As filed with the Securities and Exchange Commission on January __, 1998.
Registration No. ________
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>
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) 3,000,000 $6.12 $18,360,000 $5,416
Common Stock (3) 2,000,000 $6.12 12,240,000 3,611
Common Stock (4) 50,000 $6.12 306,000 90
Common Stock (5) 9,000 $6.12 55,080 16
Common Stock (6) 195,000 $6.12 1,193,400 353
- -------------------------------------------------------------------------------
Total 5,254,000 $32,154,480 $9,486
- -------------------------------------------------------------------------------
(1) Offering price computed in accordance with Rule 457(c).
(2) Shares of Common Stock issuable upon conversion of Company's Series D
Preferred Stock. Includes additional shares which may be issued due to
potential adjustments to conversion rate.
(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 D Preferred Stock. Includes additional
shares which may be issued due to potential adjustments to Warrant exercise
price.
(4) Shares of Common Stock issuable upon the exercise of Sales Agent's
Warrants.
(5) Shares of Common Stock previously issued to public relations consultant (6)
Shares of Common Stock issuable upon the exercise options granted to public
relations consultants.
<PAGE>
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 D 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 D Preferred Stock, the
Series A Warrants, the Series B Warrants and/or the Sales Agent's Warrants.
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
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
<PAGE>
PROSPECTUS CEL-SCI CORPORATION
Common Stock
This Prospectus relates to:
1. The sale of shares of the Common Stock of Cel-Sci Corporation (the
"Company") by holders of the Company's Series D Preferred Stock (the "Preferred
Stock") if and when the holders of the Series D Preferred Stock elect to convert
the Preferred Stock into shares of the Company's Common Stock. The holders of
the Preferred Stock may resell the shares they receive upon conversion from time
to time in the public market.
2. The sale of up to 1,100,000 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 D Preferred Stock. As part of this sale, the
Company issued 550,000 Series A Warrants and 550,000 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 $8.62 per share
at any time prior to December 22, 2001. Each Series B Warrant entitles the
holder to purchase one share of the Company's Common Stock at a price of $9.31
per share at any time prior to December 22, 2001.
3. The sale of up to 50,000 shares of common stock issuable upon the
exercise of Sales Agent Warrants.
4. The sale of 9,000 shares of common stock issued to a public
relations consultant and the sale of up to 195,000 additional shares of Common
Stock issuable upon the exercise of an options granted to certain financial
consultants.
The holders of the Series D Preferred Stock, the Sales Agent Warrants
and the shares and options referred to above, to the extent they convert the
Preferred Stock into shares of Common Stock or exercise the Sales Agent Warrants
or options and receive shares of the Company's Common Stock, are referred to in
this Prospectus as the "Selling Shareholders". For further information
concerning the terms of the Preferred Stock, Warrants and options described
above, see "Comparative Share Data".
The Company will not receive any proceeds from the sale 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 Shareholder. The costs of
registering the shares offered by the Selling Shareholder are being paid by the
Company. The Selling Shareholder 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.
<PAGE>
On January , 1998 the closing prices of the Company's Common Stock and
Warrants on the American Stock Exchange were $___ and $___, respectively.
The Date of this Prospectus is January __, 1998
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of l934 and in accordance therewith is required to file
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Copies of any such reports, proxy statements and
other information filed by the Company can be inspected and copied at the public
reference facility maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. and at the Commission's Regional offices in New York (7
World Trade Center, Suite 1300, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511). Copies of such material can be obtained from the Public
Reference Section of the Commission at its office in Washington, D.C. 20549 at
prescribed rates. Certain information concerning the Company is also available
at the Internet Web Site maintained by the Securities and Exchange Commission at
www.sec.gov. The Company's securities are listed on the American Stock Exchange
and copies of the reports, proxy statements and other information filed with the
Commission can be inspected at such exchange. The Company has filed with the
Commission a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the Units offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide, without charge, to each person to whom a copy
of this Prospectus is delivered, including any beneficial owner, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into this Prospectus).
Requests should be directed to:
CEL-SCI Corporation
66 Canal Center Plaza, Suite 510
Alexandria, VA 22314
(703) 549-5293
Attention: Secretary
The following documents filed with the Commission by the Company
(Commission File No. 0-11503) are hereby incorporated by reference into this
Prospectus:
<PAGE>
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997.
(2) The Company's Proxy Statement relating to the June 3, 1997 Annual
Meeting of Shareholders.
All documents filed with the Commission by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering registered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of the filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for the purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
<PAGE>
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, MULTIKINE TM,
manufactured using the Company's proprietary cell culture technologies, is a
combination, or "cocktail", of natural human interleukin-2 ("IL-2") and certain
lymphokines and cytokines. MULTIKINE is being tested to determine if it is
effective in improving the immune response of cancer patients. The Company's
second product, HGP-30, is being tested to determine if it is an effective
treatment/vaccine against the AIDS virus. In 1996, the Company acquired a new
patented T-cell Modulation Process which uses "heteroconjugates" to direct the
body to choose 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 potential treatments and/or vaccines against various
diseases. Present target diseases are AIDS, herpes simplex, malaria,
tuberculosis, prostate cancer and breast cancer.
Before human testing can begin with respect to a drug or biological
product, preclinical studies are conducted in laboratory animals to evaluate the
potential efficacy and the safety of a product. Human clinical studies generally
involve a three-phase process. The initial clinical evaluation, Phase I,
consists of administering the product and testing for safe and tolerable dosage
levels. Phase II trials continue the evaluation of immunogenicity and determine
the appropriate dosage for the product, identify possible side effects and risks
in a larger group of subjects, and provide preliminary indications of efficacy.
Phase III trials consist of testing for actual clinical efficacy for safety
within an expanded group of patients at geographically dispersed test sites.
In March 1995, the Canadian Health Protection Branch, Health and
Welfare Ministry gave clearance to the Company to start a phase I/II cancer
study using MULTIKINE. The study, which will enroll up to 30 head and neck
cancer patients who have failed conventional treatments, will be conducted at
several sites in the United States and Canada and is designed to evaluate
safety, tumor responses and immune responses in patients treated with multiple
courses of MULTIKINE. The length of time that each patient will remain on the
investigational treatment will depend on the patient's response to treatment.
In February 1996 the FDA authorized the start of two human clinical
studies using MULTIKINE and focusing on prostate and head and neck cancer. The
prostate study was conducted at Jefferson Hospital in Philadelphia, Pennsylvania
and involved prostate cancer patients who had failed on hormonal therapy. Five
patients completed the treatment and the data from this study demonstrated the
safety and feasibility of using MULTIKINE in the treatment of
<PAGE>
prostate cancer. Biopsies from the patients in the study also suggest the
recruitment of inflammatory cells to the tumor site. Based on these findings,
investigators are currently preparing a new protocol for evaluation by the FDA
to study the ability of MULTIKINE to treat patients with prostate cancer. The
study is expected to test MULTIKINE as a therapy to be used prior to surgical
removal of the prostate gland. 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.
In January l997 the FDA authorized a clinical trial using MULTIKINE to
determine its safety in the potential treatment of HIV infected individuals and
to determine its effect on various immune system responses.
In April 1997, pursuant to authorization from Israeli health
authorities, a clinical trial was begun using MULTIKINE to treat head and neck
cancer patients. In September l997 the Company started a similar clinical trial
in Canada. The Canadian study will involve up to 21 patients who are scheduled
for surgery or radiation. The first clinical center to start treatment is
Hospital Notre Dame in Montreal, Canada.
Viral Technologies, Inc. ("VTI"), a wholly-owned subsidiary of the
Company, is engaged in the development of a possible treatment/vaccine for AIDS.
VTI's technology may also have application in the treatment of AIDS- infected
individuals and the diagnosis of AIDS. VTI's AIDS treatment/vaccine, HGP-30, has
completed certain Phase I human clinical trials. In the Phase I trials, the
vaccine was administered to volunteers who were not infected with the HIV virus
in an effort to determine safe and tolerable dosage levels.
In April 1995 VTI, with the approval of the California Department of
Health Services Food and Drug Branch (FDB), began another clinical trial in
California using volunteers who received two vaccinations. The volunteers
receiving the two lowest dosage levels were asked to donate blood for a SCID
mouse HIV challenge study. The SCID mouse is considered by many scientists to be
the best available animal model for HIV because it lacks its own immune system
and therefore permits human cell growth. White blood cells from the five (5)
vaccinated volunteers and from normal donors were injected into groups of SCID
mice. They were then challenged with high levels of a different strain of the
HIV virus than the one from which HGP-30 is derived. Infection by virus was
determined and confirmed by two different assays, p24 antigen, a component of
the virus core, and reverse transcriptase activity, an enzyme critical to HIV
replication. Approximately 78% of the SCID mice given blood from vaccinated
volunteers showed no HIV infection after virus challenge as compared to 13% of
the mice given blood from unvaccinated donors.
In September 1997 VTI completed a Phase I safety study of the HGP-30
AIDS vaccine in 24 HIV infected patients. The study showed that immunizations
with the HGP-30 vaccine coupled with KLH were safe in AIDS patients. The
Company's main focus is now to determine the ability of the HGP-30 vaccine to
prevent, as opposed to only treat, AIDS.
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 $38,695,000 at September 30, 1997, and
expects to incur substantial losses for the foreseeable future.
<PAGE>
The Company's executive offices are located at 66 Canal Center Plaza,
Suite 510, Alexandria, Virginia 22314, and its telephone number is (703)
549-5293.
THE OFFERING
Securities Offered: Shares of Common Stock are offered for public sale by
the holders of the Company's Series D 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 1,100,000 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 D Preferred Stock.
Up to 50,000 shares of Common Stock are offered by the
holders of Sales Agent Warrants issued by the Company in
connection with the sale of the Series D Preferred Stock
and Warrants.
Up to 9,000 shares are offered by a public relations
consultant and up to 195,000 shares are offered by
certain financial consultants upon the exercise of
options granted to such consultants.
The holders of the Preferred Stock, Sales Agent Warrants
and shares and options referred to above, to the extent
they convert the Preferred Stock into Common Stock or
exercise the Sales Agent Warrants or options, may resell
the shares they receive upon conversion or exercise from
time to time in the public market. The holders of the
Preferred Stock, Sales Agent Warrants and shares and
options 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 "Comparative Share Data" and
"Selling Shareholders".
Common Stock Outstand-
ing Prior To and After
Offering: As of December 31, 1997, the Company had
11,259,410 shares of Common Stock issued and
outstanding. Assuming all shares of the Series D
Preferred Stock are converted to 1,207,730 shares of
the Company's Common Stock (assuming a conversion
price of $8.28 per share) and all Warrants and options
described above are exercised, there will be
13,821,140 shares of Common Stock issued and
outstanding. The number of outstanding shares before
and after this Offering does not give effect to shares
which may be issued upon the exercise and/or
conversion of options, warrants or
<PAGE>
other convertible securities previously issued by the
Company. See "Comparative Share Data", "Selling
Shareholders" and "Description of Securities".
Risk Factors: The purchase of the Securities offered by this
Prospectus involves a high degree of risk. Risk
factors include the following: lack of revenues and
history of loss, need for additional capital,
government regulation, need for FDA approval, and
dilution. See "Risk Factors."
AMEX Symbols: Common Stock: HIV
Warrants: HIV.WS
(1) Refers to publicly traded warrants. See "Description of Securities".
<TABLE>
<CAPTION>
Summary Financial Data
For the Years Ended September 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Investment Income &
Other Revenues $438,145 $ 322,370 $ 423,765 $624,670 $997,964
Expenses:
Research and
Development 6,011,670 3,471,477 1,824,661 2,896,109 1,307,042
Depreciation
and
Amortization 313,547 290,829 262,705 138,755 55,372
General and
Adminis-
ive 2,302,386 2,882,958 1,713,912 1,621,990 1,696,119
Equity in loss
of joint
venture -- 3,772 501,125 394,692 344,423
---------- ---------- ---------- ---------- ----------
Net Loss $(8,189,458)$(6,326,666) $(3,878,638)$(4,426,876) $(2,404,992)
========== ========== ========== ========== ==========
Loss per
common share $(0.88) $(0.98) $(0.89) $(1.06) $(0.58)
Weighted average
common shares
outstanding 9,329,419 6,425,316 4,342,628 4,185,240 4,155,431
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Data
For the Years Ended September 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Working Capital $4,581,247 $10,266,104 $3,983,699 $5,795,191 $10,296,472
Total Assets 6,334,397 11,878,370 6,359,011 8,086,670 11,633,090
Current
Liabilities 481,587 274,410 491,860 472,040 505,699
Long Term and Other
Liabilities 27,030 19,638 1,025,118 935,562 182,532
Total
Liabilities 508,617 294,048 1,516,978 1,407,602 688,231
Shareholders'
Equity 5,825,780 11,584,322 4,842,033 6,679,068 10,944,859
</TABLE>
No common stock dividends have been declared by the Company since its inception.
RISK FACTORS
Investors should be aware that ownership of the Common Stock of the
Company involves certain risks, including those described below, which could
adversely affect the value of their holdings of Common Stock. The Company does
not make, nor has it authorized any other person to make, any representation
about the future market value of the Company's Common Stock. In addition to the
other information contained in this Prospectus, the following factors should be
considered carefully in evaluating an investment in the Shares offered by this
Prospectus
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, 1997, the Company incurred net losses of approximately
$38,695,000. During the years ended September 30, 1995, 1996 and 1997 the
Company suffered losses of $3,878,638, $6,326,666 and $8,189,458 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 subsidiary of the
Company, is dependent upon funding from the Company for its operations and
research programs.
<PAGE>
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.
Offering Proceeds. The Company will not receive any funds from the
sale of the shares offered by this prospectus. See "Selling Shareholders".
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, VTI or its licensees, and there can be no assurance that such approvals
will be granted. Any failure to obtain or any delay in obtaining such approvals
may adversely affect the ability of potential licensees or the Company to
successfully market any products developed. Also, the extent of adverse
government regulations which might arise from future legislative or
administrative action cannot be predicted. The clinical trial which VTI 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 1998, 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.
Technological Change. The biomedical field in which the Company is
involved is undergoing rapid and significant technological change. The
successful development of therapeutic agents and diagnostic products from the
compounds, compositions and processes licensed to the Company, through Company
financed research or as a result of possible licensing arrangements with
pharmaceutical or other companies, will depend on its ability to be in the
technological forefront of this field. There can be no assurance that the
Company will achieve or maintain such a competitive position or that other
technological developments will not cause the Company's proprietary technologies
to become uneconomical or obsolete.
Patents. Certain aspects of the Company's technologies are covered
by U.S. and foreign patents. In addition, the Company has a number of patent
applications pending. There is no assurance that the applications still
pending or which may be filed in the future will result in the issuance of any
patents. Furthermore, there is no assurance as to the breadth and degree of
protection any issued patents might afford the owners of the patents and the
Company. Disputes may arise between the owners of the patents or the Company
<PAGE>
and others as to the scope, validity and ownership rights of these or other
patents. Any defense of the patents could prove costly and time consuming and
there can be no assurance that the Company or the owners of the patents will be
in a position, or will deem it advisable, to carry on such a defense. Other
private and public concerns, including universities, may have filed applications
for, or may have been issued, patents and are expected to obtain additional
patents and other proprietary rights to technology potentially useful or
necessary to the Company. The scope and validity of such patents, if any, the
extent to which the Company or the owners of the patents may wish or need to
acquire the rights to such patents, and the cost and availability of such rights
are presently unknown. Also, as far as the Company relies upon unpatented
proprietary technology, there is no assurance that others may not acquire or
independently develop the same or similar technology. The Company's first
MULTIKINE patent will expire in the year 2000. Since the Company does not know
if it will ever be able to sell MULTIKINE on a commercial basis, the Company
cannot predict what effect the expiration of this patent will have on the
Company. Notwithstanding the above, the Company believes that later issued
patents will protect the technology associated with MULTIKINE past the year
2000.
Product Liability Insurance. Although the Company has product liability
insurance for MULTIKINE and its HGP-30 vaccine, the successful prosecution of a
product liability case against the Company could have a materially adverse
effect upon its business if the amount of any judgment exceeds the Company's
insurance coverage.
Dependence on Management and Scientific Personnel. The Company is
dependent for its success on the continued availability of its executive
officers. The loss of the services of any of the Company's executive officers
could have an adverse effect on the Company's business. The Company does not
carry key man life insurance on any of its officers. The Company's future
success will also depend upon its ability to attract and retain qualified
scientific personnel. There can be no assurance that the Company will be able to
hire and retain such necessary personnel.
Options, Warrants and Convertible Securities. The Company has issued
options, warrants and other convertible securities ("Derivative Securities")
which allow the holders to acquire additional shares of the Company's Common
Stock. In some cases the Company has agreed that, at its expense, it will make
appropriate filings with the Securities and Exchange Commission so that the
securities underlying certain Derivative Securities will be available for public
sale. Such filings could result in substantial expense to the Company and could
hinder future financings by the Company.
For the terms of these Derivative Securities, the holders thereof will
have an opportunity to profit from any increase in the market price of the
Company's Common Stock without assuming the risks of ownership. Holders of such
Derivative Securities may exercise and/or convert them at a time when the
Company could obtain additional capital on terms more favorable than those
provided by the Derivative Securities. The exercise or conversion of the
Derivative Securities will dilute the voting interest of the owners of presently
outstanding shares of the Company's Common Stock and may adversely affect the
ability of the Company to obtain additional capital in the future.
<PAGE>
The sale of the shares of Common Stock issuable upon the exercise or conversion
of the Derivative Securities could adversely affect the market price of the
Company's stock. See "Comparative Share Data".
Competition. The competition in the research, development and
commercialization of products which may be used in the prevention or treatment
of cancer and AIDS is intense. Major pharmaceutical and chemical companies, as
well as specialized genetic engineering firms, are developing products for these
diseases. Many of these companies have substantial financial, research and
development, and marketing resources and are capable of providing significant
long-term competition either by establishing in-house research groups or by
forming collaborative ventures with other entities. In addition, both smaller
companies and non-profit institutions are active in research relating to cancer
and AIDS and are expected to become more active in the future.
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 Prospectus
will suffer immediate dilution since the price paid for the securities offered
will likely be more than the net tangible book value of the Company's Common
Stock.
Substantially all of the Company's outstanding shares of common stock
are eligible for sale in the public market. In addition, the Common Stock
issuable upon the conversion of the Series D Preferred Stock and/or the exercise
of the Series A and Series B Warrants are being offered for public sale by means
of this prospectus. The issuance of Common Stock upon the conversion of the
Series D Preferred Stock and/or the exercise of the Warrants, as well as future
sales of such Common Stock or of shares of Common Stock held by existing
stockholders, or the perception that such sales could occur, could adversely
affect the market price of the Company's Common Stock. In addition, investors
could experience substantial dilution upon the conversion of the Series D
Preferred Stock into Common Stock as a result of either (i) a decline in the
market price of the Company's Common Stock prior to conversion, or (ii) an event
triggering the antidilution rights of any outstanding shares of the Series D
Preferred Stock. See "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
<PAGE>
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.
COMPARATIVE SHARE DATA
As of December 31, 1997, the present shareholders of the Company owned
11,259,410 shares of Common Stock, which had a net tangible book value of
approximately $1.50 per share. The following table illustrates the comparative
stock ownership of the present shareholders of the Company, as compared to the
investors in this Offering, assuming all shares offered are sold.
Number of Note
Shares Reference
----------- ---------
Shares outstanding as of December 31, 1997 (1) 11,259,410
Shares to be issued upon conversion of
Series D Preferred Stock, assuming
conversion price of $8.28 per share 1,207,730 A
Shares issuable upon exercise of
Series A and Series B Warrants 1,100,000 A
Shares issuable upon exercise of
Sales Agent Warrants 50,000 B
Shares granted to public relations
consultant and shares issuable
upon exercise of options
granted to financial consultants 204,000 C
----------
Shares outstanding (pro forma basis) (1) 13,821,140
==========
Net tangible book value per share as of December
31,1997 $1.50
Equity ownership by present shareholders
after this offering 81.5%
Equity ownership by investors in this Offering 18.5%
(1) Amount excludes shares which may be issued upon the exercise and/or
conversion of options, warrants and other convertible securities previously
issued by the Company. See table below.
The purchasers of the securities offered by this Prospectus will suffer
an immediate dilution if the price paid for the securities offered is greater
than the net tangible book value of the Company's Common Stock.
"Net tangible book value" is the amount that results from subtracting
the total liabilities and intangible assets of the Company from its total
<PAGE>
assets. Tangible assets exclude deposits and patent costs. "Dilution" to
investors in this offering will be the difference between the price at which the
Preferred Shares are converted into Common Stock and the net tangible book value
of the Company's Common Stock at the time of such conversion.
Other Shares Which May Be Issued:
The following table lists additional shares of the Company's Common
Stock which may be issued as the result of the exercise of outstanding options,
warrants or the conversion of other securities issued by the Company:
Number of Note
Shares Reference
--------- ---------
Shares issuable upon exercise of
Class A and Class B Warrants 233,188 D
Shares issuable upon exercise of warrants
held by former holders of the
Company's Series B Preferred Stock. 82,250 E
Shares issuable upon exercise of
warrants sold in Company's 1992
Public Offering 2,070,000 F
Shares issuable upon exercise of
options and warrants granted to
Company's officers, directors,
employees, consultants, and third
parties 2,492,346 G
A. In December 1997, the Company sold 10,000 shares of its Series D Preferred
Stock, 550,000 Series A Warrants and 550,000 Series B Warrants, to ten
institutional investors for $10,000,000. The Series D Preferred Shares
may be converted into shares of the Company's Common Stock. Prior to
September 19, 1998 (or such earlier date as the market price of the
Company's Common Stock is $3.45 or less for five consecutive trading days)
the number of shares issuable upon the conversion of each Series D
Preferred Share is to be determined by dividing $1,000 by $8.28. On or
after September 19, 1998 the number of shares issuable upon the conversion
of each Series D Preferred Share is to be determined by dividing $1,000 by
the lower of (i) $8.28, or (ii) the average price of the Company's common
stock for any two trading days during the ten trading days preceding the
conversion date. Each Series A Warrant allows the holder to purchase one
share of the Company's common stock for $8.62 at any time prior to
December 22, 2001. Each Series B Warrant allows the holder to purchase
one share of the Company's Common Stock for $9.31 at any time prior to
December 22, 2001. The shares issuable upon the conversion of the Series
D Preferred Shares and or the exercise of Series A and Series B Warrants
are being offered for sale to the public by means of this prospectus. See
"Selling Shareholders".
<PAGE>
Pursuant to the rules of the American Stock Exchange, and in the absence of
stockholder approval, the Selling Stockholders may not receive more than
2,243,782 shares of the Company's common stock upon the conversion of the
Series D Preferred Stock if the price at which the Series D Preferred Stock
is to be converted is less than $6.90. If such stockholder approval is not
obtained, none of the Selling Stockholders will be entitled to acquire more
than its proportionate share of such 2,243,782 shares. Any Series D
Preferred Shares which cannot be converted due to such limitation must be
redeemed by the Company at a price of $1,250 per share.
B. In connection with the Company's December l997 sale of Series D Preferred
Shares and Warrants Shoreline Pacific Institutional Finance, the Sales
Agent for such offering, received a commission plus warrants to purchase
50,000 shares of the Company's Common Stock (the "Sales Agent Warrants").
The Sales Agent Warrants are exercisable at a price of $8.62 per share at
any time prior to December 22, 2001. The shares issuable upon the
exercise of the Sales Agent Warrants are being offered for sale to the
public by means of this prospectus. See "Selling Shareholders".
C. The Company has agreed to issue 9,000 shares of common stock to a public
relations consultant and options for the purchase of an additional 195,000
shares of common stock to certain financial consultants in consideration
for services provided to the Company. The options are exercisable at
prices ranging between $5.00 and $7.31 per share and expire between
October 1998 and September 2002. The 9,000 shares previously issued and
the 195,000 shares issuable upon the exercise of these options are being
offered for sale to the public by means of this prospectus. See "Selling
Shareholders".
D. 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 Class A Warrants and 379,763 Class B Warrants. The Series C
Preferred Shares were 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" 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.
Notwithstanding the above, the Conversion Price could not be more than
$4.00. Each Class 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 Class 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. By means of a separate Registration
Statement, the shares issuable upon the conversion of the Series C
Preferred Shares and the exercise of the Class A Warrants and Class B
Warrants are being offered for public sale. As of December 31, 1997 all
shares of the Series C Preferred Stock had been converted into 915,271
shares of the Company's Common Stock, 273,163 Series A Warrants had been
exercised and 253,175 Series B Warrants had been exercised.
<PAGE>
E. 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 85% of the Closing Price of the Company's
Common Stock. All Preferred Shares were 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" 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.
Notwithstanding the above, the conversion price could not be less than
$3.60 nor more than $14.75. The Preferred Shares were entitled to a
quarterly dividend of $17.50 per share. By means of a separate
Registration Statement filed with the Securities and Exchange Commission,
the shares issued upon the conversion of the Series B Preferred Shares
were 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. In May 1997 all remaining 250 shares of the Series B Preferred
Stock were converted into 69,444 shares of common stock. As of December
31, l997 Warrants for the purchase of 17,500 shares of common stock had
been exercised.
F. See "Description of Securities"
G. The options are exercisable at prices ranging from $2.38 to $14.10 per
share. The Company may also grant options to purchase additional shares
under its Incentive Stock Option and Non-Qualified Stock Option Plans.
SELLING SHAREHOLDERS
In December 1997 the Company raised $10,000,000 from the sale of 10,000
shares of the Company's Series D Preferred Stock, 550,000 Series A Warrants and
550,000 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 "Comparative Share Data". The shares
issuable upon the conversion of the Series D 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.
In connection with the Company's December 1997 offering of Series D
Preferred Stock and Warrants, Shoreline Pacific Institutional Finance, the Sales
Agent for such offering, received a commission as well as warrants to purchase
50,000 shares of the Company's Common Stock at $8.62 per share. The shares
issuable upon the exercise of the Sales Agent's Warrants are also being
offered for public sale by means of this Prospectus.
<PAGE>
This Prospectus also relates to the sale of up to 9,000 shares of
Common Stock by a public relations consultant and up to 195,000 shares of common
stock issuable upon the exercise of certain options granted by the Company to
certain financial consultants. The 9,000 shares of common stock and the options
for the purchase of the additional 195,000 shares of common stock were issued by
the Company to the public relations consultants in consideration for services
provided to the Company. The options are exercisable at prices ranging between
$5.00 and $7.31 per share and expire between October 1998 and September 2002.
The holders of the Preferred Shares, the Sales Agent Warrants and the
shares and options referred to above, to the extent they convert their Preferred
Shares into shares of Common Stock or exercise the Sales Agent Warrants or
options, are 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:
<TABLE>
<CAPTION>
Shares
Which Shares
May Be Which
Acquired May be
Upon Con- Acquired Share
version of Upon Ex- Shares to Owner-
Shares Series D ercise of be Sold ship
Presently Preferred Warrants in this After
Name Owned Shares (1) or Options Offering (7) Offering
- ------------------- --------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
KA Investments LDC -- 241,546 220,000 (2) 461,546 --
Olympus Securities, -- 362,320 330,000 (2)(6) 692,320 --
Ltd.
AG Super Fund -- 12,077 11,000 (2) 23,077 --
International
Partners, L.P.
Raphael, L.P. -- 18,116 16,500 (2) 34,616 --
Baldwin Enterprises, -- 36,232 33,000 (2) 69,232 --
Inc.
Nelson Partners -- 241,546 220,000 (2)(6) 461,546
Leonardo, L.P. -- 126,812 115,500 (2) 242,312 --
GAM Arbitrage -- 12,077 11,000 (2) 23,077 --
Investments, Inc.
Ramius Fund, Ltd. -- 36,232 33,000 (2) 69,232 --
AGR Halifax Fund, -- 120,773 110,000 (2) 230,773 --
Ltd.
<PAGE>
Shoreline Pacific -- -- 50,000 (3) 50,000 --
Institutional Finance
The Fulton Group -- -- 50,000 (4) 50,000 --
Glenn Michael -- -- 50,000 (4) 50,000 --
Financial, Inc.
Cooke Capital -- -- 40,000 (4) 40,000 --
Management
Williams de Broe -- -- 50,000 (4) 50,000 --
Daryll Strahll -- -- 5,000 (4) 5,000 --
Wachs & Associates -- -- 9,000 (5) 9,000 --
</TABLE>
(1) Represents shares issuable upon the conversion of the Series D Preferred
Stock assuming conversion price of $8.28 per share. The actual number of
shares to be issued upon the conversion of the Series D Preferred Shares
will depend upon the price of the Company's Common Stock at the time of
conversion. See "Comparative Share Data".
(2) Represents shares issuable upon the exercise of the Series A and Series B
Warrants.
(3) Represents shares issuable upon the exercise of the Sales Agent's Warrants.
(4) Represents shares issuable upon exercise of options issued as payment for
financial consulting services.
(5) Represents shares issued in payment for public relations consulting services
provided to the Company.
(6) Citadel Limited Partnership is the managing general partner of Nelson
Partners ("Nelson") and the trading manager of Olympus Securities, Ltd.
("Olympus") and consequently has voting control and investment discretion
over securities held by both Nelson and Olympus. The ownership information
for Nelson does not include the shares owned by Olympus and the ownership
information for Olympus does not include the shares owned by Nelson.
<PAGE>
(7) Assumes all shares owned, or which may be acquired, by the Selling
Shareholders, are sold to the public by means of this Prospectus.
Manner of Sale. The shares of Common Stock owned, or which may be
acquired, by the Selling Shareholders may be offered and sold by means of this
Prospectus from time to time as market conditions permit in the over-the-counter
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 ss.2(11) of the Securities Acts of 1933, and any commissions
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders and any securities
broker/dealers who may be deemed to be underwriters against certain liabilities,
including liabilities under the Securities Act as underwriters or otherwise.
The Company has advised the Selling Shareholders that they and any
securities broker/dealers or others who may be deemed to be statutory
underwriters will be subject to the Prospectus delivery requirements under the
Securities Act of 1933. The Company has also advised the Selling Shareholders
that in the event of a "distribution" of the shares owned by the Selling
Shareholder, such Selling Shareholders, any "affiliated purchasers", and any
broker/dealer or other person who participates in such distribution may be
subject to Rule 102 under the Securities Exchange Act of 1934 ("1934 Act") until
their participation in that distribution is completed. A "distribution" is
defined in Rule 102 as an offering of securities "that is distinguished from
ordinary trading transactions by the magnitude of the offering and the presence
of special selling efforts and selling methods". The Company has also advised
the Selling Shareholders that Rule 102 under the 1934 Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing
or stabilizing the price of the Common Stock in connection with this offering.
Rule 101 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.
<PAGE>
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 100,000,000 shares of Common Stock,
(the "Common Stock"). Holders of Common Stock are each entitled to cast one vote
for each share held of record on all matters presented to shareholders.
Cumulative voting is not allowed; hence, the holders of a majority of the
outstanding Common Stock can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefor
and, in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The board is not obligated to
declare a dividend. It is not anticipated that dividends will be paid in the
foreseeable future.
Holders of Common Stock do not have preemptive rights to subscribe to
additional shares if issued by the Company. There are no conversion, redemption,
sinking fund or similar provisions regarding the Common Stock. All of the
outstanding shares of Common Stock are fully paid and nonassessable and all of
the shares of Common Stock offered as a component of the Units will be, upon
issuance, fully paid and non-assessable.
Preferred Stock
The Company is authorized to issue up to 200,000 shares of Preferred
Stock. The Company's Articles of Incorporation provide that the Board of
Directors has the authority to divide the Preferred Stock into series and,
within the limitations provided by Colorado statute, to fix by resolution the
voting power, designations, preferences, and relative participation, special
rights, and the qualifications, limitations or restrictions of the shares of any
series so established. As the Board of Directors has authority to establish the
terms of, and to issue, the Preferred Stock without shareholder approval, the
Preferred Stock could be issued to defend against any attempted takeover of the
Company.
In May 1996 the Company sold 3,500 shares of its Series A Preferred
Stock (the "Preferred Shares") for $3,500,000 or $1,000 per share. At the
purchasers' option, up to 1,750 Preferred Shares were convertible, on or after
60 days from the closing date of the purchase of such shares (the "Closing"),
into shares of the Company's Common Stock on the basis of one share of Preferred
Stock for shares of Common Stock equal in number to the amount determined by
dividing $1,000 by 85% of the Closing Price of the Company's Common Stock. All
Preferred Shares were convertible, on or after 90 days from the Closing, on the
basis of one share of Preferred Stock for shares of the Company's Common Stock
equal in number to the amount determined by dividing $1,000 by 83% of the
Closing Price of the Company's Common Stock. The term "Closing Price" was
defined as the average closing bid price of the Company's Common Stock over the
five-day trading period ending on the day prior to the conversion of the
Preferred Stock. All outstanding shares of the Series A Preferred Stock have
since been converted into 632,041 shares of the Company's Common Stock. The
shares issued upon the conversion of the Series A Preferred Stock are being
offered for public sale by means of a separate registration statement.
<PAGE>
See "Comparative Share Data" for information concerning the Company's
Series B, Series C and Series D Preferred Stock.
Publicly Traded Warrants
In connection with the Company's February 1992 public offering, the
Company issued 5,175,000 Warrants. Every five Warrants entitle the holder to
purchase one share of the Company's Common Stock and one additional Warrant at a
price of $6.00 prior to February 7, 1998. The additional Warrant allows the
holder to purchase one share of the Company's Common Stock at a price of $l8.00
per share at any time prior to February 7, 2000. The exercise price of the
Public Warrants may not be increased during the term of the Public Warrants, but
the exercise price may be decreased at the discretion of the Company's Board of
Directors by giving each Public Warrant holder notice of such decrease. The
exercise period for the Public Warrants may be extended by the Company's Board
of Directors giving notice of such extension to each Public Warrant holder of
record.
Other provisions of the Warrants are set forth below. This information
is subject to the provisions of the Warrant Certificate representing the
Warrants.
1. Holders of the Warrants may sell the Warrants rather than exercise
them. However, there can be no assurance that a market will develop or continue
as to the Warrants.
2. Unless exercised within the time provided for exercise, the Warrants
will automatically expire.
3. The exercise price of the Warrants may not be increased during the
term of the Warrants, but the exercise price may be decreased at the discretion
of the Company's Board of Directors by giving each Warrant holder notice of such
decrease. The exercise period for the Warrants may be extended by the Company's
Board of Directors giving notice of such extension to each Warrant holder of
record.
4. There is no minimum number of shares which must be purchased upon
exercise of the Warrants.
5. The holders of the Warrants in certain instances are protected
against dilution of their interests represented by the underlying shares of
Common Stock upon the occurrence of stock dividends, stock splits,
reclassifications, and mergers.
6. The holders of the Warrants have no voting power and are not
entitled to dividends. In the event of a liquidation, dissolution, or winding up
of the Company, holders of the Warrants will not be entitled to participate in
the distribution of the Company's assets.
Transfer Agent
American Securities Transfer, Inc., of Denver, Colorado, is the
transfer agent for the Company's Common Stock and Warrants.
<PAGE>
EXPERTS
The financial statements as of September 30, 1997 and 1996 and for each
of the three years in the period ended September 30, 1997 incorporated by
reference in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
incorporated by reference upon the report of such firm given upon their
authority as experts in accounting and auditing.
INDEMNIFICATION
The Company's Bylaws authorize indemnification of a director, officer,
employee or agent of the Company against expenses incurred by him in connection
with any action, suit, or proceeding to which he is named a party by reason of
his having acted or served in such capacity, except for liabilities arising from
his own misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of the Company who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling the Company pursuant to the fore- going provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission, 450
5th Street, N.W., Washington, D.C. 20001, a Registration Statement under the
Securities Act of l933, as amended, with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company and
such securities, reference is made to the Registration Statement and to the
Exhibits filed therewith. Statements contained in this Prospectus as to the
contents of any contract or other documents are summaries which are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an Exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. Copies of
each document may be inspected at the Commission's offices at 450 Fifth Street,
N.W., Washington, D.C., 20549, and at the Northeast Regional Office, 7 World
Trade Center, 13th Floor, New York, New York 10048 and the Midwest Regional
Office, Suite 1400, 500 West Madison Street, Chicago, Illinois 60681-2511. This
Registration Statement and the related exhibits may also be inspected at the
Internet Web Site maintained by the Securities and Exchange Commission at
www.sec.gov. Copies may be obtained at the Washington, D.C. office upon payment
of the charges prescribed by the Commission.
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus. Any information or representation not contained in this Prospectus
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, the securities offered hereby in any state or other jurisdiction to any
person to whom it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof.
-------------------------
TABLE OF CONTENTS
Page
Prospectus Summary ...........................................
Risk Factors .................................................
Comparative Share Data .......................................
Selling Shareholders .........................................
Description of Securities ....................................
Litigation ...................................................
Experts ......................................................
Indemnification ..............................................
Additional Information .......................................
-------------------------
Common Stock
CEL-SCI CORPORATION
-------------------------
PROSPECTUS
-------------------------
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
SEC Filing Fee $9,486
Blue Sky Fees and Expenses 2,000
Printing and Engraving Expenses 2,000
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 3,000
Miscellaneous Expenses 3,514
------
TOTAL 40,000
======
All expenses other than the S.E.C. filing fees are estimated.
Item 25. Indemnification of Officers and Directors.
It is provided by Section 7-109-102 of the Colorado Revised Statutes
and the Company's Bylaws that the Company may indemnify any and all of its
officers, directors, employees or agents or former officers, directors,
employees or agents, against expenses actually and necessarily incurred by them,
in connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in the best interest of the Company.
Item 16. Exhibits
3(a) Articles of Incorporation Incorporated by
reference to Exhibit 3(a) of the Company's
combined Registration Statement on Form S-1
and Post-Effective Amendment ("Registration
Statement"), Registration Nos. 2-85547-D and
33-7531.
(b) Amended Articles Incorporated by reference to Exhibit 3(a)
of the Company's Registration Statement on
Form S-1, Registration Nos. 2-85547-D and
33-7531.
(c) Amended Articles Filed as Exhibit 3(c) to
the Company's (Name change only)
Registration Statement on Form S-1
Registration Statement (No.
33-34878).
(d) Bylaws Incorporated by reference to Exhibit 3(b)
of the Company's Registration Statement on
Form S-1, Registration Nos. 2-85547-D and
33-7531.
II-1
<PAGE>
4(a) Specimen copy of Incorporated by reference to Exhibit 4(a)
Stock Certificate of the Company's Registration Statemen on
Form S-1, Registration Nos. 2-85547-D and
33-7531.
(c) Form of Common Stock Incorporated by reference to Exhibit 4(c)
Purchase Warrant filed as an exhibit to the Company's
Registration Statement on Form S-1
(Registration No. 33-43281).
(d) Certificate of Designations Incorporated by reference to Exhibit 4.2
Preferences and Rights of filed with Report on Form 8-K dated December
Series D Preferred Stock. 22, 1997.
5. Opinion of Counsel _______________________
10(e) Employment Agreement with Filed with Amendment Number 1 to the
Geert Kersten Company'sRegistration Statement on Form S-1
(Commission File Number 33-43281).
10(f)Securities Purchase Agreement Incorporated by reference to Exhibit 4.1
(without Exhibits and Schedules) filed with Report on Form 8-K dated
pertaining to sale of Series D December 22, 1997.
Preferred Stock
10(g) Form of Common Stock Purchase Incorporated by reference to Exhibit 4.3
Warrant sold with shares of filed with Report on Form 8-K dated
Series D Preferred Stock December 22, 1997.
10(h) Registration Rights Agreement Incorporated by reference to Exhibit 4.4
Pertaining to Series D filed with Report on Form 8-K dated
Preferred Stock and Warrants December 22, 1997.
23(a) Consent of Hart & Trinen ____________________
(b) Consent of Deloitte
& Touche, LLP ____________________
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.
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<PAGE>
(i) To include any Prospectus required by Section l0(a)(3) of
the Securities Act of l933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii)To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement, including (but not limited to) any
addition or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act of l933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of l933 may be permitted to directors, officers and controlling persons of
the Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling 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 controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this Registration Statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this Registration Statement, which amendments may make such
changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Alexandria, State of Virginia, on the 15th day of
January, 1998.
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 l5, 1998
- ------------------------
MAXIMILIAN DE CLARA Executive Officer
/s/ Geert R. Kersten Director, Principal January l5, 1998
- ------------------------
GEERT R. KERSTEN Financial Officer
and Chief Executive
Officer
Director
- ------------------------
MARK V. SORESI
/s/ F. Donald Hudson Director January l5, 1998
- ------------------------
F. DONALD HUDSON
January 15, 1998
CEL-SCI Corporation
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 223l4
Gentlemen:
This letter will constitute an opinion upon the legality of the sale by certain
Selling Shareholders of CEL-SCI Corporation, a Colorado corporation ("the
Company"), of up to 5,254,000 shares of Common Stock, all as referred to in the
Registration Statement on Form S-3 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
certain Selling Shareholders propose to sell up to 5,254,000 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 15, 1998
INDEPENDENT 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 December 8, 1997, appearing
in the Annual Report on Form 10-K of Cel-Sci Corporation for the year ended
September 30, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Washington, D.C.
January 15, 1998
