selling Shareholders
and any securities broker/dealers who may be deemed to be
underwriters against certain liabilities, including
liabilities under the Securities Act as underwriters or
otherwise.
The Company has advised the Selling Shareholders
that they and any securities broker/dealers or others who
may be deemed to be statutory underwriters will be subject
to the Prospectus delivery requirements under the
Securities Act of 1933. The Company has also advised each
Selling Shareholder that in the event of a "distribution"
of the shares owned by the Selling Shareholder, such
Selling Shareholder, any "affiliated purchasers", and any
broker/ dealer or other person who participates in such
distribution may be subject to Rule 10b-6 under the
Securities Exchange Act of 1934 ("1934 Act") until their
participation in that distribution is completed. A
"distribution" is defined in Rule 10b-6 as an offering of
securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the
presence of special selling efforts and selling methods".
The Company has also advised the Selling Shareholders that
Rule 10b-7 under the 1934 Act prohibits any "stabilizing
bid" or "stabilizing purchase" for the purpose of pegging,
fixing or stabilizing the price of the Common Stock in
connection with this offering.
Rule 10b-6 makes it unlawful for any person who
is participating in a distribution to bid for or purchase
stock of the same class as is the subject of the
distribution. If Rule 10b-6 applies to the offer and sale
of any of the Shares, then participating broker/dealers
will be obligated to cease market-making activities nine
business days prior to their participation in the offer
and sale of such Shares and may not recommence market-
making activities until their participation in the
distribution has been completed. If Rule 10b-6 applies to
one or more of the principal market-makers in the
Company's Common Stock, the market price of such stock
could be adversely affected.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 100,000,000
shares of Common Stock, (the "Common Stock"). Holders of
Common Stock are each entitled to cast one vote for each
share held of record on all matters presented to
shareholders. Cumulative voting is not allowed; hence,
the holders of a majority of the outstanding Common Stock
can elect all directors.
Holders of Common Stock are entitled to receive
such dividends as may be declared by the Board of
Directors out of funds legally available therefor and, in
the event of liquidation, to share pro rata in any
distribution of the Company's assets after payment of
liabilities. The board is not obligated to declare a
dividend. It is not anticipated that dividends will be
paid in the foreseeable future.
Holders of Common Stock do not have preemptive
rights to subscribe to additional shares if issued by the
Company. There are no conversion, redemption, sinking
fund or similar provisions regarding the Common Stock.
All of the outstanding shares of Common Stock are fully
paid and nonassessable and all of the shares of Common
Stock offered as a component of the Units will be, upon
issuance, fully paid and non-assessable.
Preferred Stock
The Company is authorized to issue up to 200,000
shares of Preferred Stock. The Company's Articles of
Incorporation provide that the Board of Directors has the
authority to divide the Preferred Stock into series and,
within the limitations provided by Colorado statute, to
fix by resolution the voting power, designations,
preferences, and relative participation, special rights,
and the qualifications, limitations or restrictions of the
shares of any series so established. As the Board of
Directors has authority to establish the terms of, and to
issue, the Preferred Stock without shareholder approval,
the Preferred Stock could be issued to defend against any
attempted takeover of the Company.
In May 1996 the Company sold 3,500 shares of its
Series A Preferred Stock (the "Preferred Shares") for
$3,500,000 or $1,000 per share. At the purchasers'
option, up to 1,750 Preferred Shares were convertible, on
or after 60 days from the closing date of the purchase of
such shares (the "Closing"), into shares of the Company's
Common Stock on the basis of one share of Preferred Stock
for shares of Common Stock equal in number to the amount
determined by dividing $1,000 by 85% of the Closing Price
of the Company's Common Stock. All Preferred Shares were
convertible, on or after 90 days from the Closing, on the
basis of one share of Preferred Stock for shares of the
Company's Common Stock equal in number to the amount
determined by dividing $1,000 by 83% of the Closing Price
of the Company's Common Stock. The term "Closing Price"
was defined as the average closing bid price of the
Company's Common Stock over the five-day trading period
ending on the day prior to the conversion of the Preferred
Stock. All outstanding shares of the Series A Preferred
Stock have since been converted into 632,041 shares of the
Company's Common Stock. The shares issued upon the
conversion of the Series A Preferred Stock are being
offered for public sale by means of a separate
registration statement.
In August 1996 the Company sold 5,000 shares of
its Series B Preferred Stock (the "Series B Preferred
Shares") for $5,000,000 or $1,000 per share. At the
purchasers' option, up to 2,500 Preferred Shares are
convertible, on or after 10 days from the date of this
Prospectus (the "Effective Date"), into shares of the
Company's Common Stock on the basis of one share of
Preferred Stock for shares of Common Stock equal in number
to the amount determined by dividing $1,000 by 87% of the
Closing Price of the Company's Common Stock. All
Preferred Shares are convertible, on or after 40 days from
the Effective Date, on the basis of one share of Preferred
Stock for shares of the Company's Common Stock equal in
number to the amount determined by dividing $1,000 by 85%
of the Closing Price of the Company's Common Stock. The
term "Closing Price" is defined as the average closing bid
price of the Company's Common Stock over the five-day
trading period ending on the day prior to the conversion
of the Preferred Stock. Notwithstanding the above, the
conversion price may not be less than $3.60 nor more than
$14.75. The Preferred Shares are entitled to a quarterly
dividend of $17.50 per share. Any Preferred Shares which
are outstanding on the second anniversary of the Effective
Date will be automatically converted into shares of the
Company's Common Stock. The Preferred Shares have a
liquidation preference over the Company's Common Stock.
The shares issuable upon the conversion of the Preferred
Shares are being offered by means of this Prospectus. See
"Selling Shareholders".
Publicly Traded Warrants
In connection with the Company's February, 1992
public offering, the Company issued 5,175,000 Warrants.
Every ten Warrants entitle the holder to purchase one
share of the Company's Common Stock at a price of $15.00
per share prior to February 7, 1997. The Company, upon 30-
days notice, may accelerate the expiration date of the
Warrants, provided, however, that at the time the Company
gives such notice of acceleration (1) the Company has in
effect a current registration statement covering the
shares of Common Stock issuable upon the exercise of the
Warrants and (2) at any time during the 30 day period
preceding such notice, the average closing bid price of
the Company's Common Stock has been at least 20% higher
than the warrant exercise price for 15 consecutive trading
days. If the expiration date is accelerated, all Warrants
not exercised within the 30-day period will expire.
Other provisions of the Warrants are set forth
below. This information is subject to the provisions of
the Warrant Certificate representing the Warrants.
1. Holders of the Warrants may sell the
Warrants rather than exercise them. However, there can be
no assurance that a market will develop or continue as to
the Warrants.
2. Unless exercised within the time provided
for exercise, the Warrants will automatically expire.
3. The exercise price of the Warrants may not
be increased during the term of the Warrants, but the
exercise price may be decreased at the discretion of the
Company's Board of Directors by giving each Warrant holder
notice of such decrease. The exercise period for the
Warrants may be extended by the Company's Board of
Directors giving notice of such extension to each Warrant
holder of record.
4. There is no minimum number of shares which
must be purchased upon exercise of the Warrants.
5. The holders of the Warrants in certain
instances are protected against dilution of their
interests represented by the underlying shares of Common
Stock upon the occurrence of stock dividends, stock
splits, reclassifications, and mergers.
6. The holders of the Warrants have no voting
power and are not entitled to dividends. In the event of
a liquidation, dissolution, or winding up of the Company,
holders of the Warrants will not be entitled to
participate in the distribution of the Company's assets.
Transfer Agent
American Securities Transfer, Inc., of Denver,
Colorado, is the transfer agent for the Company's Common
Stock.
LITIGATION
In February 1996 the Company filed a lawsuit
against ImmunoRx and Dr. John Hadden for contract breach,
tortious interference of contract and patent infringement
concerning the Company's Multikine drug. The lawsuit,
filed in the U.S. District Court for the Middle District
of Florida, seeks damages and the termination of certain
research and clinical studies being conducted by ImmunoRx
and Dr. Hadden. From 1984 to 1992, Dr. Hadden consulted
with the Company, performed research on Multikine and
manufactured Multikine for the Company's head and neck
cancer study in Florida. In early 1993, Dr. Hadden signed
a separation agreement with the Company acknowledging the
Company's ownership of both Multikine and the research
results. The Company has learned that Dr. Hadden and
ImmunoRx are apparently making copies of Multikine, in
contravention of the separation agreement and the patents
covering Multikine, and have begun clinical studies in a
foreign country using a copy of Multikine. See "Business
Compounds and Processes Licensed to the Company".
EXPERTS
The financial statements as of September 30, 1995
and 1994 and for each of the three years in the period
ended September 30, 1995 incorporated by reference in this
prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing
herein, and are incorporated by reference upon the report
of such firm given upon their authority as experts in
accounting and auditing.
INDEMNIFICATION
The Company's Bylaws authorize indemnification of
a director, officer, employee or agent of the Company
against expenses incurred by him in connection with any
action, suit, or proceeding to which he is named a party
by reason of his having acted or served in such capacity,
except for liabilities arising from his own misconduct or
negligence in performance of his duty. In addition, even
a director, officer, employee, or agent of the Company who
was found liable for misconduct or negligence in the
performance of his duty may obtain such indemnification
if, in view of all the circumstances in the case, a court
of competent jurisdiction determines such person is fairly
and reasonably entitled to indemnification. Insofar as
indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers, or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy
as expressed in the Act and is therefore unenforceable.
ADDITIONAL INFORMATION
The Company has filed with the Securities and
Exchange Commission, 450 5th Street, N.W., Washington,
D.C. 20001, a Registration Statement under the Securities
Act of l933, as amended, with respect to the securities
offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement.
For further information with respect to the Company and
such securities, reference is made to the Registration
Statement and to the Exhibits filed therewith. Statements
contained in this Prospectus as to the contents of any
contract or other documents are summaries which are not
necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed
as an Exhibit to the Registration Statement, each such
statement being qualified in all respects by such
reference. Copies of each document may be inspected at
the Commission's offices at 450 Fifth Street, N.W.,
Washington, D.C., 20549, and at the Northeast Regional
Office, 7 World Trade Center, 13th Floor, New York, New
York 10048 and the Midwest Regional Office, Suite 1400,
500 West Madison Street, Chicago, Illinois 60681-2511.
This Registration Statement and the related exhibits may
also be inspected at the Internet Web Site maintained by
the Securities and Exchange Commission at www.sec.gov.
Copies may be obtained at the Washington, D.C. office upon
payment of the charges prescribed by the Commission.
No dealer, salesman or other person has been
authorized to give any information or to make any
representations, other than those contained in this
Prospectus. Any information or representation not
contained in this Prospectus must not be relied upon as
having been authorized by the Company. This Prospectus
does not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby in any
state or other jurisdiction to any person to whom it is
unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that
there has been no change in the affairs of the Company
since the date hereof.
TABLE OF CONTENTS
Page
Prospectus Summary ........................................
Risk Factors ..............................................
Dilution and Comparative Share Data .......................
Selling Shareholders ......................................
Description of Securities .................................
Litigation ................................................
Experts ...................................................
Indemnification ...........................................
Additional Information ....................................
Financial Statements ......................................
Common Stock
CEL-SCI CORPORATION
PROSPECTUS
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
SEC Filing Fee $ 3,162
NASD Filing Fee 1,416
Blue Sky Fees and Expenses 500
Printing and Engraving Expenses 200
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 5,000
Transfer Agent Fees 100
Miscellaneous Expenses 4,622
TOTAL $40,000
All expenses other than the S.E.C. and NASD filing fees
are estimated.
Item 25. Indemnification of Officers and Directors.
It is provided by Section 7-109-102 of the Colorado Revised
Statutes and the Company's Bylaws that the Company may indemnify any
and all of its officers, directors, employees or agents or former
officers, directors, employees or agents, against expenses actually
and necessarily incurred by them, in connection with the defense of
any legal proceeding or threatened legal proceeding, except as to
matters in which such persons shall be determined to not have acted in
good faith and in the best interest of the Company.
Item 16. Exhibits
3(a) Articles of Incorporation Incorporated by reference to
Exhibit 3(a) of the Company's
combined Registration Statement
on Form S-1 and PostEffective
Amendment ("Registration
Statement"), Registration Nos.
2-85547D and 33-7531.
(b) Amended Articles Incorporated by reference to
Exhibit 3(a) of the Company's
Registration Statement on Form
S-1, Registration Nos. 2-85547-D
and 33-7531.
(c) Amended Articles Filed as Exhibit 3(c) to the
Company's (Name change only)
Registration Statement on Form
S-1 Registration Statement (No.
33-34878).
(d) Bylaws Incorporated by reference to
Exhibit 3(b) of the Company's
Registration Statement on Form
S-1, Registration Nos. 2-85547-
D and 33-7531.
4(a) Specimen copy of Incorporated by reference to
Stock Certificate Exhibit 4(a) of the Company's
Registration Statement on
Form S-1, Registration Nos. 2-
85547-D and 33-7531.
(c) Form of Common Stock Incorporated by reference to
Purchase Warrant Exhibit 4(c) filed as an exhibit
to the Company's Registration
Statement on Form S-1
(Registration No. 33-43281).
5. Opinion of Counsel Filed with initial Registration
Statement.
10(a) Purchase Agreement Incorporated by reference to
dated April 21, 1986 Exhibit 10(a) of the Company's
with Alpha I Biomedical Registration Statement on Form
S-1, Registration
Nos. 2-85547-D and 33-7531.
(b) Agreement with Sittona Incorporated by reference to
Company B.V. dated Exhibit 10(c) of the Company's
May 3, 1983 Registration Statement on Form
S-1, Registration Nos. 2-85547-D
and 33-7531.
(c) Addendum effective May 3, Incorporated by reference to
1983 to Licensing Agreement Exhibit 10(e) of the Company's
with Sittona Company, B.V. Registration Statement on Form
S-1, Registration Nos. 2-85547-D
and 33-7531.
(d) Addendum effective October Incorporated by reference to
13, 1989 to Licensing Agree- Exhibit 10(d) of Company's
ment with Sittona Company, Annual Report on Form 10-K for
B.V. the year ended September
30, 1989.
10(e) Employment Agreement with Filed with Amendment Number 1 to
Geert Kersten the Company's Registration
Statement on Form S-1
(Commission File Number
3343281).
10(g) Agreement between Viral Filed with Amendment Number 2
Technologies, Inc. and to the Company's Registration
Nippon Zeon Co., Ltd. Statement on Form S-1
(Commission File Number 33-
90230).
23(a) Consent of Hart & Trinen Filed with initial Registration
Statement.
(b) Consent of Deloitte & Filed with initial Registration
Touche LLP Statement.
24. Power of Attorney Included as part of signature
page.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement.
(i) To include any Prospectus required by Section
l0(a)(3) of the Securities Act of l933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement,
including (but not limited to) any addition or deletion
of a managing underwriter.
(2) That, for the purpose of determining any liability under
the Securities Act of l933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of l933 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
POWER OF ATTORNEY
The registrant and each person whose signature appears below
hereby authorizes the agent for service named in this Registration
Statement, with full power to act alone, to file one or more
amendments (including post-effective amendments) to this Registration
Statement, which amendments may make such changes in this Registration
Statement as such agent for service deems appropriate, and the
Registrant and each such person hereby appoints such agent for service
as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually
and in each capacity stated below, any such amendments to this
Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933,
the Registrant certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Alexandria,
State of Virginia, on the 23rd day of October, 1996.
CEL-SCI CORPORATION
By: /s/ Maximilian de Clara
MAXIMILIAN DE CLARA, PRESIDENT
Pursuant to the requirements of the Securities Act of l933,
this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
/s/ Maximilian de Clara Director and Principal October 23, 1996
MAXIMILIAN DE CLARA Executive Officer
/s/ Geert R. Kersten Director, Principal October 23, 1996
GEERT R. KERSTEN Financial Officer
and Chief Executive
Officer
/s/ Mark V. Soresi* Director October 23, 1996
MARK V. SORESI
/s/ F. Donald Hudson* Director October 23, 1996
F. DONALD HUDSON
/s/ Edwin A. Shalloway* Director October 23, 1996
EDWIN A. SHALLOWAY
*By Geert R. Kersten, as
his Attorney-in-Fact
