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, 2001 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 22,754,857 May 1, 2001
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) March 31, September 30, 2001 2000 ------------------------------------- CURRENT ASSETS: Cash and cash equivalents $ 2,145,775 $6,909,263 Investments, net 3,135,944 3,760,922 Interest and other receivables 54,322 39,252 Prepaid expenses 710,516 1,838,376 Advances to officer/shareholder and employees - 728 ------------------------------------- Total Current Assets 6,046,557 12,548,541 RESEARCH AND OFFICE EQUIPMENT- Less accumulated depreciation of $1,788,300 and $1,721,336 629,386 594,919 DEPOSITS 139,828 139,828 PATENT COSTS- less accumulated amortization of $607,331 and $574,362 517,569 525,594 ------------------------------------- $ 7,333,340 $13,808,882 ===================================== See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------ (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) March 31, September 30, 2001 2000 CURRENT LIABILITIES: ---------------------------------- Accounts payable $ 384,961 $ 822,601 ---------------------------------- Total current liabilities 384,961 822,601 DEFERRED RENT 24,822 24,822 ---------------------------------- Total liabilities 409,783 847,423 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, 20,766,769 and 20,459,700 shares 207,668 204,597 Additional paid-in capital 73,973,658 73,924,653 Net unrealized gain/(loss) on equity securities 25,890 (61,564) Deficit (67,283,659) (61,106,227) ---------------------------------- TOTAL STOCKHOLDERS' EQUITY 6,923,557 12,961,459 ---------------------------------- $ 7,333,340 $ 13,808,882 See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS --------------------------------- (unaudited) Six Months Ended March 31, 2001 2000 REVENUES: Interest income $ 218,231 $ 107,592 Other income 119,465 28,256 ---------------------------------- TOTAL INCOME 337,696 135,848 EXPENSES: Research and development 4,821,261 2,487,290 Depreciation and amortization 99,934 143,337 General and administrative 1,593,933 2,067,469 ---------------------------------- TOTAL OPERATING EXPENSES 6,515,128 4,698,096 ---------------------------------- NET LOSS $ 6,177,432 $4,562,248 ================================== LOSS PER COMMON SHARE (BASIC) $ 0.30 $ 0.25 ================================== LOSS PER COMMON SHARE (DILUTED) $ 0.30 $ 0.25 ================================== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,563,439 18,071,192 See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS --------------------------------- (unaudited) Three Months Ended March 31, 2001 2000 -------------------------------- REVENUES: Interest income $ 35,020 $ 78,899 Other income 52,868 26,901 -------------------------------- TOTAL INCOME 87,888 105,800 EXPENSES: Research and development 2,804,254 1,492,266 Depreciation and amortization 50,855 72,557 General and administrative 866,722 1,398,817 -------------------------------- TOTAL OPERATING EXPENSES 3,721,831 2,963,640 -------------------------------- NET LOSS $ 3,633,943 $2,857,840 ================================ LOSS PER COMMON SHARE (BASIC) $ 0.18 $ 0.15 ================================ LOSS PER COMMON SHARE (DILUTED) $ 0.18 $ 0.15 ================================ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,669,266 18,881,179 See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW --------------------------------- (unaudited) Six Months Ended March 31, 2001 2000 -------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(6,177,432) $(4,562,248) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 99,934 143,337 Stock bonus granted to officer - 550,000 Stock issued to 401(k) 51,802 47,067 Net realized loss on sale of securities 15,932 - Warrants exercised for stock 274 - (Increase) in receivables (15,070) (25,128) Decrease (increase) in prepaid expenses 1,127,860 (104,955) Decrease in advances 728 68,236 Increase (decrease) in accounts payable (437,640) 133,585 --------------------------------- NET CASH USED IN OPERATING ACTIVITIES (5,333,612) (3,750,106) --------------------------------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITY: Sales of investments 696,499 1,487,364 Purchase of investments - (2,000,000) Purchase of research and office equipment (101,431) (84,778) Patent costs (24,944) (48,738) --------------------------------- NET CASH PROVIDED BY(USED IN) INVESTING ACTIVITY 570,124 (646,152) --------------------------------- 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 --------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES - 13,627,709 --------------------------------- NET INCREASE (DECREASE) IN CASH (4,763,488) 9,231,451 CASH AND CASH EQUIVALENTS: Beginning of period 6,909,263 2,746,531 --------------------------------- $ $ End of period 2,145,775 11,977,982 ================================= See notes to consolidated condensed financial statements.
CEL-SCI CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS SIX MONTHS ENDED MARCH 31, 2001 AND 2000 ---------------------------------------- (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, 2000. 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, 2001 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 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 SIX MONTHS ENDED MARCH 31, 2001 AND 2000 ---------------------------------------- (unaudited) (continued) B. 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, 2001 March 31, 2000 -------------- -------------- Net Loss $(6,177,458) $(4,562,248) Other Comprehensive Income: Unrealized (Loss) Gain From Investments 25,890 (39,444) ---------- ----------- Comprehensive Loss $(6,151,568) $(4,601,692) ----------- -----------
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. 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 six months ending March 31, 2001 was higher than it was during the same quarter in 2000 as a result of the Company's larger cash position. Research and development expenses were significantly higher because of the expenses incurred in the validation of the new manufacturing facilities at BSCP (see above). The Company's expenditures will decrease significantly in the next quarter since the work at BSCP has been completed. 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 During the quarter ended March 31, 2001, 13,195 shares of stock were issued by the Company for its contribution to the 401K. These shares were registered on an S-8 filing. 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, 2001.
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:May 11, 2001 /s/ Geert Kersten ------------------------------ Geert Kersten Chief Executive Officer* *Also signing in the capacity of the Chief Accounting Officer and Principal Financial Officer.