UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1999.
OR
( ) RANSITION 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
of incorporation Identification Number
8229 Boone Boulevard, Suite 802
Vienna, Virginia 22182
Address of principal executive offices
(703) 506-9460
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 18,037,981 February 9, 2000
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Page
Balance Sheets 3-4
Statements of Operations 5
Statements of Cash Flow 6
Notes to Financial Statements 7
Item 2.
Management's Discussion and Analysis 9
PART II
Item 6.
Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
Item 1. FINANCIAL STATEMENTS
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
------------------------
ASSETS
(unaudited)
December 31, September
30,
1999 1999
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents $ 4,570,132 $ 2,746,531
Investments, net 2,002,492 3,192,604
Interest and other receivables 55,149 62,825
Prepaid expenses 463,421 514,572
Advances to officer/shareholder and 13,294 69,448
employees
-------------- --------------
Total Current Assets 7,104,488 6,585,980
RESEARCH AND OFFICE EQUIPMENT-
Less accumulated depreciation
of $1,618,930 and $1,563,586 444,812 468,627
DEPOSITS 14,828 14,828
PATENT COSTS- less accumulated
amortization of
$526,655 and $511,118 517,689 490,337
-------------- --------------
$ 8,081,817 $ 7,559,772
============== ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
------------------------
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
December 31, September 30,
1999 1999
-------------- --------------
CURRENT LIABILITIES:
Accounts payable $ 263,508 $ 433,265
-------------- --------------
Total current liabilities 263,508 433,265
DEFERRED RENT
28,321 28,321
-------------- --------------
Total liabilities 291,829 461,586
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized,
100,000,000 shares; issued and
outstanding, 18,037,981 and
17,002,341 shares 180,380 170,023
Additional paid-in capital
62,039,794 59,672,652
Net unrealized loss on equity
securities (97,946) (116,659)
Deficit
(54,332,240) (52,627,830)
-------------- --------------
TOTAL STOCKHOLDERS'
EQUITY
7,789,988 7,098,186
-------------- --------------
$ 8,081,817 $ 7,559,772
============== ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
---------------------------------
(unaudited)
Three Months Ended
December 31,
1999 1998
-------------- --------------
REVENUES:
Interest income $ 28,693 $ 156,046
Other income 1,355 39,667
-------------- --------------
TOTAL INCOME
30,048 195,713
EXPENSES:
Research and development
995,024 941,948
Depreciation and
amortization
70,780 65,932
General and administrative
668,652 706,024
-------------- --------------
TOTAL OPERATING EXPENSES
1,734,456 1,713,904
-------------- --------------
NET LOSS $ 1,704,408 $ 1,518,191
============== ==============
LOSS PER COMMON SHARE (BASIC) $ 0.10 $ 0.13
============== ==============
LOSS PER COMMON SHARE (DILUTED) $ 0.10 $ 0.13
============== ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
17,270,008 11,615,914
============== ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
---------------------------------
(unaudited)
Three Months Ended
December 31,
1999 1998
-------------- --------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET LOSS $ (1,704,408) $(1,518,191)
Adjustments to reconcile net loss
to net cash used in operating activities:
-
Depreciation and amortization
70,780 65,932
Net realized loss on sale of
securities 51,918 -
Stock issued for services - -
Stock bonus granted to officer - -
Stock issued to 401(k) 22,498 -
Decrease (increase) in deposits - -
Decrease (increase) in receivables 7,676 1,256
Decrease (increase) in prepaid
expenses 51,151 70,013
Decrease (increase) in advances 56,154 (52,395)
(Increase) decrease in deferred rent - -
Increase (decrease) in accounts payable (169,757) (128,251)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (1,613,988) (1,561,636)
------------ ------------
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITY:
Sales of investments 1,156,907 1,294,101
Purchase of investments - -
Note receivable from
employee/shareholder - -
Payment on note receivable from
employee/shareholder - -
Purchase of research and office
equipment (31,430) (31,887)
Patent costs (42,888) (23,654)
-------------- --------------
NET CASH USED IN INVESTING ACTIVITY
1,082,589 1,238,560
-------------- --------------
CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Cash proceeds from issuance of
preferred and common stock
and warrant conversion for cash 2,355,000 21,553
-------------- --------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 2,355,000 21,553
-------------- --------------
NET (DECREASE) INCREASE IN CASH
1,823,601 (301,523)
CASH AND CASH EQUIVALENTS:
Beginning of period
2,746,531 2,813,225
-------------- --------------
End of period $ 4,570,132 $ 2,511,702
============== ==============
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(unaudited)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance
with rules established by the Securities and Exchange Commission for Form
10-Q. Not all financial disclosures required to present the financial
position and results of operations in accordance with generally accepted
accounting principles are included herein. The reader is referred to the
Company's Financial Statements included in the registrant's Annual Report
on Form 10-K for the year ended September 30, 1999. In the opinion of
management, all accruals and adjustments (each of which is of a normal
recurring nature) necessary for a fair presentation of the financial
position as of December 31, 1999 and the results of operations for the
three-month period then ended have been made. Significant accounting
policies have been consistently applied in the interim financial
statements and the annual financial statements.
Investments
Investments that may be sold as part of the liquidity management of the
Company or for other factors are classified as available-for-sale and are
carried at fair market value. Unrealized gains and losses on such
securities are reported as a separate component of stockholders' equity.
Realized gains and losses on sales of securities are reported in earnings
and computed using the specific identified cost basis.
Loss per Share
Net loss per common share is computed by dividing the net loss, after
increasing the loss for the effect of any preferred stock dividends, by
the weighted average number of common shares outstanding during the
period. Common stock equivalents, including options to purchase common
stock, were excluded from the calculation.
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.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(unaudited)
(continued)
B. STOCKHOLDERS' EQUITY
In December 1999 and January 2000, the Company sold 1,148,592 shares of
its common stock, plus Series A and Series B warrants, to a group of
private investors for $2,800,000. The Series A warrants allow the holders
to purchase up to 402,007 shares of the Company's common stock at a price
of $2.925 per share at any time prior to December 8, 2002. The Series B
warrants allow the holders, under certain circumstances, to acquire
additional shares of the Company's common stock at a nominal price in the
event (i) the price of the Company's common stock falls below $2.44 per
share prior to certain vesting dates, or (ii) the Company raises in excess
of $1,000,000 at a price which is below either the then prevailing market
price of the Company's common stock or $2.44 per share. The actual number
of shares issuable upon the exercise of the Series B warrants (if any)
will vary depending upon a number of factors, including the price of the
Company's common stock at certain dates.
C. COMPREHENSIVE LOSS
In fiscal 1999, the Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 130 "Reporting Comprehensive Income" which was
effective for fiscal years beginning after December 15, 1997.
Comprehensive Income (loss) is the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from non-owner sources. The Company's source of other
comprehensive loss, other than net losses, is from unrealized gain or loss
on investments. The components of comprehensive income (loss) are as
follows:
Three Months Ended Three Months Ended
December 31, 1999 December 31, 1998
Net Loss $1,704,408 $1,518,191
Other Comprehensive Income:
Unrealized Loss (Gain) from
Investments (18,713) 62,819
------------- -------------
Comprehensive Loss $1,685,695 $1,581,010
========== ==========
<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 the proceeds from the sale of its
securities to meet all of its liquidity and capital resource requirements. The
Company had working capital of $6,840,980 at December 31, 1999. During the three
months ended December 31, 1999 the Company's operations used $1,613,988 of cash.
Results of Operations
Interest income during the three months ending December 31, 1999 reflects
interest accrued on investments. Interest income has decreased as the Company
continues to use the proceeds from the sale of its Series D Preferred Stock for
operations. Research and development expense in 1999 was higher than in 1998
because the Company is running more and larger clinical trials. General and
administrative expenses have decreased due to a decline in activities in the
Company's subsidiary.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company's cash flow and earnings are subject to fluctuations due to
changes in interest rates in its investment portfolio of debt securities, to the
fair value of equity instruments held, and, to an immaterial extent, to foreign
currency exchange rates. The Company maintains an investment portfolio of
various issuers, types and maturities. These securities are generally classified
as available-for-sale and, consequently, are recorded on the balance sheet at
fair value with unrealized gains or losses reported as a separate component of
stockholders' equity. Other-than-temporary losses are recorded against earnings
in the same period the loss was deemed to have occurred. The Company does not
currently hedge this exposure and there can be no assurance that
other-than-temporary losses will not have a material adverse impact on the
Company's results of operations in the future.
<PAGE>
PART II
Item 1. Legal Proceedings
See Part I, Item 3 of the Company's report on Form 10-K for the year
ending September 30, 1999.
Item 2. Changes in Securities and Use of Proceeds
See Note B to the Company's Notes to Financial Statements. Item 6.
(a) Exhibits
No exhibits are filed with this report.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended December 31, 1999.
<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 14, 2000 /s/ Geert Kersten
------------------------------------
Geert Kersten
Chief Executive Officer
*Also signing in the capacity of the Chief Accounting Officer and Principal
Financial Officer.
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