As filed with the Securities and Exchange Commission on October __, 2003.
Registration No 333-106879
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3/A
Amendment No. 2
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. [ ]
1
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 Share (1)
---------- ---------- --------- --------- ------------
Common stock (2) 2,247,831 $0.81 $1,820,743 $168
--------------------------------------------------------------------------
(1) Offering price computed in accordance with Rule 457(c). (2) Shares of common
stock to be sold by the selling shareholder.
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 I
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.
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PROSPECTUS
CEL-SCI CORPORATION
2,247,831 shares of Common Stock
By means of this prospectus two shareholders of CEL-SCI Corporation are
offering to sell up to 1,147,831 shares of CEL-SCI's common stock plus 1,100,000
additional shares of common stock issuable upon the exercise of CEL-SCI's Series
I 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 __ 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 October
__, 2003 the closing price of CEL-SCI's common stock on the American Stock
Exchange was $___.
The date of this prospectus is October __, 2003
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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(R), its first, and main product, using CEL-SCI's
proprietary cell culture technologies. 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.
LEAPS, another technology of CEL-SCI, is being tested by CEL-SCI to
determine if it is effective in developing potential treatments and/or vaccines
against various diseases. Present target diseases are herpes simplex and
malaria.
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.
All of CEL-SCI's products are in the development stage. As of October 31,
2003 CEL-SCI was not receiving any revenues from the sale of MULTIKINE or any
other products which CEL-SCI was developing.
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 $(84,660,000) at June 30, 2003 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.
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THE OFFERING
Securities Offered:
By means of this prospectus two shareholders of CEL-SCI are offering to
sell 1,147,831 shares of common stock plus 1,100,000 additional shares issuable
upon the exercise of CEL-SCI's Series I warrants. CEL-SCI refers to the owner of
these shares as the selling shareholders in this prospectus.
Common Stock Outstanding: As of September 15, 2003 CEL-SCI had 60,753,294
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. If all outstanding
warrants and convertible securities, including the
warrants held by the selling shareholders, were
exercised and converted, CEL-SCI would have
77,109,569 outstanding shares of common
stock. 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:
Nine Months Ended Years Ended September 30,
June 30, 2003 2002 2001
------------- ---- ----
Grant Revenue and Other: $ 197,520 $ 384,939 $ 293,871
---------- ---------- ------------
Expenses:
Research and Development 1,408,225 4,699,909 7,762,213
Depreciation and Amortization 143,351 226,514 209,121
General and Administrative 1,726,265 1,754,332 3,432,437
Interest Income (40,707) (85,322) (376,221)
Interest Expense 1,437,996 2,131,750 --
--------- ------------- ------------
Net Loss $(4,477,610) $(8,342,244) $(10,733,679)
Accrued Dividends on Preferred Stock (5,844) (202,987) (53,153)
Accretion of Beneficial Conversion
Feature on Preferred stock (74,577) (1,444,757) (317,419)
------------ --------------- ------------
Net Loss Attributable to Common
Stockholders $ (4,558,031) $ (9,989,988) $(11,104,251)
============ ============== =============
Loss per common share (basic
and diluted) $ (0.10) $ (0.35) $ (0.51)
============ ============= =============
Weighted average common shares
outstanding 47,914,264 28,746,341 21,824,273
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Balance Sheet Data:
June 30, 2003 September 30, 2002 September 30, 2001
Working Capital $ 614,490 $ 690,804 $2,807,229
Total Assets 3,008,673 3,771,258 4,508,920
Convertible Debt 105,702 * 639,288 --
Note Payable - Covance 199,928 * -- --
Note Payable - Cambrex 637,566 * 1,135,017 * --
Total Liabilities 1,783,610 2,709,087 507,727
Stockholders' Equity 1,225,063 1,062,171 4,001,193
* Included in Total Liabilities.
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 the risks described
below, which could adversely affect the price 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.
RISKS RELATED TO CEL-SCI
Since CEL-SCI Has Earned Only Limited Revenues and Has a History of Losses,
CEL-SCI Will Require Additional Capital to Remain in Operation.
CEL-SCI has had only limited revenues since it was formed in 1983. Since
the date of its formation and through June 30, 2003 CEL-SCI incurred net losses
of approximately $(84,660,000). During the years ended September 30, 2000, 2001
and 2002 CEL-SCI suffered losses of $(8,478,397), $(10,733,679) and $(8,342,244)
respectively. CEL-SCI has relied principally upon the proceeds of public and
private sales of securities and convertible notes to finance its activities to
date. All of CEL-SCI's potential products are in the early stages of
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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 Cost Estimates for Clinical Trials and Research Are Inaccurate, CEL-SCI Will
Require Additional Capital.
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.
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.
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
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of Multikine under an alternative manufacturing arrangement, in which case
CEL-SCI may have to delay its research and development activities.
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.
CEL-SCI may not be able to achieve or maintain a competitive position and other
technological developments may result in CEL-SCI's proprietary technologies
becoming 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, in
which case CEL-SCI may not have any advantage over competitors in selling any
products which it may develop.
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.
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Notwithstanding the above, CEL-SCI believes that trade secrets and later issued
patents will protect the technology associated with MULTIKINE.
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.
CEL-SCI is dependent for its success on the continued availability of its
executive officers and the loss of management and scientific personnel could
adversely affect CEL-SCI.
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.
RISKS RELATED TO THIS OFFERING
Since the Market Price for CEL-SCI's Common Stock is Volatile, Investors in This
Offering May Not Be Able to Sell Any of CEL-SCI's Shares at a Profit.
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.
Shares issuable upon the exercise of options and warrants, or the
conversion of promissory notes may substantially increase the number of shares
available for sale in the public market and 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.
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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, F and G Warrants
In August 2001 three private investors exchanged their warrants for
CEL-SCI's Series E warrants. The Series E warrants allow the holders to purchase
up to 815,351 shares of CEL-SCI's common stock at a price of $1.19 per share at
any time prior to August 16, 2004 and 23,758 shares of CEL-SCI's common stock at
a price of $0.77 per share at any time prior to August 17, 2006.
In December 2001 and January 2002, CEL-SCI sold Series F convertible
notes, plus Series F warrants, to a group of private investors for $1,600,000.
As of December 31, 2002 all of the Series F notes had been converted into
6,592,461 shares of CEL-SCI's common stock. The Series F warrants collectively
allow the holders to purchase up to 420,000 shares of CEL-SCI's common stock at
a price of $0.153 per share at any time prior to December 31, 2008.
In July and September 2002 CEL-SCI sold Series G convertible notes, plus
Series G warrants, to a group of private investors for $1,300,000. As of June
20, 2003 all of the Series G notes had been converted into 8,390,746 shares of
CEL-SCI's common stock. The Series G warrants collectively allow the holders to
purchase up to 450,000 shares of CEL-SCI's common stock at a price of $0.145 per
share at any time prior to July 12, 2009.
The exercise price of the Series F and G warrants, and the number of
shares issuable upon the exercise of the Series F and G warrants, are subject to
adjustment under those conditions explained in the section of the prospectus
entitled "Description of Securities".
The sale of common stock issued or issuable upon the exercise of the
Series E, F or G warrants, or the perception that such sales could occur, could
adversely affect the market price of CEL-SCI's common stock.
Series H Convertible Notes and Series H Warrants
In January and July 2003 CEL-SCI sold Series H convertible notes, plus
Series H warrants, to a group of private investors for $1,350,000. 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. If the closing price of
CEL-SCI's common stock is less than $0.50 on any conversion date, the Conversion
Price will be 76% of the average of the three lowest daily trading prices of
CEL-SCI's common stock on the American Stock Exchange during the 15 trading days
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immediately prior to the conversion date. If the closing price of CEL-SCI's
common stock is $0.50 or greater on any conversion date, the Conversion Price
will be 70% of the average of the three lowest daily trading prices of CEL-SCI's
common stock on the American Stock Exchange during the 15 trading days
immediately prior to the conversion date. As of September 15, 2003 Series H
notes in the principal amount of $1,050,000 had been converted into 2,637,415
shares of CEL-SCI's common stock.
The Series H warrants allow the holders to purchase up to 550,000 shares
of CEL-SCI's common stock at a price of $0.25 per share at any time prior to
January 7, 2010.
The Conversion Price, the warrant exercise price, and the number of
shares issuable upon the exercise of the Series H warrants are subject to
adjustment under those conditions explained in the section of the prospectus
entitled "Description of Securities".
The sale of common stock upon the conversion of the Series H notes or the
exercise of the Series H warrants, or the perception that such sales could
occur, could adversely affect the market price of CEL-SCI's common stock.
Cambrex Bio Sciences Note
In November 2001 CEL-SCI gave a promissory note in the principal amount of
$1,172,517 to Cambrex Bio Sciences, Inc. The note represented the cost of
CEL-SCI's use of the Cambrex manufacturing facility for the three months ended
January 10, 2002 to produce MULTIKINE for CEL-SCI's clinical trials. The amount
due Cambrex bears interest at the prime interest rate, plus 3%, which is
adjusted monthly. The note is due in full, including accrued interest, on
January 2, 2004. As of September 15, 2003 CEL-SCI had made $485,525 in principal
payments on the note. Cambrex, at its option, may convert all or part of the
amount due Cambrex into shares of CEL-SCI's common stock. The number of shares
to be issued to Cambrex upon any conversion of the note will be determined by
dividing that portion of the note to be converted by the Conversion Price. The
"Conversion Price" is an amount equal to 90% of the average of the closing
prices of CEL-SCI's common stock for the three trading days immediately prior to
the conversion date. The Conversion Price may not be less than $0.22. As of
September 15, 2003 Cambrex had not converted any part of the note into shares 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 Rubicon
Group Ltd. As CEL-SCI sells shares of its common stock to Rubicon Group under
the equity line of credit, and Rubicon Group 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
Rubicon Group, 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
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then outstanding shares will be diluted and the more CEL-SCI's stock price may
decrease. Any decline in the price of CEL-SCI's common stock may encourage short
sales, 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.
Series I Warrants
In May 2003 CEL-SCI sold shares of its common stock plus Series I
warrants to a private investor. The Series I warrants allow the holder to
purchase 1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per
share at any time prior to May 30, 2006. The shares issuable upon the exercise
of the Series I warrants, as well as 1,100,000 shares of CEL-SCI's common stock,
which are owned by the holder of the Series I warrants, are being offered for
sale by means of this prospectus. See "Selling Shareholders".
COMPARATIVE SHARE DATA
Number of Note
Shares Reference
Shares outstanding as of September 15, 2003 60,753,594
Shares to be sold in this Offering: 2,247,831 A
The number of shares outstanding as of September 15, 2003 excludes shares
which may be issued upon the exercise of options or warrants or the conversion
of notes described 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 556,000 B
Series H notes
Shares issuable upon exercise of 550,000 B
Series H warrants
Shares issuable upon exercise of Series E, F and G 1,709,109 C
warrants
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Shares issuable upon exercise of equity line warrants 200,800 D
Shares issuable upon conversion of Cambrex note 946,000 E
Shares issuable pursuant to equity line of credit Unknown F
Shares issuable upon exercise of equity line warrants 395,726 F
Shares issuable upon exercise of options and 10,698,640 G
warrants granted to CEL-SCI's officers,
directors, employees, consultants, and third
parties
Shares issuable upon exercise of options 200,000 H
granted to investor relations consultants
A. Selling shareholders:
Shares owned by Eastern Biotech 1,100,000
Shares issuable upon exercise of warrants held
by Eastern Biotech 1,100,000
Shares owned by Mooring Capital Fund LLC 47,831
See the "Selling Shareholder" section of this prospectus for additional
information concerning the selling shareholders.
B. In January and July 2003, CEL-SCI sold Series H convertible notes, plus
Series H warrants, to a group of private investors for $1,350,000. 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. If the closing price of
CEL-SCI's common stock is less than $0.50 on any conversion date, the Conversion
Price will be 76% of the average of the three lowest daily trading prices of
CEL-SCI's common stock on the American Stock Exchange during the 15 trading days
immediately prior to the conversion date. If the closing price of CEL-SCI's
common stock is $0.50 or greater on any conversion date, the Conversion Price
will be 70% of the average of the three lowest daily trading prices of CEL-SCI's
common stock on the American Stock Exchange during the 15 trading days
immediately prior to the conversion date. The Conversion Price may not be less
than $0.16. However, if CEL-SCI's common stock trades for less than $0.21 per
share for a period of 20 consecutive trading days, the $0.16 minimum price will
no longer be applicable.
The Series H warrants allow the holders to purchase up to 550,000 shares
of CEL-SCI's common stock at a price of $0.25 per share at any time prior to
January 7, 2010.
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The Conversion Price, the warrant exercise price, and the number of shares
issuable upon the exercise of the warrants are subject to adjustment under those
conditions explained in the section of the prospectus entitled "Description of
Securities".
As of September 15, 2003 Series H notes in the principal amount of
$1,050,000 had been converted into 2,637,415 shares of CEL-SCI's common stock.
The actual number of additional shares issuable upon the conversion of the
Series H 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 Series H notes cannot be
determined at this time. However, based upon the market price of CEL-SCI's
common stock on September 15, 2003, CEL-SCI would be required to issue
approximately 556,000 shares of common stock if all outstanding notes were
converted on September 15, 2003.
C. In August 2001 three private investors exchanged their warrants for CEL-SCI's
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 and 23,758 shares of
CEL-SCI's common stock at a price of $0.77 per share at any time prior to August
17, 2006.
In December 2001 and January 2002, CEL-SCI sold Series F convertible
notes, plus Series F warrants, to a group of private investors for $1,600,000.
As of December 31, 2002 all of the Series F notes had been converted into
6,592,461 shares of CEL-SCI's common stock. The Series F warrants presently
allow the holders to purchase up to 420,000 shares of CEL-SCI's common stock at
a price of $0.153 per share at any time prior to December 31, 2008.
In July and September 2002, CEL-SCI sold Series G convertible notes, plus
Series G warrants, to a group of private investors for $1,300,000. As of June
20, 2003 all of the Series G notes had been converted into 8,390,746 shares of
CEL-SCI's common stock. The Series G warrants allow the holders to purchase up
to 450,000 shares of CEL-SCI's common stock at a price of $0.145 per share at
any time prior to July 12, 2009.
The warrant exercise price, and the number of shares issuable upon the
exercise of the Series F and Series G warrants are subject to adjustment under
those conditions explained in the section of the prospectus entitled
"Description of Securities".
D. In 2001, CEL-SCI entered into an equity line of credit agreement with Paul
Revere Capital Partners. During the term the equity line of credit, which
expired in June 2003, CEL-SCI received net proceeds of $2,074,692 from the sale
of 5,430,960 shares of common stock pursuant to the terms of the equity line. 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.
E. In November 2001 CEL-SCI gave a promissory note in the principal amount of
$1,172,517 to Cambrex Bio Sciences, Inc. The note represented the cost of
CEL-SCI's use of the Cambrex manufacturing facility for the three months ended
January 10, 2002 to produce MULTIKINE for CEL-SCI's clinical trials. The amount
14
due Cambrex bears interest at the prime interest rate, plus 3%, which is
adjusted monthly. The note is due in full, including accrued interest, on
January 2, 2004. As of September 15, 2003 CEL-SCI had made $485,525 in principal
payments on the note. Cambrex, at its option, may convert all or part of the
amount due Cambrex into shares of CEL-SCI's common stock. The number of shares
to be issued to Cambrex upon any conversion of the note will be determined by
dividing that portion of the note to be converted by the Conversion Price. The
"Conversion Price" is an amount equal to 90% of the average of the closing
prices of CEL-SCI's common stock for the three trading days immediately prior to
the conversion date. The Conversion Price may not be less than $0.22. As of
September 15, 2003 Cambrex had not converted any part of the note into shares of
CEL-SCI's common stock. The actual number of additional shares issuable upon the
conversion of the Cambrex note 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 Cambrex note
cannot be determined at this time. However, based upon the market price of
CEL-SCI's common stock on September 15, 2003, CEL-SCI would be required to issue
approximately 946,000 shares of common stock if all outstanding notes were
converted on September 15, 2003.
F. An unknown number of shares of common stock are issuable under the equity
line of credit agreement between CEL-SCI and Rubicon Group, Ltd. As
consideration for extending the equity line of credit, CEL-SCI granted Rubicon
Group warrants to purchase 395,726 shares of common stock at a price of $0.83
per share at any time prior to September 16, 2008.
Under the equity line of credit agreement, Rubicon Group has agreed to
provide CEL-SCI with up to $10,000,000 of funding over a two year period. During
this period, CEL-SCI may request a drawdown under the equity line of credit by
selling shares of its common stock to Rubicon Group and Rubicon Group 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 Rubicon Group 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 Rubicon
Group, 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 Rubicon Group 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 Rubicon Group based on the reduced market price.
15
As of September 19, 2003 CEL-SCI had not requested any drawdowns under the
equity line of credit.
G. The options are exercisable at prices ranging from $0.16 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.
H. CEL-SCI has granted options for the purchase of 200,000 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 $2.50 per share and expire between February 2004 and June 2006.
The shares referred to in Notes B, C, D, F and G 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
By means of this prospectus two shareholders of CEL-SCI are offering to
sell 1,147,831 shares of common stock plus 1,100,000 additional shares issuable
upon the exercise of CEL-SCI's Series I warrants. CEL-SCI refers to the owners
of these shares and the Series I warrants as the selling shareholders in this
prospectus. CEL-SCI will not receive any proceeds from the sale of the shares by
the selling shareholders.
The name of, and the shares to be sold by, the selling shareholders are:
Shares Which Shares to Owner-
May be Acquired be Sold ship
Shares Upon Exercise of in this After
Name Owned Series I Warrants (1) Offering Offering
---------------- ------ --------------------- --------- --------
Eastern Biotech 1,100,000 1,100,000 2,200,000 --
Mooring Capital Fund LLC 47,831 -- 47,831 --
(1) The Series I warrants allow the holders to initially purchase up to
1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per share at
any time prior to May 30, 2008.
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.
Eastern Biotech
In May 2003, CEL-SCI entered into an agreement with Eastern Biotech which
provided Eastern Biotech with the following (i) the exclusive right to
distribute MULTIKINE and CEL-1000 in Greece, Serbia and Croatia, (ii) a royalty
equal to 2% of CEL-SCI's net sales of MULTIKINE and CEL-1000 prior to May 30,
16
2033, (iii) 1,100,000 shares of CEL-SCI's common stock and, (iv) Series I
warrants which allow Eastern Biotech to purchase an additional 1,100,000 shares
of CEL-SCI's common stock at a price of $0.47 per share at any time prior to May
30, 2008. In consideration for the above Eastern Biotech paid CEL-SCI $500,000.
Eastern Biotech will lose its exclusive right to distribute CEL-SCI's products
unless Eastern Biotech has enrolled at least 20 patients in a controlled,
mutually designed head and neck cancer clinical trial by June 1, 2004.
Eastern Biotech is controlled by Marta de Saavedra and Leslie Barker de
Giron. Eastern Biotech is engaged in the development and distribution of
biomedical drugs. Eastern Biotech is not in the business of underwriting
securities, is not a broker-dealer and is not affiliated with a broker-dealer.
Other than as disclosed in this prospectus, during the past three years Eastern
Biotech has not had any relationship with the Company or its officers or
directors.
Mooring Capital
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, Koch Investment Group, and
Mooring Capital Fund 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
(454,867 shares in the case of Mooring Capital Fund), 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 was 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
17
$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, the maximum number of common shares issuable upon the conversion of each
Series E Preferred share prior to August 16, 2003 was 923 shares. Each Series E
Preferred share was entitled to a quarterly dividend of $15 per share, payable
in cash.
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.
Any Series E Preferred shares that were not converted by August 16, 2003
were automatically converted 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 was also required to issue to the holders of
any Series E Preferred shares which were 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.
As of August 15, 2003, all Series E preferred shares owned by Advantage
Fund II and Koch Investment Group had been converted into 5,184,174 shares of
CEL-SCI's common stock. As of that same date 630 of the Series E Preferred
shares originally issued to Mooring Capital Fund had been converted into 565,581
shares of CEL-SCI's common stock. On August 16, 2003 the remaining 39 Series E
Preferred shares held by Mooring Capital Fund were converted into 71,994 shares
of CEL-SCI's common stock. In addition, and as a result of the 39 Series E
shares still owned by Mooring Capital Fund on August 16, 2003, Mooring Capital
Fund received additional Series E warrants which entitle Mooring Capital to
purchase 23,758 shares of CEL-SCI's common stock at a price of $0.77 per share
at any time prior to August 17, 2006.
In August 2003 CEL-SCI also issued 47,831 shares of its common stock to
Mooring Capital Fund in payment of approximately $26,000 in accrued and unpaid
dividends on Mooring Capital's Series E Preferred shares. These 47,831 shares
are being offered for public sale by means of this prospectus.
Mooring Capital Fund is controlled by John M. Jacquemin. Mr. Jacquemin was
a director of CEL-SCI between 1999 and March 2001. Mooring Capital Fund is a
private, closed-end fund that invests primarily in sub-performing and
non-performing commercial loan portfolios. Mooring Capital Fund also invests
from time-to-time in real estate ventures and equity securities. Mooring Capital
Fund is not in the business of underwriting securities, is not a broker-dealer
and is not affiliated with a broker-dealer. Other than as disclosed in this
prospectus, during the past three years Mooring Capital Fund has not had any
relationship with CEL-SCI or CEL-SCI's officers or directors.
18
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 shareholders 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 its 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 shareholder (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.
19
CEL-SCI has advised the selling shareholders that in the event of a
"distribution" of the shares owned by the selling shareholders, the 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.
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 and all of
the shares of common stock offered as a component of the Units will be, upon
issuance, 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.
20
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 and 23,758 shares of CEL-SCI's common
stock at a price of $0.77 per share at any time prior to August 17, 2006.
Series F and Series G Warrants
In December 2001 and January 2002, CEL-SCI sold Series F convertible
notes, plus Series F warrants, to a group of private investors for $1,600,000.
All of the Series F convertible notes have since been converted into shares of
CEL-SCI's common stock.
In July and September 2002 CEL-SCI sold Series G convertible notes, plus
Series G warrants, to a group of private investors for $1,300,000. All of the
Series G convertible notes have since been converted into shares of CEL-SCI's
common stock.
As of September 15, 2003 the Series F warrants collectively allowed the
holders to purchase 420,000 share of CEL-SCI's common stock at a price of $0.153
per share at any time prior to December 31, 2008. Every three months after
August 17, 2003, the exercise price of the Series F warrants will be adjusted to
an amount equal to 84% 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 three month adjustment date, provided that the adjusted
price is lower than the warrant exercise price on the adjustment date.
As of September 15, 2003 the Series G warrants collectively allowed the
holders to purchase up to 450,000 shares of CEL-SCI's common stock at a price of
$0.145 per share at any time prior to July 12, 2009. Every three months after
September 9, 2003, the exercise price of the Series G warrants will be adjusted
to an amount equal to 84% 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 three month adjustment date, provided that the adjusted
price is lower than the warrant exercise price on that 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 exercise
price of the Series F or Series G warrants, 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 exercise price of the Series F or Series G warrants will be
21
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 exercise price of the Series F or Series G warrants
nor the shares issuable upon the exercise of the Series F or Series G warrants
will 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:
o in connection with a merger or acquisition;
o upon the exercise of options or the issuance of common stock to CEL-SCI's
employees, officers, directors, consultants and vendors in accordance with
CEL-SCI's equity incentive policies;
o pursuant to the conversion or exercise of securities which were outstanding
prior to December 31, 2001 in the case of the Series F warrants and July
12, 2002 in the case of the Series G warrants;
o to key officers of CEL-SCI in lieu of their respective salaries.
The sale of the Series G and H notes and warrants did not result in any
change to the exercise price of the Series F warrants. The sale of the Series H
notes and warrants did not result in any change to the exercise price of the
Series G warrants.
Series H Notes and Warrants
In January and July 2003, CEL-SCI sold Series H convertible notes, plus
Series H warrants, to a group of private investors for $1,350,000. The notes
bear interest at 7% per year, are due and payable on January 7, 2005 and are
secured by substantially all of CEL-SCI's assets. Interest is payable quarterly
with the first interest payment due on April 1, 2003. If CEL-SCI fails to make
any interest payment when due, the notes will become immediately due and
payable. CEL-SCI has agreed to file a registration statement with the Securities
and Exchange Commission in order that the shares of common stock issuable upon
the conversion of the Series H notes or the exercise of the Series H warrants
may be resold in the public market.
At the holder's option the Series H 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 15 trading days
immediately prior to the conversion date. The Conversion Price may not be less
22
than $0.16. However, if CEL-SCI's common stock trades for less than $0.21 per
share for a period of 20 consecutive trading days, the $0.16 minimum price will
no longer be applicable. The Conversion Price will decline to 70% if the closing
price of CEL-SCI's common stock equals or exceeds $.50 on any trading day. The
Conversion Price will increase to 76% on the trading day following the date that
the closing price of CEL-SCI's common stock falls below $.50. The Conversion
Price will decline to 60% if (i) CEL-SCI defaults in the performance of any
material covenant, condition or agreement with the holders of the notes or, (ii)
CEL-SCI's common stock is delisted from the American Stock Exchange.
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 of the Series H notes, the Conversion Price of the Series H notes will be
lowered to the price at which the shares were sold or the lowest price at which
the securities are convertible. 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 of the Series H
notes 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, 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:
o in connection with a merger or acquisition;
o upon the exercise of options or the issuance of common stock to CEL-SCI's
employees, officers, directors, consultants and vendors in accordance with
CEL-SCI's equity incentive policies;
o pursuant to the conversion or exercise of securities which were outstanding
prior to January 7, 2003;
o to key officers of CEL-SCI in lieu of their respective salaries.
CEL-SCI's agreement with the Series H 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 Series H notes outstanding at the time the consent is required.
o So long as the Series H notes are outstanding:
- 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.
23
Until the date that 50% of the Series H 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.
So long as the Series H 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 Series H notes at a price equal to 130% of then outstanding principal
balance of the notes:
o 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
o 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.
o 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.
o 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.
o a purchase, tender or exchange offer accepted by the holders of more
than 30% of CEL-SCI's outstanding shares of common stock.
o CEL-SCI files for protection from its creditors under the federal
bankruptcy code.
The Series H warrants allow the holders to purchase up to 550,000 shares
of CEL-SCI's common stock at a price of $0.25 per share at any time prior to
January 7, 2010. Every three months after June 26, 2003 the exercise price of
the Series H warrants 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.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series H warrants, the exercise price of the Series H warrants will
be lowered to the price at which the shares were sold or the lowest price at
which the securities are convertible. If the exercise price of the Series H
warrants is adjusted, the number of shares of common stock issuable upon the
exercise of the Series H warrants will be increased by the product of the number
of shares of common stock issuable upon the exercise of the warrant immediately
24
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 exercise price of the Series H warrants 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, divided by the then prevailing market
price of CEL-SCI's common stock. If the exercise price of the Series H warrants
is adjusted, the number of shares of common stock issuable upon the exercise of
the warrants 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 exercise price nor the shares issuable upon the
exercise of the Series H warrants will be adjusted as the result of shares
issued in connection with a Permitted Financing.
As of September 15, 2003 Series H notes in the principal amount of
$1,050,000 had been converted into 2,637,415 shares of CEL-SCI's common stock.
Series I Warrants
In May 2003 CEL-SCI sold shares of its common stock plus Series I
warrants to a private investor. The Series I warrants allow the holders to
purchase 1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per
share at any time prior to May 30, 2006. The shares issuable upon the exercise
of the Series I warrants, as well as 1,100,000 shares of CEL-SCI's common stock
which are owned by the holder of the Series I warrants, are being offered for
sale by means of this prospectus. See "Selling Shareholders".
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, 2002 and 2001, and for each of the three years in the period ended
September 30, 2002 incorporated by reference in this prospectus from CEL-SCI's
Annual Report on Form 10-K for the year ended September 30, 2002, 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.
25
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:
o CEL-SCI's Annual Report on Form 10-K for the fiscal year ended
September 30, 2002,
o CEL-SCI's Quarterly Reports (unaudited) on Form 10-Q for the quarters
ended December 31, 2002, March 31, 2003 and June 30, 2003, and
26
o CEL-SCI's Proxy Statement relating to its March 31, 2003 shareholders'
meeting.
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.
27
TABLE OF CONTENTS
Page
Prospectus Summary...............................................
Risk Factors.....................................................
Comparative Share Data...........................................
Selling Shareholders.............................................
Description of Securities........................................
Experts..........................................................
Indemnification..................................................
Additional Information...........................................
Common stock
CEL-SCI CORPORATION
PROSPECTUS
28
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
SEC Filing Fee $ 920
Blue Sky Fees and Expenses 100
Printing and Engraving Expenses 2,000
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 10,000
Miscellaneous Expenses 1,980
--------
TOTAL $35,000
=======
All expenses other than the SEC 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 (Name change Filed as Exhibit 3(c) to CEL-SCI's
only) Registration 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
Stock Certificate 4(a) 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
Preferred Stock to report on Form 8-K dated August
21, 2001.
5. Opinion of Counsel (1)
-------------------------------------
10(d) Employment Agreement with Incorporated by reference to Exhibit
Maximilian de Clara 10(d) to the Company's Registration
Statement on Form S-1 (Commission File
#333-102639).
10(e) Employment Agreement with (1)
Geert Kersten -------------------------------------
10(q) Common Stock Purchase Agreement Incorporated by reference to Exhibit
with Paul Revere Capital 10(q) to CEL-SCI Registration Statement
Partners Ltd. on Form S-1 (Commission File Number
333-59798).
10(r) Stock Purchase Warrant issued to Incorporated by reference to Exhibit
Paul Revere Capital 10(r) to CEL-SCI Registration Statement
Partners Ltd. on Form S-1 (Commission File Number
333-59798).
10(s) Securities Exchange Agreement Incorporated by reference to Exhibit
(together with Schedule 10.1 to report on Form 8-K dated
required by Instruction 2 to August 21, 2001.
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 Incorporated by reference to Exhibit
Agreement (together with 10(v) to CEL-SCI's Registration
Schedule required by Statement on Form S-3 (Commission File
Instruction 2 to Item 601 Number 333-76396)
Regulation S-K) pertaining
to notes sold in December 2001
and January 2002
10(vi) Note and Warrant Purchase Incorporated by reference
Agreement (together with to Exhibit (vi) to CEL-SCI's
Schedule required by Registration statement on
Instruction 2 to Item 601 Form S-3 (Commission File
Regulation S-K) No. 333-97171)
pertaining to Series G notes
and warrants
II-2
10(vii) Note and Warrant Purchase Incorporated by reference to Exhibit
Agreement (together with 10 to CEL-SCI's report on Form 8-K dated
Schedule required by January 14, 2003
Instruction 2 to Item 601
Regulation S-K) pertaining to
Series H notes and warrants
10(x) Distribution and Royalty
Agreement with Eastern Biotech
----------------------------------
23(a) Consent of Hart & Trinen (1)
----------------------------------
(b) Consent of Deloitte & Touche, LLP (1)
----------------------------------
(1) Filed as an Exhibit to Amendment No. 1 to this registration statement.
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.
II-3
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-4
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/A 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 28th day of
October 2003.
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 October 28, 2003
------------------------
Maximilian de Clara Executive Officer
/s/ Geert R. Kersten Director, Principal October 28, 2003
------------------------ Financial Officer
Geert R. Kersten and Chief Executive Officer
------------------------ Director
Alexander G. Esterhazy
/s/ C. Richard Kinsolving Director October 28, 2003
-------------------------
C. Richard Kinsolving, Ph.D.
/s/ Peter R. Young Director October 28, 2003
------------------------
Peter R. Young