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 June 30, 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 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 20,457,152 August 14, 2000 Page 1 of 12 pages
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
Item 1. FINANCIAL STATEMENTS CEL-SCI CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ASSETS (unaudited) June 30, September 30, 2000 1999 --------------------------- CURRENT ASSETS: Cash and cash equivalents $9,483,974 $2,746,531 Investments, net 3,733,945 3,192,604 Interest and other receivables 59,940 62,825 Prepaid expenses 910,969 514,572 Advances to officer/shareholder and employees -- 69,448 ----------------------------- Total Current Assets 14,188,828 6,585,980 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $1,690,740 and $1,563,586 469,732 468,627 DEPOSITS 14,828 14,828 PATENT COSTS- less accumulated amortization of $558,290 and $511,118 533,342 490,337 ----------- ------------ $15,206,730 $7,559,772 =========== =========== See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) June 30, September 30, 2000 1999 --------------------------- CURRENT LIABILITIES: Accounts payable $488,242 $433,265 -------- -------- Total current liabilities 488,242 433,265 DEFERRED RENT 28,321 28,321 ------ --------- Total liabilities 516,563 461,586 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; authorized 1,000,000 shares; no shares issued and outstanding Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 20,457,152 and 17,002,341 shares 204,572 170,023 Additional paid-in capital 73,930,953 59,672,652 Net unrealized loss on equity securities (90,172) (116,659) Deficit (59,355,186) (52,627,830) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 14,690,167 7,098,186 ---------- --------- $15,206,730 $7,559,772 =========== ========== See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Nine Months Ended June 30, 2000 1999 ---- ---- REVENUES: Interest income $269,305 $316,194 Other income 30,318 59,332 ------ ------ TOTAL INCOME 299,623 375,526 EXPENSES: Research and development 3,866,572 3,269,931 Depreciation and amortization 174,326 199,749 General and administrative 2,986,080 2,229,726 --------- --------- TOTAL OPERATING EXPENSES 7,026,978 5,699,406 --------- --------- NET LOSS $6,727,355 $5,323,880 LOSS PER COMMON SHARE (BASIC) $0.36 $0.39 LOSS PER COMMON SHARE (DILUTED) $0.36 $0.39 --------- --------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 18,857,493 13,786,779 ========== ========== See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended June 30, 2000 1999 ---- ---- REVENUES: Interest income $161,713 $72,328 Other income 2,062 12,555 ---------- -------- TOTAL INCOME 163,775 84,883 EXPENSES: Research and development 1,379,282 1,027,401 Depreciation and amortization 30,989 66,744 General and administrative 918,611 673,076 ------- ------- TOTAL OPERATING EXPENSES 2,328,882 1,767,221 --------- --------- NET LOSS $2,165,107 $1,682,338 ========== ========== LOSS PER COMMON SHARE (BASIC) $ 0.11 $ 0.11 ========== ========= LOSS PER COMMON SHARE (DILUTED) $ 0.11 $ 0.11 =========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,438,736 15,742,037 ========== ========== See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (unaudited) Nine Months Ended June 30, 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(6,727,355) $(5,323,880) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 174,326 199,749 Stock issued in settlement of a lawsuit' 33,750 Stock issued for services -- 61,149 Stock bonus granted to officer 550,000 -- Stock issued to 401(k) 72,882 -- Unrealized gain (loss) on investments -- (55,170) Decrease (increase) in receivables 2,885 (21,628) Decrease (increase) in prepaid expenses (396,397) 191,748 Decrease (increase) in advances 69,448 -- Increase (decrease) in accounts payable 54,977 (83,879) ------------- ------------- NET CASH USED IN OPERATING ACTIVITIES (6,165,484) (5,031,911) ----------- ----------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments 1,485,145 3,289,701 Purchase of investments (2,000,000) -- Payment on note receivable from employee shareholder -- 70,982 Purchase of research and office equipment (128,259) (40,627) Patent costs (90,177) (78,000) -------- -------- NET CASH USED IN INVESTING ACTIVITY (733,291) 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 13,636,218 43,380 ---------- ------ NET CASH PROVIDED BY FINANCING ACTIVITIES 13,636,218 43,380 ---------- ------ NET INCREASE (DECREASE) IN CASH 6,737,443 (1,746,475) CASH AND CASH EQUIVALENTS: Beginning of period 2,746,531 2,813,225 --------- --------- End of period $9,483,974 $1,066,750 ========== ========== See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 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 June 30, 2000 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 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 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 because they are antidilutive due to the net losses. 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.
CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NINE MONTHS ENDED JUNE 30, 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:
Nine months ended Nine months ended June 30, 2000 June 30, 1999 ----------------- -------------- Net Loss $6,727,355 $5,323,880 Other Comprehensive Income: Unrealized Loss (Gain) From Investments (26,487) 66,900 ------------ ----------- Comprehensive Loss $6,700,868 $5,390,780 ---------- ---------- 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. The Company believes it has adequate cash resources to meet it's working capital requirements for the next twelve months. In June 2000, the Company entered into an agreement with Bio Science Contract Production Corp. ("BSCP") whereby BSCP agreed to provide the Company with a facility which will allow the Company to manufacture Multikine in accordance with the Good Manufacturing Practices regulations of the FDA.. Company personnel will staff this facility. The Company has the right to extend the term of its agreement with BSCP until December 31, 2006. Results of Operations Interest income during the nine months ending June 30, 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 and settlement of a lawsuit. 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.
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 June 30, 2000.
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: August 14, 2000 ____________________________ Geert Kersten Chief Executive Officer* *Also signing in the capacity of the Chief Accounting Officer and Principal Financial Officer.