UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997.
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 9,995,318 May 19,1997
Page 1 of ___ pages
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Page
Balance Sheets 3-4
Statement of Operations 5-6
Statements of Cash Flow 7-8
Notes to Financial Statements 9
Item 2.
Management's Discussion and Analysis 12
PART II
Item 6.
Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
Item 1. FINANCIAL STATEMENTS
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
(unaudited)
March 31, September 30,
1997 1996
CURRENT ASSETS:
Cash and cash equivalents $ 3,725,067 $3,549,810
Investments, net 3,062,004 6,498,812
Accounts receivable 688
Interest receivable 94,313 76,515
Prepaid expenses 430,184 272,404
Short-term loan to officer/shareholder 300,000 --
Advances to officer/shareholder
and employees 6,680 142,973
Total Current Assets 7,618,936 10,540,514
RESEARCH AND OFFICE EQUIPMENT-
Less accumulated depreciation
of $995,279 and $863,899 903,739 871,983
DEPOSITS 18,178 18,178
PATENT COSTS- less accumulated
amortization of $376,928 and $352,990 452,947 447,695
$ 8,993,800 $11,878,370
See notes to condensed financial statements.
3
<PAGE>
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
March 31, September 30,
1997 1996
CURRENT LIABILITIES:
Accounts payable $ 123,525 $ 274,410
Other current liabilities -- --
Total current liabilities 123,525 274,410
DEFERRED RENT 19,638 19,638
Total liabilities 143,163 294,048
STOCKHOLDERS' EQUITY
Preferred stock, Series A, $.01
par value - authorized 3,500
shares; issued and outstanding,
0 and 600 shares -- 6
Preferred stock, Series B, $.01
par value - authorized 5,000
shares; issued and outstanding,
250 and 5,000 shares 3 50
Preferred stock, Series C, $.01
par value - authorized 3,600
shares; issued and outstanding,
2,350 and 0 shares 23 --
Common stock, $01 par value; author-
ized, 100,000,000 shares; issued
and outstanding, 9,485,478 and
7,831,481 shares 94,855 78,315
Additional paid-in capital 44,022,926 41,918,036
Net unrealized loss on equity
securities (27,628) (16,078)
Dividends (103,963)
Deficit (35,135,579) (30,396,007)
TOTAL STOCKHOLDERS'
EQUITY 8,850,637 11,584,322
$ 8,993,800 $11,878,370
See notes to condensed financial statements.
4
<PAGE>
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Six Months Ended
March 31,
1997 1996
REVENUES:
Interest income $ 223,222 $ 84,914
Other income 3,438 25,406
TOTAL INCOME 226,660 110,320
EXPENSES:
Research and development 3,672,943 1,750,694
Depreciation and
amortization 155,319 139,962
General and administrative 1,137,970 1,219,719
TOTAL OPERATING EXPENSES 4,966,232 3,110,375
EQUITY IN LOSS OF JOINT VENTURE -- (3,772)
4,966,232 3,114,147
NET LOSS $4,739,572 $ 3,003,827
LOSS PER COMMON SHARE $ 0.56 $ 0.52
WElGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,497,139 5,825,011
See notes to condensed financial statements.
5
<PAGE>
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31,
1997 1996
REVENUES:
Interest Income $ 99,552 $ 40,493
Other Income 2,063 7,326
TOTAL INCOME 101,615 47,819
EXPENSES:
Research and development 2,988,983 512,497
Depreciation and
amortization 81,105 68,694
General and administrative 589,761 741,831
TOTAL OPERATING EXPENSES 3,659,849 1,323,022
EQUITY lN LOSS OF JOINT VENTURE -- --
3,659,849 1,323,022
NET LOSS $ 3,558,234 $ 1,275,203
LOSS PER COMMON SHARE $ 0.40 $ 0.21
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,848,507 6,196,630
See notes to condensed financial statements.
6
<PAGE>
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
March 31,
1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET LOSS $(4,739,572) $(3,003,827)
Adjustments to reconcile net loss to
net cash used in operating activities:
Research and development expenses re-
lated to purchase of Viral Technol-
ogies Inc -- 515,617
Depreciation and amortization 155,319 139,962
Amortization of premium (discount) on
investments (113,192) --
Equity in loss of joint venture -- 3,772
Unrealized loss on sale of investments (11,550) --
Changes in assets and liabilities, net
of effect from purchase of Viral
Technologies, Inc.:
Decrease (increase) in interest receivable (17,798) (22,530)
Decrease (increase) in accounts receivable (688) --
Decrease (increase) in prepaid expenses (157,781) 98,483
Decrease (increase) in advances 136,293 (121,409)
Increase (decrease) in other current
liabilities -- --
Increase (decrease) in accounts payable (150,885) (190,701)
NET CASH USED IN OPERATING ACTIVITIE (4,899,854) (2,580,633)
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITY:
Sales of investments 3,550,000 --
Purchase of investments -- --
Payment on note payable -- (121,690)
Note receivable from employee/shareholder (300,000) --
Laboratory construction (113,837) --
Purchase of research and office equipment (49,299) (2,907)
Patent costs (29,191) (11,651)
NET CASH USED IN INVESTING ACTIVITY 3,057,673 (136,248)
7
Continued on next page
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
CONTINUED FROM PREVIOUS PAGE
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Repurchase of preferred stock (2,850,000) --
Issuance of preferred stock 2,850,000 --
Issuance of convertible debenture -- 1,250,000
Dividends paid (103,963) --
Issuance of common stock 2,121,401 1,383,717
NET CASH PROVIDED BY FINANCING
ACTIVITIES 2,017,438 2,633,717
NET (DECREASE) INCREASE IN CASH 175,257 (83,164)
CASH AND CASH EQUIVALENTS:
Beginning of period 3,549,810 3,886,950
End of period $3,725,067 $ 3,803,786
SUPPLEMENTAL DISCLOSURES:
In October 1995, CEL-SCI issued 159,170 shares of common stock as
consideration for the purchase of the remaining 50% of Viral Tech-
nology, Inc. In conjunction with this acquisition, CEL-SCI
obtained net assets with a fair value of $170,000.
During the quarter ended December 31, 1996, 600 shares of Series
A Preferred Stock were converted into 127,945 shares of common
stock and 1,900 shares of Series B Preferred Stock were converted
into 527,774 shares of common stock.
See notes to condensed financial statements.
8
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(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, 1996. 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 March 31, 1997 and
the results of operations for the six-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.
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.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
(continued)
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.
B. RELATED PARTY TRANSACTIONS
In October, 1996, the Company loaned $300,000 to an officer and
shareholder. The loan carried an interest rate of 5% and was due
on December 31, 1996. At that time, the loan was extended and is
now due July 30, 1997.
C. STOCKHOLDERS' EQUITY
During 1996, the Company sold 5,000 shares of Series B Preferred
Stock (Series B Stock) for $1,000 per share. Holders of Series B
Stock are entitled to dividends, payable quarterly if declared,
at the rate of $17.50 per quarter. Dividends which are not
declared will not accrue nor be cumulative. Each share of Series
B Stock is convertible into 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 on or after 10 days
from the effective registration date of the common shares, and
85% of the closing price on or after 40 days from the effective
date, with the conversion price not less than $3.60 nor more than
$14.75. Dividends were declared and paid on Series B Stock
during the quarter ended December 31, 1996. During the quarter
ending December 31, 1996, 1,900 shares of Series B Stock were
converted into 527,774 shares of common stock at a conversion
price of $3.60 per share. Two thousand, eight hundred fifty
shares of Series B Stock were repurchased by the Company during
the quarter ended December 31, 1996.
During the quarter ended December 31, 1996, the Company sold
2,850 shares of Series C Preferred Stock (Series C Stock) for
$1,000 per share. The Series C Preferred Stock is convertible
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
(continued)
into shares of the Company's common stock on the basis of one
share of Series C Stock for shares of common stock equal in
number to the amount determined by dividing $1,000 by 85% of the
average closing price of the Company's common stock over the five-
day trading period ending on the day prior to the conversion of
the Series C Preferred Stock. The conversion price may not be
more than $4.00. Beginning 90 days after December 17, 1996, one-
half of the Series C Stock is 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 that, if the Company's common
stock trades for more than $8.00 at any time, then all shares of
the Series C Stock will thereafter be immediately convertible
into shares of the Company's common stock. In addition, 379,796
Series A warrants and 379,763 Series B warrants were sold with
the Series C 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. Five hundred shares of the Series C
stock were converted into 125,000 shares of common stock during
the quarter ended March 31, 1997.
D. NEW ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board
issued Statement No. 123, Accounting for Stock Based Compensation
(SFAS 123), which provides an alternative to APB Opinion No. 25
in accounting for stock-based compensation issued to employees.
As permitted by SFAS 123, the Company plans to continue to
account for stock-based compensation in accordance with APB
Opinion No. 25. The Company will present in its annual financial
statements the additional disclosure required by SFAS 123.
E. PURCHASE OF RIGHTS TO MULTIKINE
On March 10, 1997, the Company announced that it had
purchased from Sittona Company, B.V., Netherlands, all rights to
its Multikine technology, including all patents and trade
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
(continued)
secrets. The previous agreement with Sittona required Cel-Sci to
pay a 10% royalty on sales and a 15% royalty on sublicenses for
the use of the technology, knowhow and trade secrets. The
Company purchased these rights with $500,000 in cash and 751,678
shares of its common stock. This purchase was expensed as
research and development expense.
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
Companysponsored 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.
Effective June 1, 1997, the exercise price of the publicly
held warrants, will be lowered from $15.00 to $6.00. In
addition, the Company has changed the terms of the warrants such
that only 5 warrants are required to purchase one share.
Previously ten warrants had been required.
During 1996, the Company issued Preferred Stock.
See Footnote C, Stockholders' Equity.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
(continued)
Results of Operations
Interest income during the six months ending March 31, 1997
reflects interest accrued on investments. Research and
development expenses have increased due to the beginning of new
clinical studies with cancer and AIDS patients. Research and
development expenses also increased due to the purchase of the
Multikine rights from the Sittona Company, which was expensed as
research and development expense.
PART II
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 March 31, 1997.
<PAGE>
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:_______________, 1997 _____________________
Geert Kersten
Chief Executive Officer*
*Also signing in the capacity of the Chief Accounting Officer and
Principal Financial Officer.
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