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 June 30, 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 10,389,194 August 14,1997
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)
June 30, September 30,
1997 1996
------------- --------------
CURRENT ASSETS:
Cash and cash equivalents
$3,401,150 $3,549,810
Investments, net 6,498,812
1,994,914
Accounts receivable -
Interest receivable 72,376 76,515
Prepaid expenses 576,510 272,404
Short-term loan to 281,900 -
officer/shareholder
Advances to officer/shareholder
and employees 8,172 142,973
------------- --------------
Total Current Assets 6,335,022 10,540,514
RESEARCH AND OFFICE EQUIPMENT-
Less accumulated depreciation
of $1,064,297 and $863,899 853,042 871,983
DEPOSITS 18,178 18,178
PATENT COSTS- less accumulated
amortization of
$389,132 and $352,990 457,404 447,695
------------- --------------
$7,663,646 $11,878,370
============= ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
June 30, September 30,
1997 1996
------------- --------------
CURRENT LIABILITIES:
Accounts payable $281,254 $274,410
Other current liabilities 25,498 -
------------- --------------
Total current liabilities 306,752 274,410
DEFERRED RENT 19,638 19,638
------------- --------------
Total liabilities 326,390 294,048
STOCKHOLDERS' EQUITY
Preferred stock, Series A, $.01
par value - authorized
3,500 shares; issued and - 6
outstanding, 0 and 600 shares
Preferred stock, Series B, $.01
par value - authorized
5,000 shares; issued and - 50
outstanding, 0 and 5,000 shares
Preferred stock, Series C, $.01
par value - authorized
3,600 shares; issued and - -
outstanding, 0 and 0 shares
Common stock, $.01 par value;
authorized, 100,000,000
shares; issued and
outstanding, 10,389,191 and
7,831,481 shares 103,892 78,315
Additional paid-in capital
44,194,118 41,918,036
Net unrealized loss on equity (2,555) (16,078)
securities
Dividends (108,957)
Deficit
(36,849,242) (30,396,007)
------------- --------------
TOTAL STOCKHOLDERS'
EQUITY
7,337,256 11,584,322
------------- --------------
$7,663,646 $11,878,370
============= ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
---------------------------------
(unaudited)
Nine
Months Ended
June 30,
1997 1996
------------- --------------
REVENUES:
Interest income $316,159 $136,651
Other income 62,105 51,605
------------- --------------
TOTAL INCOME 378,264 188,256
EXPENSES:
Research and development 2,350,600
4,795,504
Depreciation and
amortization 236,541 208,912
General and administrative 2,113,884
1,799,454
------------- --------------
TOTAL OPERATING EXPENSES 6,831,499 4,673,396
EQUITY IN LOSS OF JOINT VENTURE - (3,772)
------------- --------------
6,831,499 4,677,168
------------- --------------
NET LOSS
$6,453,235 $4,488,912
ACCRETION OF PREFERRED STOCK
DIVIDENDS 1,062,482 716,867
PREFERRED STOCK DIVIDENDS 108,957 -
------------- --------------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $7,624,674 $5,205,779
LOSS PER COMMON SHARE (BASIC) $0.85 $0.86
============= ==============
LOSS PER COMMON SHARE (DILUTED) $0.85 $0.86
============= ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,970,583 6,086,492
============= ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(unaudited)
Three Months Ended
June 30,
1997 1996
------------- --------------
REVENUES:
Interest Income $92,937 $51,737
Other Income 58,667 44,280
------------- --------------
TOTAL INCOME 151,604 96,017
EXPENSES:
Research and development 1,122,561 617,987
Depreciation and
amortization 81,222 68,950
General and administrative 661,484 894,165
------------- --------------
TOTAL OPERATING EXPENSES 1,581,102
1,865,267
NET LOSS 1,713,663 1,485,085
ACCRETION OF PREFERRED
STOCK DIVIDENDS 251,470 716,867
------------- --------------
NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $1,965.133 $2,201,952
========== ==========
LOSS PER COMMON SHARE (basic) $0.20 $0.33
============= ==============
LOSS PER COMMON SHARE (diluted) $0.20 $0.33
============= ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 9,917,471 6,612,293
============= ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
---------------------------------
(unaudited)
Nine Months Ended
June 30,
1997 1996
----------------------- ---------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET LOSS $(6,453,235) $(4,488,912)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Research and development expenses
related to stock portion of purchase
of Cell-Med 150,000
Research and development expenses
related to stock portion of purchase
of Multikine rights from Sittona 1,747,651
Research and development expenses
related to
purchase of Viral Technologies, - 515,617
Inc.
Depreciation and amortization 236,541 208,912
Amortization of premium (166,102) -
(discount) on investments
Equity in loss of joint venture - 3,772
Unrealized loss on sale of 13,523 -
investments
Changes in assets and liabilities,
net of effect from purchase
of Viral Technologies, Inc.:
Decrease (increase) in interest 4,139 (11,325)
receivable
Decrease (increase) in accounts - (46,342)
receivable
Decrease (increase) in prepaid (304,106) 73,362
expenses
Decrease (increase) in advances 134,801 (116,488)
Increase (decrease) in other 25,498 -
current liabilities
Increase (decrease) in accounts 6,844 (136,176)
payable
----------------------- ---------------
NET CASH USED IN OPERATING (4,604,446) (3,997,580)
ACTIVITIES
----------------------- ---------------
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITY:
Sales of investments 5,620,000 -
Purchase of investments (950,000) -
Payment on note payable - (182,534)
<PAGE>
Note receivable from (300,000) (114,800)
employee/shareholder
Payment on note receivable from 18,100 28,700
employee/shareholder
Laboratory construction (115,790) -
Purchase of research and office (65,667) (17,808)
equipment
Patent costs (45,851) (30,800)
----------------------- ---------------
NET CASH USED IN INVESTING ACTIVITY 4,160,792 (317,242)
----------------------- ---------------
CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Repurchase of preferred stock - -
Issuance of preferred stock - 3,325,000
Issuance of convertible debenture - 1,250,000
Dividends paid (108,957) -
Issuance of common stock 403,951 2,499,129
----------------------- ---------------
NET CASH PROVIDED BY FINANCING 294,994 7,074,129
ACTIVITIES
----------------------- ---------------
NET (DECREASE) INCREASE IN CASH (148,660) 2,759,307
CASH AND CASH EQUIVALENTS:
Beginning of period 3,549,810 3,886,950
----------------------- ---------------
End of period $3,401,150 $6,646,257
======================= ===============
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 Technology, 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. During the quarter ended March 31, 1997, 500 shares of Series C Preferred
Stock were converted into 125,000 shares of common stock. During the quarter
ended June 30, 1997, 250 shares of Series B Preferred Stock was converted into
69,444 shares of common stock and 2,350 shares of Series C Preferred Stock were
converted into 790,271 shares of common stock.
During the quarter ended June 30, 1997, 250 shares of Series B Preferred
Stock was converted into 69,444 shares of common stock and 2,350 shares of
Series C Preferred Stock were converted into 790,271 shares of common stock.
In March 1997, CEL-SCI issued 751,678 shares of common stock as
consideration for the purchase of the rights to its Multikine technology. In
addition, the Company paid $500,000 in cash for the rights, included in research
and development expense.
In April 1997, CEL-SCI issued 33,378 shares of common stock to Cell-Med as
a milestone payment for the company's heteroconjugate technology. CEL-SCI also
paid $50,000 in cash for Cell-Med, included in research and development expense.
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(unaudited)
INTRODUCTORY NOTE
This Amendment on Form 10-Q/A amends the Company's Quarterly Report on
Form 10-Q, as filed by the Company on August 14, 1997, and is being filed
to reflect the restatement of the Company's condensed consolidated
financial statements (the "Restatement"). The Restatement reflects the
effect on net loss per share amounts for the accretion of preferred stock
beneficial conversion features and warrants, and preferred stock
dividends.
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 June 30, 1997 and the results of operations for the
nine-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
Basic EPS excludes dilution and is computed by dividing net income or loss
attributable to common stockholders by the weighted average of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock (convertible preferred stock, warrants to purchase common stock and
common stock options using the treasury stock method) were exercised or
converted into common stock. Potential common shares in the diluted EPS
computation are excluded in net loss periods as their effect would be
antidilutive. The loss attributable to common stockholders includes the
accretion of Series B and Series C Preferred Stock beneficial conversion
features, and preferred stock dividends.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 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 the balance is
now due September 30, 1997. Payments have been made on the note and the
balance on June 30, 1997 is $281,900.
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
price of $3.60 per share of common stock. During the quarter ended
December 31, 1996, 2,850 shares of Series B Stock were repurchased by the
Company. During the quarter ended June 30, 1997 the remaining 250 shares
of the Series B Preferred Stock were converted into 69,444 shares of the
Company's common stock..
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. Series
C Stock is convertible 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 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. The Series A warrants entitle
<PAGE>
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.
As of June 30, 1997, all shares of the Series C Preferred Stock have been
converted into shares of the Company's Common Stock.
D. NEW ACCOUNTING PRONOUNCEMENTS
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. As of
June 30, 1997, there are 140,000 options outstanding to non-employees
ranging in exercise price from $3.50 to $3.94. All of these options were
granted in April, 1997.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share (SFAS 128), which establishes
standards for computing and presenting earnings per share. Because the
Company has a loss from continuing operations, potential exercise of
warrants and options would have an antidilutive effect, and are therefore
not included in the earnings per share calculation.
E. PURCHASE OF RIGHTS TO MULTIKINETM
On March 10, 1997, the Company purchased from Sittona Company, B.V.,
Netherlands, all rights to its Multikine technology, including all patents
and trade 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, know-how 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.
F. PURCHASE OF HETEROCONJUGATE TECHNOLOGY
In April 1997, the Company purchased the rights to Cell-Med's
heteroconjugate technology. To date, the milestone payments include
$50,000 in cash and 33,378 shares of the Company's common stock. This
purchase was expensed as research and development expense.
G. RESTATEMENT
Subsequent to the issuance of the Company's Report on Form 10-Q for the
quarter ended June 30, 1997, the Company determined that the application
of a technical accounting treatment required the loss per share
calculation to include the impact of $1,062,482 and $108,957 for the
accretion of the assumed beneficial conversion features of the Series B
and C Preferred Stock and preferred stock dividends, respectively, for the
nine months ended June 30, 1997 and $716,867 for the accretion of the
assumed beneficial conversion features of the Series A Preferred Stock for
the nine months ended June 30, 1996. The effect of the accretion is a
non-cash charge to additional paid-in capital and does not impact the
previously reported net loss for the nine months ended June 30, 1997 and
1996, nor does it result in a net change to stockholders' deficit at
September 30, 1996 or June 30, 1997. The effect of the restatement was to
increase net loss attributable to common stockholders and net loss per
share for the nine months ended June 30, 1997 and 1996.
<PAGE>
CEL-SCI CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Capital Resources
The Company has had only limited revenues from operations since its
inception in March 1983. The Company has relied upon proceeds realized from the
public and private sale of its Common Stock and short-term borrowings to meet
its funding requirements. Funds raised by the Company have been expended
primarily in connection with the acquisition of exclusive rights to certain
patented and unpatented proprietary technology and know-how relating to the
human immunological defense system, the funding of VTI's research and
development program, patent applications, the repayment of debt, the
continuation of Company-sponsored research and development and administrative
costs, and the construction of laboratory facilities. Inasmuch as the Company
does not anticipate realizing significant revenues until such time as it enters
into licensing arrangements regarding its technology and know-how 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,
was lowered from $15.00 to $6.00. In addition, the Company changed the terms of
the conversion 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.
Results of Operations
Interest income during the nine months ending June 30, 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.
<PAGE>
PART II
Item 6.
(a) Exhibits
No exhibits are filed with this document.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the fiscal
quarter ended June 30, 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:February 11, 1999 /s/ Geert Kersten
Geert Kersten
Chief Executive Officer*
*Also signing in the capacity of the Chief Accounting Officer and Principal
Financial Officer.
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 3,401,150
<SECURITIES> 1,994,914
<RECEIVABLES> 362,448
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,335,022
<PP&E> 1,917,339
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<TOTAL-ASSETS> 7,663,646
<CURRENT-LIABILITIES> 306,752
<BONDS> 0
0
0
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<SALES> 0
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