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 March 31, 2000.
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
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 20,437,305 May 15, 2000
Page 1 of 12 pages
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Page
----
Balance Sheets 3-4
Statements of Operations 5-6
Statements of Cash Flow 7
Notes to Financial Statements 8
Item 2.
Management's Discussion and Analysis 10
PART II
Item 6.
Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
Item 1. FINANCIAL STATEMENTS
CEL-SCI CORPORATION
- ------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
- ------------------------
ASSETS
(unaudited)
March 31, September 30,
2000 1999
-------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $11,977,982 $2,746,531
Investments, net 3,744,684 3,192,604
Interest and other receivables 87,953 62,825
Prepaid expenses 619,527 514,572
Advances to officer/shareholder and 1,212 69,448
employees
------------------ ------------------
Total Current Assets 16,431,358 6,585,980
RESEARCH AND OFFICE EQUIPMENT-
Less accumulated depreciation
of $1,675,915 and $1,563,586 441,075 468,627
DEPOSITS 14,828 14,828
PATENT COSTS- less accumulated
amortization of
$542,125 and $511,118 508,068 490,337
------------------ ------------------
$17,395,329 $7,559,772
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
- ------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
- ------------------------
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
March 31, September 30,
2000 1999
------------- --------------
CURRENT LIABILITIES:
Accounts payable $566,850 $433,265
Total current liabilities 566,850 433,265
DEFERRED RENT 28,321 28,321
------------------ ------------------
Total liabilities 595,171 461,586
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized,
100,000,000
shares; issued and outstanding, 20,435,305
and 17,002,341 shares 204,353 170,023
Additional paid-in capital 73,863,099 59,672,652
Net unrealized loss on equity securities (77,215) (116,659)
Deficit (57,190,079) (52,627,830)
------------------ ------------------
TOTAL STOCKHOLDERS'
EQUITY 16,800,158 7,098,186
------------------ ------------------
$17,395,329 $7,559,772
================== ==================
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
- ---------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
- ---------------------------------
(unaudited)
Six Months Ended
March 31,
2000 1999
------------------ ------------------
REVENUES:
Interest income $107,592 $243,866
Other income 28,256 46,777
------------------ ------------------
TOTAL INCOME 135,848 290,643
EXPENSES:
Research and development 2,487,290 2,242,530
Depreciation and
amortization 143,337 133,005
General and administrative 2,067,469 1,556,650
------------------ ------------------
TOTAL OPERATING EXPENSES 4,698,096 3,932,185
------------------ ------------------
NET LOSS $4,562,248 $3,641,542
LOSS PER COMMON SHARE (BASIC) $0.25 $0.28
LOSS PER COMMON SHARE (DILUTED) $0.25 $0.28
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 18,071,192 12,809,150
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
- -------------------
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31,
2000 1999
------------------ ------------------
REVENUES:
Interest income $78,899 $87,820
------------------ ------------------
TOTAL INCOME 105,800 94,930
EXPENSES:
Research and development 1,492,266 1,300,582
Depreciation and
amortization 72,557 67,073
General and administrative 1,398,817 850,626
------------------ ------------------
TOTAL OPERATING EXPENSES 2,963,640 2,218,281
------------------ ------------------
NET LOSS $2,857,840 $2,123,351
================== ==================
LOSS PER COMMON SHARE (BASIC) $0.15 $0.15
LOSS PER COMMON SHARE (DILUTED) $0.15 $0.15
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 18,881,179 14,004,082
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(unaudited)
Six Months Ended
March 31,
2000 1999
------------------ ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET LOSS $(4,562,248) $(3,641,542)
Adjustments to reconcile net loss to
net cash used in operating activities:
-
Depreciation and amortization 143,337 133,005
Net realized loss on sale of securities -
Stock issued for services - 61,149
Stock bonus granted to officer 550,000 -
Stock issued to 401(k) 47,067 -
Unrealized gain(loss) on investments - (55,170)
Decrease (increase) in receivables (25,128) (21,628)
Decrease (increase) in prepaid expenses (104,955) 191,748
Decrease (increase) in advances 68,236 -
(Increase) decrease in deferred rent - -
Increase (decrease) in accounts payable 133,585 (83,879)
------------------ ------------------
NET CASH USED IN OPERATING ACTIVITIES (3,750,106) (3,416,317)
------------------ ------------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITY:
Sales of investments 1,487,364 3,289,701
Purchase of investments (2,000,000) -
Payment on note receivable from - 70,982
employee/shareholder
Purchase of research and office equipment (84,778) (40,627)
Patent costs (48,738) (78,000)
------------------ ------------------
NET CASH USED IN INVESTING ACTIVITY (646,152) 3,242,056
------------------ ------------------
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Cash proceeds from issuance of preferred and -
common
stock and warrant conversion for cash 13,627,709 43,380
------------------ ------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 13,627,709 43,380
------------------ ------------------
NET (DECREASE) INCREASE IN CASH 9,231,451 (130,881)
CASH AND CASH EQUIVALENTS:
Beginning of period 2,746,531 2,813,225
------------------ ------------------
End of period $11,977,982 $2,682,344
================== ==================
See notes to condensed financial statements.
<PAGE>
CEL-SCI CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
----------------------------------------
(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 March 31, 2000 and the results of operations for the
six-month period then ended have been made. Significant accounting
policies have been consistently applied in the interim financial
statements and the annual financial statements.
Investments
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
SIX MONTHS ENDED March 31, 2000 AND 1999
----------------------------------------
(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 two
institutional investors and one of the Company's directors 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.
In March 2000, $7,000,000 of the Company's common stock was sold to the
same institutional investors. An additional $700,000 was purchased by the
same director of the Company under identical terms. The Series C warrants
allow the holders to purchase up to 413,347 shares of the Company's common
stock at a price of $8.50 per share at any time prior to March 15, 2003.
The Series D 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 $7.50
per share during the 30 day period prior to March 16, 2001-or during the
30 day period prior to certain subsequent 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 $7.50
per share. The actual number of shares issuable upon the exercise of the
Series D 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:
Six months ended Six months ended
March 31, 2000 March 31, 1999
-------------- --------------
Net Loss $4,511,246 $3,641,542
Other Comprehensive Income:
Unrealized Loss (Gain) From
Investments (39,444) 55,170
----------- ------------
Comprehensive Loss $4,471,802 $3,696,712
---------- ----------
<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.
Results of Operations
Interest income during the six months ending March 31, 2000 reflects
interest accrued on investments. Interest income has decreased as a result of
the Company's lower cash position. Research and development expense in 2000 was
higher than in 1999 because the Company is running more and larger clinical
trials. General and administrative expenses have increased primarily due to a
non-cash charge to expense for the issuance of a stock bonus to an officer and
director.
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 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 March 31, 2000.
<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:_______________, 2000 ____________________________
Geert Kersten
Chief Executive Officer*
*Also signing in the capacity of the Chief Accounting Officer and Principal
Financial Officer.
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