UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(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, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF
THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________.
Commission File Number 0-11503
CEL-SCI CORPORATION
Colorado
84-0916344
____________________________
____________________________
State or other jurisdiction
(IRS) Employer
incorporation
Identification Number
66 Canal Center Plaza, Suite 510
Alexandria, Virginia 22314
_____________________________
Address of principal executive offices
(703) 549-5293
_____________________________
Registrant's telephone number, including area code
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports) and (2) had been subject to such
filing requirements for the past 90 days.
Yes ____X_____ No __________
Class of Stock No. Shares Outstanding
Date
Common 5,809,914 February 20,
1996
Page 1 of 11 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 5.
Other Information 10
Item 6.
Exhibits and Reports on Form 8-K 10
Signatures 11
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(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, 1995. 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, 1995 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
Effective September 30, 1994, the Company adopted, on a
prospective basis, Statement of Financial
Accounting Standard No. 115, "Accounting for Certain Debt
and Equity Securities" (SFAS 115) and revised its policy for
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. As of December 31, 1995,
there is no effect on the Company's financial statements.
Loss per Share
Net loss per common share is based on the weighted average
number of common shares outstanding during the period.
Common stock equivalents, including options to purchase
common stock, are excluded from the calculation as they are
antidilutive.
Long-lived Assets
Statement of Accounting Standards No. 121, "Accounting for
the Impairment of Long-lived Assets
and for Long-lived Assets to be Disposed of" is effective
for financial statements for fiscal years beginning after
December 15, 1995. It is the Company's opinion that the
adoption of the statement would have no material effect on
its Financial Statements.
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(unaudited)
(continued)
B. JOINT VENTURE
On October 30, 1995, the Company announced it had acquired
Alpha 1 Biomedical's interest in Viral Technologies, Inc.
("VTI"). VTI was formed by the two companies in 1986. This
transaction gives CEL-SCI 100% ownership of VTI. Under the
terms of the agreement, CEL-SCI gave Alpha 1 Biomedicals,
Inc. 159,170 shares of CEL-SCI common stock as the purchase
price for net assets with a fair value of approximately
$170,000. The acquisition was accounted for under the
purchase method of accounting; and as the acquisition
represents primarily research and development costs, the
purchase price was expensed and is included as research and
development expense for the three months ended December 31,
1995. The contract also contains provisions allowing for
the repurchase of the shares by CEL-SCI and limits the
amount of shares that can be sold in the open market at any
given time. Effective October 31, 1995, the Company has
consolidated CEL-SCI's and VTI's financial statements and
the consolidated financial statements reflect the results of
VTI's operations since the date of acquisition. This
results in a significant increase in patent costs on the
consolidated balance sheet. Intercompany accounts are
eliminated upon consolidation.
C. CONSTRUCTION OF NEW LABORATORY AND FUNDING
On January 31, 1994, the Company entered into a leasing a
greement with a non-affiliated landlord for 7,800 square
feet at 4820 Seton Drive, Baltimore, Maryland. In the
spring of 1994 the commenced construction of the new
laboratory. The cost of the laboratory buildout and
equipment was approximately $1,100,000. To fund this
laboratory, the Company borrowed funds from a bank at a
rate of prime plus 2%. The outstanding loan balance at
December 31, 1995 is $750,418.
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 an exclusive worldwide license
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 the
technology and know-how licensed to it 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.
In February, 1992, the Company sold 1,035,000 Units at
$15.50 per Unit in a public offering. Each unit consisted of
five shares of Common Stock and five Common Stock Purchase
Warrants. Ten Warrants entitle the holder to purchase one
additional share of Common Stock at a price of $46.50 per share
prior to February 7, 1997.
In June and September, 1995, the Company completed private
offerings whereby it sold a total of 1,150,000 units at $2.00 per
unit. Each unit consisted of one share of Common Stock and one
Warrant. Each Warrant entitles the holder to purchase one
additional share of Common Stock at a price of $3.25 per share at
any time prior to June 30, 1997. The net proceeds to the Company
from these offerings, after the payment of Sales Agent's
commissions and other offering expenses, were approximately
$2,000,000. On November 30, 1995 the Company and the investors
in these Private Offerings agreed to reduce the exercise price of
the Warrants to $1.60 per share in return for the commitment on
the part of the investors to exercise 312,500 Warrants ($500,000)
prior to December 23, 1995 and an additional 312,500 Warrants
($500,000) prior to January 31, 1996.
Results of Operations
Interest income during the three months ending December 31,
1995 reflects interest accrued on investments. The interest
income has declined from the previous year because the interest
income from the loans to VTI is eliminated upon consolidation.
Research and development expenses increased because of the
consolidation of Cel-Sci and Viral Technologies research and
development expenses. In addition, the purchase of the second 50%
of VTI from Alpha 1 was expensed as research and development
cost. (See Note B.) Before consolidation, Cel-Sci's research and
development costs decreased by approximately $100,000 due to cost
savings achieved from the consolidation of research in the
Company's new lab. General and administrative expenses increased
due to interest expense on the note and because of the
consolidation of Cel-Sci and Viral Technologies general and
administrative expenses.
PART II
Item 5. Other Information
In December, 1995, Cel-Sci's subsidiary, Viral Technologies,
(VTI) began phase I human testing in HIV-positive individuals in
a clinical trial in California. The trial will involve injecting
22 individuals with CD4 counts between 50 and 600 with VTI's HGP-
30 HIV immunogen in a series of three injections over a period of
six months.
On January 4, 1996, the Company announced that it had acquired a
new patented medical technology which directs the body to chose a
specific immune response. This new T-cell Modulation Process
using "heteroconjugates" was acquired from CELL MED, Inc. of
Columbia, Maryland.
Item 6.
(a) Exhibits
No exhibits are filed with this document.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the
fiscal quarter ended December 31, 1995.
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: April 2, 1996 /s/ Geert Kersten
Geert Kersten
Chief Executive Officer*
*Also signing in the capacity of the Chief Accounting Officer and
Principal Financial Officer.
Item 1. FINANCIAL STATEMENTS
CEL-SCI CORPORATION
- -------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
- ------------------------
ASSETS
(unaudited)
December 31, September
30,
1995 1995
CURRENT ASSETS:
Cash and cash equivalents $3,040,412 $3,886,950
Investments, net 170,000 170,000
Interest receivable 66,143 64,080
Prepaid expenses 303,962 341,295
Advances to officer/shareholder
and employees 6,930 13,234
3,587,447 4,475,559
RECEIVABLE FROM JOINT VENTURE 0 522,695
RESEARCH AND OFFICE EQUIPMENT-
Less accumulated depreciation
of $678,605 and $589,897 1,040,549 1,102,038
DEPOSITS 18,178 18,178
PATENT COSTS- less accumulated
amortization of
$318,723 and $239,490 423,467 240,541
$5,069,641 $6,359,011
See notes to condensed
financial statements.
3
CEL-SCI CORPORATION
- -------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
- ------------------------
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
December 31, September
30,
1995 1995
CURRENT LIABILITIES:
Accounts payable $64,071.00 $248,488.00
Current portion note payable 243,372 243,372
Total current liabilities 307,443 491,860
NOTE PAYABLE 507,046 567,891
DEFERRED RENT 24,959 24,959
EQUITY IN SUBSIDIARY 0 432,268
Total liabilities 839,448 1,516,978
STOCKHOLDERS' EQUITY
Preferred stock, $.01
par value; authorized,
200,000 shares; none issued
- -
Common stock, $.01 par
value; authorized,
100,000,000 shares;
issued and outstanding,
5,809,914 and
5,338,244 shares 58,099 53,382
Additional paid-in capital 29,911,265 28,799,198
Deficit (25,739,171) (24,010,547)
TOTAL STOCKHOLDERS'
EQUITY 4,230,193 4,842,033
$5,069,641 $6,359,011
See notes to condensed
financial statements.
4
CEL-SCI CORPORATION
- -------------------
CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS
- ---------------------------------
(unaudited)
Three Months
Ended
December 31,
1995 1994
REVENUES:
Interest income $44,421 $116,701
Other income 18,080 -
TOTAL INCOME 62,501 116,701
EXPENSES:
Research and development 1,238,197 618,636
Depreciation and
amortization 71,268 66,775
General and administrative 477,888 398,281
TOTAL OPERATING EXPENSES 1,787,353 1,083,692
EQUITY IN LOSS OF JOINT VENTURE (3,772) (181,578)
1,791,125 1,265,270
NET LOSS $1,728,624 $1,148,569
LOSS PER COMMON SHARE $0.32 $0.27
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 5,457,431 4,188,244
See notes to condensed
financial statements.
5
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOW
(unaudited)
Three Months E
n
d
e
d
D
e
c
e
m
b
e
r
3
1
,
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET LOSS
$(1,728,624) $(1,148,569)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 71,268 66,775
Equity in loss of joint venture 3,772 181,578
Amortization of premium on investments - -
Realized loss on sale of investments 5,962
Research and develolpment expense 536,619
related to VTI purchase -
Changes in assets and liabilities, net of
effects from purchase of VTI:
Decrease (increase) in interest (2,063) 23,999
receivable
Decrease (increase) in prepaid expenses 37,333 78
Decrease (increase) in advances 6,304 (844)
Decrease (increase) in receivable from (38,292)
joint venture -
Increase (decrease) in accounts payable (184,417) (255,546)
NET CASH USED IN OPERATING ACTIVITIES (1,259,808) (1,164,859)
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES:
Sales of investments - 690,900
Advance to Joint Venture - (34,455)
Payment on note (80,845) (797)
Purchase of research and office - (112,211)
equipment
Patent costs (5,885) -
NET CASH USED IN INVESTING ACTIVITIES (86,730) 543,437
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES:
Issuance of common stock 500,000 -
NET CASH PROVIDED BY FINANCING ACTIVITIES 500,000 -
NET INCREASE IN CASH (846,538) (621,422)
CASH AND CASH EQUIVALENTS:
Beginning of period 3,886,950 3,370,713
End of period $3,040,412 $2,749,291
NON-CASH TRANSACTION:
In October 1995, CEL-SCI issued 159,170
shares of Common
Stock as consideration for the purchase
of the remaining 50%
interest in VTI. In conjunction with
the acquisition, CEL-SCI
obtained net assets with a fair value of
approximately $170,000.
6
