As filed with the Securities and Exchange Commission on December ___, 2001.
Registration No 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
Registration Statement
Under
THE SECURITIES ACT OF 1933
CEL-SCI Corporation
-----------------------------------------
(Exact name of registrant as specified in charter)
Colorado
---------------------
(State or other jurisdiction of incorporation)
8229 Boone Blvd. #802
Vienna, Virginia 22182
84-09l6344 (703) 506-9460
-------------------- -----------------------------------
(IRS Employer I.D. (Address, including zip code, and telephone
Number) number including area of principal executive
offices)
Geert Kersten
8229 Boone Blvd. #802
Vienna, Virginia 22182
(703) 506-9460
-------------------------------------
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this
Registration Statement
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
----------------------------------------------------------------------
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Unit (1) Price Fee (3)
---------- ---------- ----------- ------------ -------------
Common stock (2) 6,500,000 $0.94 $6,110,000 $1,614
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(1) Offering price computed in accordance with Rule 457(c).
(2) Shares of common stock to be sold by the selling shareholders.
Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for issuance
upon the exercise of the warrants as a result of any adjustment in the number of
securities issuable by reason of the anti-dilution provisions of the Series F
Warrants.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
CEL-SCI CORPORATION
6,500,000 shares of Common Stock
By means of this prospectus certain shareholders of CEL-SCI Corporation are
offering to sell up to 6,500,000 shares of CEL-SCI's common stock which may be
issued upon the conversion of promissory notes sold by CEL-SCI as well as shares
of common stock issuable upon the exercise of CEL-SCI's Series F warrants. The
actual number of shares issuable upon the conversion of the promissory notes
will vary depending upon the price of CEL-SCI's common stock at the time of
conversion. In addition, the shares issuable upon the exercise of the Series F
warrants may increase as the result of future sales of CEL-SCI's common stock at
prices below either the warrant exercise price or the market value of CEL-SCI's
common stock. See "Comparative Share Data" for information concerning the terms
of the convertible promissory notes and the Series F warrants.
The securities offered by this prospectus are speculative and involve a high
degree of risk and should be purchased only by persons who can afford to lose
their entire investment. Prospective investors should consider certain important
factors described under "Risk Factors" beginning on page 4 of this prospectus.
These Securities Have Not Been Approved or Disapproved by the Securities and
Exchange Commission Nor Has the Commission Passed Upon the Accuracy or Adequacy
of this Prospectus. Any Representation to the Contrary is a Criminal Offense.
CEL-SCI's common stock is traded on the American Stock Exchange. On December
28, 2001 the closing price of CEL-SCI's common stock on the American Stock
Exchange was $0.94.
The date of this prospectus is _______, 2002
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE
IN THIS PROSPECTUS.
CEL-SCI
CEL-SCI Corporation was formed as a Colorado corporation in 1983. CEL-SCI
is involved in the research and development of certain drugs and vaccines.
CEL-SCI manufactures MULTIKINE, its first, and main product, using CEL-SCI's
proprietary cell culture technologies, which involve a combination, or
"cocktail", of natural human interleukin-2 and certain lymphokines and
cytokines. CEL-SCI is testing MULTIKINE to determine if it is effective in
creating an anti-cancer immune response in head and neck cancer patients, and in
HIV-infected women with Human Papilloma Virus induced cervical dysplasia, the
precursor stage before the development of cervical cancer.
Another technology CEL-SCI is developing, Ligand Epitope Antigen
Presentation System (LEAPS), is a T-cell modulation technology which CEL-SCI is
testing to determine if it is effective in developing potential treatments
and/or vaccines against various diseases. Present target diseases are AIDS,
herpes simplex, malaria, prostate cancer and breast cancer.
Before human testing can begin with respect to a drug or biological
product, preclinical studies are conducted in laboratory animals to evaluate the
potential efficacy and the safety of a product. Human clinical studies generally
involve a three-phase process. The initial clinical evaluation, Phase I,
consists of administering the product and testing for safe and tolerable dosage
levels. Phase II trials continue the evaluation of safety and determine the
appropriate dosage for the product, identify possible side effects and risks in
a larger group of subjects, and provide preliminary indications of efficacy.
Phase III trials consist of testing for actual clinical efficacy within an
expanded group of patients at geographically dispersed test sites.
CEL-SCI has funded the costs associated with the clinical trials relating
to CEL-SCI's technologies, research expenditures and CEL-SCI's administrative
expenses with the public and private sales of shares of CEL-SCI's common stock
and borrowings from third parties, including affiliates of CEL-SCI.
CEL-SCI does not expect to develop commercial products for several years,
if at all. CEL-SCI has had operating losses since its inception, had an
accumulated deficit of approximately $(71,840,000) at September 30, 2001 and
expects to incur substantial losses for the foreseeable future.
CEL-SCI's executive offices are located at 8229 Boone Blvd., #802, Vienna,
Virginia 22182, and its telephone number is (703) 506-9460.
THE OFFERING
Securities Offered:
By means of this prospectus certain CEL-SCI shareholders are offering to
sell shares of CEL-SCI's common stock issuable upon the conversion of CEL-SCI's
promissory notes sold by CEL-SCI or upon the exercise of CEL-SCI's Series F
warrants. CEL-SCI refers to the owners of these shares as the selling
shareholders in this prospectus.
Common Stock Outstanding: As of December 31, 2001 CEL-SCI
had 23,344,342 shares of common stock issued and
outstanding. The number of outstanding shares does
not give effect to shares which may be issued upon
the exercise and/or conversion of options, warrants
or other convertible securities held by the selling
shareholders or other persons. See "Comparative
Share Data".
Risk Factors: The purchase of the securities offered by
this prospectus involves a high degree of risk. Risk
factors include the lack of revenues and history of
loss, need for additional capital and need for FDA
approval. See the "Risk Factors" section of this
prospectus for additional Risk Factors.
AMEX Symbol: CVM
Summary Financial Data
----------------------
Results of Operations:
Year Ended Year Ended
September 30, 2001 September 30, 2000
---------------------- ------------------
Investment Income and Other
Revenues: $ 670,092 $ 442,551
Expenses:
Research and Development 7,762,213 5,186,065
Depreciation and Amortization 209,121 220,994
General and Administrative 3,432,437 3,513,889
--------- ---------
Net Loss $(10,733,679) $(8,478,397)
============= ============
Loss per common share
(basic and diluted) $(0.51) $(0.44)
Weighted average common
Shares outstanding 21,824,273 19,259,190
Balance Sheet Data:
September 30, 2001 September 30, 2000
-------------------- ------------------
Working Capital $2,807,229 $11,725,940
Total Assets 4,508,920 13,808,882
Long-Term Liabilities 507,727 847,423
Shareholders' Equity 4,001,193 12,961,459
Forward Looking Statements
This prospectus contains various forward-looking statements that are based
on CEL-SCI's beliefs as well as assumptions made by and information currently
available to CEL-SCI. When used in this prospectus, the words "believe",
"expect", "anticipate", "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements may include statements
regarding seeking business opportunities, payment of operating expenses, and the
like, and are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from projections or estimates.
Factors which could cause actual results to differ materially are discussed at
length under the heading "Risk Factors". Should one or more of the enumerated
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. Investors should not place undue reliance on forward-looking
statements, all of which speak only as of the date made.
RISK FACTORS
Investors should be aware that this offering involves certain risks,
including those described below, which could adversely affect the value of their
holdings of common stock. CEL-SCI does not make, nor has it authorized any other
person to make, any representation about the future market value of CEL-SCI's
common stock. In addition to the other information contained in this prospectus,
the following factors should be considered carefully in evaluating an investment
in the Shares offered by this prospectus.
CEL-SCI Has Earned Only Limited Revenues and Has a History of Losses.
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CEL-SCI has had only limited revenues since it was formed in 1983. Since
the date of its formation and through September 30, 2001 CEL-SCI incurred net
losses of approximately $(71,840,000). During the years ended September 30,
1999, 2000 and 2001 CEL-SCI suffered losses of $(7,490,725), $(8,478,397) and
$(10,733,679) respectively. CEL-SCI has relied principally upon the proceeds of
public and private sales of securities to finance its activities to date. All of
CEL-SCI's potential products are in the early stages of development, and any
commercial sale of these products will be many years away. Accordingly, CEL-SCI
expects to incur substantial losses for the foreseeable future.
There can be no assurance CEL-SCI will be profitable. At the present time,
CEL-SCI intends to use available funds to finance CEL-SCI's operations.
Accordingly, while payment of dividends rests within the discretion of the Board
of Directors, no common stock dividends have been declared or paid by CEL-SCI.
CEL-SCI does not presently intend to pay dividends on its common stock and there
can be no assurance that common stock dividends will ever be paid.
If Cel-Sci cannot obtain additional capital, Cel-Sci may have to delay or
postpone development and research expenditures which may influence Cel-Sci's
ability to produce a timely and competitive product.
Clinical and other studies necessary to obtain approval of a new drug can
be time consuming and costly, especially in the United States, but also in
foreign countries. The different steps necessary to obtain regulatory approval,
especially that of the Food and Drug Administration, involve significant costs
and may require several years to complete. CEL-SCI expects that it will need
additional financing over an extended period of time in order to fund the costs
of future clinical trials, related research, and general and administrative
expenses. Although CEL-SCI's equity line of credit agreement is expected to be a
source of funding, the amounts which CEL-SCI is able to draw from the equity
line during each drawdown period may not satisfy CEL-SCI's capital needs.
Shares Issuable Upon the Conversion of Options, Warrants and Convertible
Securities or in Connection with the Equity Line of Credit May Depress the Price
of CEL-SCI's Common stock.
Options
CEL-SCI has issued options to its officers, directors, employees and
consultants which allow the holders to acquire additional shares of CEL-SCI's
common stock. In some cases CEL-SCI has agreed that, at its expense, it will
make appropriate filings with the Securities and Exchange Commission so that the
securities issuable upon the exercise of the options will be available for
public sale. Such filings could result in substantial expense to CEL-SCI and
could hinder future financings by CEL-SCI.
Until the options expire, the holders will have an opportunity to profit
from any increase in the market price of CEL-SCI's common stock without assuming
the risks of ownership. Holders of the options may exercise them at a time when
CEL-SCI could obtain additional capital on terms more favorable than those
provided by the options. The exercise of the options will dilute the voting
interest of the owners of presently outstanding shares of CEL-SCI's common stock
and may adversely affect the ability of CEL-SCI to obtain additional capital in
the future. The sale of the shares of common stock issuable upon the exercise of
the options could adversely affect the market price of CEL-SCI's stock.
Series E Preferred Stock and Warrants
In December 1999 and January 2000, CEL-SCI sold 1,148,592 shares of its
common stock, plus Series A and Series B warrants, to three private investors.
The Series A warrants permitted the holders of the warrants to purchase 402,007
shares of CEL-SCI's common stock at a price of $2.925 per share at any time
prior to December 8, 2002. The Series B warrants allowed the holders to acquire
additional shares of CEL-SCI's common stock at a nominal price in the event the
price of CEL-SCI's common stock fell below $2.4375 per share prior to certain
fixed vesting dates, the first of which in December 2000. On the first fixed
vesting date the price of CEL-SCI's common stock was $1.54. Pursuant to the
terms of the Series B warrants, which have since expired, the holders of the
warrants, in December 2000, received 274,309 additional shares of CEL-SCI's
common stock. The share of common stock sold by CEL-SCI in the December 1999 and
January 2000 private offerings have since been resold by the investors, and as a
result no additional shares are issuable by the terms of the Series B warrants.
In March 2000, CEL-SCI sold an additional 1,026,666 shares of its common
stock, plus Series C and Series D warrants, to the same three private investors.
The Series C warrants permitted the holders of the warrants to purchase 413,344
shares of CEL-SCI's common stock at a price of $8.50 per share at any time prior
to March 21, 2003. The Series D warrants originally allowed the holders, to the
extent they held any shares purchased in the March 2000 offering, to acquire
additional shares of CEL-SCI's common stock at a nominal price in the event the
price of CEL-SCI's common stock fell below $7.50 per share prior to certain
fixed vesting dates, the first of which was in March 2001. On the first fixed
vesting date the price of CEL-SCI's common stock was $1.47 and on the second,
and final vesting date, the price of CEL-SCI's common stock was $1.08. As a
result, and in accordance with the terms of the Series D warrants, the private
investors were entitled to receive 5,734,155 additional shares of CEL-SCI's
common stock of which 3,520,123 shares had been issued and 959,340 shares had
been sold as of August 15, 2001.
On August 16, 2001 the three private investors exchanged the shares of
CEL-SCI's common stock which they owned, plus their unexercised Series D
Warrants, for 6,288 shares of CEL-SCI's Series E Preferred stock. Each Series E
Preferred share is convertible into shares of CEL-SCI's common stock on the
basis of one Series E Preferred share for shares of common stock equal in number
to the amount determined by dividing $1,000 by the lesser of $5 or 93% of the
average closing bid prices (the "Conversion Price") of CEL-SCI's common stock on
the American Stock Exchange for the five days prior to the date of each
conversion notice.
As part of this transaction the three private investors also exchanged
their Series A and Series C warrants for new Series E warrants. The Series E
warrants collectively allow the holders to purchase up to 815,351 additional
shares of CEL-SCI's common stock at a price of $1.19 per share at any time prior
to August 16, 2004.
The sale of common stock issued or issuable upon the exercise of the
Series E warrants, or the conversion of the Series E Preferred stock, or the
perception that such sales could occur, could adversely affect the market price
of CEL-SCI's common stock.
Equity Line of Credit
An unknown number of shares of common stock, which may be sold by means of
a separate registration statement filed with the Securities and Exchange
Commission, are issuable under a equity line of credit arrangement to Paul
Revere Capital Partners. As CEL-SCI sells shares of its common stock to Paul
Revere Capital Partners under the equity line of credit, and Paul Revere Capital
Partners sells the common stock to third parties, the price of CEL-SCI's common
stock may decrease due to the additional shares in the market. If CEL-SCI
decides to draw down on the equity line of credit as the price of its common
stock decreases, CEL-SCI will be required to issue more shares of its common
stock for any given dollar amount invested by Paul Revere Capital Partners,
subject to the minimum selling price specified by CEL-SCI. The more shares that
are issued under the equity line of credit, the more CEL-SCI's then outstanding
shares will be diluted and the more CEL-SCI's stock price may decrease. Although
Paul Revere Capital Partners has agreed not to engage in any short selling
during the term of the equity line of credit, any decline in the price of
CEL-SCI's common stock may encourage short sales by others, which could place
further downward pressure on the price of CEL-SCI's common stock. Short selling
is a practice of selling shares which are not owned by a seller with the
expectation that the market price of the shares will decline in value after the
sale. See "Comparative Share Data" for more information concerning the equity
line.
Convertible Notes and Warrants
In December 2001, CEL-SCI sold convertible notes, plus Series F warrants,
to a group of private investors for $800,000. At the holder's option the notes
are convertible into shares of CEL-SCI's common stock equal in number to the
amount determined by dividing each $1,000 of note principal to be converted by
the Conversion Price. The Conversion Price is 76% of the average of the three
lowest daily trading prices of CEL-SCI's common stock on the American Stock
Exchange during the 20 trading days immediately prior to the conversion date. If
CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price or the market price of its common stock, the Conversion Price may be
subject to adjustment.
The Series F warrants allow the holders to initially purchase up to
960,000 shares of CEL-SCI's common stock at a price of $0.95 per share at any
time prior to December 31, 2008. If CEL-SCI sells any additional shares of
common stock, or any securities convertible into common stock, at a price below
the then applicable warrant exercise price or the market price of CEL-SCI's
common stock, the warrant exercise price and the number of shares of common
stock issuable upon the exercise of the warrant may be subject to adjustment.
CEL-SCI has filed a registration statement with the Securities and
Exchange Commission, of which this prospectus is a part, in order that the
shares of common stock issued upon the conversion of the notes or the exercise
of the warrants may be resold in the public market. Upon the effective date of
this registration statement the holders of the notes have agreed to purchase an
additional $800,000 of convertible notes from CEL-SCI. The additional $800,000
of convertible notes will have the same terms as the notes sold in December
2001.
See "Description of Securities - Convertible Notes and Series F Warrants"
for information concerning potential adjustments to the conversion price, the
warrant exercise price, and other terms of the notes and the Series F warrants.
The sale of common stock upon the conversion of the notes or the exercise
of the Series F warrants, or the perception that such sales could occur, could
adversely affect the market price of CEL-SCI's common stock.
CEL-SCI may be required to make payments to the holders of the Convertible Notes
and the Series F warrants.
As explained in the preceding risk factor the shares of CEL-SCI's common
stock issuable upon the conversion of the promissory notes will be issued at a
discount to the market price of CEL-SCI's common stock. In addition the terms of
the Series F warrants provide that the exercise price of the Series F warrants
may be adjusted to a price which is below the market price of CEL-SCI's common
stock on the date the warrants were issued ($0.94).
The actual number of shares issuable upon the conversion of the notes and
the exercise of the Series F warrants (if any) will vary depending upon a number
of factors, including the price of CEL-SCI's common stock at certain dates.
CEL-SCI's common stock trades on the American Stock Exchange. The rules of
the AMEX require a corporation, the securities of which are listed on the AMEX,
to obtain shareholder approval if 20% or more of a corporation's common stock
will be sold in a private offering and below the greater of the book value or
market price of the corporation's common stock.
For purposes of applying this particular rule to the convertible notes and
Series F warrants, the AMEX will consider the issuance of any common stock upon
the conversion of the notes to be a sale of CEL-SCI's common stock at less than
market price. If any of the Series F warrants are exercised at a price below the
market price of CEL-SCI's common stock on the date the warrants were issued the
AMEX will consider these shares to have been sold at less than market price.
Consequently, the AMEX rule would prohibit CEL-SCI from issuing more than
4,668,868 shares of common stock as a result of the conversion of the notes or
the exercise of the Series F warrants, if exercised at a price which is less
than $0.94 per share, unless shareholder approval is obtained for the issuance
of the additional shares.
It is possible, depending upon the future market price of CEL-SCI's common
stock, that more than 4,668,868 shares could be issued upon the conversion of
the notes and the exercise, at price below $0.94 per share, of the Series F
warrants.
In order to avoid any violation of the AMEX rules relating to the issuance
of shares below the market price of CEL-SCI's common stock, the terms of the
notes and the Series F warrants provide that no more than 4,668,868 shares may
be issued unless CEL-SCI obtains shareholder approval for the issuance of such
additional shares.
If CEL-SCI fails to obtain or elects not to obtain shareholder approval
for the issuance of the additional shares CEL-SCI will be required to pay the
holders of the notes 130% of the then outstanding principal balance of the notes
plus an amount equal to the then market value of the shares which would
otherwise be issuable upon the exercise of the Series F warrants had shareholder
approval been obtained.
If Cost Estimates for Clinical Trials and Research Are Inaccurate, CEL-SCI Will
Require Additional Funding.
CEL-SCI's estimates of the costs associated with future clinical trials
and research may be substantially lower than the actual costs of these
activities. If CEL-SCI's cost estimates are incorrect, CEL-SCI will need
additional funding for its research efforts.
Any failure to obtain or any delay in obtaining required regulatory approvals
may adversely affect the ability of CEL-SCI or potential licensees to
successfully market any products they may develop.
Therapeutic agents, drugs and diagnostic products are subject to approval,
prior to general marketing, by the FDA in the United States and by comparable
agencies in most foreign countries. The process of obtaining FDA and
corresponding foreign approvals is costly and time consuming, particularly for
pharmaceutical products such as those which might ultimately be developed by
CEL-SCI, VTI or its licensees, and there can be no assurance that such approvals
will be granted. Also, the extent of adverse government regulations which might
arise from future legislative or administrative action cannot be predicted.
CEL-SCI has, at the present time, only one source of multikine and if this
source could not, for any reason, supply CEL-SCI with Multikine, CEL-SCI
estimates that it would take approximately six to ten months to obtain supplies
of Multikine under an alternative manufacturing arrangement.
CEL-SCI has an agreement with an unrelated corporation for the production,
until 2006, of Multikine. CEL-SCI does not know what cost it would incur to
obtain an alternative source of supply.
There can be no assurance that CEL-SCI will achieve or maintain a competitive
position or that other technological developments will not cause CEL-SCI's
proprietary technologies to become uneconomical or obsolete.
The biomedical field in which CEL-SCI is involved is undergoing rapid and
significant technological change. The successful development of therapeutic
agents from CEL-SCI's compounds, compositions and processes through
CEL-SCI-financed research or as a result of possible licensing arrangements with
pharmaceutical or other companies, will depend on its ability to be in the
technological forefront of this field.
Many pharmaceutical and biotechnology companies are developing products
for the prevention or treatment of cancer and infectious diseases. Many of these
companies have substantial financial, research and development, and marketing
resources and are capable of providing significant long-term competition either
by establishing in-house research groups or by forming collaborative ventures
with other entities. In addition, both smaller companies and non-profit
institutions are active in research relating to cancer and infectious diseases
and are expected to become more active in the future.
CEL-SCI's Patents Might Not Protect CEL-SCI's Technology from Competitors.
Certain aspects of CEL-SCI's technologies are covered by U.S. and foreign
patents. In addition, CEL-SCI has a number of patent applications pending. There
is no assurance that the applications still pending or which may be filed in the
future will result in the issuance of any patents. Furthermore, there is no
assurance as to the breadth and degree of protection any issued patents might
afford CEL-SCI. Disputes may arise between CEL-SCI and others as to the scope
and validity of these or other patents. Any defense of the patents could prove
costly and time consuming and there can be no assurance that CEL-SCI will be in
a position, or will deem it advisable, to carry on such a defense. Other private
and public concerns, including universities, may have filed applications for, or
may have been issued, patents and are expected to obtain additional patents and
other proprietary rights to technology potentially useful or necessary to
CEL-SCI. The scope and validity of such patents, if any, the extent to which
CEL-SCI may wish or need to acquire the rights to such patents, and the cost and
availability of such rights are presently unknown. Also, as far as CEL-SCI
relies upon unpatented proprietary technology, there is no assurance that others
may not acquire or independently develop the same or similar technology.
CEL-SCI's first MULTIKINE patent expired in 2000. Since CEL-SCI does not know if
it will ever be able to sell MULTIKINE on a commercial basis, CEL-SCI cannot
predict what effect the expiration of this patent will have on CEL-SCI.
Notwithstanding the above, CEL-SCI believes that trade secrets and later issued
patents will protect the technology associated with Multikine.
CEL-SCI's Product Liability Insurance May Not Be Adequate to Protect CEL-SCI
from Possible Losses.
Although CEL-SCI has product liability insurance for Multikine, the
successful prosecution of a product liability case against CEL-SCI could have a
materially adverse effect upon its business if the amount of any judgment
exceeds CEL-SCI's insurance coverage.
The Loss of Management and Scientific Personnel Could Adversely Affect CEL-SCI.
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CEL-SCI is dependent for its success on the continued availability of its
executive officers. The loss of the services of any of CEL-SCI's executive
officers could have an adverse effect on CEL-SCI's business. CEL-SCI does not
carry key man life insurance on any of its officers. CEL-SCI's future success
will also depend upon its ability to attract and retain qualified scientific
personnel. There can be no assurance that CEL-SCI will be able to hire and
retain such necessary personnel.
The Market Price for CEL-SCI's Common Stock is Volatile.
The market price of CEL-SCI's common stock, as well as the securities of
other biopharmaceutical and biotechnology companies, have historically been
highly volatile, and the market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. Factors such as fluctuations in CEL-SCI's operating
results, announcements of technological innovations or new therapeutic products
by CEL-SCI or its competitors, governmental regulation, developments in patent
or other proprietary rights, public concern as to the safety of products
developed by CEL-SCI or other biotechnology and pharmaceutical companies, and
general market conditions may have a significant effect on the market price of
CEL-SCI's common stock.
COMPARATIVE SHARE DATA
Number of Note
Shares Reference
Shares outstanding as of December 31, 2001 23,344,342
Shares to be sold in this Offering:
Shares issuable upon conversion of 1,127,000 A
promissory notes
Shares issuable upon exercise of 960,000 A
Series F warrants
The number of shares outstanding as of December 31, 2001 excludes shares
which may be issued in connection with CEL-SCI's line of credit or upon the
exercise of other options, warrants, or convertible securities previously issued
by CEL-SCI. See table below.
Other Shares Which May Be Issued:
--------------------------------
The following table lists additional shares of CEL-SCI's common stock which
may be issued pursuant to the equity line of credit agreement and as the result
of the exercise of other outstanding options or warrants issued by CEL-SCI:
Number of Note
Shares Reference
Shares issuable upon conversion of Series E Unknown B
Preferred stock
Shares issuable upon exercise of Series E 815,351 B
warrants
Shares issuable pursuant to equity line
of credit: Unknown C
Shares issuable upon exercise of warrants 200,800 C
Shares issuable upon exercise of options 275,000 D
granted to investor relations consultants
Shares issuable upon exercise of options 5,030,689 E
and warrants granted to CEL-SCI's
officers, directors, employees,
consultants, and third parties
A. In December 2001, CEL-SCI sold convertible notes, plus Series F
warrants, to a group of private investors for $800,000. At the holder's option
the notes are convertible into shares of CEL-SCI's common stock equal in number
to the amount determined by dividing each $1,000 of note principal to be
converted by the Conversion Price. The Conversion Price is 76% of the average of
the 3 lowest daily trading prices of CEL-SCI's common stock on the American
Stock Exchange during the 20 trading days immediately prior to the conversion
date. If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price or the market price of its common stock, the Conversion Price may be
subject to adjustment.
CEL-SCI has filed a registration statement with the Securities and Exchange
Commission, of which this prospectus is a part, in order that the shares of
common stock issued upon the conversion of the notes or the exercise of the
warrants may be resold in the public market. Upon the effective date of this
registration statement the holders of the notes have agreed to purchase an
additional $800,000 of convertible notes from CEL-SCI. The additional $800,000
of convertible notes will have the same terms as the notes sold in December
2001.
The Series F warrants allow the holders to initially purchase up to 960,000
shares of CEL-SCI's common stock at a price of $0.95 per share at any time prior
to December 31, 2008. If CEL-SCI sells any additional shares of common stock, or
any securities convertible into common stock, at a price below the then
applicable warrant exercise price or the market price of CEL-SCI's common stock,
the warrant exercise price and the number of shares of common stock issuable
upon the exercise of the warrant may be subject to adjustment. Every three
months following the date of this prospectus the warrant exercise price will be
adjusted to an amount equal to 110% of the Conversion Price of the notes on that
date, provided that the adjusted price is lower than the warrant exercise price
on that date.
The actual number of shares issuable upon the conversion of the notes
will vary depending upon a number of factors, including the price of CEL-SCI's
common stock at certain dates. Accordingly, the number of shares which may be
issued upon the conversion of the notes cannot be determined at this time.
However, based upon the market price of CEL-SCI's common stock on December 28,
2001, CEL-SCI would be required to issue approximately 1,127,000 shares of
common stock if all of the notes, including notes in the principal amount of
$800,000 to be sold at a later date, were converted on December 31, 2001.
See "Description of Securities - Convertible Notes and Series F Warrants"
for information concerning potential adjustments to the conversion price, the
warrant exercise price, and other terms of the notes and the Series F warrants.
B. In December 1999 and January 2000, CEL-SCI sold 1,148,592 shares of its
common stock, plus Series A and Series B warrants, to Advantage Fund II, Koch
Investment Group Limited and Mooring Capital Fund LLC for $2,800,000. The Series
A warrants allowed the holders to purchase up to 402,007 shares of CEL-SCI's
common stock at a price of $2.925 per share at any time prior to December 8,
2002. CEL-SCI issued 274,309 shares of common stock upon the exercise of the
Series B warrants, which have since expired.
In March 2000, CEL-SCI sold 1,026,666 shares of its common stock, plus
Series C and Series D warrants, to the same private investors referred to above
for $7,700,000. The Series C warrants allowed the holders to purchase up to
413,344 shares of CEL-SCI's common stock at a price of $8.50 per share at any
time prior to March 21, 2003. The Series D warrants allowed the holders, to the
extent they held any shares purchased in the March 2000 offering, to acquire
additional shares of CEL-SCI's common stock at a nominal price in the event the
price of CEL-SCI's common stock fell below $7.50 per share prior to certain
fixed vesting dates. On the first fixed vesting date the price of CEL-SCI's
common stock was $1.47 and on the second, and final vesting date, the price of
CEL-SCI's common stock was $1.08. As a result, and in accordance with the terms
of the Series D warrants, the private investors were entitled to receive
5,734,155 additional shares of CEL-SCI's common stock, of which 3,520,123 shares
had been issued and 959,340 shares had been sold as of August 15, 2001.
On August 16, 2001 CEL-SCI, Advantage Fund II and Koch Investment Group
agreed to restructure the terms of the Series A, C and D warrants in the
following manner:
Advantage Fund II, Koch Investment Group Limited and Mooring Capital Fund
LLC exchanged the 3,588,564 shares of CEL-SCI's common stock which they owned,
plus their unexercised Series D Warrants, for 6,288 shares of CEL-SCI's Series E
Preferred stock. At the holder's option, each Series E Preferred share is
convertible into shares of CEL-SCI's common stock on the basis of one Series E
Preferred share for shares of common stock equal in number to the amount
determined by dividing $1,000 by the lesser of $5 or 93% of the average closing
bid prices (the "Conversion Price") of CEL-SCI's common stock on the American
Stock Exchange for the five days prior to the date of each conversion notice.
Notwithstanding the above, a maximum 923 shares of common stock are
issuable upon the conversion of each Series E Preferred share prior to August
16, 2003.
Each Series E Preferred share can be redeemed by CEL-SCI at a price of
$1,200 per share, plus accrued dividends, at any time prior to July 18, 2003. At
any time on or after July 18, 2003 and prior to the close of business on August
16, 2003 CEL-SCI may redeem any outstanding Series E Preferred shares at a price
of $1,000 per share.
Preferred shares that have not been redeemed or converted by August 16,
2003 will automatically convert to twice the number of shares of common stock
which such shares would otherwise convert into based upon the Conversion Price
on such date. On August 16, 2003 CEL-SCI will also be required to issue the
holders of any Series E Preferred shares which are then outstanding Series E
warrants which will allow the holders of the warrants to purchase shares of
CEL-SCI's common stock equal in number to 33% of the common shares which were
issued upon the conversion of the remaining Series E Preferred shares. These
warrants, if issued, will be exercisable at any time prior to August 17, 2006 at
a price equal to 110% of the volume weighted average price of CEL-SCI's common
stock for the five days prior to August 16, 2003.
Each Series E Preferred share is entitled to a quarterly dividend of $60
per share, payable in cash. Dividends not declared will accumulate. Except as
otherwise provided by law the Series E Preferred shares do not have any voting
rights. The Series E Preferred shares have a liquidation preference over
CEL-SCI's common stock.
As part of this transaction the three investors exchanged their Series A
and Series C warrants for new Series E warrants. The Series E warrants
collectively allow the holders to purchase up to 815,351 additional shares of
CEL-SCI's common stock at a price of $1.19 per share at any time prior to August
16, 2004.
With respect to the shares issuable upon the conversion of the Series E
Preferred shares, or the exercise of the Series E warrants, Advantage II and
Koch have each agreed to limit their respective weekly sales of CEL-SCI's common
stock to 9% of the average of the four prior weeks traded volume as listed by
Bloomberg, while Mooring Financial will limit its weekly sales of CEL-SCI's
common stock to 2.14% of the average of the four prior weeks trading volume as
listed by Bloomberg. If CEL-SCI's trading volume reaches 200,000 shares or more
on any given day, each of Advantage II and Koch will be allowed to sell an
additional 4.5% of that day's trading volume on each of that day and the
following day, while Mooring Financial will be allowed to sell an additional 1%
of that day's trading volume on each of that day and the following day.
As of December 31, 2001 1,274 Series E Preferred shares had been converted
into 1,132,468 shares of CEL-SCI's common stock. The actual number of shares
issuable upon the conversion of the Series E Preferred shares will vary
depending upon a number of factors, including the price of CEL-SCI's common
stock at certain dates. Accordingly, the number of shares of common stock which
will be issued upon the conversion of the Series E Preferred shares cannot be
determined at this time. However, prior to August 16, 2003, CEL-SCI would not be
required to issue more than additional 4,627,922 shares of its common stock upon
the conversion of the Series E Preferred shares.
C. An unknown number of shares of common stock are issuable under the
equity line of credit agreement between CEL-SCI and Paul Revere Capital
Partners. As consideration for extending the equity line of credit, CEL-SCI
granted Paul Revere Capital Partners warrants to purchase 200,800 shares of
common stock at a price of $1.64 per share at any time prior to April 11, 2004.
Under the equity line of credit agreement, Paul Revere Capital Partners has
agreed to provide CEL-SCI with up to $10,000,000 of funding prior to June 22,
2003. During this twenty-four month period, CEL-SCI may request a drawdown under
the equity line of credit by selling shares of its common stock to Paul Revere
Capital Partners and Paul Revere Capital Partners will be obligated to purchase
the shares. CEL-SCI may request a drawdown once every 22 trading days, although
CEL-SCI is under no obligation to request any drawdowns under the equity line of
credit.
During the 22 trading days following a drawdown request, CEL-SCI will
calculate the amount of shares it will sell to Paul Revere Capital Partners and
the purchase price per share. The purchase price per share of common stock will
be based on the daily volume weighted average price of CEL-SCI's common stock
during each of the 22 trading days immediately following the drawdown date, less
a discount of 11%.
CEL-SCI may request a drawdown by faxing a drawdown notice to Paul Revere
Capital Partners, Ltd., stating the amount of the drawdown and the lowest daily
volume weighted average price, if any, at which CEL-SCI is willing to sell the
shares. The lowest volume weighted average price will be set by CEL-SCI's Chief
Executive Officer in his sole and absolute discretion.
If CEL-SCI sets a minimum price which is too high and CEL-SCI's stock
price does not consistently meet that level during the 22 trading days after its
drawdown request, the amount CEL-SCI can draw and the number of shares CEL-SCI
will sell to Paul Revere Capital Partners will be reduced. On the other hand, if
CEL-SCI sets a minimum price which is too low and its stock price falls
significantly but stays above the minimum price, CEL-SCI will have to issue a
greater number of shares to Paul Revere Capital Partners based on the reduced
market price.
The following provides information concerning drawdowns requested by
CEL-SCI as of December 31, 2001.
Average Sale Net Proceeds
Date of Sale Shares Sold Price Per Share to CEL-SCI
------------ ----------- --------------- -----------
11/09/01 277,684 $1.08 $299,000
D. CEL-SCI has granted options for the purchase of 275,000 shares of common
stock to certain investor relations consultants in consideration for services
provided to CEL-SCI. The options are exercisable at prices ranging between $1.63
and $5.00 per share and expire between June 2001 and February 2004.
E. The options are exercisable at prices ranging from $0.98 to $11.00 per
share. CEL-SCI may also grant options to purchase additional shares under its
Incentive Stock Option and Non-Qualified Stock Option Plans.
The shares referred to in Notes B through E are being, or will be, offered
for sale by means of separate registration statements which have been filed with
the Securities and Exchange Commission.
SELLING SHAREHOLDERS
This prospectus relates to shares of CEL-SCI's common stock issued or
issuable upon the conversion of promissory notes sold by CEL-SCI and upon the
exercise of CEL-SCI's Series F warrants.
The actual number of shares issuable upon the conversion of the promissory
notes will vary depending upon a number of factors, including the price of
CEL-SCI's common stock at the time the notes are converted. In addition, the
shares issuable upon the exercise of the Series F warrants may increase as the
result of future sales of CEL-SCI's common stock at prices below either the
warrant exercise price or the market value of CEL-SCI's common stock.
Accordingly, the number of shares which may be issued upon the conversion of the
promissory notes or the exercise of the Series F warrants cannot be determined
at this time. See "Comparative Share Data".
The owners of the promissory notes and the Series F warrants are referred
to in this prospectus as the "selling shareholders". CEL-SCI will not receive
any proceeds from the sale of the shares by the selling shareholders.
The names of and the shares to be sold by the selling shareholders are:
Shares Shares
Which Which
May be May be
Acquired Acquired
Upon Upon Shares to Owner
Conversion Exercise of be Sold ship
Shares of Promissory Series F in this After
Name Owned Notes (1) Warrants (2) Offering Offering
---------------- ------ ------------ ----------- -------- --------
SDS Merchant Fund, L.P. -- 493,000 420,000 913,000 --
Bristol Investment
Fund, Ltd. -- 493,000 420,000 913,000 --
Periscope Partners, L.P. -- 141,000 120,000 161,000 --
(1) Based upon the price of CEL-SCI's common stock as of December 31, 2001. At
the holder's option the notes are convertible into shares of CEL-SCI's
common stock equal in number to the amount determined by dividing each
$1,000 of note principal to be converted by the Conversion Price. The
Conversion Price is 76% of the average of the three lowest daily trading
days immediately prior to the conversion date. If CEL-SCI sells any
additional shares of common stock, or any securities convertible into
common stock, at a price below the then applicable Conversion Price or the
market price of its common stock, the Conversion Price may be subject to
adjustment. See "Description of Securities - Convertible Notes and Series F
Warrants" for information concerning potential adjustments to the
Conversion Price and other terms of the notes.
(2) The Series F warrants allow the holders to initially purchase up to 960,000
shares of CEL-SCI's common stock at a price of $0.95 per share at any time
prior to December 31, 2008. If CEL-SCI sells any additional shares of
common stock, or any securities convertible into common stock, at a price
below the then applicable warrant exercise price or the market price of
CEL-SCI's common stock, the warrant exercise price and the number of shares
of common stock issuable upon the exercise of the warrant may be subject to
adjustment. Every three months following the date of this prospectus, the
warrant exercise price will be adjusted to an amount equal to 110% of the
Conversion Price of the notes on such date, provided that the adjusted
price is lower than the warrant exercise price on that date. See
"Description of Securities - Convertible Notes and Series F Warrants" for
information concerning potential adjustments to the warrant exercise price
and other terms of the Series F warrants.
For purposes of the foregoing table, it is assumed that all shares owned,
or which may be acquired, by the selling shareholders are sold to the public by
means of this prospectus.
Each note holder is prohibited from converting the notes to the extent
that such conversion would result in such holder, together with any affiliate of
the holder, beneficially owning in excess of 9.999% of the outstanding shares of
CEL-SCI's common stock following such conversion. This restriction may be waived
by each holder on not less than 61 days' notice to CEL-SCI. However, the 9.999%
limitation would not prevent each note holder from acquiring and selling in
excess of 9.999% of CEL-SCI's common stock through a series of acquisitions and
sales so long as the holder never beneficially owns more than 9.999% of
CEL-SCI's common stock at any one time.
Each Series F warrant holder is prohibited from exercising the warrants to
the extent that such exercise would result in such holder, together with any
affiliate of the warrant holder, beneficially owning in excess of 9.999% of the
outstanding shares of CEL-SCI's common stock following such exercise. This
restriction may be waived by each holder on not less than 61 days' notice to
CEL-SCI. However, the 9.999% limitation would not prevent each warrant holder
from acquiring and selling in excess of 9.999% of CEL-SCI's common stock through
a series of acquisitions and sales under the warrants so long as the warrant
holder never beneficially owns more than 9.999% of CEL-SCI's common stock at any
one time.
Plan of Distribution
The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share; o a combination of
any such methods of sale; and o any other method permitted pursuant to
applicable law.
The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling shareholders may also engage in short sales against the box,
puts and calls and other transactions in securities of CEL-SCI or derivatives of
CEL-SCI securities and may sell or deliver shares in connection with these
trades. The selling shareholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a selling shareholder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling shareholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
CEL-SCI is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
selling shareholders. CEL-SCI has agreed to indemnify the selling shareholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
CEL-SCI has advised the selling shareholders that in the event of a
"distribution" of the shares owned by the selling shareholder, such selling
shareholders, any "affiliated purchasers", and any broker/dealer or other person
who participates in such distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. A "distribution" is defined in Rule 102 as an
offering of securities "that is distinguished from ordinary trading transactions
by the magnitude of the offering and the presence of special selling efforts and
selling methods". CEL-SCI has also advised the selling shareholders that Rule
102 under the 1934 Act prohibits any "stabilizing bid" or "stabilizing purchase"
for the purpose of pegging, fixing or stabilizing the price of the common stock
in connection with this offering. Rule 101 makes it unlawful for any person who
is participating in a distribution to bid for or purchase stock of the same
class as is the subject of the distribution. CEL-SCI has agreed to indemnify the
selling shareholders and any securities broker/dealers who may be deemed to be
underwriters against certain liabilities, including liabilities under the
Securities Act as underwriters or otherwise.
DESCRIPTION OF SECURITIES
Common Stock
CEL-SCI is authorized to issue 100,000,000 shares of common stock, (the
"common stock"). Holders of common stock are each entitled to cast one vote for
each share held of record on all matters presented to shareholders. Cumulative
voting is not allowed; hence, the holders of a majority of the outstanding
common stock can elect all directors.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of liquidation, to share pro rata in any distribution of CEL-SCI's
assets after payment of liabilities. The board is not obligated to declare a
dividend. It is not anticipated that dividends will be paid in the foreseeable
future.
Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by CEL-SCI. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock . All of the
outstanding shares of Common stock are fully paid and non-assessable.
Preferred Stock
CEL-SCI is authorized to issue up to 200,000 shares of preferred stock.
CEL-SCI's Articles of Incorporation provide that the Board of Directors has the
authority to divide the preferred stock into series and, within the limitations
provided by Colorado statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As the Board of Directors has authority to establish the terms of,
and to issue, the preferred stock without shareholder approval, the preferred
stock could be issued to defend against any attempted takeover of CEL-SCI.
See "Comparative Share Data" for information concerning CEL-SCI's Series E
preferred stock.
Convertible Notes and Series F Warrants
In December 2001, CEL-SCI sold convertible notes, plus Series F warrants, to
a group of private investors for $800,000. The notes bear interest at 7% per
year, are due and payable on December 31, 2003 and are secured by substantially
all of the Company's assets. Interest is payable quarterly except that the first
interest payment is not due until July 1, 2002. If the Company fails to make any
interest payment when due, the notes will become immediately due and payable.
At the holder's option the notes are convertible into shares of CEL-SCI's
common stock equal in number to the amount determined by dividing each $1,000 of
note principal to be converted by the Conversion Price. The Conversion Price is
76% of the average of the three lowest daily trading prices of CEL-SCI's common
stock on the American Stock Exchange during the 20 trading days immediately
prior to the conversion date. The Conversion Price may not be less than $0.57.
However, if CEL-SCI's common stock trades for less than $0.57 per share for a
period of 20 consecutive trading days, the $0.57 minimum price will no longer be
applicable.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price, the Conversion Price will be lowered to the price at which the shares
were sold or the lowest price at which the securities are convertible, as the
case may be. If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price below the market price of
CEL-SCI's common stock, the Conversion Price will lowered by a percentage equal
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be, divided by the then prevailing
market price of CEL-SCI's common stock. However the Conversion Price will not be
adjusted as the result of shares issued in connection with a Permitted
Financing. A Permitted Financing involves shares of common stock issued or sold:
- in connection with a merger or acquisition;
- upon the exercise of options or the issuance of common stock to the
Company's employees, officers, directors, consultants and vendors in
accordance with the Company's equity incentive policies;
- pursuant to the conversion or exercise of securities which were outstanding
prior to December 31, 2001;
- pursuant to the Company's equity line of credit;
- to key officers of the Company in lieu of their respective salaries.
CEL-SCI has agreed to file a registration statement with the Securities and
Exchange Commission in order that the shares of common stock issued upon the
conversion of the notes or the exercise of the warrants may be resold in the
public market. Upon the effective date of this registration statement the
holders of the notes have agreed to purchase an additional $800,000 of
convertible notes from CEL-SCI. The additional $800,000 of convertible notes
will have the same terms as the notes sold in December 2001.
CEL-SCI's agreement with the note holders places the following restrictions
on CEL-SCI's operations. Any of the following restrictions may be waived with
the written consent of the holders of a majority of the principal amount of the
notes outstanding at the time the consent is required.
o So long as the notes are outstanding, and except as required by the terms
of CEL-SCI's Series E Preferred stock, CEL-SCI may not:
- declare or pay any dividends (other than a stock dividend or
stock split) or make any distributions to any holders of its
common stock, or
- purchase or otherwise acquire for value, directly or indirectly,
any common or preferred stock.
o Until the earlier of September 30, 2002 or the date all of the notes are no
longer outstanding CEL-SCI may not sell any common stock or any securities
convertible into common stock. However, this restriction will not apply to
shares issued in a Permitted Financing.
o If CEL-SCI maintains a balance of less than $1,000,000 in its bank account
in any month, it may draw down the maximum amount allowable for such month
under its equity line of credit. If CEL-SCI maintains a balance of greater
than $1,000,000 in its bank account in any month, it may only draw down a
maximum of $235,000 per month under the equity line of credit.
So long as the notes remain outstanding, the note holders will have a
first right of refusal to participate in any subsequent financings involving
CEL-SCI. If CEL-SCI enters into any subsequent financing on terms more favorable
than the terms governing the notes and warrants, then the note holders may
exchange notes and warrants for the securities sold in the subsequent financing.
Upon the occurrence of any of the following events CEL-SCI is required to
redeem the notes at a price equal to 130% of then outstanding principal balance
of the notes:
- the failure of the Registration Statement which CEL-SCI has
agreed to file to be declared effective by the Securities and
Exchange Commission by March 31, 2002.
- the suspension from listing or the failure of CEL-SCI's common
stock to be listed on the American Stock Exchange for a period
of five consecutive trading days; or
- the effectiveness of the Registration Statement lapses for any
reason or the Registration Statement is unavailable to the note
holders and the lapse or unavailability continues for a period
of ten consecutive trading days, provided the cause of the lapse
or unavailability is not due to factors primarily within the
control of the note holders.
- any representation or warranty made by Cel-Sci to the note
holders proves to be materially inaccurate or Cel-Sci fails to
perform any material covenant or condition in its agreement with
the note holders.
- the completion of a merger or other business combination
involving CEL-SCI and as a result of which CEL-SCI is not the
surviving entity.
- a purchase, tender or exchange offer accepted by the holders of
more than 30% of CEL-SCI's outstanding shares of common stock.
- CEL-SCI's shareholders fail to approve the issuance of the
shares of CEL-SCI's common stock upon the conversion of the
notes or the exercise of the warrants
- CEL-SCI files for protection from its creditors under the
federal bankruptcy code.
- CEL-SCI exceeds its draw down limits under it equity line of
credit.
The Series F warrants allow the holders to initially purchase up to
960,000 shares of CEL-SCI's common stock at a price of $0.95 per share at any
time prior to December 31, 2008.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable warrant
exercise price, the warrant exercise price will be lowered to the price at which
the shares were sold or the lowest price at which the securities are
convertible, as the case may be. If the warrant exercise price is adjusted, the
number of shares of common stock issuable upon the exercise of the warrant will
be increased by the product of the number of shares of common stock issuable
upon the exercise of the warrant immediately prior to the sale multiplied by the
percentage by which the warrant exercise price is reduced.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the market price of CEL-SCI's
common stock, the warrant exercise price will be lowered by a percentage equal
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be, divided by the then prevailing
market price of CEL-SCI's common stock. If the warrant exercise price is
adjusted, the number of shares of common stock issuable upon the exercise of the
warrant will be increased by the product of the number of shares of common stock
issuable upon the exercise of the warrant immediately prior to the sale
multiplied by the percentage determined by dividing the price at which the
shares were sold by the market price of CEL-SCI's common stock on the date of
sale.
However, neither the warrant exercise price nor the shares issuable upon
the exercise of the warrant will be adjusted as the result of shares issued in
connection with a Permitted Financing.
On the date that the registration statement which CEL-SCI has agreed to
file is declared effective by the Securities and Exchange Commission, and every
three months following the effective date, the warrant exercise price will be
adjusted to an amount equal to 110% of the Conversion Price on such date,
provided that the adjusted price is lower than the warrant exercise price on
that date.
Transfer Agent
Computershare Trust Co., Inc., of Denver, Colorado, is the transfer agent
for CEL-SCI's common stock.
EXPERTS
The consolidated financial statements of CEL-SCI Corporation as of
September 30, 2001 and 2000, and for each of the three years in the period ended
September 30, 2001 incorporated by reference in this prospectus from CEL-SCI's
Annual Report on Form 10-K for the year ended September 30, 2001, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
INDEMNIFICATION
CEL-SCI's bylaws authorize indemnification of a director, officer, employee
or agent of CEL-SCI against expenses incurred by him in connection with any
action, suit, or proceeding to which he is named a party by reason of his having
acted or served in such capacity, except for liabilities arising from his own
misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of CEL-SCI who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling CEL-SCI pursuant to the foregoing provisions, CEL-SCI has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ADDITIONAL INFORMATION
CEL-SCI is subject to the requirements of the Securities Exchange Act of
l934 and is required to file reports, proxy statements and other information
with the Securities and Exchange Commission. Copies of any such reports, proxy
statements and other information filed by CEL-SCI can be read and copied at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.,
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding CEL-SCI. The address of that site is
http://www.sec.gov.
CEL-SCI will provide, without charge, to each person to whom a copy of this
prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
by reference below (other than exhibits to these documents, unless the exhibits
are specifically incorporated by reference into this prospectus). Requests
should be directed to:
CEL-SCI Corporation
8229 Boone Blvd., #802
Vienna, Virginia 22182
(703) 506-9460
The following documents filed with the Commission by CEL-SCI (Commission
File No. 0-11503) are incorporated by reference into this prospectus:
CEL-SCI's Annual Report on Form 10-K for the fiscal year ended September
30, 2001.
All documents filed with the Securities and Exchange Commission by CEL-SCI
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this prospectus and prior to the termination of this offering shall
be deemed to be incorporated by reference into this prospectus and to be a part
of this prospectus from the date of the filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
shall be deemed to be modified or superseded for the purposes of this prospectus
to the extent that a statement contained in this prospectus or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
CEL-SCI has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of l933, as amended, with
respect to the securities offered by this prospectus. This prospectus does not
contain all of the information set forth in the Registration Statement. For
further information with respect to CEL-SCI and such securities, reference is
made to the Registration Statement and to the exhibits filed with the
Registration Statement. Statements contained in this prospectus as to the
contents of any contract or other documents are summaries which are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. The
Registration Statement and related exhibits may also be examined at the
Commission's internet site.
No dealer salesman or other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus. Any information or representation not contained in this prospectus
must not be relied upon as having been authorized by CEL-SCI. This prospectus
does not constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any state or other jurisdiction to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of CEL-SCI
since the date of this prospectus.
TABLE OF CONTENTS
Page
Prospectus Summary................................................... 2
Risk Factors......................................................... 4
Comparative Share Data............................................... 9
Selling Shareholders................................................. 13
Description of Securities............................................ 16
Experts.............................................................. 17
Indemnification...................................................... 17
Additional Information............................................... 18
Common stock
CEL-SCI CORPORATION
PROSPECTUS
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
SEC Filing Fee $1,614
Blue Sky Fees and Expenses 2,000
Printing and Engraving Expenses 2,000
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 6,000
Miscellaneous Expenses 6,386
----------
TOTAL $ 38,000
========
All expenses other than the S.E.C. filing fees are estimated.
Item 15. Indemnification of Officers and Directors.
-----------------------------------------
It is provided by Section 7-109-102 of the Colorado Revised Statutes and
CEL-SCI's Bylaws that CEL-SCI may indemnify any and all of its officers,
directors, employees or agents or former officers, directors, employees or
agents, against expenses actually and necessarily incurred by them, in
connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in the best interest of CEL-SCI.
Item 16. Exhibits
3(a) Articles of Incorporation Incorporated by reference to Exhibit
3(a) of CEL-SCI's combined Registration Statement on Form S-1 and
Post-Effective Amendment ("Registration Statement"), Registration
Nos. 2-85547-D and 33-7531.
(b) Amended Articles Incorporated by reference to Exhibit 3(a) of
CEL-SCI's Registration Statement on Form S-1, Registration Nos.
2-85547-D and 33-7531.
(c)Amended Articles Filed as Exhibit 3(c) to CEL-SCI's Registration
(Name change only) Statement on Form S-1 Registration Statement
(No. 33-34878).
(d) Bylaws Incorporated by reference to Exhibit 3(b) of CEL-SCI's
Registration Statement on Form S-1, Registration Nos.
2-85547-D and 33-7531.
II-1
(a) Specimen copy of Incorporated by reference to Exhibit 4(a) Stock
Certificate of CEL-SCI's Registration Statement on
Form S-1 Registration Nos. 2-85547-D and 33-7531.
(b) Designation of Series E Incorporated by reference to Exhibit 4 to report
Preferred Stock on Form 8-K dated August 21, 2001.
5. Opinion of Counsel --------------------------------------------------
10(e) Employment Agreement with Incorporated by reference to Exhibit 10(e) of
Geert Kersten the Company's report on Form 10-K for the
year ended September 30, 2000.
10(q) Common Stock Purchase Incorporated by reference to Exhibit 10(q) to
Agreement with Paul Revere Cel-Sci Registration Statement on Form S-1
Capital Partners Ltd. (Commission File Number 333-59798).
10(r) Stock Purchase Warrant Incorporated by reference to Exhibit 10(r) to
issued to Paul Revere Cel-Sci Registration Statement on Form S-1
Capital Partners Ltd. (Commission File Number 333-59798).
10(s) Securities Exchange Incorporated by reference to Exhibit 10.1 to
Agreement (together with report on Form 8-K dated August 21, 2001.
Schedule required by
Instruction 2 to Item 601
Regulation S-K)
10(t) Form of Series E Warrant Incorporated by reference to Exhibit 10.2 to
report on Form 8-K dated August 21, 2001.
10(u) Form of Secondary Warrant Incorporated by reference to Exhibit 10.3 to
report on Form 8-K dated August 21, 2001.
10(v) Note and Warrant Purchase ______________________________
Agreement(together with
Schedule required by
Instruction 2 to Item 601
Regulation S-K)
23(a) Consent of Hart & Trinen _______________________________
(b) Consent of Deloitte & Touche, LLP ___________________________
II-2
Item 17. Undertakings.
------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section l0(a)(3) of the
Securities Act of l933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement,
including (but not limited to) any addition or deletion of a managing
underwriter.
(2) That, for the purpose of determining any liability under the Securities Act
of l933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of l933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this Registration Statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this Registration Statement, which amendments may make such
changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vienna, Commonwealth of Virginia, on the 31st day of
December, 2001.
CEL-SCI CORPORATION
By: /s/ Maximilian de Clara
-----------------------------------
Maximilian de Clara, President
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Maximilian de Clara Director and Principal December 31, 2001
------------------------ Executive Officer
Maximilian de Clara
/s/ Geert R. Kersten Director, Principal December 31, 2001
------------------------ Financial Officer
Geert R. Kersten and Chief Executive Officer
/s/ Alexander G. Esterhazy Director December 31, 2001
---------------------------
Alexander G. Esterhazy
/s/ C. Richard Kinsolving Director December 31, 2001
--------------------------
C. Richard Kinsolving, Ph.D.