As filed with the Securities and Exchange Commission on
January 15, 1997.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) 800,000 $5.05 $4,040,000 $1,225
Common Stock (3) 759,526 $5.05 3,835,607 1,163
Total 1,389,000 $7,875,607 $2,388
(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 C Preferred Stock into shares of common stock.
(3) Shares of Common Stock issuable upon the exercise of Series A and
Series B Warrants. The Series A and Series B Warrants were issued in
connection with the sale of the Company's Series C 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 C Preferred Stock or upon the
exercise of the Warrants as a result of any adjustment in the number of
securities issuable by reason of the anti-dilution provisions of the
Series C 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 Registra- tion 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 Sec- tion 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 shares of the
Common Stock of Cel-Sci Corporation (the "Company") by the holders of the
Company's Series C Preferred Stock (the "Preferred Stock") if and when
the holders of the Series C Preferred Stock elect to convert the
Preferred Stock into shares of the Company's Common Stock. The Series C
Preferred Shares are convertible 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 (the "Conversion
Price"). 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 more than
$4.00. Beginning 90 days after December 17, 1996 one half of the Series
C Preferred Shares are convertible into shares of the Commpany's common
stock. All preferred shares are convertible into shares of the Company's
common stock beginning 180 days after December 17, 1996 provided however
that if the Company's common stock trades for more than $8.00 at any
time, then all shares of Preferred Stock will thereafter be immediately
convertible 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 759,526 shares of
common stock issuable upon the exercise of certain Warrants. The
Warrants were issued in connection with the sale of the Company's Series
C Preferred Stock. As part of this sale, the Company issued 379,763
Series A Warrants and 379,763 Series B Warrants (collectively, the
"Warrants"). Each Series A warrant entitles the holder to purchase one
share of the Company's common stock at a price of $4.50 per share at any
time prior to March 15, 1998. Each Series B Warrant entitles the holder
to purchase one share of the Company's Common Stock at a price of $4.50
per share at any time prior to March 15, 1999. The holders of the
Warrants, to the extent they exercise the 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 January , 1997 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 January , 1997
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 Washing- ton, D.C.
20549 at prescribed rates. Certain information concerning the Com- pany
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
Commis- sion 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 Registra- tion 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 for the fiscal year
ended September 30, 1996; and
(2) 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 super- seded, 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
interleukin2 ("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 "hetero- conjugates" 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 indi- cations 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.
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 inves- tigational 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-in fected 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.
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, had an accumulated deficit of approximately $30,400,000 at
September 30, 1996, and expects to incur substantial losses for the
foreseeable future.
In August 1996 the Company sold, in a private transaction, 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 Series B Preferred Shares are convertible, on or after ten days from
the date the shares have been registered for public sale (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. Each Preferred Share is entitled to a quarterly dividend, if, as,
and when declared by the Board of Directors, of $17.50. Any Series B
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. By means of a Registration Statement filed with
the Securities and Exchange Commission, the shares issuable upon the
conversion of the Series B Preferred Shares have been registered for
public sale. Prior to December 20, 1996 1,900 Series B Preferred Shares
were converted into 527,774 shares of the Company's common stock. In
December 1996 the Company repurchased 2,850 Series B Preferred Shares for
$2,850,000 plus warrants which allow the holders to purchase up to 99,750
shares of the Company's common stock for $4.25 per share at any time prior
to December 15, 1999. The Company raised funds required for this
repurchase from the sale of its Series C Preferred Stock.
In December 1996 the Company raised $2,850,000 from the sale of
units consisting of 2,850 shares of the Company's Series C Preferred
Stock, 379,763 Series A Warrants and 379,763 Series B Warrants. The
Series C Preferred Shares are convertible 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 (the "Conversion
Price"). 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 more than
$4.00. Beginning 90 days after December 17, 1996 one half of the Series C
Preferred Shares are convertible into shares of the Commpany's common
stock. All preferred shares are convertible into shares of the Company's
common stock beginning 180 days after December 17, 1996 provided however
that if the Company's common stock trades for more than $8.00 at any time,
then all shares of Preferred Stock will thereafter be immediately
convertible into shares of the Company's common stock. The Preferred
Shares are not entitled to any annual dividends, provided however that if
the shares of common stock issuable upon the conversion of the Series C
Preferred Stock have not been registered for public sale within 90 days
after December 17, 1996, then the Company will pay a dividend (based upon
a variable formula) with respect to each outstanding share of the Series C
Preferred Stock. Any Series C Preferred Shares which are outstanding on
December 15, 1998 will be automatically converted into shares of the
Company's Common Stock, provided however the shares of Common Stock
issuable upon the conversion of the Series C Preferred Shares have been
registered for public sale and the Company's Common Stock is listed on the
Nasdaq System. The Preferred Shares have a liquidation preference of
$1,000 per share over the Company's Common Stock. Each Series A Warrant
entitles the holder to purchase one share of the Company's common stock at
a price of $4.50 per share at any time prior to March 15, 1998. Each
Series B Warrant entitles the holder to purchase one share of the
Company's common stock at a price of $4.50 per
share at any time prior to March 15, 1999. The shares issuable upon the
conversion of the Series C Preferred Shares and the exercise of the
Warrants are are being offered for public sale by means of this
Registration Statement. See "Selling Shareholders".
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: Shares of Common Stock are offered for public
sale
by the holders of the Company's Series C
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.
Up to 759,526 additional shares of common stock
are offered for public sale upon the exercise of
Warrants which were issued in connection with the
sale of the Series C Preferred Stock. The holders
of the Preferred Stock and the Warrants, to the
extent they convert the Preferred Stock into
Common Stock or exercise the 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
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 December
31, 1996, the Company had 8,519,950
shares of Common
Stock issued and
outstanding.
Assuming all
shares of the
Series C
Preferred Stock
are converted to
712,500 shares
of the Company's
Common Stock
(assuming a
conversion price
of $4.00 per
share) and all
of the Warrants
are exercised,
there will be
9,991,988 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
conversionof
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 Pros-
pectus involves
a high degree of
risk. Risk
factors include
the following:
lack of revenues
and history of
loss, need for
additional
capital,
government
regula- tion,
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,
1996 1995 1994 1993
1992
Investment Income
& Other Revenues $ 322,370 $ 423,765
$624,670 $997,964 $434,180
Expenses:
Research and
Development 3,471,477 1,824,661
2,896,109 1,307,042 481,697
Depreciation
and
Amortization 290,829 262,705
138,755 55,372 33,536
General and
Administrative 2,882,958
1,713,912 1,621,990 1,696,119
1,309,475
Equity in loss
of joint
venture 3,772 501,125
394,692 344,423 260,388
Net Loss $(6,326,666) $(3,878,638)
$(4,426,876) $(2,404,992) $(1,650,916)
Loss per
common share $(0.98) $(0.89)
$(1.06) $(0.58) $(0.42)
Weighted average
common shares
outstanding 6,425,316 4,342,628
4,185,240 4,155,431 3,953,233
Balance Sheet Data:
September 30,
1996 1995
1994 1993 1992
Working
Capital $10,266,104 $3,983,699
$5,795,191 $10,296,472 $13,043,012
Total Assets 11,878,370 6,359,011
8,086,670 11,633,090 13,769,504
Total
Liabilities 294,048 1,516,978
1,407,602 688,231 467,086
Shareholders'
Equity 11,584,322 4,842,033
6,679,068 10,944,859 13,302,4l8
No common stock 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 September 30,
1996, the Company has incurred net losses of approximately
$30,400,000. During the years ended September 30, 1994, 1995
and 1996 the Company suffered losses of $4,426,876,
$3,878,638 and $6,326,666 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 poten- tial 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. The Company's clinical studies and
research with respect to MULTIKINE have 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,
controlled Sittona between 1985 and 1996. Any commercial
products developed by the Com- pany 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. Any future trans
actions 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 tech-
nological forefront of this field. There can be no assurance
that the Company will achieve or maintain such a competitive
position or that other technologi- cal developments will not
cause the Company's proprietary technologies to become
uneconomical or obsolete.
Certain of the Company's products, as well as
certain technology relating to such products, are covered by
U.S. and foreign patents licensed to the Company. There is
no assurance that any pending patent applications or any
patent applications 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, in- cluding universities, may have filed
applications for, or may have been is- sued, patents and are
expected to obtain additional patents and other proprie- tary
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 pa- tents, 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.
Options, Warrants and Convertible Securities. The Company
has is sued options, warrants and other convertible
securities ("Derivative Securi ties") 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 pre- sently
outstanding shares of the Company's Common Stock and may
adversely af- fect 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 conver- sion 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 com mercialization 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 competi- tive 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 common
stock dividends have been declared or paid by the Company.
The Company does not presently intend to pay dividends on its
common stock and there can be no assurance that common stock
dividends will ever be paid.
Dilution. Persons purchasing the securities offered
by this Pros pectus 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 December 31, 1996, the present shareholders of the
Company owned 8,519,950 shares of Common Stock, which had a net
tangible book value of approximately $1.38 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) 8,519,950
Shares to be issued upon conversion of
Series C Preferred Stock, assuming
conversion price of $4.00 per share 712,512
Shares to be issued upon exercise of
Warrants 759,526
Shares outstanding (pro forma basis)
(1) 9,991,988
Net tangible book value per share $1.38
Equity ownership by present
shareholders afterthis offering 85%
Equity ownership by investors in this Offering 15%
(1) Amount excludes shares which may be issued upon the exercise
and/or con version 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 as- sets. "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 is
sued 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 Reference
Outstanding as of December 31,
1996 8,519,950
Shares Subject to this Offering:
Shares issuable upon conversion of
the Series C preferred stock,
assuming conversion price of
$4.00 per share 712,512 A
Shares issuable upon exercise
of Series A and Series B Warrants 759,526 A
Shares outstanding (pro forma
basis) 9,991,988
Other Shares Which May Be Issued:
Shares issuable upon conversion of
Series B Preferred stock,
assuming conversion
price of $4.00 per share 62,500 B
Shares issuable upon exercise of warrants
to be held by former holders of
the Company's Series B Preferred Stock. 99,750 B
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 49,720 C
Shares issuable upon exercise of
warrants issued to Selling Agent, or
its assigns, in connection with the
Company's August 1996
Private Offering 15,355 D
Shares issuable upon exercise of
warrants sold in Company's 1992
Public Offering 517,500 E
Shares issuable upon exercise of warrants
sold to Underwriter in connection with
Company's 1992 Public Offering 90,000 F
Shares issuable upon exercise of
options granted to Company's officers,
directors, employees and consultants 1,161,750 G
11,988,563
A. In December 1996 the Company raised $2,850,000 from the sale of
units consisting of 2,850 shares of the Comany's Series C Preferred
Stock, 379,763 Series A Warrants and 379,763 Series B Warrants. The
Series C Preferred Shares are convertible 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 the 85% of Closing Price of the Company's Common Stock (the
"Conversion Price"). 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. Beginning 90 days after December 17, 1996, one half
of the Series C Preferred Shares are convertible into shares of the
Company's common stock. All preferred shares are convertible into
shares of the Company's common stock beginning 180 days after December
17, 1996, provided however that if the closing bid price of the
Company's common stock trades for more than $8.00 at any time, then
all shares of Preferred Stock will thereafter be immediately
convertible into shares of the Company's common stock.
Notwithstanding the above, the Conversion Price may not be more than
$4.00. Any Preferred Shares which are outstanding on December 15,
1998 will be automatically converted into shares of the Company's
Common Stock, provided that the shares of Common Stock issuable upon
the conversion of the Preferred Shares have been registered for public
sale and the Company's Common Stock is listed on the Nasdaq system.
Each Series A Warrant entitles the holder to purchase one share of the
Company's common stock at a price fo $4.50 per share at any time prior
to March 15, 1998. Each Series B Warrant entitles the holder to
purchase one share of the Company's common stock at a price of $4.50
per share at any time prior to March 15, 1999. The shares issuable
upon the conversion of the Series C Preferred Shares and the exercise
of the Warrants are being offered for public sale by means of this
prospectus.
B. 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 were convertible, on or after November 7, 1996 (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 divi- dend of $17.50 per share. Any Preferred
Shares which are outstanding on November 7, 1998 will be automatically
converted into shares of the Com- pany's Common Stock. By means of a
Registration Statement filed with the Securities and Exchange Commission,
the shares issuable upon the conversion of the Series B Preferred Shares
have been registered for public sale.
Prior to December 20, 1996 1,900 Series B Preferred Shares were
converted into 527,774 shares of the Company's common stock. In
December 1996 the Company repurchased 2,850 Series B Preferred Shares
for $2,850,000 plus warrants which allow the holders to purchase up to
99,750 shares of the Company's common stock for $4.25 per share at any
time prior to December 15, 1999. The Company raised the funds
required for this repurchase from the sale of its Series C Preferred
Stock.
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 180,280 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. In connection with the Company's August l996 Private Offering,
Shoreline Pacific Institutional Finance, the Sales Agent for such
offering, received a commission plus warrants to purchase 15,355
shares of the Company's Com- mon Stock at $6.51 per share. By means
of a separate Registration State- ment, the shares of Common Stock
issuable upon the exercise of the Warrants issued to the Sales Agent
(or its assigns) have been registered for public sale.
E. See "Description of Securities".
F. 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.
G. The options are exercisable at prices ranging from $2.87 to
$19.70 per share. The Company may also grant options to purchase
833,707 additional shares under its Incentive Stock Option and Non-
Qualified Stock Option Plans.
SELLING SHAREHOLDERS
In December 1996 the Company raised $2,850,000 from the sale of
units consisting of 2,850 shares of the Company's Series C Preferred
Stock, 379,763 Series A Warrants and 379,763 Series B Warrants. 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 "Dilution and Comparative Share Data". The shares
issuable upon the conversion of the Series C Preferred Shares and/or the
exercise of the Series A and Series B Warrants are being offered to the
public by means of this Prospectus.
The holders of the Preferred Shares and the 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 of the Selling Shareholders are:
Shares
Which
May Be Shares
Acquired Which
Upon Con- May be
Share version of Acquired Shares to
Owner-
Shares Series C Upon Ex- be Sold
ship
Presently Preferred ercise of in this
After Name Owned Shares (1) Warrants (2) Offering (3)
Offering
Laura Huberfeld/Naomi - 250,000 266,500 516,500
- -
Bodner Partnership
Saleslink LTD - 125,000 133,250 258,250
- -
Newark Sales Corporation - 75,000 79,950 154,950
- -
Cong. Ahavas Tzdoka - 125,000 133,250 258,250
- -
V'Chesed
Rita Folger - 37,500 39,976 77,476
- -
Viva Corporation - 100,000 106,600 106,600
- -
712,500 759,526 1,472,000
- -
(1) Represents shares issuable upon the conversion of the Series C Preferred
Stock assuming conversion price of $4.00 per share. 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 Series A and
Series B Warrants.
(3) Assumes all shares owned, or which may be acquired, by the Selling
Share holders, 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
overthecounter 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 re- ceived 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 liabili- ties, including
liabilities under the Securities Act as underwriters or other- wise.
The Company has advised the Selling Shareholders that they and
any securities broker/dealers or others who may be deemed to be statutory
under writers 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 spe-
cial selling efforts and selling methods". The Company has also advised
the Selling Shareholders that Rule 10b-7 under the 1934 Act prohibits any
"stabi- lizing 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 activi- ties until their
participation in the distribution has been completed. If Rule 10b-6
applies to one or more of the principal marketmakers 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 out- standing 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, redemp- tion, 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 take- over 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.
See "Dilution and Comparative Share Data" for information concerning
the Company's Series B and Series C Preferred Stock.
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, 1998. 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 cur- rent 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 pre- ceding 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 exer-
cised 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 dis cretion 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 Com- pany'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, 1996 and 1995 and
for each of the three years in the period ended September 30, 1996
incorporated by reference in this prospectus have been audited by Deloitte
& Touche LLP, inde- pendent auditors, as stated in their report appearing
herein, and are incorpo- rated 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 en- titled 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 Com-
pany has been informed that in the opinion of the Securities and Exchange
Com- mission, 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 State-
ment, 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, Illi- nois 606812511. 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.
2512D
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 Prospec- tus 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 .......................................
Common Stock
CEL-SCI CORPORATION
PROSPECTUS
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
SEC Filing Fee $
2,388
NASD Filing Fee
1,287
Blue Sky Fees and Expenses
2,000
Printing and Engraving Expenses
1,000
Legal Fees and Expenses
20,000
Accounting Fees and Expenses
3,000
Transfer Agent Fees
100
Miscellaneous Expenses
5,225
TOTAL
$35,000
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 con- nection with the defense of any legal proceeding
or threatened legal proceed- ing, 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
Regis tration 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 337531.
II-1
4(a) Specimen copy of Incorporated by reference to
Exhibit
Stock Certificate 4(a) of the Company's
Registration
Statement on Form S-1,
Registration Nos. 2-85547-D and
337531.
(c) Form of Common Stock Incorporated by reference to
Exhibit
Purchase Warrant 4(c) filed as an exhibit to the
Com-
pany's Registration Statement on
Form S-1 (Registration No. 33
43281).
5. Opinion of Counsel Filed with initial Registration
State-
ment.
10(a) Purchase Agreement Incorporated by reference to
Exhibit
dated April 21, 1986 10(a) of the Company's
Registration
with Alpha I Biomedical Statement on Form S-1,
Registration
Nos. 2-85547-D and 33-7531.
(b) Agreement with Sittona Incorporated by reference to
Exhibit
Company B.V. dated 10(c) of the Company's
Registration
May 3, 1983 Statement on Form S-1,
Registration
Nos. 2-85547-D and 33-7531.
(c) Addendum effective May 3, Incorporated by reference to
Exhibit
1983 to Licensing Agree- 10(e) of the Company's
Registration
ment with Sittona Company, Statement on Form S-1,
Registration
B.V. Nos. 2-85547-D and 33-7531.
(d) Addendum effective October Incorporated by reference to
Exhibit 13, 1989 to Licensing Agree- 10(d) of Company's Annual
Report on ment with Sittona Company, Form 10-K for the year
ended September
B.V. 30, 1989.
10(e) Employment Agreement with Filed with Amendment Number 1 to
the
Geert Kersten Company's Registration Statement on
Form S-1 (Commission File Number 33
43281).
10(g) Agreement between Viral Filed with Amendment Number 2 to
the
Technologies, Inc. and Company's Registration Statement on
Nippon Zeon Co., Ltd. Form S-1 (Commission File Number 33-
90230).
23(a) Consent of Hart & Trinen Filed with initial Registration
State-
ment.
II-2
(b) Consent of Deloitte & Filed with initial Registration
State-
Touche LLP ment.
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
Registra tion Statement or any material change to such
information in the Registration Statement, including (but not
limited to) any addi- tion 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
amend ment any of the securities being registered which remain unsold at
the termi nation of the offering.
Insofar as indemnification for liabilities arising under the
Securi
ties Act of l933 may be permitted to directors, officers and controlling
per sons 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 pay- ment 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 per- son in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controll- ing
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.
II-3
2512D:dm
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 posteffective 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
Reg istrant 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 14th day of January, 1997.
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 January 14, 1997
MAXIMILIAN DE CLARA Executive Officer
/s/ Geert R. Kersten Director, Principal January 14, 1997
GEERT R. KERSTEN Financial Officer
and Chief Executive
Officer
/s/ Mark V. Soresi Director January 14, 1997
MARK V. SORESI
/s/ F. Donald Hudson Director January 14, 1997
F. DONALD HUDSON
2512D:dm
January 14, 1997
CEL-SCI Corporation
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 22314
Gentlemen:
This letter will constitute an opinion upon the legality of the sale by CEL-SCI
Corporation, a Colorado corporation ("the Company"), of up to 1,389,000 shares
of Common Stock, all as referred to in the Registration Statement on Form S-1
filed by the Company with the Securities and Exchange Commission.
We have examined the Articles of Incorporation, the Bylaws and the minutes of
the Board of Directors of the Company and the applicable laws of the State of
Colorado, and a copy of the Registration Statement. In our opinion, the
Company is authorized to issue the shares of stock mentioned above and such
shares, when issued, will represent fully paid and non-assessable shares of the
Company's Common Stock.
Very truly yours,
HART & TRINEN
William T. Hart
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement of CEL-SCI Corporation, whereby
the Company proposes to sell up to 1,389,000 shares of the Company's Common
Stock. Reference is also made to Exhibit 5 included in the Registration
Statement relating to the validity of the securities proposed to be sold.
We hereby consent to the use of our opinion concerning the validity of the
securities proposed to be issued and sold.
Very truly yours,
HART & TRINEN
William T. Hart
Denver, Colorado
January 14, 1997
INDEPENDANT AUDITORS'CONSENT
We consent to the incorporation by reference in this Registration Statement of
CEL SCI Corporation on Form S-3 of our report dated November 27, 1996, appearing
in the Annual Report on Form 10-K of CEL-SCI Corporation for the year ended
September 30, 1996 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Washington, DC
January 10, 1997
2512D
