Edgar Filing: CEL SCI CORP

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2008.

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _________ to __________.

Commission file number 1-11889
CEL-SCI CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)

COLORADO 84-0916344
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)

8229 Boone Blvd., Suite 802
Vienna, Virginia 22182
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (703) 506-9460
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
-------------------------
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ]

Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): [ ] Yes [X] No

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the common stock on March 31,
2008, as quoted on the NYSE Alternext US, was $73,839,745.

As of December 31, 2008, the Registrant had 123,636,965 issued and outstanding
shares of common stock.

Documents Incorporated by Reference: None

PART I

ITEM 1. BUSINESS
-----------------

CEL-SCI Corporation (CEL-SCI) was formed as a Colorado corporation in
1983. CEL-SCI's principal office is located at 8229 Boone Boulevard, Suite 802,
Vienna, VA 22182. CEL-SCI's telephone number is 703-506-9460 and its web site is
www.cel-sci.com. CEL-SCI makes its electronic filings with the Securities and
Exchange Commission (SEC), including its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to these
reports available on its website free of charge as soon as practicable after
they are filed or furnished to the SEC.

OVERVIEW
--------

CEL-SCI's lead product, Multikine(R), has been cleared for a global Phase
III clinical trial in advanced primary (previously untreated) head and neck
cancer patients. Multikine is being developed for the treatment of cancer. It is
the first of a new class of cancer immunotherapy drugs called Immune SIMULATORs.
It simulates the activities of a healthy person's immune system, which battles
cancer every day. Multikine is multi-targeted; it is the only cancer
immunotherapy that both kills cancer cells in a targeted fashion and activates
the general immune system to destroy the cancer. We believe Multikine is the
first immunotherapeutic agent being developed as a first-line standard of care
treatment for cancer.

CEL-SCI took delivery of its new manufacturing facility for its lead
drug Multikine on October 8, 2008. This dedicated facility will be used to
produce the Multikine that will be used for CEL-SCI's pivotal Phase III clinical
trial and subsequently for sale following approval of the drug. CEL-SCI needs to
raise additional funds in order to launch the global Phase III clinical trial.
CEL-SCI is currently working on partnerships and joint ventures to finance the
part of the Phase III clinical trial that will not be funded by its existing
partners. If CEL-SCI cannot raise the funds in a timely manner the Phase III
clinical trial will be delayed.

Multikine is a new type of immunotherapy in that it is a comprehensive
immunotherapy, incorporating both active and passive immune activity. A
comprehensive immunotherapy most closely resembles the workings of the natural
immune system in the sense that it works on multiple fronts in the battle
against cancer. A comprehensive immunotherapy causes a direct and targeted
killing of the tumor cells and activates the immune system to produce a more
robust and sustainable anti-tumor response.

Multikine is designed to target the tumor micro-metastases that are mostly
responsible for treatment failure. The basic concept is to add Multikine to the
current cancer treatments with the goal of making the overall cancer treatment
more successful. Phase II data indicated that Multikine treatment resulted in a
substantial increase in the survival of patients. The lead indication is
advanced primary (previously untreated) head & neck cancer (about 600,000 new
cases per annum). Since Multikine is not tumor specific, it may also be
applicable in many other solid tumors.

Multikine is the first immunotherapeutic agent being developed as a
first-line treatment for cancer. It is administered prior to any other cancer
therapy because that is the period when the anti-tumor immune response can still
be fully activated. Once the patient has had surgery or has received radiation
and/or chemotherapy, the immune system is severely weakened and is less able to
mount an effective anti-tumor immune response. To date, other immunotherapies
have been administered later in cancer therapy (i.e., after radiation,
chemotherapy, surgery).

In January 2007, the US Food and Drug Administration (FDA) concurred with
the initiation of a global Phase III clinical trial in head and neck cancer
patients using Multikine. The Canadian regulatory agency, the Biologics and
Genetic Therapies Directorate, had previously concurred with the initiation of a
global Phase III clinical trial in head and neck cancer patients using
Multikine.

The protocol is designed to develop conclusive evidence of the efficacy of
Multikine in the treatment of advanced primary (previously untreated) squamous
cell carcinoma of the oral cavity (head and neck cancer). A successful outcome
from this trial should enable CEL-SCI to apply for a Biologics License to market
Multikine for the treatment of this patient population.

The trial will test the hypothesis that Multikine treatment administered
prior to the current standard therapy for head and neck cancer patients
(surgical resection of the tumor and involved lymph nodes followed by
radiotherapy or radiotherapy and concurrent chemotherapy) will extend the
overall survival, enhance the local/regional control of the disease and reduce
the rate of disease progression in patients with advanced oral squamous cell
carcinoma.

Clinical trials in over 200 patients have been completed with Multikine
with the following results:

1) It has been demonstrated to be safe and non-toxic.

2) It has been shown to render cancer cells much more susceptible to
radiation therapy (The Laryngoscope, December 2003, Vol.113 Issue
12).

3) A publication in the Journal of Clinical Oncology (Timar et al, JCO,
23(15): May 2005), revealed the following:

(i) Multikine induced anti-tumor immune responses through the
combined activity of the different cytokines present in Multikine
following local administration of Multikine for only three weeks.

(ii) The combination of the different cytokines caused the induction,
recruitment into the tumor bed, and proliferation of anti-tumor
T-cells and other anti-tumor inflammatory cells, leading to a
massive anti-tumor immune response.

(iii) Multikine induced a reversal of the CD4/CD8 ratio in the tumor
infiltrating cells, leading to a marked increase of CD4 T-cells in

the tumor, which resulted in the prolongation of the anti-tumor
immune response and tumor cell destruction.

(iv) The anti-tumor immune-mediated processes continued long after the
cessation of Multikine administration.

(v) A three-week Multikine treatment of patients with advanced primary
oral squamous cell carcinoma resulted in an overall response rate
of 42% prior to standard therapy, with 12% of the patients having
a complete response.

(vi) A histopathology study showed that the tumor load in Multikine
treated patients was reduced by nearly 50% as compared to tumors
from control patients in the same pathology study.

(vii) The tumors of all of the patients in this Phase II trial who
responded to Multikine treatment were devoid of the cell surface
marker for HLA Class II. This finding, if confirmed in this global
Phase III clinical trial, may lead to the establishment of a
marker for selecting the patient population best suited for
treatment with Multikine.

(viii) In a Phase II study, using the same drug regimen as will be used
in the Phase III study, the addition of Multikine as first-line
treatment prior to the standard of care treatment resulted in a
33% improvement in the median overall survival at 3 1/2 years
post-surgery, when compared to the results of 55 OSCC clinical
trials published in the scientific literature between 1987 and
2007.

CEL-SCI also owns a pre-clinical technology called L.E.A.P.S.TM (Ligand
Epitope Antigen Presentation System). One of the lead products derived from this
technology is the CEL-1000 peptide which has shown protection in animals against
herpes, malaria, viral encephalitis and cancer. Another product is CEL-2000
which is being tested for the treatment of rheumatoid arthritis. Recent data
indicate that CEL-SCI's rheumatoid arthritis vaccine CEL-2000 prevents or
retards the permanent tissue damage caused by rheumatoid arthritis in an animal
model of the disease, The data were derived from a histopathological analysis of
tissues samples collected in comparative studies of CEL-2000 and Enbrel(R) that
were conducted in a well established animal model of rheumatoid arthritis.
Enbrel is a leading treatment for people with rheumatoid arthritis.

MULTIKINE
---------

Multikine is the first of a new class of cancer immunotherapy drugs called
Immune SIMULATORs. It simulates the activities of a healthy person's immune
system, which battles cancer every day. Multikine is multi-targeted; it is the
only cancer immunotherapy that both kills cancer cells in a targeted fashion and
activates the general immune system to destroy the cancer.

immune system in the sense that it works on multiple fronts in the battle
against cancer. A comprehensive immunotherapy causes a direct and targeted
killing of the tumor cells and activates the immune system to produce a more
robust and sustainable anti-tumor response.

Multikine works in a comprehensive way to marshal an effective killing of
the tumor:

1. Multikine attacks multiple antigens on the cancer cells.

2. Multikine directly kills cancer cells:

o The various cytokines present in Multikine, such as TNF, IL-1,
along with other cytokines, are responsible for this activity.

3. Multikine signals the immune system to mount an effective and
sustainable anti-tumor immune response:

o Multikine changes the type of cells that infiltrate and attack
the tumor from the `usual' CD-8 cells to CD-4 cells. These CD-4
cells bring about a more robust anti-tumor response.

- This is extremely important because the tumor is able to
shut down the infiltrating CD-8 cells, but is unable to shut
down the CD-4 cell attack. In addition, CD-4 cells help
break "tumor tolerance," thereby allowing the immune system
to recognize, attack, and destroy the tumor. The normal
immune system is `blind' to tumor cells because the tumor
cells are derived from the body's own cells, and thus the
body `thinks' of the tumor as `self', a phenomenon also
known as `tumor tolerance'.

4. Multikine renders the remaining cancer cells potentially much more
susceptible to radiation and chemotherapy treatment, thereby making
these treatments much more effective.

Multikine is currently being developed as first-line therapy for advanced
primary head and neck cancer. This is a deadly cancer in which there is a clear
unmet medical need. The recurrence rate is high and about one out of every two
patients die within three years. Currently used therapies (surgery followed by
radiation, chemotherapy or radio-chemotherapy) fail to completely arrest the
disease because they are unable to completely remove or kill all of the cancer
cells. The persistence of these residual cells is responsible for the cancer's
recurrence or metastasis. Multikine is injected five times a week for three
weeks around the tumor (peri-tumorally) as well as in the vicinity of the local
lymph nodes (peri-lymphatically) prior to the patient's tumor being removed
surgically and the patient receiving any other therapy because these are the
areas in which the cancer will recur and from which metastases will develop.
Multikine unleashes and then harnesses and enhances the immune system's ability
to target and kill those tumor cells before they can cause recurrence or
metastasize. It is expected that multiple indications will be pursued over time
since it is the same principle for different cancers.

Summary of Key Multikine Responses:

The following efficacy was seen in the last Phase II study conducted with
Multikine. This study used the same treatment protocol as will be used in the
Phase III study:

- 33% improvement in median overall survival: In the last Phase II study
a 33% improvement in median overall survival at a median of 3.5 years
post surgery was seen in patients with locally advanced disease
treated with Multikine as first-line therapy (absolute survival rate
63%) over the 3.5 year median overall survival rates of the same
cancer patient population determined from a review of 55 clinical
trials reported in the scientific literature that were conducted
between 1987 and 2007. CEL-SCI's Phase III clinical trial will need to
demonstrate a 10% improvement in overall survival for Multikine to be
successful.

- Average of 50% reduction in tumor cells: The 3 week Multikine
treatment regimen used in the last Phase II study killed, on average,
about half of the cancer cells before the start of standard therapy
like surgery, radiation and chemotherapy (as determined by
histopathology).

- 12% complete response: In 12% of patients the tumor was completely
eliminated after only a 3 week treatment with Multikine (as determined
by histopathology).

History of Multikine

Multikine has been tested in over 200 patients in clinical trials
conducted in the U.S., Canada, Europe and Israel. Most of these patients were
head and neck cancer patients, but some studies were also conducted in prostate
cancer patients, HIV-infected patients and HIV-infected women with Human
Papilloma Virus ("HPV")-induced cervical dysplasia, the precursor stage before
the development of cervical cancer. The safety profile was found to be very good
and CEL-SCI believes that the clinical data suggests that further studies are
warranted.

The objective of CEL-SCI scientists is to use Multikine as an adjunct
(additive) therapy to the existing treatment of previously untreated head & neck
cancer patients with the goal of killing cancer cells and activating the general
immune system to destroy the cancer. However, pursuant to FDA regulations,
CEL-SCI was required to test the drug first for safety in locally recurrent,
locally metastatic head and neck cancer patients who had failed other cancer
therapies. This dose escalation study was started in 1995 at several centers in
Canada and the US where 16 patients were enrolled at 4 different dosage levels.
The study ended in 1998 and showed Multikine to be safe and well tolerated at
all dose levels.

Because CEL-SCI scientists have determined that patients with previously
untreated disease would most likely benefit more from Multikine treatment,
CEL-SCI started a safety trial in Canada in 1997 in advanced primary head & neck
cancer patients who had just recently been diagnosed with head & neck cancer.
This study ultimately enrolled 28 patients, also at 4 different dosage levels,
and ended in late 1999. Halfway through this study, CEL-SCI launched a number of
Phase II studies in advanced primary head & neck cancer to determine the best

dosage, best route of administration and best frequency of administration of
Multikine. Those studies involved 19 patients in Israel (1997 - 2000), 30
patients in Poland and the Czech Republic (1999 - 2000), and 94 patients (half
treated with Multikine and the other half disease-matched cancer patients served
as control) in Hungary (1999 - 2003). The Hungarian trial compared the control
group (receiving only conventional cancer therapy) to the Multikine treated
patients (receiving Multikine prior to conventional therapy) by histopathology
and immunohistochemistry. The results of these studies were published in
peer-reviewed scientific journals and/or presented at scientific meetings. The
studies that have not yet been published were conducted in support of
Multikine's safety and clinical utility.

The above studies, which are all completed, indicate that Multikine was
safe and well tolerated at all dose levels investigated. The studies also showed
partial and complete tumor responses following Multikine treatment at the best
treatment regimen combinations as well as tumor necrosis (destruction) and
fibrosis (as determined by histopathology).

The initial results of the Hungarian study were published in December
2003. Data from a Phase I/II clinical trial in fifty-four (54) advanced primary
head and neck cancer patients (half treated, half control), the first part of
the Hungarian study, were published in The Laryngoscope, December 2003, Vol.113
(12). The title of the article is "The Effect of Leukocyte Interleukin Injection
(MULTIKINE) on the Peritumoral and Intratumoral Subpopulation of Mononuclear
Cells and on Tumor Epithelia: A Possible New Approach to Augmenting Sensitivity
to Radiation Therapy and Chemotherapy in Oral Cancer - A Multi Center Phase I/II
Clinical Trial".

The data demonstrate that treatment with Multikine rendered a high
proportion of the tumor cell population highly susceptible to radiation therapy.
This finding represents a major advance in the treatment of cancer since, under
current standard therapy, only about 5%-10% of the cancer cells are thought to
be susceptible to radiation therapy at any one point in time.

The increased sensitivity of the Multikine-treated tumors to radiation was
derived from a dramatic increase in the number of proliferating (those that are
in cell cycle) cancer cells. Following Multikine treatment, the great majority
of the tumor cells were in a proliferative state, as measured by the
well-established cell proliferation marker Ki67. The control patients (not
treated with Multikine) had only low expression (near background) of the same
proliferation marker (Ki67) in this study. These findings were statistically
significant (p<0.05, ANOVA).

This is an important finding because the ability of radiation therapy (and
chemotherapy) to kill tumor cells is dependent, in large part, on the
proliferative state of the tumor cells at the time of radiation (and
chemotherapy) treatment. As seen in the control group in this study, and also in
many other tumor types, the great majority of tumor cells (about 90% or more)
are in a "resting" state (non-proliferating). It is generally accepted that
tumor cells in the "resting" state are by-and-large resistant to radiation and
chemotherapy. However, Multikine treatment induced a reversal of this
non-proliferative state of the tumor cells and caused the great majority of the
tumor cells to enter into the proliferative state, thereby rendering the tumor
highly susceptible to radiation therapy (and chemotherapy).

The results of the Israeli trial have been published in Archives of
Otolaryngology - Head & Neck Surgery, August 2003, Vol.129. This paper on 12
patients treated by Dr. Feinmesser shows positive safety, tumor response and
clinical outcome data.

Results from the Multikine Phase II clinical trials were published in June
2004 at the 40th ASCO Annual Meeting. The study involved 39 head & neck cancer
patients, 19 of whom were treated with CEL-SCI's immunotherapy drug Multikine
prior to surgery and radiation. The other 20 patients served as matched
controls, meaning that they did not receive Multikine prior to surgery and
radiation. In a comparison pathology study of the tumors, Multikine treatment
caused a significant shift in the ratio of key immune cells that infiltrate the
tumor. The cancer patients treated with Multikine were shown to have much higher
rate of tumor cell killing, resulting in a 42% overall response rate, including
12% complete responses.

The tumors of the 39 head & neck cancer patients were analyzed by three
independent pathologists, blinded to the study. Of the 19 Multikine treated
patients in this study, 2 patients (12%) had no remaining cancer cells, another
2 patients (12%) had a reduction in the cancer cell mass greater than 50% and an
additional 4 patients (21%) had a reduction in the cancer cell mass of more than
30%. The objective response rate in this trial was 21%, with an overall response
rate of 42%, as determined by pathology.

This study, which used a three-week, non-toxic treatment with Multikine,
caused a shift from a low CD4/CD8 cell ratio (less than one CD4 cell for each
CD8 cell) to a high (over 2.5 - 3) CD4/CD8 cell ratio (2.5 - 3 CD4 cells for
each CD8 cell) in the tumor. This indicates that Multikine treatment shifts the
immune response from a mainly CD8 cell anti-tumor response to a predominately
CD4 anti-tumor response. Both CD4 and CD8 are key cells of the immune system.

CEL SCI believes the change in the immune response from CD8 to CD4 cells
is very important for the cancer patient because the cancer cells seem to have
learned to shut down the CD8 anti-tumor immune response. This "shut-down" of the
CD8 cells was evident in the tumors of the control (non-Multikine treated)
group. The control group had predominately CD8 cell infiltrate which was
inactive against the tumor. The Multikine treated group, on the other hand, had
a predominately CD4 cell infiltrate. The tumor was unable, or less able, to shut
down the Multikine induced CD4 cell immune response and, as a result thereof,
the cancer patients treated with Multikine were shown to have a much higher rate
of tumor cell killing.

In May 2006, CEL-SCI presented long-term survival data from its last Phase
II clinical trial in patients with head and neck cancer (oral squamous cell
carcinoma -- OSCC) treated with its anti-cancer drug Multikine. The addition of
Multikine as first-line treatment prior to the standard of care treatment
resulted in a 33% improvement in the median overall survival at 3 1/2 years
post-surgery, when compared to the results of 55 OSCC clinical trials published
in the scientific literature between 1987 and 2007. The data were presented at
the "Vaccine Discovery and Commercialization" conference in Philadelphia, PA.

The long-term survival data were collected by the treating physicians in a
follow-up study of 22 patients with advanced untreated primary tumors, who were
enrolled in the Multikine Phase II clinical trial. The Multikine treatment

regimen was administered to these patients prior to the standard of care
treatment (i.e., surgery + radiation or surgery + chemo-radiation). Informed
consent was obtained from all patients in the clinical trial and from 19
patients for the long-term follow-up study. Investigational Review Board /
Ethics Committee approval was provided before the initiation of the clinical
trial and again for the data collection in the follow-up study. The follow-up
study questionnaire assessed the overall survival and the local regional control
of the Multikine treated patients in this Phase II trial.

Documented data were available for 19 of the 22 patients in the follow-up
portion of this clinical trial. Of the three patients who could not be evaluated
in the follow-up study, one patient was known to be alive, but failed to give
informed consent, and the other two were lost to follow-up. One patient died the
day after definitive surgery, unrelated to Multikine therapy.

The median overall survival (calculated by including death from any cause
of patients in the trial, even deaths not related to the disease) of the 19
evaluable patients in the follow-up portion of this clinical trial was 63% at a
median follow-up of 40 months post-surgery. The results of the published
scientific literature (55 OSCC clinical trials published between 1987 and 2007)
document that survival at 3 1/2 years is approximately 47% following standard of
care treatment. The addition of Multikine to the standard of care treatment
resulted in a 33% increase in overall survival over the results published in the
literature.

Multikine first-line treatment also resulted in a 2-year local regional
control (LRC) rate of 79%, as compared to the median 2-year LRC of 73% reported
in the same 39 scientific publications. Multikine treatment resulted in an
improvement over the published local regional control rate. It is clinically
recognized that recurrence of disease in head & neck cancer is associated with a
very poor prognosis.

Multikine treatment did not result in any severe adverse events (SAE) in
this Phase II clinical trial. No SAEs related to Multikine have been reported in
other trials conducted with Multikine either.

The data from CEL-SCI's Multikine Phase II clinical trial are thought to
be directly applicable to CEL-SCI's planned global Phase III clinical trial, as
the Multikine treatment regimen planned in the Phase III trial is identical to
that of the Multikine treatment in the Phase II Clinical trial.

In January 2007, CEL-SCI received a no objection letter from the FDA
indicating that it could proceed with the Phase III protocol with Multikine in
head & neck cancer patients. The protocol for the Phase III clinical trial was
designed to develop conclusive evidence of the safety and efficacy of Multikine
in the treatment of advanced primary squamous cell carcinoma of the oral cavity.
CEL-SCI had previously received a "no objection" letter from the Canadian
Biologics and Genetic Therapies Directorate which enabled CEL-SCI to begin its
Phase III clinical trial in Canada.

The Phase III trial will test the hypothesis that Multikine administered
prior to the current standard therapy for head and neck cancer patients
(surgical resection of the tumor and involved lymph nodes followed by

radiotherapy or radiotherapy and concurrent chemotherapy) will extend the
overall survival, enhance the local/regional control of the disease and reduce
the rate of disease progression in patients with advanced oral squamous cell
carcinoma. A successful outcome from this trial should enable CEL-SCI to apply
for a Biologics License to market Multikine for the treatment of this patient
population.

In May 2005, CEL-SCI was issued a new U.S. patent covering Multikine. The
patent, No. 6,896,879, relates to a new method for pre-sensitizing cancer with
Multikine prior to therapeutic treatment such as chemotherapy, radiation therapy
or immunotherapy.

Multikine has also been tested in 15 HIV-infected patients (1998 - 1999)
in California. This small study found Multikine to be safe in the HIV-infected
population and showed preliminary evidence of improved delayed type
hypersensitivity response to recall antigens. The results of this study were
reported in Antiviral Therapy 5 (Supplement), 2000.

Another study at the Thomas Jefferson Medical Center (1998) used very
small amounts of Multikine to determine the feasibility of injecting Multikine
into the prostate of 5 hormonal therapy refractive prostate cancer patients
scheduled for prostatectomy. Although deemed safe by the investigators,
Multikine administration in this trial directly into the prostate (under
ultrasound guidance) resulted in occasional mild dysuria and mild increase in
urinary frequency. Two out of the five treated cases had an inflammatory
response in the prostate and a third case had fibrosis. CEL-SCI believes that
more Multikine injections will need to be given to achieve a potential outcome
as seen in head & neck cancer. None of the prostate cancer patients received
more than half of the amounts given to the head & neck cancer patients. Also, no
testing was done at the time to determine if Multikine would enhance
susceptibility to radiation therapy in the prostate. The results of this trial
were published in Seminars in Oncology Vol. 26 (4) (August) 1999.

In May 2001, CEL-SCI started a Phase I clinical trial at the University of
Maryland Biotechnology Institute (UMBI). The focus of this study was
HIV-infected women with Human Papilloma Virus (HPV)-induced cervical dysplasia,
the precursor stage before the development of cervical cancer. The goal of the
study was to obtain safety and preliminary efficacy data on Multikine as a
treatment for pre-cancerous lesions of the cervix (dysplasia). Most cervical
dysplasia and cancer is due to infection with HPV. The rationale for using
Multikine in the treatment of cervical dysplasia/cancer is that Multikine may
safely boost the patients' immune systems to the point where their immune
systems can eliminate the virally-induced cancer. Cervical cancer is the second
leading cause of cancer death in women worldwide.

The HIV-infected women with HPV-induced cervical dysplasia were chosen as
a study group because of the high morbidity and low success rate of current
surgical therapies. Since HIV infection results in immune suppression,
HPV-induced cervical dysplasia follows a more malignant and aggressive course of
disease in such women. Co-infection with HPV is common in HIV-positive women
(about 83%) and cervical cancer is considered an AIDS-defining illness.

HPV infection is also a leading health problem in non HIV-infected
American college-age women. A large concern among women who have HPV-induced
cervical dysplasia is that the repeated surgical procedures will lead to a
hysterectomy and the inability to bear children.

At the March 2002 33rd Annual Meeting of the Society of Gynecological
Oncologists in Miami, Florida, scientists from UMBI and CEL-SCI presented data
from this trial in HIV-infected women with HPV induced cervical dysplasia. The
results were as follows: 8 patients had been treated with no major toxicity. The
lower dosage group had 3 out of 5 patients resolved/improved with 2 out of 5
patients with no change in their cervical dysplasia status as compared to the
patient's own baseline disease. The higher dosage group had 2 out of 3 patients
who improved and 1 out of 3 patients with no change. The changes in disease
status were determined by both Colposcopy and Histology.

Subsequent HPV testing during 2001 and 2002 of the first three patients
revealed the elimination of HPV virus types (using in situ PCR) following
treatment with Multikine and ranged from 54% to 84% (Avg = 68%) reduction in HPV
virus in the cervical tissue of Multikine treated HIV/HPV co-infected patients.
The study was closed due to the inability to enroll further patients.

CEL-SCI's future studies in the HPV-induced cervical dysplasia area will
only be conducted with grant or government funds as CEL-SCI plans to devote its
resources to head and neck cancer, the area where it has the most data.

Since 1985, Multikine has been well tolerated in clinical studies
involving over 200 patients. Forty-eight patients were treated in the United
States in accordance with clinical trials authorized by the FDA. The remaining
patients were treated outside of the United States in accordance with protocols
authorized by comparable health regulatory authorities in the countries where
the patients were treated. All the clinical trials were conducted in accordance
with the Declaration of Helsinki (1985), and informed consent was obtained from
each patient volunteer. This process is the standard procedure for the conduct
of human clinical trials.

Proof of efficacy for anti-cancer drugs is a lengthy and complex process.
At this stage of clinical investigation, it remains to be proven that Multikine
will be effective against any form of cancer. Even if some form of Multikine is
found to be effective in the treatment of cancer, commercial use of Multikine
may be several years away due to extensive safety and effectiveness tests that
would be necessary before required government approvals are obtained. It should
be noted that other companies and research teams are actively involved in
developing treatments and/or cures for cancer, and accordingly, there can be no
assurance that CEL-SCI's research efforts, even if successful from a medical
standpoint, can be completed before those of its competitors.

Development, Supply and Distribution Agreements

CEL-SCI has a development, supply and distribution agreement with Orient
Europharma of Taiwan. The agreement gave Orient Europharma the exclusive
marketing rights to Multikine for all cancer indications in Taiwan, Singapore,
Hong Kong and Malaysia. On November 3, 2008 CEL-SCI expanded its exclusive

licensing agreement for Multikine with Orient Europharma. The new agreement
extends the Multikine collaboration to also cover South Korea, the Philippines,
Australia and New Zealand. As part of this new agreement, Orient Europharma
invested an additional $500,000 in CEL-SCI. The agreement provides for Orient
Europharma to fund the clinical trials needed to obtain marketing approvals in
these countries for head and neck cancer, naso-pharyngeal cancer and potentially
cervical cancer, which are very prevalent in Far East Asia. CEL-SCI may use the
clinical data generated in these trials to support applications for marketing
approvals for Multikine in other parts of the world. Orient Europharma will
participate and pay for part of CEL-SCI's head and neck Phase III clinical
trial.

Under the agreement, CEL-SCI will manufacture Multikine and Orient
Europharma will purchase the product from CEL-SCI for distribution in the
territory. Both parties will share in the revenue from the sale of Multikine. As
of September 30, 2008, Orient Europharma had not started any clinical trials and
CEL-SCI agreed in December 2007 with Orient Europharma, that Orient EuroPharma
will participate in the global Phase III clinical trial by enrolling and paying
for a substantial number of patients in its territory. Orient Europharma will
also purchase Multikine from CEL-SCI for these patients at a rate established in
the November 2000 agreement.

Pursuant to an agreement dated May 2003, Eastern Biotech will receive a
royalty equal to 2% of CEL-SCI's net sales of Multikine and CEL-1000 prior to
May 30, 2033.

On August 19, 2008 CEL-SCI entered into an agreement with Teva
Pharmaceutical Industries Ltd. (Teva), a leading global pharmaceutical company,
under which CEL-SCI granted Teva an exclusive license to market and distribute
CEL-SCI's cancer drug Multikine in Israel and Turkey (the "Territory"). Although
the licensing agreement is initially restricted to the areas of head and neck
cancer, Teva has the right, subject to certain conditions, to include other
cancers during the term of the agreement. Multikine is currently thought to be
potentially useful in treating many tumor types.

Pursuant to the agreement, Teva will participate in CEL-SCI's upcoming
global Phase III clinical trial. Teva will fund a portion of the Phase III
clinical study and Teva's clinical group will conduct part of the clinical study
in Israel under the auspices of CEL-SCI and its Clinical Research Organization.
Teva will also be responsible for registering Multikine in the Territory. If
Multikine is approved, CEL-SCI will be responsible for manufacturing the
product, while Teva will be responsible for sales in the Territory. Revenues
will be divided equally between CEL-SCI and Teva.

T-CELL MODULATION PROCESS
-------------------------

CEL-SCI's patented T-cell Modulation Process uses "heteroconjugates" to
direct the body to choose a specific immune response. The heteroconjugate
technology, referred to as L.E.A.P.S. (Ligand Epitope Antigen Presentation
System), is intended to selectively stimulate the human immune system to more
effectively fight bacterial, viral and parasitic infections as well as
autoimmune, allergies, transplantation rejection and cancer, when it cannot do

so on its own. Administered like vaccines, L.E.A.P.S. combines T-cell binding
ligands with small, disease associated, peptide antigens and may provide a new
method to treat and prevent certain diseases.

The ability to generate a specific immune response is important because
many diseases are often not combated effectively due to the body's selection of
the "inappropriate" immune response. The capability to specifically reprogram an
immune response may offer a more effective approach than existing vaccines and
drugs in attacking an underlying disease.

Using the LEAPS technology, CEL-SCI discovered a peptide, named CEL-1000,
which is currently being tested in animals for the prevention/treatment of avian
flu, herpes simplex, malaria, viral encephalitis, smallpox, vaccinia and a
number of other indications. In addition, CEL-SCI announced the discovery of a
novel peptide for the treatment of rheumatoid arthritis. This peptide, called
CEL-2000, was tested in a well established animal model of rheumatoid arthritis
and was compared to Enbrel(R), a leading treatment for people with rheumatoid
arthritis. The tests showed that CEL-2000 is equivalent or possibly superior to
Enbrel in slowing disease progression and lessening symptoms in mice. In
addition, the vaccine has the potential to require fewer and smaller doses, be
less toxic, more disease specific and much less invasive. Further data indicates
that, in mice vaccinated with CEL-2000 after appearance of visible disease,
statistically significant less inflammation and permanent damage with regard to
1) bone erosion, 2) cartilage destruction, and 3) pannus formation were
observed. These are some of the same parameters that can be seen in rheumatoid
arthritis damage in humans. CEL-2000 was as good as, and possibly superior to,
Enbrel in slowing further disease progression as evaluated by these histological
parameters and by footpad swelling as well as externally visible joint damage.

In May 2005, CEL-SCI scientists, in collaboration with scientists from the
laboratory of Dr. Noel Rose at The Johns Hopkins University Department of
Pathology, presented animal data showing that pretreatment and early therapy of
Experimental Autoimmune Myocarditis with a compound developed by CEL-SCI
resulted in significant reduction in heart enlargement and disease associated
histopathological changes. The compound used to achieve these results was
derived from CEL-SCI's patented LEAPS technology.

The protection observed was statistically significant for both
pretreatment and early therapy. This protective effect was shown to be
antigen-specific and was associated with an increase in IL-13 in both the sera
and heart tissue and of IL-1a in the sera of the protected mice. Other studies
from Dr. Rose's laboratory with IL-13 knockout mice (mice missing the IL-13
gene) demonstrate the importance of IL-13 in this model of Experimental
Autoimmune Myocarditis and corroborated these findings.

CEL-SCI has also evaluated the use of CEL-1000 as a vaccine adjuvant with
both hepatitis B Virus antigen and an antigen from Bird Influenza. These
findings were reported at two scientific conferences in April and May 2007.

As of November 30, 2008, CEL-SCI was involved in a number of pre-clinical
studies with respect to its L.E.A.P.S. technology. CEL-SCI intends to continue
to prepare and submit scientific papers to disclose future results for CEL-1000,
CEL-2000 and the L.E.A.P.S. technology and to continue to apply for government
grants to help fund future studies. However CEL-SCI does not know what obstacles

it will encounter in future pre-clinical and clinical studies involving its
L.E.A.P.S. technology.

RESEARCH AND DEVELOPMENT
------------------------

Since 1983, and through September 30, 2008, approximately $59,319,600 has
been spent on CEL-SCI-sponsored research and development, including
approximately $4,101,600, $2,529,000, and $1,897,000 respectively during the
years ended September 30, 2008, 2007 and 2006.

The costs associated with the clinical trials relating to CEL-SCI's
technologies, research expenditures and CEL-SCI's administrative expenses have
been funded with the public and private sales of CEL-SCI's securities and
borrowings from third parties, including affiliates of CEL-SCI. The extent of
CEL-SCI's clinical trials and research programs is primarily based upon the
amount of capital available to CEL-SCI and the extent to which CEL-SCI has
received regulatory approvals for clinical trials.

GOVERNMENT REGULATION
---------------------

New drug development and approval process

Regulation by governmental authorities in the United States and other
countries is a significant factor in the manufacture and marketing of biological
and other drug products and in ongoing research and product development
activities. CEL-SCI's products will require regulatory approval by governmental
agencies prior to commercialization. In particular, these products are subject
to rigorous preclinical and clinical testing and other premarket approval
requirements by the FDA and regulatory authorities in other countries. In the
United States, various statutes and regulations also govern or influence the
manufacturing, safety, labeling, storage, record keeping and marketing of
pharmaceutical and biological drug products. The lengthy process of seeking
these approvals, and the subsequent compliance with applicable statutes and
regulations, require the expenditure of substantial resources. CEL-SCI believes
that it is currently in compliance with applicable statutes and regulations that
are relevant to its operations. CEL-SCI has no control, however, over compliance
by its manufacturing and other partners.

The FDA's statutes, regulations, or policies may change and additional
statutes or government regulations may be enacted which could prevent or delay
regulatory approvals of biological or other drug products. CEL-SCI cannot
predict the likelihood, nature or extent of adverse governmental regulation that
might arise from future legislative or administrative action, either in the U.S.
or abroad.

Regulatory approval, when and if obtained, may be limited in scope. In
particular, regulatory approvals will restrict the marketing of a product to
specific uses. Further, approved biological and other drugs, as well as their
manufacturers, are subject to ongoing review. Discovery of previously unknown
problems with these products may result in restrictions on their manufacture,
sale or use or in their withdrawal from the market. Failure to comply with

regulatory requirements may result in criminal prosecution, civil penalties,
recall or seizure of products, total or partial suspension of production or
injunction, as well as other actions affecting CEL-SCI. Any failure by CEL-SCI
or its manufacturing and other partners to obtain and maintain, or any delay in
obtaining, regulatory approvals could materially adversely affect CEL-SCI's
business.

The process for new drug approval has many steps, including:

Preclinical testing

Once a biological or other drug candidate is identified for development,
the drug candidate enters the preclinical testing stage. During preclinical
studies, laboratory and animal studies are conducted to show biological activity
of the drug candidate in animals, both healthy and with the targeted disease.
Also, preclinical tests evaluate the safety of drug candidates. These tests
typically take approximately two years to complete. Preclinical tests must be
conducted in compliance with good laboratory practice regulations. In some
cases, long-term preclinical studies are conducted while clinical studies are
ongoing.

Investigational new drug application

When the preclinical testing is considered adequate by the sponsor to
demonstrate the safety and the scientific rationale for initial human studies,
an investigational new drug application (IND) is filed with the FDA to seek
authorization to begin human testing of the biological or other drug candidate.
The IND becomes effective if not rejected by the FDA within 30 days after
filing. The IND must provide data on previous experiments, how, where and by
whom the new studies will be conducted, the chemical structure of the compound,
the method by which it is believed to work in the human body, any toxic effects
of the compound found in the animal studies and how the compound is
manufactured. All clinical trials must be conducted under the supervision of a
qualified investigator in accordance with good clinical practice regulations.
These regulations include the requirement that all subjects provide informed
consent. In addition, an institutional review board (IRB), comprised primarily
of physicians and other qualified experts at the hospital or clinic where the
proposed studies will be conducted, must review and approve each human study.
The IRB also continues to monitor the study and must be kept aware of the
study's progress, particularly as to adverse events and changes in the research.
Progress reports detailing the results of the clinical trials must be submitted
at least annually to the FDA and more frequently if adverse events occur. In
addition, the FDA may, at any time during the 30-day period after filing an IND
or at any future time, impose a clinical hold on proposed or ongoing clinical
trials. If the FDA imposes a clinical hold, clinical trials cannot commence or
recommence without FDA authorization, and then only under terms authorized by
the FDA. In some instances, the IND process can result in substantial delay and
expense.

Some limited human clinical testing may also be done under a physician's
IND that allows a single individual to receive the drug, particularly where the
individual has not responded to other available therapies. A physician's IND
does not replace the more formal IND process, but can provide a preliminary

indication as to whether further clinical trials are warranted, and can, on
occasion, facilitate the more formal IND process.

Clinical trials are typically conducted in three sequential phases, but
the phases may overlap.

Phase I clinical trials

Phase I human clinical trials usually involve between 20 and 80 healthy
volunteers or patients and typically take one to two years to complete. The
tests study a biological or other drug's safety profile, and may seek to
establish the safe dosage range. The Phase I clinical trials also determine how
a drug candidate is absorbed, distributed, metabolized and excreted by the body,
and the duration of its action.

Phase II clinical trials

In Phase II clinical trials, controlled studies are conducted on an
expanded population of patients with the targeted disease. The primary purpose
of these tests is to evaluate the effectiveness of the drug candidate on the
volunteer patients as well as to determine if there are any side effects or
other risks associated with the drug. These studies generally take several years
and may be conducted concurrently with Phase I clinical trials. In addition,
Phase I/II clinical trials may be conducted to evaluate not only the efficacy of
the drug candidate on the patient population, but also its safety.

Phase III clinical trials

This phase typically lasts several years and involves an even larger
patient population, often with several hundred or even several thousand patients
depending on the use for which the drug is being studied. Phase III trials are
intended to establish the overall risk-benefit ratio of the drug and provide, if
appropriate, an adequate basis for product labeling. During the Phase III
clinical trials, physicians monitor the patients to determine efficacy and to
observe and report any reactions or other safety risks that may result from use
of the drug candidate.

Chemical and formulation development

Concurrent with clinical trials and preclinical studies, companies also
must develop information about the chemistry and physical characteristics of the
drug and finalize a process for manufacturing the product in accordance with
current good manufacturing practice requirements (cGMPs). The manufacturing
process must be capable of consistently producing quality batches of the product
and the manufacturer must develop methods for testing the quality, purity, and
potency of the final drugs. Additionally, appropriate packaging must be selected
and tested and chemistry stability studies must be conducted to demonstrate that
the product does not undergo unacceptable deterioration over its shelf-life.

New drug application or biological license application

After the completion of the clinical trial phases of development, if the
sponsor concludes that there is substantial evidence that the biological or
other drug candidate is effective and that the drug is safe for its intended
use, a new drug application (NDA) or biologics license application (BLA) may be
submitted to the FDA. The application must contain all of the information on the
biological or other drug candidate gathered to that date, including data from
the clinical trials.

The FDA reviews all NDAs and BLAs submitted before it accepts them for
filing. It may request additional information rather than accepting an
application for filing. In this event, the application must be resubmitted with
the additional information. The resubmitted application is also subject to
review before the FDA accepts it for filing. Once the submission is accepted for
filing, the FDA begins an in-depth review of the application. The FDA may refer
the application to an appropriate advisory committee, typically a panel of
clinicians, for review, evaluation and a recommendation. The FDA is not bound by
the recommendation of an advisory committee. If FDA evaluations of the NDA or
BLA and the manufacturing facilities are favorable, the FDA may issue an
approval letter authorizing commercial marketing of the drug or biological
candidate for specified indications. The FDA could also issue an approvable
letter, which usually contains a number of conditions that must be met in order
to secure final approval of the NDA or BLA. When and if those conditions have
been met to the FDA's satisfaction, the FDA will issue an approval letter. On
the other hand, if the FDA's evaluation of the NDA or BLA or manufacturing
facilities is not favorable, the FDA may refuse to approve the application or
issue a non-approvable letter.

Among the conditions for NDA or BLA approval is the requirement that each
prospective manufacturer's quality control and manufacturing procedures conform
to current good manufacturing practice standards and requirements (cGMPs).
Manufacturing establishments are subject to periodic inspections by the FDA and
by other federal, state or local agencies.

COMPETITION AND MARKETING
-------------------------

Many companies, nonprofit organizations and governmental institutions are
conducting research on cytokines. Competition in the development of therapeutic
agents incorporating cytokines is intense. Large, well-established
pharmaceutical companies are engaged in cytokine research and development and
have considerably greater resources than CEL-SCI has to develop products.
Licensing and other collaborative arrangements between governmental and other
nonprofit institutions and commercial enterprises, as well as the seeking of
patent protection of inventions by nonprofit institutions and researchers, could
result in strong competition for CEL-SCI. Any new developments made by such
organizations may render CEL-SCI's licensed technology and know-how obsolete.

Several biotechnology companies are producing compounds that utilize
cytokines. However, CEL-SCI believes that its main advantage lies in two areas
and that those two areas will allow it to be successful: 1) Multikine is given
prior to surgery, radiation and/or chemotherapy, a time when the immune system
can still be activated effectively. Other companies give their immunotherapy

drugs after these cancer treatments. At that time the immune system is already
so weakened that it can no longer mount a good immune response. 2) Multikine
simulates the activities of a healthy person's immune system, which battles
cancer every day. Multikine is multi-targeted; it is a cancer immunotherapy that
both kills cancer cells in a targeted fashion and activates the general immune
system to destroy the cancer. In addition, since Multikine is a complex
biologic, CEL-SCI believes that it will be close to impossible for someone to
copy Multikine.

Some of the clinical trials funded to date by CEL-SCI have not been
approved by the FDA, but rather have been conducted pursuant to approvals
obtained from certain states and foreign countries. Conducting clinical studies
in foreign countries is normal industry practice since these studies can often
be completed in less time and are less expensive than studies conducted in the
U.S. Conducting clinical studies in foreign countries is also beneficial since
CEL-SCI will need the approval from a foreign country prior to the time CEL-SCI
can market any of its drugs in the foreign country. However, since the results
of these clinical trials may not be accepted by the FDA, competitors conducting
clinical trials approved by the FDA may have an advantage in that the products
of such competitors are further advanced in the regulatory process than those of
CEL-SCI. CEL-SCI is conducting its trials in compliance with internationally
recognized standards. By following these standards, CEL-SCI anticipates
obtaining acceptance from world regulatory bodies, including the FDA.

Once CEL-SCI has acquired the necessary funding to begin the Phase III
clinical trial, we will retain a Clinical Research Organization to establish an
accurate budget for the Phase III clinical trial.

EMPLOYEES
---------

As of December 31, 2008, CEL-SCI had 30 employees. Nine employees are
involved in administration and 21 employees are involved in manufacturing.

ITEM 1A. RISK FACTORS
----------------------

Investors should be aware that the risks described below could adversely
affect the price of CEL-SCI's common stock.

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 September 30, 2008 CEL-SCI incurred net
losses of approximately $124,696,000. CEL-SCI has relied principally upon the
proceeds of public and private sales of its securities to finance its activities
to date. All of CEL-SCI's potential products, with the exception of Multikine,

are in the early stages of development, and any commercial sale of these
products will be many years away. Even potential product sales from Multikine
are many years away as cancer trials can be lengthy. Accordingly, CEL-SCI
expects to incur substantial losses for the foreseeable future.

Since CEL-SCI does not intend to pay dividends on its common stock, any return
to investors will come only from potential increases in the price of CEL-SCI's
common stock.

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 and CEL-SCI has no intention of paying any common
stock dividends.

If CEL-SCI cannot obtain additional capital, CEL-SCI may have to postpone
development and research expenditures and may be in default on its manufacturing
facility lease, which will delay CEL-SCI's ability to produce a competitive
product. Delays of this nature may depress the price of CEL-SCI's common stock.

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. 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. 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
substantial 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.

The extent of CEL-SCI's clinical trials and research programs are
primarily based upon the amount of capital available to CEL-SCI and the extent
to which CEL-SCI has received regulatory approvals for clinical trials. CEL-SCI
is currently in the process of establishing estimates of the future costs of the
Phase III clinical trial.

In accordance with the terms of the manufacturing facility's lease,
CEL-SCI must maintain a certain amount of cash. Should CEL-SCI's cash position
fall below the amount stipulated in the lease CEL-SCI would be required to
deposit with the landlord the equivalent of one year's base rent.

The inability of CEL-SCI to conduct clinical trials or research, whether
due to a lack of capital or regulatory approval, will prevent CEL-SCI from
completing the studies and research required to obtain regulatory approval for
any products which CEL-SCI is developing.

No definite plan for marketing of Multikine has been established.

CEL-SCI has not established a definitive plan for marketing nor has it
established a price structure for CEL-SCI's saleable products. However, CEL-SCI
intends, if CEL-SCI is in a position to begin commercialization of its products,
to sell Multikine itself in certain markets and to enter into written marketing

agreements with various major pharmaceutical firms with established sales
forces. The sales forces in turn would probably target CEL-SCI's products to
cancer centers, physicians and clinics involved in head and neck cancer.

CEL-SCI may encounter problems, delays and additional expenses in
developing marketing plans with outside firms. In addition, even though
Multikine should be very cost effective to use if proven to increase overall
survival, CEL-SCI may experience other limitations involving the proposed sale
of its products, such as uncertainty of third-party reimbursement. There is no
assurance that CEL-SCI can successfully market any products which they may
develop or market them at competitive prices.

Potential Future Dilution

To raise additional capital CEL-SCI may have to sell shares of its common
stock or securities convertible into common stock at prices that may be below
the prevailing market price of CEL-SCI's common stock at the time of sale. The
issuance of additional shares will have a dilutive impact on other stockholders
and could have a negative effect on the market price of CEL-SCI's common stock.

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.

Multikine is made from components of human blood which involves inherent risks
that may lead to product destruction or patient injury which could materially
harm CEL-SCI's financial results, reputation and stock price.

Multikine is made, in part, from components of human blood. There are
inherent risks associated with products that involve human blood such as
possible contamination with viruses, including Hepatitis or HIV. Any possible
contamination could require CEL-SCI to destroy batches of Multikine or cause
injuries to patients who receive the product thereby subjecting CEL-SCI to
possible financial losses and harm to its business.

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.

Although no claims have been brought to date, participants in CEL-SCI's
clinical trials could bring civil actions against CEL-SCI for any unanticipated
harmful effects arising from the use of Multikine or any drug or product that
CEL-SCI may try to develop. Although CEL-SCI believes its insurance coverage of
$1,000,000 per claim is adequate, the defense or settlement of any product
liability claim could adversely affect CEL-SCI even if the defense and
settlement costs did not exceed CEL-SCI's insurance coverage.

CEL-SCI's directors are allowed to issue shares of preferred stock with
provisions that could be detrimental to the interests of the holders of
CEL-SCI's common stock.

The provisions in CEL-SCI's Articles of Incorporation relating to
CEL-SCI's preferred stock would allow CEL-SCI's directors to issue preferred
stock with rights to multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to CEL-SCI's common stock.
The issuance of preferred stock with such rights may make more difficult the
removal of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.

Our Independent Registered Public Accountants have issued a "Going Concern"
opinion raising doubt about our financial viability.

As a result of our continuing losses, negative cash flows, and negative
working capital, our independent registered public accounting firm, BDO Seidman,
LLP, issued a "going concern" opinion in connection with their audit of our
consolidated financial statements for the year ended September 30, 2008. This
opinion expressed substantial doubts as to our ability to continue as a going
concern. The going concern opinion could have an adverse impact on our ability
to execute our business plan, result in the reluctance on the part of certain
suppliers to do business with us, or adversely affect our ability to raise
additional debt or equity capital.

Risks Related to Government Approvals
-------------------------------------

CEL-SCI's product candidates must undergo rigorous preclinical and clinical
testing and regulatory approvals, which could be costly and time-consuming and
subject CEL-SCI to unanticipated delays or prevent CEL-SCI from marketing any
products.

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. Before obtaining marketing approval,
CEL-SCI's product candidates must undergo rigorous preclinical and clinical
testing which is costly and time consuming and subject to unanticipated delays.
There can be no assurance that such approvals will be granted.

CEL-SCI cannot be certain when or under what conditions it will undertake
further clinical trials, including the Phase III clinical trial for Multikine.
The clinical trials of CEL-SCI's product candidates may not be completed on
schedule, the FDA or foreign regulatory agencies may order CEL-SCI to stop or
modify its research or these agencies may not ultimately approve any of
CEL-SCI's product candidates for commercial sale. Varying interpretations of the
data obtained from pre-clinical and clinical testing could delay, limit or
prevent regulatory approval of CEL-SCI's product candidates. The data collected
from CEL-SCI's clinical trials may not be sufficient to support regulatory
approval of its various product candidates, including Multikine. CEL-SCI's
failure to adequately demonstrate the safety and efficacy of any of its product
candidates would delay or prevent regulatory approval of its product candidates
in the United States, which could prevent CEL-SCI from achieving profitability.

The requirements governing the conduct of clinical trials, manufacturing,
and marketing of CEL-SCI's product candidates, including Multikine, outside the
United States can vary from country to country. Foreign approvals may take
longer to obtain than FDA approvals and can require, among other things,
additional testing and different trial designs. Foreign regulatory approval
processes include all of the risks associated with the FDA approval processes.
Some of those agencies also must approve prices for products approved for
marketing. Approval of a product by the FDA does not ensure approval of the same
product by the health authorities of other countries. In addition, changes in
regulatory policy in the US or in foreign countries for product approval during
the period of product development and regulatory agency review of each submitted
new application may cause delays or rejections.

In addition to conducting further clinical studies of Multikine and
CEL-SCI's other product candidates, CEL-SCI also must undertake the development
of its manufacturing process and optimize its product formulations.

CEL-SCI has only limited experience in filing and pursuing applications
necessary to gain regulatory approvals, which may impede its ability to obtain
timely approvals from the FDA or foreign regulatory agencies, if at all. CEL-SCI
will not be able to commercialize Multikine and other product candidates until
it has obtained regulatory approval, and any delay in obtaining, or inability to
obtain, regulatory approval could harm its business. In addition, regulatory
authorities may also limit the types of patients to which CEL-SCI or others may
market Multikine or CEL-SCI's other products.

Even if CEL-SCI obtains regulatory approval for its product candidates, CEL-SCI
will be subject to stringent, ongoing government regulation.

If CEL-SCI's products receive regulatory approval, either in the United
States or internationally, CEL-SCI will be subject to extensive regulatory
requirements. These regulations are wide-ranging and govern, among other things:

o product design, development and manufacture;
o adverse drug experience;
o product advertising and promotion;
o product manufacturing, including good manufacturing practice
requirements;
o record keeping requirements;
o registration and listing of CEL-SCI's establishments and products with
the FDA and certain state agencies;
o product storage and shipping;
o drug sampling and distribution requirements;
o electronic record and signature requirements; and
o labeling changes or modifications.

CEL-SCI and any third-party manufacturers or suppliers must continually
adhere to federal regulations setting forth requirements, known as current Good
Manufacturing Practices, or cGMPs, and their foreign equivalents, which are
enforced by the FDA and other national regulatory bodies through their
facilities inspection programs. If CEL-SCI's facilities, or the facilities of
its contract manufacturers or suppliers, cannot pass a pre-approval plant
inspection, the FDA will not approve the marketing applications of CEL-SCI's
product candidates. In complying with cGMP and foreign regulatory requirements,
CEL-SCI and any of its potential third-party manufacturers or suppliers will be
obligated to expend time, money and effort in production, record-keeping and
quality control to ensure that its products meet applicable specifications and
other requirements. State regulatory agencies and the regulatory agencies of
other countries have similar requirements.

If CEL-SCI does not comply with regulatory requirements at any stage,
whether before or after marketing approval is obtained, it may be subject to
license suspension or revocation, criminal prosecution, seizure, injunction,
fines, or be forced to remove a product from the market or experience other

adverse consequences, including restrictions or delays in obtaining regulatory
marketing approval, which could materially harm CEL-SCI's financial results,
reputation and stock price. Additionally, CEL-SCI may not be able to obtain the
labeling claims necessary or desirable for product promotion. CEL-SCI may also
be required to undertake post-marketing trials. In addition, if CEL-SCI or other
parties identify adverse effects after any of CEL-SCI's products are on the
market, or if manufacturing problems occur, regulatory approval may be
withdrawn. CEL-SCI may be required to reformulate its products, conduct
additional clinical trials, make changes in its product's labeling or
indications of use, or submit additional marketing applications to support these
changes. If CEL-SCI encounters any of the foregoing problems, its business and
results of operations will be harmed and the market price of our common stock
may decline.

Also, the extent of adverse government regulations which might arise from
future legislative or administrative action cannot be predicted. Without
government approval, CEL-SCI will be unable to sell any of its products.

Risks Related to Intellectual Property
--------------------------------------

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 companies are working on drugs designed to cure or treat cancer and
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, smaller companies and non-profit institutions are
active in research relating to cancer and infectious diseases.

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 new 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.

Risks Related to CEL-SCI's Common Stock
---------------------------------------

Since the market price for CEL-SCI's common stock is volatile, investors 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. During the year ended September 30, 2008, CEL-SCI's stock
price has ranged from a low of $0.37 per share to a high of $0.78 per share.
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 future market price of CEL-SCI's
common stock.

Shares issuable upon the conversion of the Series K notes, the payment of
interest or principal on the Series K notes, the exercise of the Series K
warrants, or the exercise of other outstanding options and warrants, 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.

CEL-SCI had outstanding convertible notes, options and warrants which as
of November 30, 2008 could potentially allow the holders to acquire up to
approximately 174,100,000 additional shares of its common stock. Until the
options and warrants expire, or the convertible notes are paid, or the options
or warrants 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 convertible notes, options and warrants may
convert or exercise these securities at a time when CEL-SCI could obtain
additional capital on terms more favorable than those provided by the options.
The conversion of the notes or the exercise of the options and warrants will
dilute the voting interest of the owners of presently outstanding shares by
adding a substantial number of additional shares of CEL-SCI's common stock.

CEL-SCI has filed registration statements with the Securities and Exchange
Commission so that substantially all of the shares of common stock which are
issuable upon the exercise of outstanding options and warrants may be sold in
the public market. The sale of common stock issued or issuable upon the exercise

of the warrants described above, or the perception that such sales could occur,
may adversely affect the market price of CEL-SCI's common stock.

ITEM 1B. UNRESOLVED SEC COMMENTS
--------------------------------

None

ITEM 2. PROPERTIES
--------------------

CEL-SCI leases office space at 8229 Boone Blvd., Suite 802, Vienna,
Virginia at a monthly rental of approximately $7,590. The lease on the office
space expires in June 2012. CEL-SCI believes this arrangement is adequate for
the conduct of its present business.

CEL-SCI has a 17,900 square foot laboratory located at 4820 A-E Seton
Drive, Baltimore, Maryland. The laboratory is leased by CEL-SCI at a cost of
approximately $10,556 per month. The laboratory lease expires in 2009, with an
extension available until 2014.

In August 2007, CEL-SCI leased a building near Baltimore, Maryland. The
building, which consists of approximately 73,000 square feet, has been remodeled
in accordance with CEL-SCI's specifications so that it can be used by CEL-SCI to
manufacture Multikine for CEL-SCI's Phase III clinical trial and sales of the
drug if approved by the FDA. The lease expires on October 31, 2028 and requires
annual base rent payments of $1,575,000 during the year ending 2009. The annual
base rent escalates each year thereafter at 3%. CEL-SCI is also required to pay
all real and personal property taxes, insurance premiums, maintenance expenses,
repair costs and utilities. The lease allows CEL-SCI, at its election, to extend
the lease for two ten-year periods or to purchase the building at the end of the
20-year lease. The lease requires CEL-SCI to pay $3,150,000 towards the
remodeling costs, which will be recouped by reductions in the annual base rent
of $303,228 beginning in 2014. In July 2008, CEL-SCI was required to deposit the
equivalent of one year's base rent in accordance with the contract. The
$1,575,000 was required to be deposited when the amount of cash CEL-SCI had fell
below the amount stipulated in the lease. In December 2008, CEL-SCI was not in
compliance with certain lease requirements (i.e., failure to pay an installment
of Base Annual Rent). However, the landlord has not declared CEL-SCI formally in
default under the terms of the lease. The landlord currently has the right to
declare CEL-SCI in default if CEL-SCI fails to pay any installment of the Base
Annual Rent when such failure continues for a period of 5 business days after
CEL-SCI's receipt of written notice thereof from the Landlord, provided that if
CEL-SCI fails to pay any of the foregoing within 5 business days more than two
(2) times in any twelve (12) month period during the lease term, the Landlord
shall not be required to provide CEL-SCI with any further notice and CEL-SCI
shall be deemed to be in default. CEL-SCI is currently in negotiation with the
Landlord for rent deferral on the lease in order to conserve its cash. If
CEL-SCI does not renegotiate the lease, CEL-SCI plans to either obtain an
additional loan from Mr. de Clara or use the equity line of credit to make the
rent payments.

ITEM 3. LEGAL PROCEEDINGS
---------------------------

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------------------------------------------------------------

Not applicable.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

As of November 30, 2008, there were approximately 2,500 record holders of
CEL-SCI's common stock. CEL-SCI's common stock is traded on the NYSE Alternext
US (formerly the American Stock Exchange) under the symbol "CVM". Set forth

below are the range of high and low quotations for CEL-SCI's common stock for
the periods indicated as reported on the NYSE Alternext US. The market
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions.

Quarter Ended High Low
------------- ---- ---

12/31/06 $0.81 $0.55
3/31/07 $0.90 $0.56
6/30/07 $1.08 $0.71
9/30/07 $0.76 $0.57

12/31/07 $0.64 $0.48
3/31/08 $0.74 $0.37
6/30/08 $0.71 $0.60
9/30/08 $0.78 $0.40

Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors out of legally available funds and, in the
event of liquidation, to share pro rata in any distribution of CEL-SCI's assets
after payment of liabilities. The Board of Directors is not obligated to declare
a dividend. CEL-SCI has not paid any dividends on its common stock and CEL-SCI
does not have any current plans to pay any common stock dividends.

The provisions in CEL-SCI's Articles of Incorporation relating to
CEL-SCI's preferred stock would allow CEL-SCI's directors to issue preferred
stock with rights to multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to CEL-SCI's Common Stock.
The issuance of preferred stock with such rights may make more difficult the
removal of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.

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.

The graph below compares the cumulative 5-year total return of holders of
CEL-SCI Corporation's common stock with the cumulative total returns of the AMEX
Composite index, and a customized peer group of three companies that includes:
IDM Pharma Inc, Neoprobe Corp. and Orchestra Therapeutics Inc. The graph tracks
the performance of a $100 investment in our common stock, in the peer group, and
the index (with the reinvestment of all dividends) from September 30, 2003 to
September 30, 2008.

9/03 9/04 9/05 9/06 9/07 9/08
------------------------------------------------------------------------

CEL-SCI Corporation 100.00 61.29 50.54 66.67 67.23 43.01
AMEX
Composite 100.00 127.97 188.44 212.08 270.41 208.31
Peer Group 100.00 80.89 36.12 19.51 10.29 16.10

The stock price performance included in this graph is not necessarily
indicative of future stock price performance.

ITEM 6. SELECTED FINANCIAL DATA
--------------------------------

The following selected historical consolidated financial data are qualified
by reference to, and should be read in conjunction with the consolidated
financial statements and the related notes thereto, appearing elsewhere in this
report, as well as Item 7 of this report.

For the years ended September 30,
---------------------------------------------------------------
Statements of Operations 2008 2007 2006 2005 2004
------------------------ ---------------------------------------------------------------

Grant revenue and other $ 5,065 $ 57,043 $ 125,457 $ 269,925 $325,479
Operating expenses:
Research and development 4,101,563 2,528,528 1,896,976 2,229,729 1,941,630
Depreciation and
amortization 215,060 176,186 170,903 190,420 198,269
General and
administrative 5,200,735 6,704,538 3,406,774 1,930,543 2,310,279
Gain on derivative
instruments 1,799,393 868,182 2,325,784 363,028 1,174,660
Other income - - - 625,472 -
Other costs of financing - - (4,791,548) - -
Interest income 483,252 562,973 92,487 52,660 51,817
Interest expense (473,767) (1,708,603) (216,737) - (53,855)
------------ ------------ ------------ ------------ ------------
Net loss (7,703,415) $(9,629,657) (7,939,210) (3,039,607) (2,952,077)
------------ ------------ ------------ ------------ ------------
Dividends (424,815) - - - -
------------ ------------ ------------ ------------ ------------
Net loss available to
common shareholders $(8,128,230) $(9,629,657) $(7,939,210) $(3,039,607) $(2,952,077)
------------ ------------ ------------ ------------ ------------

Statements of Operations
------------------------

Net loss per common share
Basic $ (0.07) $ (0.10) $ (0.10) $ (0.04) $ (0.04)
Diluted $ (0.07) $ (0.10) $ (0.11) $ (0.05) $ (0.06)

Weighted average common
shares outstanding
Basic 117,060,866 97,310,488 78,971,290 72,703,395 67,273,133
Diluted (1) 117,060,866 97,310,488 93,834,078 73,581,925 68,924,099

September 30,
---------------------------------------------------------------
Balance Sheets 2008 2007 2006 2005 2004
--------------- ---------------------------------------------------------------

Working capital $(2,492,555) $10,257,568 $ 7,109,879 $ 2,235,297 $ 4,592,332
Total assets 14,683,672 20,730,802 9,653,277 3,092,352 5,513,810
Derivative instruments -
current (2) 3,018,697 782,732 1,670,234 1,280 -
Derivative instruments -
noncurrent (2) - 4,831,252 8,645,796 811,180 1,175,488
Total liabilities 3,847,637 6,060,703 10,583,878 987,313 1,391,468
Stockholders' equity
(deficit) 10,836,035 14,670,099 (930,601) 2,105,039 4,122,342

(1) The calculation of diluted earnings per share for the year ended September
30, 2007 and 2008 equals the basic earnings per share because the
calculation would have been anti-dilutive.
(2) Included in total liabilities.

No dividends have been declared on CEL-SCI's common stock. However, in
December 2007, warrants held by outsiders were extended, resulting in a $424,815
charge, which was treated as a deemed dividend and is shown as such in the
consolidated financial statements. No actual dividends were paid to
shareholders.

CEL-SCI's net losses for each fiscal quarter during the two years ended
September 30, 2008 were:

Net income (loss) per share
Net income ----------------------------
Quarter (loss) Basic Diluted
------- ------------ ----- -------

12/31/2006 $ (1,112,359) $ (0.01) $ (0.01)
3/31/2007 $ (2,723,885) $ (0.03) $ (0.03)
6/30/2007 $ (5,554,976) $ (0.05) $ (0.05)
9/30/2007 $ (238,437) $ (0.00) $ (0.00)

12/31/2007 $ (2,267,550) $ (0.02) $ (0.02)
3/31/2008 $ (3,210,294) $ (0.03) $ (0.03)
6/30/2008 $ (1,989,278) $ (0.02) $ (0.02)
9/30/2008 $ (684,389) $ (0.01) $ (0.01)

The Company has experienced large swings in its quarterly losses in 2008
and 2007. These swings are caused by the changes in the fair value of the
convertible debt each quarter. These changes in the fair value of the debt are
recorded on the consolidated statements of operations. In addition, the cost of
options granted to consultants, as discussed in the results of operations in the
10K, has affected the quarterly losses recorded by the Company.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements and the related notes thereto appearing
elsewhere in this report.

OVERVIEW
--------

CEL-SCI's most advanced product, Multikine, which is cleared for a Phase
III clinical trial in the U.S. and in Canada, is being developed for the
treatment of cancer. It is the first of a new class of cancer immunotherapy
drugs called Immune SIMULATORs. It simulates the activities of a healthy
person's immune system, which battles cancer every day. Multikine is
multi-targeted; it is the only cancer immunotherapy that both kills cancer cells
in a targeted fashion and activates the general immune system to destroy the
cancer. We believe Multikine is the first immunotherapeutic agent being
developed as a first-line standard of care treatment for cancer and it is
cleared for a global Phase III clinical trial in advanced primary (previously
untreated) head and neck cancer patients.

We believe Multikine is the first immunotherapeutic agent being developed
as a first-line treatment for cancer. It is administered prior to any other
cancer therapy because that is the period when the anti-tumor immune response
can still be fully activated. Once the patient has had surgery or has received
radiation and/or chemotherapy, the immune system is severely weakened and is
less able to mount an effective anti-tumor immune response. To date, other
immunotherapies have been administered later in cancer therapy (i.e., after
radiation, chemotherapy, surgery).

CEL-SCI also owns a pre-clinical technology called L.E.A.P.S. (Ligand
Epitope Antigen Presentation System).

Since inception, CEL-SCI has financed its operations through the issuance
of equity securities, convertible notes, loans and certain research grants.
CEL-SCI's expenses will likely exceed its revenues as it continues the

development of Multikine and brings other drug candidates into clinical trials.
Until such time as CEL-SCI becomes profitable, any or all of these financing
vehicles or others may be utilized to assist CEL-SCI's capital requirements.

Results of Operations
---------------------

Fiscal 2008
-----------

Grant revenue and other decreased by $51,978 during the year ended
September 30, 2008, compared to fiscal 2007, due to the completion of the work
funded by the grants. The final grant ended on March 31, 2007. A training grant
in the amount of $3,535 was received from the State of Maryland during the year
ended September 30, 2008. In addition, CEL-SCI received rent on an office sublet
during a portion of the fiscal year 2008.

During the year ended September 30, 2008, research and development expenses
increased by $1,573,035 compared to fiscal 2007. This increase was due to
expenses relating to the preparation for the Phase III clinical trial on
Multikine.

During the year ended September 30, 2008, general and administrative
expenses decreased by $1,503,803 compared to fiscal 2007. This change was
primarily due to stock issued to consultants in 2007 (approximately $1,825,000)
and a reduction in the public relations and presentations (approximately
$43,400) from fiscal 2007. This reduction on stock and public relation costs was
partially offset by an increase in filing fees (approximately $41,600),
insurance ($35,000) and the implementation costs of Sarbanes-Oxley requirements
(approximately $16,700).

Interest income during the year ended September 30, 2008 decreased by
$79,721 compared to fiscal 2007. The decrease was due to fewer funds available
for investment. This decrease was partially offset by interest income accrued on
the deferred rent on the manufacturing facility (approximately $190,550).

The gain on derivative instruments of $1,799,393 for the year ended
September 30, 2008 was the result of the change in fair value of the Series K
Notes and Series K Warrants during the year. These gains were caused by
fluctuations in the share price of CL-SCI's common stock.

The interest expense of $473,767 for the year ended September 30, 2008 was
composed of three elements: 1) amortization of the Series K discount ($249,106),
2) interest paid and accrued on the Series K debt ($217,140) and 3) loan
interest ($7,521). This is a decline of approximately $1,234,836 from the year
ended September 30, 2007 due to the lower principal balance of Series K notes.

Fiscal 2007
-----------

Grant revenues and other decreased by approximately $68,400 during the
year ended September 30, 2007 compared to the previous year due to the
completion of the grant in March 2007.

During the year ended September 30, 2007, research and development
expenses increased by approximately $631,600 compared to the year ended
September 30, 2006. This increase was due to work on two new CEL-1000 projects

and the use of lab supplies in the preparation for the beginning of the Phase
III trials on Multikine.

During the year ended September 30, 2007, general and administrative
expenses increased by approximately $3,297,800 compared to the year ended
September 30, 2006. This change was primarily due to: (1) increased public
relations, presentations and strategic consulting agreements (approximately
$3,231,000); (2) additional accounting expenses relating to the valuation of the
Series K notes and warrants (approximately $76,100), and, (3) increased travel
by CEL-SCI's employees (approximately $37,500).

During the year ended September 30, 2007, interest income increased by
approximately $470,500 compared to the year ended September 30, 2006 due to
interest earned on the funds received from the sale of the Series K notes and
the shares of common stock sold in April 2007.

The gain on derivative instruments of approximately $868,200 for the year
ended September 30, 2007, was the result of the change in fair value of the
Series K notes and warrants during the period.

The interest expense of approximately $1,708,600 for the year ended
September 30, 2007 was composed of two elements: (1) amortization of the
discounted Series K notes (approximately $1,180,400) and (2) interest paid and
accrued on the Series K warrants (approximately $528,200).

Research and Development Expenses
---------------------------------

During the five years ended September 30, 2008 CEL-SCI's research and
development efforts involved Multikine and L.E.A.P.S. The table below shows the
research and development expenses associated with each project during this
five-year period.

2008 2007 2006 2005 2004
---- ---- ---- ---- ----

MULTIKINE $3,765,258 $2,217,108 $1,656,362 $1,911,615 $1,539,454
L.E.A.P.S. 336,305 311,420 240,614 318,114 402,176
------------------------------------ -----------------------

TOTAL $4,101,563 $2,528,528 $1,896,976 $2,229,729 $1,941,630
========== ========== ========== ========== ==========

In January 2007, FDA gave the go-ahead for the Phase III clinical trial
which had earlier been cleared by the Canadian regulatory agency, the Biologics
and Genetic Therapies Directorate.

As explained in Item 1 of this report, as of September 30, 2008, CEL-SCI
was involved in a number of pre-clinical studies with respect to its L.E.A.P.S.
technology. As with Multikine, CEL-SCI does not know what obstacles it will
encounter in future pre-clinical and clinical studies involving its L.E.A.P.S.
technology. Consequently, CEL-SCI cannot predict with any certainty the funds
required for future research and clinical trials and the timing of future
research and development projects.

CEL-SCI's lead product, Multikine, has been cleared for a global Phase III
clinical trial in advanced primary (previously untreated) head and neck cancer
patients. CEL-SCI is currently working on partnerships and joint ventures to
finance the part of the Phase III clinical trial that is not currently funded by
its partners. Once CEL-SCI raises the necessary funding to begin the Phase III
clinical trial, we will retain a Clinical Research Organization to establish an
accurate budget for the Phase III clinical trial.

Clinical and other studies necessary to obtain regulatory approval of a
new drug involve significant costs and require several years to complete. The
extent of CEL-SCI's clinical trials and research programs are primarily based
upon the amount of capital available to CEL-SCI and the extent to which CEL-SCI
has received regulatory approvals for clinical trials. The inability of CEL-SCI
to conduct clinical trials or research, whether due to a lack of capital or
regulatory approval, will prevent CEL-SCI from completing the studies and
research required to obtain regulatory approval for any products which CEL-SCI
is developing. Without regulatory approval, CEL-SCI will be unable to sell any
of its products.

Since all of CEL-SCI's projects are under development, CEL-SCI cannot
predict when it will be able to generate any revenue from the sale of any of its
products.

Liquidity and Capital Resources
-------------------------------

CEL-SCI has had only limited revenues from operations since its inception
in March l983. CEL-SCI has relied primarily upon proceeds realized from the
public and private sale of its common and preferred stock and convertible notes
to meet its funding requirements. Funds raised by CEL-SCI have been expended
primarily in connection with the acquisition of an exclusive worldwide license
to, and later purchase of, certain patented and unpatented proprietary
technology and know-how relating to the human immunological defense system,
patent applications, the repayment of debt, the continuation of research and
development sponsored by CEL-SCI, administrative costs and construction of
laboratory facilities. Inasmuch as CEL-SCI does not anticipate realizing
revenues until such time as it enters into licensing arrangements regarding the
technology and know-how licensed to it (which could take a number of years),
CEL-SCI is mostly dependent upon the proceeds from the sale of its securities to
meet all of its liquidity and capital resource requirements.

CEL-SCI's working capital at September 30, 2008 was $(2,492,555) compared
to $10,257,568 at September 30, 2007. The convertible debt of $2,240,715 and the
short-term loan of $200,000 (repaid in November 2008) are the only debt that
CEL-SCI has outstanding.

During fiscal year 2008, cash and cash equivalents decreased by
approximately $10,281,800 over fiscal year 2007. Net cash provided by financing
activities totaled approximately $183,150 and resulted primarily from the
issuance of stock and was used for the new manufacturing facility and equipment
purchases and patent costs.

Cash used in investing activities totaled $2,523,123. The additional cost
of the manufacturing facility totaled $2,359,473 and equipment purchases, most
for the manufacturing facility, totaled $1,023,011. In addition, expenditures
for patent costs during the fiscal year were $121,616.

Components of the cash used in operating activities ($7,941,790), were the
net loss of $7,703,415 and the cost of stock and options issued, options and
warrants extended and repriced, to both employees and nonemployees of
$2,841,201. The gain on derivative instruments of $1,799,393 and an additional
deposit on the manufacturing facility ($1,575,000) required by the contract were
other major components of the cash used in operating activities.

drug if approved by the FDA. The lease expires on October 31, 2028 and requires
annual base rent payments of $1,575,000 during the year ending October 31, 2009.
The annual base rent escalates each year thereafter at 3%. CEL-SCI is also
required to pay all real and personal property taxes, insurance premiums,
maintenance expenses, repair costs and utilities. The lease allows CEL-SCI, at
its election, to extend the lease for two ten-year periods or to purchase the
building at the end of the 20-year lease. The lease required CEL-SCI to pay
$3,150,000 towards the remodeling costs, which will be recouped by reductions in
the annual base rent of $303,228 beginning in 2014.

In December 2008, CEL-SCI was not in compliance with certain lease
requirements (i.e., failure to pay an installment of Base Annual Rent). However,
the landlord has not declared CEL-SCI formally in default under the terms of the
lease. The landlord currently has the right to declare CEL-SCI in default if
CEL-SCI fails to pay any installment of the Base Annual Rent when such failure
continues for a period of 5 business days after CEL-SCI's receipt of written
notice thereof from the Landlord, provided that if CEL-SCI fails to pay any of
the foregoing within 5 business days more than two (2) times in any twelve (12)
month period during the lease term, the Landlord shall not be required to
provide CEL-SCI with any further notice and CEL-SCI shall be deemed to be in
default. CEL-SCI is currently in negotiation with the Landlord for rent deferral
on the lease in order to conserve its cash. If we do not renegotiate the lease
we plan to either get an additional loan from Mr. deClara or use the equity line
of credit to make the rent payments.

Regulatory authorities prefer to see biologics, such as Multikine,
manufactured for commercial sale in the same facility used to produce dosages
used in Phase III clinical trials since this arrangement helps to ensure that
the drug lots used to conduct the clinical trials will be consistent with those
that nay be subsequently sold commercially. Although some biotech companies
outsource their manufacturing, this can prevent problems since biologics require
intense manufacturing and process control. With biologic products a minor change
in manufacturing and process control can result in a major change in the final
product. Good and consistent manufacturing and process control is critical and
is best assured if the product is manufactured and controlled in the
manufacturer's own facility by its own specially trained personnel.

On August 4, 2006, CEL-SCI sold Series K convertible notes, plus Series K
warrants, to independent private investors for $8,300,000. The Notes bear
interest annually at the greater of 8% or 6 month LIBOR plus 3% per year. The
Notes are due and payable on August 4, 2011 and are secured and collateralized
by substantially all of CEL-SCI's assets.

Interest is payable quarterly. Since March 2007 CEL-SCI has been required
to make monthly payments of $207,500 toward the principal amount of the Notes.
If CEL-SCI fails to make any interest or principal payment when due, the Notes
will become immediately due and payable.

At CEL-SCI's election, and under certain conditions, CEL-SCI may use
shares of its common stock to make interest and principal payments.

At the holder's option the Series K notes are convertible into shares of
the Company's common stock at a Conversion Price of $0.75.

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 above the Conversion Price,
but below the average closing price of CEL-SCI's common stock over the five
trading days prior to the sale of the shares, the Conversion Price will be
lowered to a price determined by a formula contained in the Notes. The
Conversion Price will also be proportionately adjusted in the event of any stock
splits.

CEL-SCI has filed a registration statement with the Securities and
Exchange Commission so that the shares of common stock issuable upon the
conversion of the Series K notes or the exercise of the Series K warrants may be
resold in the public market. CEL-SCI is required to keep the registration
statement continuously effective until the shares covered by the registration
statement have been sold or can be sold pursuant to Rule 144(k). If CEL-SCI
fails to comply with this provision, CEL-SCI will be required to pay damages to
the holders of the Notes.

At any time after August 4, 2009 any Note holder will have the right to
require CEL-SCI to redeem all or any portion of the outstanding principal amount
of the Notes, plus all accrued but unpaid interest.

The Series K warrants allow the holders to purchase up to 4,825,581 shares
of CEL-SCI's common stock at a price of $0.75 per share at any time prior to
February 4, 2012.

The exercise price of the Series K warrants, as well as the shares
issuable upon the exercise of the warrants, will be proportionately adjusted in
the event of any stock splits.

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 K 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 CEL-SCI sells any additional shares of common stock or any securities
convertible into common stock at a price above the exercise price but below the
market price of CEL-SCI's common stock, the exercise price of the Series K
warrants will be lowered to a price determined by a formula contained in the
warrants.

As of September 30, 2008, Series K notes in the principal amount of
$4,399,284 had been converted into 5,744,765 shares of CEL-SCI's common stock.
In addition, principal payments of $1,452,500 in cash and $207,500 in shares of
common stock were made to the holders of the Series K notes. As of September 30,
2008 the outstanding principal balance on the Series K notes was $2,240,715.

In April 2007 CEL-SCI raised $15,000,000 from the sale of 19,999,998
shares of its common stock at a price of $0.75 per share. The investors who
purchased the shares also received warrants which entitle the holders to
purchase 10,000,000 shares of CEL-SCI's common stock at a price of $0.75 per
share and warrants to purchase an additional 10,000,000 shares of common stock
at a price of $2.00 per share. The warrants expire on March 31, 2012.

As a result of the April 2007 financing, and in accordance with the terms
of the Series K notes and warrants, the conversion price of the Series K notes
was reduced to $0.75 and the exercise price of the Series K warrants was reduced
to $0.75.

On August 18, 2008, CEL-SCI sold 1,383,389 shares of common stock and
2,075,084 warrants in a private financing for $1,037,500. The shares were sold
at $0.75, a significant premium over the closing price of CEL-SCI's common stock
on the date of sale. Each warrant entitles the holder to purchase one share of

CEL-SCI's common stock at a price of $0.75 per share at any time prior to August
18, 2014. The shares have no registration rights.

Future Capital Requirements
---------------------------

CEL-SCI has two partners who have agreed to participate in and pay for part
of the Phase III clinical trial for Multikine. However in light of the current
capital market environment, CEL-SCI believes it is prudent not to start the
Phase III clinical trial until it has firm commitments in the form of
partnerships and/or money raised for a substantial amount of cash to support the
Phase III clinical trial. In the meantime, CEL-SCI will operate at significantly
reduced cash expenditure levels and additional cash may be raised by offering
contract manufacturing services to the pharmaceutical industry in its new
manufacturing facility. CEL-SCI expects that it will need to raise additional
capital in fiscal year 2009 in the form of corporate partnerships and/or equity
financings to support its operations at its current rate. CEL-SCI is currently
working towards a transaction which it expects to complete in fiscal 2009 which
will finance its Phase III clinical trial of Multikine. CEL-SCI believes that it
will be able to obtain additional financing since Multikine is a Phase III
product designed to treat cancer, an area that pharmaceutical companies are
increasingly targeting. CEL-SCI is working on a sale-leaseback program for the
equipment it owns which would provide CEL-SCI approximately $1.5 million in
additional cash. It is important to note that CEL-SCI's expenditures for fiscal
year 2008 included several very large non-recurring expenses that amounted to
several million dollars, mostly related to the build out of the manufacturing
facility. These expenses will not recur in fiscal year 2009, thereby reducing
CEL-SCI's expenditures significantly. Beyond those savings CEL-SCI has also made
other very significant cuts in its expenditures and certain vendors have agreed
to take common stock in lieu of cash payments. In addition, CEL-SCI has put in
place a $5 million Equity Line of Credit (see Note 15). With this Equity Line of
Credit in place CEL-SCI believes it will have the required capital to continue
operations into January 2010. However, if necessary CEL-SCI can make further
reductions in expenditures by a reduction in force or by implementation of a
salary reduction program.

The Company has determined that the convertible debt holders of the Series
K Notes may require repayment of the entire remaining principal balance at any
time after August 4, 2009. This debt can be paid in stock and may not require a
cash payment. In addition, in December 2008, CEL-SCI was not in compliance with
certain lease requirements (i.e., failure to pay an installment of Base Annual
Rent). However, the landlord has not declared CEL-SCI formally in default under
the terms of the lease. The landlord currently has the right to declare CEL-SCI
in default if CEL-SCI fails to pay any installment of the Base Annual Rent when
such failure continues for a period of 5 business days after CEL-SCI's receipt
of written notice thereof from the Landlord, provided that if CEL-SCI fails to
pay any of the foregoing within 5 business days more than two (2) times in any
twelve (12) month period during the lease term, the Landlord shall not be
required to provide CEL-SCI with any further notice and CEL-SCI shall be deemed
to be in default. CEL-SCI is currently in negotiation with the Landlord for rent
deferral on the lease in order to conserve its cash. If we do not renegotiate
the lease we plan to either get an additional loan from Mr. deClara or use the
equity line of credit to make the rent payments.

In general, with the reduction in expenses and the $5 million Equity Line
in place, the Company expects to have enough cash to continue operations through
January 2010 if the debt holders do not exercise their put options and the
landlord of their manufacturing facility does not issue a default notice. The
Company's independent audit firm has issued an audit opinion that expresses
doubt about the Company's ability to continue as a going concern mainly due to
continued losses from operations, the debt holders ability to exercise their put
options, and the potential for the landlord to issue a default notice.

While there can be no assurance that the debt holders will not exercise
their put option, and the landlord of the manufacturing facility will not issue
a default notice, the Company continues to work on solutions for additional
financing and ways to reduce expenses. The Company has shown in the past that
they are able to secure financing to continue operations. However, there is no
assurance to do so in the future.

Other than funding operating losses, funding its research and development
program, and paying its liabilities, CEL-SCI does not have any material capital
commitments. Material future liabilities as of September 30, 2008 are as
follows:

Contractual Obligations:

Years Ending September 30,
--------------------------------------------------------------------------
Total 2009 2010 2011 2012 2013 2014 & thereafter
----- ---- ---- ---- ---- ---- -----------------

Operating Leases $38,212,676 $1,711,320 $1,727,368 $1,779,188 $1,805,169 $1,751,839 $29,437,792
Employment
Contracts $ 1,576,400 $ 963,825 $ 612,575 -- -- -- --

It should be noted that substantial funds will be needed for the clinical
trial which will be necessary before CEL-SCI will be able to apply to the FDA
for approval to sell any products which may be developed on a commercial basis
throughout the United States. In the absence of revenues, CEL-SCI will be
required to raise additional funds through the sale of securities, debt
financing or other arrangements in order to continue with its research efforts.
However, there can be no assurance that such financing will be available or be
available on favorable terms. Ultimately, CEL-SCI must complete the development
of its products, obtain appropriate regulatory approvals and obtain sufficient
revenues to support its cost structure.

Since all of CEL-SCI's projects are under development CEL-SCI cannot
predict with any certainty the funds required for future research and clinical
trials, the timing of future research and development projects, or when it will
be able to generate any revenue from the sale of any of its products.

CEL-SCI's cash flow and earnings are subject to fluctuations due to
changes in interest rates on its certificates of deposit, and, to an immaterial
extent, foreign currency exchange rates.

Subsequent Events

On November 3, 2008, the Company extended its licensing agreement for
Multikine with Orient Europharma. The new agreement extends the Multikine
collaboration to also cover South Korea, the Philippines, Australia and New
Zealand. The licensing agreement initially focuses on the areas of head and neck
cancer, nasopharyngeal cancer and potentially cervical cancer. As part of this
new agreement, Orient Europharma invested $500,000 in the Company.

Effective December 3, 2008, Dr. Daniel Zimmerman, the Company's Senior Vice
President of Research, Cellular Immunology, and John Cipriano, the Company's
Senior Vice President of Regulatory Affairs, have agreed to become consultants
to the Company on an as needed basis thereby ending their full time employment
with the Company. The stock and options owned by these two individuals will
fully vest on January 1, 2009

On December 30, 2008, CEL-SCI entered into an equity line of credit
agreement as a source of funding for CEL-SCI. For a two-year period, the
agreement allows CEL-SCI, at its discretion, to sell up to $5 million of
CEL-SCI's common stock at the volume weighted average price on the day of the
drawdown, less 9%. CEL-SCI may request a drawdown once every ten trading days,
although CEL-SCI is under no obligation to request any drawdowns under the
equity line of credit. The equity line of credit expires on January 6, 2011.

In December 2008 and January 2009 CEL-SCI Maximilian de Clara, CEL-SCI's
president and a director, loaned CEL-SCI a total of $230,000. The loan bears
interest at 15% per year and is payable on March 27, 2009.

Critical Accounting Policies
----------------------------

CEL-SCI's significant accounting policies are more fully described in Note
1 to the consolidated financial statements. However, certain accounting policies
are particularly important to the portrayal of financial position and results of
operations and require the application of significant judgments by management.
As a result, the consolidated financial statements are subject to an inherent
degree of uncertainty. In applying those policies, management uses its judgment
to determine the appropriate assumptions to be used in the determination of
certain estimates. These estimates are based on CEL-SCI's historical experience,
terms of existing contracts, observance of trends in the industry and
information available from outside sources, as appropriate. CEL-SCI's
significant accounting policies include:

Patents - Patent expenditures are capitalized and amortized using the
straight-line method over 17 years. In the event changes in technology or other
circumstances impair the value or life of the patent, appropriate adjustment in
the asset value and period of amortization is made. An impairment loss is
recognized when estimated future undiscounted cash flows expected to result from
the use of the asset, and from disposition, is less than the carrying value of
the asset. The amount of the impairment loss is the difference between the
estimated fair value of the asset and its carrying value.

Stock Options and Warrants - SFAS No. 123R requires companies to recognize
expense associated with share based compensation arrangements, including
employee stock options, using a fair value-based option pricing model. SFAS No.
123R applies to all transactions involving issuance of equity by a company in
exchange for goods and services, including employees. Using the modified
prospective transition method of adoption, CEL-SCI reflects compensation expense
in the financial statements beginning October 1, 2005. The modified prospective
transition method does not require restatement of prior periods to reflect the
impact of SFAS No. 123R. As such, compensation expense is recognized for awards
that were granted, modified, repurchased or cancelled on or after October 1,
2005.

Options to non-employees are accounted for in accordance with FASB's
Emerging Issues Task Force (EITF) Issue 96-18 Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services. Accordingly, compensation is recognized when goods
or services are received and is measured using the Black-Scholes valuation
model. The Black-Scholes model requires CEL-SCI's management to make assumptions
regarding the fair value of the options at the date of grant and the expected
life of the options.

Asset Valuations and Review for Potential Impairments - CEL-SCI reviews
its fixed assets, intangibles and deferred rent every fiscal quarter. This
review requires that CEL-SCI make assumptions regarding the value of these
assets and the changes in circumstances that would affect the carrying value of
these assets. If such analysis indicates that a possible impairment may exist,
CEL-SCI is then required to estimate the fair value of the asset and, as deemed
appropriate, expense all or a portion of the asset. The determination of fair
value includes numerous uncertainties, such as the impact of competition on
future value. CEL-SCI believes that it has made reasonable estimates and

judgments in determining whether its long-lived assets have been impaired;
however, if there is a material change in the assumptions used in its
determination of fair values or if there is a material change in economic
conditions or circumstances influencing fair value, CEL-SCI could be required to
recognize certain impairment charges in the future. As a result of the reviews,
no changes in asset values were required.

Prepaid Expenses and Laboratory Supplies--The majority of prepaid expenses
consist of bulk purchases of laboratory supplies used on a daily basis in the
lab and items that will be used for future production. The items in prepaid
expenses are expensed when used in production or daily activity as Research and
Development expenses. These items are disposables and consumables and can be
used for both the manufacturing of Multikine for clinical studies and in the
laboratory for quality control and bioassay use. They can be used in training,
testing and daily laboratory activities. Other prepaid expenses are payments for
services over a long period and are expensed over the time period for which the
service is rendered.

Derivative Instruments--CEL-SCI enters into financing arrangements that
consist of freestanding derivative instruments or are hybrid instruments that
contain embedded derivative features. CEL-SCI accounts for these arrangement in
accordance with Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", ("SFAS No. 133") and
Emerging Issues Task Force Issue No. 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock",
("EITF 00-19"), as well as related interpretations of these standards. In
accordance with accounting principles generally accepted in the United States
("GAAP"), derivative instruments and hybrid instruments are recognized as either
assets or liabilities in the statement of financial position and are measured at
fair value with gains or losses recognized in earnings or other comprehensive
income depending on the nature of the derivative or hybrid instruments. Embedded
derivatives that are not clearly and closely related to the host contract are
bifurcated and recognized at fair value with changes in fair value recognized as
either a gain or loss in earnings if they can be reliably measured. When the
fair value of embedded derivative features cannot be reliably measured, CEL-SCI
measures and reports the entire hybrid instrument at fair value with changes in
fair value recognized as either a gain or loss in earnings. CEL-SCI determines
the fair value of derivative instruments and hybrid instruments based on
available market data using appropriate valuation models, giving consideration
to all of the rights and obligations of each instrument and precluding the use
of "blockage" discounts or premiums in determining the fair value of a large
block of financial instruments. Fair value under these conditions does not
necessarily represent fair value determined using valuation standards that give
consideration to blockage discounts and other factors that may be considered by
market participants in establishing fair value.

Recent Accounting Pronouncements
--------------------------------

In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements". The statement defines fair value, establishes a framework for
measuring fair value in GAAP and expands disclosures about fair value
measurements. In February 2008, the FASB issued FASB Staff Position ("FSP") No.
157-2, Effective Data of FASB Statement No. 157. FSP 157-2 delays the effective
date of SFAS 157 to fiscal years beginning after November 15, 2008, for

nonfinancial assets and nonfinancial liabilities, except for items that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). The Company is evaluating whether this statement will
affect its current practice in valuing fair value of its derivatives each
quarter. The effect of the adoption is expected to be immaterial.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 15". The Statement permits companies to choose to measure many
financial instruments and certain other items at fair value. The statement is
effective for fiscal years that begin after November 15, 2007, but early
adoption is permitted. The effect will be immaterial.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations", which replaces SFAS No. 141. The statement retains the purchase
method of accounting for acquisitions, but requires a number of changes,
including changes in the way assets and liabilities are recognized in the
purchase accounting. It also changes the recognition of assets acquired and
liabilities assumed arising from contingencies, requires the capitalization of
in-process research and development at fair value, and requires the expensing of
acquisition-related costs as incurred. SFAS No. 141R is effective beginning
October 1, 2009 and will apply prospectively to business combinations completed
on or after that date.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests
in Consolidated Financial Statements, an amendment of ARB 51", which changes the
accounting and reporting for minority interests. Minority interests will be
recharacterized as noncontrolling interests and will be reported as a component
of equity separate from the parent's equity, and purchases or sales of equity
interests that do not result in a change in control will be accounted for as
equity transactions. In addition, net income attributable to the noncontrolling
interest will be included in consolidated net income on the face of the income
statement and, upon loss of control, the interest sold, as well as any interest
retained, will be recorded at fair value with any gain or loss recognized in
earnings. SFAS No. 160 is effective beginning October 1, 2009 and will apply
prospectively, except for the presentation and disclosure requirements, which
will apply retrospectively.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No. 133",
which changes disclosure requirements for derivative instruments and hedging
activities. The statement is effective for periods ending on or after November
15, 2008, with early application encouraged. The Company is currently assessing
the additional requirements of this statement.

In April 2008, the FASB staff issued PSP FAS 142-3, "Determination of the
Useful Life of Intangible Assets", which amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FASB Statement No. 142,
"Goodwill and Other Intangible Assets". The staff position is intended to
improve the consistency between the useful life of a recognized intangible asset
under Statement 142 and the period of expected cash flows used to measure the
fair value of the asset under FASB Statement No. 141, "Business Combinations",

and other U.S. generally accepted accounting principles (GAAP). The Company is
currently assessing the potential impact of this staff position on its
consolidated financial statements.

In June 2008, the FASB finalized EITF 07-5, "Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock". The EITF
lays out a procedure to determine if the debt instrument is indexed to its own
common stock. The EITF is effective for fiscal years beginning after December
15, 2008. The Company believes it will have an impact on the convertible debt
and certain warrants and it could be material.

In September 2008, the FASB staff issued PSP FAS 133-1 and FIN 45-4,
"Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the
Effective Date of FASB Statement No. 161". The FSP applies to credit derivatives
within the scope of Statement 133 and hybrid instruments that have embedded
credit derivatives. It deals with disclosures related to these derivatives and
is effective for reporting periods ending after November 15, 2008. It also
clarifies the effective date of SFAS No. 161 as any reporting period beginning
after November 15, 2008. The Company is currently assessing the potential impact
of this staff position on its consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
-------------------------------------------------------------------

Market risk is the potential change in an instrument's value caused by,
for example, fluctuations in interest and currency exchange rates. CEL-SCI
enters into financing arrangements that are or include freestanding derivative
instruments or that are or include hybrid instruments that contain embedded
derivative features. CEL-SCI does not enter into derivative instruments for
trading purposes. Additional information is presented in the notes to
consolidated financial statements. The fair value of these instruments is
affected primarily by volatility of the trading prices of the CEL-SCI's common
stock. For the years ended September 30, 2008, 2007 and 2006, CEL-SCI recognized
a gain of $1,799,393, $868,182, and $2,325,784, respectively, resulting from
changes in fair value of derivative instruments. CEL-SCI has no exposure to
risks associated with foreign exchange rate changes because none of the
operations of CEL-SCI are transacted in a foreign currency. The interest rate
risk on investments is considered immaterial due to the dollar value of
investments as of September 30, 2008, 2007 and 2006.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the consolidated financial statements included with this Report.

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable

ITEM 9A. and 9A(T). CONTROLS AND PROCEDURES

Under the direction and with the participation of CEL-SCI's management,
including CEL-SCI's Chief Executive Officer and Chief Financial Officer, CEL-SCI
carried out an evaluation of the effectiveness of the design and operation of
its disclosure controls and procedures as of September 30, 2008. CEL-SCI
maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in its periodic reports with the Securities
and Exchange Commission is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and regulations, and that such
information is accumulated and communicated to CEL-SCI's management, including
its principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure. CEL-SCI's disclosure
controls and procedures are designed to provide a reasonable level of assurance
of reaching its desired disclosure control objectives. Based on the evaluation,
the Chief Executive Officer and Cheif Financial Officer have concluded that
these disclosure controls and procedures are effective as of September 30, 2008.

Management's Report on Internal Control Over Financial Reporting

CEL-SCI's management is responsible for establishing and maintaining
adequate internal control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of CEL-SCI's principal executive
officer and principal financial officer and implemented by CEL-SCI's Board of
Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
CEL-SCI's financial statements in accordance with U.S. generally accepted
accounting principles.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Geert Kersten, CEL-SCI's Chief Executive and Principal Financial Officer,
evaluated the effectiveness of CEL-SCI's internal control over financial
reporting as of September 30, 2008 based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or the COSO Framework. Management's
assessment included an evaluation of the design of CEL-SCI's internal control
over financial reporting and testing of the operational effectiveness of those
controls.

Based on this evaluation, Mr. Kersten concluded that CEL-SCI's internal
control over financial reporting was effective as of September 30, 2008.

There was no change in CEL-SCI's internal control over financial reporting
that occurred during the quarter ended September 30, 2008 that has materially
affected, or is reasonably likely to materially affect, CEL-SCI's internal
control over financial reporting.

This report does not include an attestation report of CEL-SCI's
independent registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
CEL-SCI's independent registered public accounting firm pursuant to temporary
rules of the SEC that permit CEL-SCI to provide only management's report on
internal control in this report.

ITEM 9B. OTHER INFORMATION
---------------------------

Not applicable.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors

Name Age Position
---- --- --------

Maximilian de Clara 78 Director and President
Geert R. Kersten, Esq. 49 Director, Chief Executive Officer and Treasurer
Patricia B. Prichep 57 Senior Vice President of Operations and Secretary
Dr. Eyal Talor 52 Senior Vice President of Research and
Manufacturing
Dr. Daniel H. Zimmerman 67 Senior Vice President of Research, Cellular
Immunology
John Cipriano 66 Senior Vice President of Regulatory Affairs
Alexander G. Esterhazy 66 Director
Dr.C. Richard Kinsolving 72 Director
Dr. Peter R. Young 63 Director

The directors of CEL-SCI serve in such capacity until the next annual
meeting of CEL-SCI's shareholders and until their successors have been duly
elected and qualified. The officers of CEL-SCI serve at the discretion of
CEL-SCI's directors.

Mr. Maximilian de Clara, by virtue of his position as an officer and
director of CEL-SCI, may be deemed to be the "parent" and "founder" of CEL-SCI
as those terms are defined under applicable rules and regulations of the SEC.

The principal occupations of CEL-SCI's officers and directors, during the
past several years, are as follows:

Maximilian de Clara has been a Director of CEL-SCI since its inception in
March l983, and has been President of CEL-SCI since July l983. Prior to his
affiliation with CEL-SCI, and since at least l978, Mr. de Clara was involved in
the management of his personal investments and personally funding research in
the fields of biotechnology and biomedicine. Mr. de Clara attended the medical
school of the University of Munich from l949 to l955, but left before he
received a medical degree. During the summers of l954 and l955, he worked as a
research assistant at the University of Istanbul in the field of cancer
research. For his efforts and dedication to research and development in the
fight against cancer and AIDS, Mr. de Clara was awarded the "Pour le Merit"

honorary medal of the Austrian Military Order "Merito Navale" as well as the
honor cross of the Austrian Albert Schweitzer Society.

Geert Kersten has served in his current leadership role at CEL-SCI since
1995. Mr. Kersten has been with CEL-SCI from the early days of its inception
since 1987. He has been involved in the pioneering field of cancer immunotherapy
for almost two decades and has successfully steered CEL-SCI through many
challenging cycles in the biotechnology industry. Mr. Kersten also provides
CEL-SCI with significant expertise in the fields of finance and law and has a
unique vision of how the company's Multikine product will change the way cancer
is treated. Prior to CEL-SCI, Mr. Kersten worked at the law firm of Finley &
Kumble and worked at Source Capital, an investment banking firm located in
McLean, VA. He is a native of Germany, graduated from Millfield School in
England, and completed his studies in the US. Mr. Kersten completed his
Undergraduate Degree in Accounting, received an M.B.A. from George Washington
University, and a law degree (J.D.) from American University in Washington, DC.

Patricia B. Prichep joined CEL-SCI in 1992 and has been CEL-SCI's Senior
Vice President of Operations since March 1994. Between December 1992 and March
1994, Ms. Prichep was CEL-SCI's Director of Operations. Ms. Prichep became
CEL-SCI's Corporate Secretary in May 2000. She is responsible for all day-to-day
operations of the Company, including human resources and is the liaison with the
auditing firm for financial reporting. June 1990 to December 1992, Ms. Prichep
was the Manager of Quality and Productivity for the NASD's Management, Systems
and Support Department. She was responsible for the internal auditing and work
flow analysis of operations. Between 1982 and 1990, Ms. Prichep was Vice
President and Operations Manager for Source Capital, Ltd. She handled all
operations and compliance for the company and was licensed as a securities
broker. Ms. Prichep received her B.A. from the University of Bridgeport in
Connecticut.

Eyal Talor, Ph.D. joined CEL-SCI in October 1993 and has been Senior Vice
president of Research and Manufacturing since March of 1994. He is a clinical
immunologist with over 19 years of hands-on management of clinical research and
drug development for immunotherapy application; pre-clinical to Phase III, in
the biopharmaceutical industry. His expertise includes; biopharmaceutical R&D
and Biologics product development, GMP (Good Manufacturing Practices)
manufacture, Quality Control testing, and the design and building of GMP
manufacturing and testing facilities. He served as Director of Clinical
Laboratories (certified by the State of Maryland) and has experience in the
design of clinical trials (Phase I - III) and GCP (Good Clinical Practices)
requirements. He also has broad experience in the different aspects of
biological assay development, analytical methods validation, raw material
specifications, and QC (Quality Control) tests development under FDA/GMP, USP,
and ICH guidelines. He has extensive experience in the preparation of
documentation for IND and other regulatory submissions. His scientific area of
expertise encompasses immune response assessment. He is the author of over 25
publications and has published a number of reviews on immune regulations in
relation to clinical immunology. Before coming to CEL-SCI, he was Director of
R&D and Clinical Development at CBL, Inc., Principal Scientist - Project
Director, and Clinical Laboratory Director at SRA Technologies, Inc. Prior to
that he was a full time faculty member at The Johns Hopkins University, Medical
Intuitions; School of Public Health. He holds two US patents; one on Multikine's

composition of matter and method of use in cancer, and one on a platform Peptide
technology (`Adapt') for the treatment of autoimmune diseases, asthma, allergy,
and transplantation rejection. He also has numerous product and process
inventions as well as a number of pending US and PCT patent applications. He
received his Ph.D. in Microbiology and Immunology from the University of Ottawa,
Ottawa, Ontario, Canada, and had post-doctoral training in clinical and cellular
immunology at The John Hopkins University, Baltimore, Maryland, USA. He holds an
Adjunct Associate teaching position at the Johns Hopkins University Medical
Institutions.

Daniel H. Zimmerman, Ph.D., has been CEL-SCI's Senior Vice President of
Cellular Immunology since 1996. He joined CEL-SCI in January 1996 as the Vice
President of Research, Cellular Immunology. Dr. Zimmerman founded CELL-MED, Inc.
and was its president from 1987-1995. From 1973-1987, Dr. Zimmerman served in
various positions at Electronucleonics, Inc. His positions included: Scientist,
Senior Scientist, Technical Director and Program Manager. Dr Zimmerman held
various teaching positions at Montgomery College between 1987 and 1995. Dr.
Zimmerman holds over a dozen US patents as well as many foreign equivalent
patents. He is the author of over 40 scientific publications in the area of
immunology and infectious diseases. He has been awarded numerous grants from NIH
and DOD. From 1969-1973, Dr. Zimmerman was a Senior Staff Fellow at NIH. For the
following 25 years, he continued on at NIH as a guest worker. Dr Zimmerman
received a Ph.D. in Biochemistry in 1969, a Masters in Zoology in 1966 from the
University of Florida and a B.S. in Biology from Emory and Henry College in
1963. Dr. Zimmerman ended his full time employment with the Company on December
3, 2008.

John Cipriano, has been CEL-SCI's Senior Vice President of Regulatory
Affairs since March 2004. Mr. Cipriano brings to CEL-SCI over 30 years of
experience in both biotech and pharmaceutical companies. In addition, he held
positions at the United States Food and Drug Administration (FDA) as Deputy
Director, Division of Biologics Investigational New Drugs, Office of Biologics
Research and Review and was the Deputy Director, IND Branch, Division of
Biologics Evaluation, Office of Biologics. Mr. Cipriano completed his B.S. in
Pharmacy from the Massachusetts College of Pharmacy in Boston, Massachusetts and
his M.S. in Pharmaceutical Chemistry from Purdue University in West Lafayette,
Indiana. Mr. Cipriano ended his full time employment with the Company on
December 3, 2008.

Alexander G. Esterhazy has been a Director of CEL-SCI since December 1999
and has been an independent financial advisor since November 1997. Between July
1991 and October 1997, Mr. Esterhazy was a senior partner of Corpofina S.A.
Geneva, a firm engaged in mergers, acquisitions and portfolio management.
Between January 1988 and July 1991, Mr. Esterhazy was a managing director of DG
Bank in Switzerland. During this period Mr. Esterhazy was in charge of the
Geneva, Switzerland branch of the DG Bank, founded and served as vice president
of DG Finance (Paris) and was the President and Chief Executive officer of
DG-Bourse, a securities brokerage firm.

C. Richard Kinsolving, Ph.D. has been a Director of CEL-SCI since April
2001. Since February 1999, Dr. Kinsolving has been the Chief Executive Officer
of BioPharmacon, a pharmaceutical development company. Between December 1992 and
February 1999, Dr. Kinsolving was the President of Immuno-Rx, Inc., a company
engaged in immuno-pharmaceutical development. Between December 1991 and

September 1995, Dr. Kinsolving was President of Bestechnology, Inc. a nonmedical
research and development company producing bacterial preparations for industrial
use. Dr. Kinsolving received his Ph.D. in Pharmacology from Emory University
(1970), his Masters degree in Physiology/Chemistry from Vanderbilt University
(1962), and his Bachelor's degree in Chemistry from Tennessee Tech. University
(1957).

Peter R. Young, Ph.D. has been a Director of CEL-SCI since August 2002.
Dr. Young has been a senior executive within the pharmaceutical industry in the
United States and Canada for most of his career. Over the last 20 years he has
primarily held positions of Chief Executive Officer or Chief Financial Officer
and has extensive experience with acquisitions and equity financings. Since
November 2001, Dr. Young has been the President of Agnus Dei, LLC, which acts as
a partner in an organization managing immune system clinics which treat patients
with diseases such as cancer, multiple sclerosis and hepatitis. Since January
2003, Dr. Young has been the President and Chief Executive Officer of SRL
Technology, Inc., a company involved in the development of pharmaceutical (drug)
delivery systems. Between 1998 and 2001, Dr. Young was the Chief Financial
Officer of Adams Laboratories, Inc. Dr. Young received his Ph.D. in Organic
Chemistry from the University of Bristol, England (1969), and his Bachelor's
degree in Honors Chemistry, Mathematics and Economics also from the University
of Bristol, England (1966).

All of CEL-SCI's officers devote substantially all of their time to
CEL-SCI's business.

CEL-SCI has an audit committee and compensation committee. The members of
the audit committee are Alexander G. Esterhazy, C. Richard Kinsolving and Dr.
Peter Young. Dr. Peter Young serves as the audit committee's financial expert.
In this capacity, Dr. Young is independent, as that term is defined in the
listing standards of the NYSE Alternext US. The members of the compensation
committee are Maximilian de Clara, Alexander Esterhazy and C. Richard
Kinsolving.

CEL-SCI has adopted a Code of Ethics which is applicable to CEL-SCI'S
principal executive, financial, and accounting officers and persons performing
similar functions. The Code of Ethics is available on CEL-SCI's website, located
at www.cel-sci.com.

If a violation of this code of ethics act is discovered or suspected, the
Senior Officer must (anonymously, if desired) send a detailed note, with
relevant documents, to CEL-SCI's Audit Committee, c/o Dr. Peter Young, 1247
Dodgeton Drive, Frisco, TX 75034-1432.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The Company's Compensation Committee is empowered to review and approve
the annual compensation and compensation procedures for our executive officers
and annually determines the total compensation level for our President and Chief
Executive Officer. The total proposed compensation of our named executive

officers is formulated and evaluated by our Chief Executive Officer and
submitted to the Compensation Committee for consideration.

The key components of CEL-SCI's executive compensation program include
annual base salaries and long-term incentive compensation consisting of stock
options. It is CEL-SCI's policy to target compensation (i.e., base salary, stock
option grants and other benefits) at approximately the median of comparable
companies in the biotechnology field. Accordingly, data on compensation
practices followed by other companies in the biotechnology industry is
considered.

Objectives and Components of the Compensation Program

The primary objective of our compensation program is to attract, motivate
and retain talented executives who are enthusiastic about our mission. The
components of our compensation practices are:

o CEL-SCI's base salary levels are commensurate with those of comparable
positions at other biotechnology companies given the level of
seniority and skills possessed by the executive officer and which
reflect the individual's performance with us over time. The base
salary of the President, CEO and our other named executive officers is
reviewed annually. Current employment agreements with Maximilian de
Clara and Geert Kersten set minimums for their base salary rates.

o CEL-SCI's long-term stock option incentive program consists
exclusively of periodic grants of stock options with an exercise price
equal to the fair market value of CEL-SCI's common stock on the date
of grant. To encourage retention, the ability to exercise options
granted under the program is subject to vesting restrictions.
Decisions made regarding the timing and size of option grants take
into account the performance of both CEL-SCI and the employee,
"competitive market" practices, and the size of the option grants made
in prior years. The weighting of these factors varies and is
subjective. Current option holdings are not considered when granting
options.

o CEL-SCI's stock-based incentive awards are intended to strengthen the
mutuality of interests between the executive officers and our
stockholders.

o CEL-SCI has a defined contribution retirement plan, qualifying under
Section 401(k) of the Internal Revenue Code and covering substantially
all CEL-SCI's employees. CEL-SCI's contribution to the plan is made in
shares of CEL-SCI's common stock. Each participant's contribution is
matched by CEL-SCI with shares of common stock which have a value
equal to 100% of the participant's contribution, not to exceed 6% of
the participant's total compensation.

The following table sets forth in summary form the compensation received
by (i) the Chief Executive Officer of CEL-SCI and (ii) by each other executive
officer of CEL-SCI who received in excess of $100,000 during the two fiscal
years ended September 30, 2008.

All
Other
Restric- Annual
ted Stock Option Compen-
Name and Princi- Fiscal Salary Bonus Awards Awards sation
pal Position Year (1) (2) (3) (4) (5) Total
-------------------- ----- ------ ------ --------- -------- ------- ---------

Maximilian de Clara, 2008 $363,000 -- $543,174 $103,320 $ 89,268 $1,098,762
President 2007 363,000 -- 418,327 105,460 64,693 951,480

Geert R. Kersten, 2008 404,900 -- 156,674 103,320 39,901 704,795
Chief Executive 2007 389,637 -- 31,752 105,460 16,114 542,963
Officer and
Treasurer

Patricia B. Prichep 2008 185,780 -- 82,558 51,660 4,225 324,223
Senior Vice President 2007 179,574 -- 19,520 52,730 4,225 256,049
of Operations and
Secretary

Eyal Talor, Ph.D. 2008 229,353 -- 81,187 51,660 4,225 366,425
Senior Vice President 2007 218,587 -- 18,764 52,730 4,225 294,306
of Research and
Manufacturing

Daniel Zimmerman, Ph.D. 2008 175,988 -- 46,186 38,745 4,225 265,144
Senior Vice President 2007 169,127 -- 14,469 39,548 4,225 227,369
of Cellular Immunology

John Cipriano 2008 171,028 -- 45,893 38,745 25 255,691
Senior Vice President 2007 165,400 -- 14,196 39,548 25 219,169
of Regulatory Affairs

(1) The dollar value of base salary (cash and non-cash) earned. During the
years ended September 30, 2008 and 2007, $18,730 and $28,429, respectively,
of the total salaries paid to the persons shown in the table were paid in
restricted shares of CEL-SCI's common stock.

Information concerning the issuance of these restricted shares is shown in
the following table:

Date Shares Number of Price
Issued Shares Issued Per Share

09/20/2006 49,016 $0.52
01/15/2008 36,020 $0.52

On each date the amount of compensation satisfied through the issuance of
shares was determined by multiplying the number of shares issued by the price
per share. The price per share was equal to the closing price of CEL-SCI's
common stock on the date prior to the date the shares were issued.

(2) The dollar value of bonus (cash and non-cash) earned.

(3) During the periods covered by the table, the value of the shares of
restricted stock issued as compensation for services to the persons listed
in the table. In the case of Mr. de Clara, during the years ended September
30, 2008 and 2007 $400,000 and $400,000, respectively, were paid in
restricted shares of CEL-SCI's common stock which cannot be sold in the
public market for a period of three years after the date of issuance. In
the case of all other persons listed in the table, the shares were issued
as CEL-SCI's contribution on behalf of the named officer to CEL-SCI's
401(k) retirement plan and restricted shares issued from the Stock
Compensation Plan.

(4) The value of all stock options granted during the periods covered by the
table are calculated according to SFAS 123R requirements.

(5) All other compensation received that CEL-SCI could not properly report in
any other column of the table including annual contributions or other
allocations to vested and unvested defined contribution plans, and the
dollar value of any insurance premiums paid by, or on behalf of, CEL-SCI
with respect to term life insurance for the benefit of the named executive
officer, and the full dollar value of the remainder of the premiums paid
by, or on behalf of, CEL-SCI. Includes board of directors fees for M. de
Clara and G. Kersten.

Long Term Incentive Plans - Awards in Last Fiscal Year

See Footnote 6 to the financial statements.

Employee Pension, Profit Sharing or Other Retirement Plans

CEL-SCI has a defined contribution retirement plan, qualifying under
Section 401(k) of the Internal Revenue Code and covering substantially all
CEL-SCI's employees. CEL-SCI's contribution to the plan is made in shares of
CEL-SCI's common stock. Each participant's contribution is matched by CEL-SCI
with shares of common stock which have a value equal to 100% of the
participant's contribution, not to exceed the lesser of $1,000 or 6% of the
participant's total compensation. CEL-SCI's contribution of common stock is
valued each quarter based upon the closing price of its common stock. The fiscal
2008 expenses for this plan were $110,024. Other than the 401(k) Plan, CEL-SCI
does not have a defined benefit, pension plan, profit sharing or other
retirement plan.

Compensation of Directors During Year Ended September 30, 2008

Stock Option
Name Paid in Cash Awards (1) Awards (2) Total
---- ------------ ---------- ---------- --------

Maximilian de Clara $20,000 $124,000 $103,320 $247,320
Geert Kersten $20,000 $124,000 $103,320 $247,320
Alexander Esterhazy $20,000 $ 62,000 $ 51,660 $133,660
C. Richard Kinsolving $20,000 $ 62,000 $ 51,660 $133,660
Peter R. Young $20,000 $ 62,000 $ 51,660 $133,660

(1) The fair value of stock issued for services.
(2) The fair value of options granted computed in accordance with FAS 123R on
the date of grant.

Directors' fees paid to Maximilian de Clara and Geert Kersten are included
in the Executive Compensation table.

Employment Contracts.

In April 2005, CEL-SCI entered into a three-year employment agreement with
Mr. de Clara. The employment agreement provided that CEL-SCI will pay Mr. de
Clara an annual salary of $363,000 during the term of the agreement. On
September 8, 2006 Mr. de Clara's Employment Agreement was amended and extended
to April 30, 2010. The terms of the amendment to Mr. de Clara's employment
agreement are referenced in a report on Form 8-K filed with the Securities and
Exchange Commission on September 8, 2006. In the event that there is a material
reduction in Mr. de Clara's authority, duties or activities, or in the event
there is a change in the control of CEL-SCI, then the agreement allows Mr. de
Clara to resign from his position at CEL-SCI and receive a lump-sum payment from
CEL-SCI equal to 18 months salary ($544,500), the remaining stock payments per
the amendment to Mr. de Clara's employment agreement (valued at $200,000) and
the unvested portion of any stock options would vest immediately ($227,333). For
purposes of the employment agreement, a change in the control of CEL-SCI means
the sale of more than 50% of the outstanding shares of CEL-SCI's Common Stock,
or a change in a majority of CEL-SCI's directors.

The Employment Agreement will also terminate upon the death of Mr. de
Clara, Mr. de Clara's physical or mental disability, the conviction of Mr. de
Clara for any crime involving fraud, moral turpitude, or CEL-SCI's property, or
a breach of the Employment Agreement by Mr. de Clara. If the Employment
Agreement is terminated for any of these reasons, Mr. de Clara, or his legal
representatives, as the case may be, will be paid the salary provided by the
Employment Agreement through the date of termination.

Effective September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. The employment agreement provides that during the
term of the employment agreement CEL-SCI will pay Mr. Kersten an annual salary
of $370,585 plus any increases approved by the Board of Directors during the
period of the employment agreement. In the event there is a change in the

control of CEL-SCI, the agreement allows Mr. Kersten to resign from his position
at CEL-SCI and receive a lump-sum payment from CEL-SCI equal to 24 months salary
($809,800) and the unvested portion of any stock options would vest immediately
($246,666). For purposes of the employment agreement a change in the control of
CEL-SCI means: (1) the merger of CEL-SCI with another entity if after such
merger the shareholders of CEL-SCI do not own at least 50% of voting capital
stock of the surviving corporation; (2) the sale of substantially all of the
assets of CEL-SCI; (3) the acquisition by any person of more than 50% of
CEL-SCI's common stock; or (4) a change in a majority of CEL-SCI's directors
which has not been approved by the incumbent directors. Effective September 1,
2006 Mr. Kersten's employment agreement was extended to September 1, 2011.

The Employment Agreement will also terminate upon the death of Mr.
Kersten, Mr. Kersten's physical or mental disability, willful misconduct, an act
of fraud against CEL-SCI, or a breach of the Employment Agreement by Mr.
Kersten. If the Employment Agreement is terminated for any of these reasons Mr.
Kersten, or his legal representatives, as the case may be, will be paid the
salary provided by the Employment Agreement through the date of termination.

Compensation Committee Interlocks and Insider Participation

CEL-SCI has a compensation committee comprised of all of CEL-SCI's
directors, with the exception of Mr. Kersten. During the year ended September
30, 2008, Mr. de Clara was the only officer participating in deliberations of
CEL-SCI's compensation committee concerning executive officer compensation.

During the year ended September 30, 2008, no director of CEL-SCI was also
an executive officer of another entity, which had an executive officer of
CEL-SCI serving as a director of such entity or as a member of the compensation
committee of such entity.

Stock Options

The following tables show information concerning the options granted
during the fiscal year ended September 30, 2008, to the persons named below.

Options Granted
Exercise
Grant Options Price Per Expiration
Name Date Granted (#) Share Date
------ ---- ----------- ---------- ----
Maximilian de Clara 03/05/2008 200,000 $0.62 03/04/2018
Geert Kersten 03/05/2008 200,000 $0.62 03/04/2018
Patricia B. Prichep 03/05/2008 100,000 $0.62 03/04/2018
Eyal Talor, Ph.D. 03/05/2008 100,000 $0.62 03/04/2018
Daniel Zimmerman, Ph.D. 03/05/2008 75,000 $0.62 03/04/2018
John Cipriano 03/05/2008 75,000 $0.62 03/04/2018

Options Exercised

Shares
Date of Acquired On Value
Exercise Exercise Realized
-------- ------------ --------

None

Shares underlying unexercised
Option which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- --------- -----------

Maximilian de Clara 23,333 2.87 07/31/13
95,000 (1) 1.94 08/31/13
70,000 1.05 09/25/09
56,666 1.05 05/01/10
50,000 1.05 05/01/13
50,000 1.05 04/12/09
60,000 1.05 04/19/10
60,000 1.38 03/22/11
75,000 0.54 03/14/12
50,000 0.61 09/02/14
50,000 0.48 09/21/15
66,667 0.58 09/12/16
66,667 0.63 09/13/17
------
773,333
33,333 0.58 09/12/16
133,333 0.63 09/13/17
200,000 0.62 03/04/18
-------
366,666

Geert R. Kersten 50,000 1.05 11/01/13
14,000 1.05 10/31/13
50,000 1.05 07/31/13
224,000 (1) 1.05 06/10/13
50,000 1.05 09/25/09
150,000 1.05 05/01/10
50,000 1.05 05/01/13
50,000 1.05 04/12/09
95,000 (1) 1.94 08/31/13
60,000 1.05 04/19/10
60,000 1.38 03/22/11
560,000 (1) 1.05 10/16/13
105,000 0.54 03/14/12
1,890,000 0.22 04/01/13
50,000 0.61 09/02/14
50,000 0.48 09/21/15
133,334 0.58 09/12/16
66,667 0.63 09/13/17
------
3,708,001

Shares underlying unexercised
Option which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- --------- -----------

Geert R. Kersten (cont'd) 66,666 0.58 09/12/16
133,333 0.63 09/13/17
200,000 0.62 03/04/18
-------
399,999

------------------------------------------------------------------------------

Patricia B. Prichep 6,000 1.05 12/01/13
10,000 1.05 11/30/13
9,500 1.05 07/31/13
3,000 1.05 12/31/09
35,000 1.05 03/01/10
17,000 1.05 12/01/13
15,000 1.05 04/12/09
47,500 (1) 1.94 08/31/13
23,000 1.05 02/02/10
25,000 1.18 12/08/10
30,000 1.00 12/03/11
200,000 (1) 1.05 10/16/13
10,500 0.54 03/14/12
50,000 0.33 04/26/12
243,000 0.22 04/01/13
337,000 0.22 04/01/13
50,000 0.61 09/02/14
30,000 0.48 09/21/15
60,000 0.58 09/12/16
33,334 0.63 09/13/17
------
1,234,834
30,000 0.58 09/12/16
66,666 0.63 09/13/17
100,000 0.62 03/04/18
-------
196,666

-------------------------------------------------------------------------------

Eyal Talor, Ph.D. 15,500 1.05 07/31/13
16,666 1.05 03/16/10
15,000 1.05 08/03/13
10,000 (1) 1.94 08/31/13
20,000 1.05 08/02/09
25,000 1.76 11/10/10
35,000 1.00 12/03/11
160,000 (1) 1.05 10/16/13
50,000 0.33 04/26/12
374,166 0.22 04/01/13
50,000 0.61 09/02/14
30,000 0.48 09/21/15
53,334 0.58 09/12/16
33,334 0.63 09/13/17
------
888,000

Shares underlying unexercised
Option which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- --------- -----------

Eyal Talor, Ph.D (cont'd) 26,666 0.58 09/12/16
66,666 0.63 09/13/17
100,000 0.62 03/04/18
-------
193,332

-------------------------------------------------------------------------------

Daniel Zimmerman, Ph.D.12,000 1.05 12/31/13
3,000 1.05 12/31/09
7,000 1.05 06/19/10
15,000 1.05 02/19/13
30,000 (1) 1.94 08/31/13
15,000 1.05 04/12/09
20,000 1.05 02/02/10
20,000 1.85 01/26/11
120,000 (1) 1.05 10/16/13
41,000 0.54 03/14/12
50,000 0.33 04/16/12
392,000 0.22 04/01/13
50,000 0.61 09/02/14
30,000 0.48 09/21/15
40,000 0.58 09/12/16
25,000 0.63 09/13/17
------
870,000

20,000 0.58 09/12/16
50,000 0.63 09/13/17
75,000 0.62 03/04/18
------
145,000

-------------------------------------------------------------------------------

John Cipriano 100,000 1.13 03/01/14
20,000 0.61 09/02/14
30,000 0.48 09/21/15
40,000 0.58 09/12/16
25,000 0.63 09/13/17
------
215,000
20,000 0.58 09/12/16
50,000 0.63 09/13/17
75,000 0.62 03/04/18
------
145,000

(1) Options purchased by Employee through the Salary Reduction Plan.

Stock Option, Bonus and Compensation Plans

CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option,
Stock Bonus and Stock Compensation Plans. All Stock Option, Bonus and
Compensation Plans have been approved by the stockholders. A summary description
of these Plans follows. In some cases these Plans are collectively referred to
as the "Plans".

Incentive Stock Option Plan. The Incentive Stock Option Plans authorize
the issuance of shares of CEL-SCI's common stock to persons who exercise options
granted pursuant to the Plan. Only CEL-SCI's employees may be granted options
pursuant to the Incentive Stock Option Plan.

To be classified as incentive stock options under the Internal Revenue
Code, options granted pursuant to the Plans must be exercised prior to the
following dates:

(a) The expiration of three months after the date on which an option
holder's employment by CEL-SCI is terminated (except if such
termination is due to death or permanent and total disability);

(b) The expiration of 12 months after the date on which an option holder's
employment by CEL-SCI is terminated, if such termination is due to the
Employee's permanent and total disability;

(c) In the event of an option holder's death while in the employ of
CEL-SCI, his executors or administrators may exercise, within three
months following the date of his death, the option as to any of the
shares not previously exercised;

The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.

Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the Common Stock of
CEL-SCI may not be exercisable by its terms after five years from the date of
grant. Any other option granted pursuant to the Plan may not be exercisable by
its terms after ten years from the date of grant.

The purchase price per share of Common Stock purchasable under an option
is determined by the Committee but cannot be less than the fair market value of
the Common Stock on the date of the grant of the option (or 110% of the fair
market value in the case of a person owning more than 10% of CEL-SCI's
outstanding shares).

Non-Qualified Stock Option Plans. The Non-Qualified Stock Option Plans
authorize the issuance of shares of CEL-SCI's common stock to persons that
exercise options granted pursuant to the Plans. CEL-SCI's employees, directors,
officers, consultants and advisors are eligible to be granted options pursuant
to the Plans, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by CEL-SCI's Board of Directors.

Stock Bonus Plan. Under the Stock Bonus Plans shares of CEL-SCI's common
stock may be issued to CEL-SCI's employees, directors, officers, consultants and
advisors, provided however that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.

Stock Compensation Plan. Under the Stock Compensation Plan, shares of
CEL-SCI's common stock may be issued to CEL-SCI's employees, directors,
officers, consultants and advisors in payment of salaries, fees and other
compensation owed to these persons. However, bona fide services must be rendered
by consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.

Other Information Regarding the Plans. The Plans are administered by
CEL-SCI's Compensation Committee ("the Committee"), each member of which is a
director of CEL-SCI. The members of the Committee were selected by CEL-SCI's
Board of Directors and serve for a one-year tenure and until their successors
are elected. A member of the Committee may be removed at any time by action of
the Board of Directors. Any vacancies which may occur on the Committee will be
filled by the Board of Directors. The Committee is vested with the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Committee is empowered to select those persons to whom
shares or options are to be granted, to determine the number of shares subject
to each grant of a stock bonus or an option and to determine when, and upon what
conditions, shares or options granted under the Plans will vest or otherwise be
subject to forfeiture and cancellation.

In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan and any options
granted pursuant to the Incentive Stock Option Plan or the Non-Qualified Stock
Option Plan will be forfeited if the "vesting" schedule established by the
Committee administering the Plan at the time of the grant is not met. For this
purpose, vesting means the period during which the employee must remain an
employee of CEL-SCI or the period of time a non-employee must provide services
to CEL-SCI. At the time an employee ceases working for CEL-SCI (or at the time a
non-employee ceases to perform services for CEL-SCI), any shares or options not
fully vested will be forfeited and cancelled. At the discretion of the Committee
payment for the shares of Common Stock underlying options may be paid through
the delivery of shares of CEL-SCI's Common Stock having an aggregate fair market
value equal to the option price, provided such shares have been owned by the
option holder for at least one year prior to such exercise. A combination of
cash and shares of Common Stock may also be permitted at the discretion of the
Committee.

Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Committee when the shares were issued.

The Board of Directors of CEL-SCI may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner they deem
appropriate, provided that such amendment, termination or suspension will not
adversely affect rights or obligations with respect to shares or options

previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
Common Stock which may be issued pursuant to the Plans except in the case of a
reclassification of CEL-SCI's capital stock or a consolidation or merger of
CEL-SCI; reduce the minimum option price per share; extend the period for
granting options; or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.

Summary. The following shows certain information as of November 30, 2008
concerning the stock options and stock bonuses granted by CEL-SCI. Each option
represents the right to purchase one share of CEL-SCI's common stock.

Total Shares
Shares Reserved for Shares Remaining
Reserved Outstanding Issued as Options/Shares
Name of Plan Under Plans Options Stock Bonus Under Plans
------------ ----------- ------------ ----------- ----------

Incentive Stock
Option Plans 10,100,000 4,745,266 n/a 5,003,000
Non-Qualified Stock
Option Plans 13,760,000 8,404,565 n/a 2,028,000
Stock Bonus Plans 7,940,000 n/a 4,805,019 3,134,897
Stock Compensation Plan 5,500,000 n/a 4,062,146 1,437,854

Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 1,180,544
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.

The following table shows the weighted average exercise price of the
outstanding options granted pursuant to CEL-SCI's Incentive and Non-Qualified
Stock Option Plans as of September 30, 2008, CEL-SCI's most recent fiscal year
end. CEL-SCI's Incentive and Non-Qualified Stock Option Plans have been approved
by CEL-SCI's shareholders.

Number of Securities
Number Remaining Available
of Securities For Future Issuance
to be Issued Weighted-Average Under Equity
Upon Exercise Exercise Price of Compensation Plans,
of Outstanding of Outstanding Excluding Securities
Plan category Options (a) Options Reflected in Column (a)
------------------------------------------------------------------------------------------------

Incentive Stock Option Plans 4,745,266 $0.53 5,003,000
Non-Qualified Stock Option Plans 8,406,265 $0.68 2,028,000

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table shows, as of November 30, 2008, information with
respect to the only persons owning beneficially 5% or more of the outstanding
common stock and the number and percentage of outstanding shares owned by each
director and officer and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of common stock.

Name and Address Number of Shares (1) Percent of Class (3)
---------------- ---------------- ----------------

Maximilian de Clara 1,211,410 1.0%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland

Geert R. Kersten 7,034,583 5.6%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Patricia B. Prichep 2,029,987 1.6%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Eyal Talor, Ph.D. 1,403,209 1.1%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Daniel H. Zimmerman, Ph.D. 1,392,820 1.1%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

John Cipriano 401,693 0.3%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Alexander G. Esterhazy 516,666 0.4%
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland

C. Richard Kinsolving, Ph.D. 745,757 0.6%
P.O. Box 20193
Bradenton, FL 34204-0193

Peter R. Young, Ph.D. 517,934 0.4%
1247 Dodgeton Drive
Frisco, TX 75034-1432

Name and Address Number of Shares (1) Percent of Class (3)
---------------- ---------------- ----------------

All Officers and Directors 15,254,059 11.6%
as a Group (9 persons)

(1) Includes shares issuable prior to January 31, 2009 upon the exercise of
options or warrants granted to the following persons:

Options or Warrants Exercisable

Name Prior to January 31, 2009
---- --------------------------

Maximilian de Clara 773,333
Geert R. Kersten 3,708,001
Patricia B. Prichep 1,234,834
Eyal Talor, Ph.D. 888,000
Daniel H. Zimmerman, Ph.D. 870,000
John Cipriano 215,000
Alexander G. Esterhazy 296,666
C. Richard Kinsolving, Ph.D. 456,667
Peter R. Young, Ph.D. 283,333

(2) Amount includes shares held in trust for the benefit of Mr. Kersten's minor
children. Geert R. Kersten is the stepson of Maximilian de Clara.

(3) Amount includes shares referred to in (1) above but excludes shares which
may be issued upon the exercise or conversion of other options, warrants
and other convertible securities previously issued by CEL-SCI.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

BDO Seidman, LLP served as CEL-SCI's independent registered public
accountant for the two years ended September 30, 2008. The following table shows
the aggregate fees billed to CEL-SCI for these years by BDO Seidman, LLP:

Year Ended September 30,
2008 2007
---- ----

Audit Fees $173,052 $ 142,704
Audit-Related Fees -- --
Tax Fees -- --
All Other Fees -- --

Audit fees represent amounts billed for professional services rendered for
the audit of the CEL-SCI's annual financial statements and the reviews of the
financials statements included in CEL-SCI's 10-Q reports for the fiscal year and
all regulatory filings. Before BDO Seidman, LLP was engaged by CEL-SCI to render
audit or non-audit services, the engagement was approved by CEL-SCI's audit
committee. CEL-SCI's Board of Directors is of the opinion that the Audit Related
Fees charged by BDO Seidman, LLP are consistent with BDO Seidman, LLP
maintaining its independence from CEL-SCI.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) See the Financial Statements attached to this Report.

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.

3(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.

3(c)Amended Articles (Name change only) Filed as Exhibit 3(c) to CEL-SCI's
Registration Statement on Form S-1
Registration Statement (No. 33-34878).

3(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.

4 Shareholders Rights Agreement Incorporated by reference to Exhibit 4
of CEL-SCI'S report on Form 8-K dated
November 7, 2007.

10(d)Employment Agreement with Incorporated by reference to Exhibit
Maximilian de Clara 10(d) of CEL-SCI's report on Form 8-K
(dated April 21, 2005) and Exhibit 10(d)
to CEL-SCI's report on Form 8-K dated
September 8, 2006.

10(e) Employment Agreement with Incorporated by reference to Exhibit
Geert Kersten 10(e) of CEL-SCI's Registration Statement
on Form S-3 (Commission File #106879)
and Exhibit 10(c) to CEL-SCI's report on
Form 8-K dated September 8, 2006.

10(f)Distribution and Royalty Agreement Incorporated by reference to Exhibit
with Eastern Biotech 10(x) to Amendment No. 2 to CEL-SCI's
Registration statement on Form S-3
(Commission File No. 333-106879).

10(g) Securities Purchase Agreement Incorporated by reference to Exhibit 10
(together with schedule required to CEL-SCI's report on Form 8-K dated
by Instruction 2 to Item 601 of August 4, 2006.
Regulation S-K) pertaining to
Series K notes and warrants,
together with the exhibits to the
Securities Purchase Agreement.

10(h) Subscription Agreement (together Incorporated by reference to Exhibit
with Schedule required by 10 of CEL-SCI's report on Form 8-K
Instruction 2 to Item 601 of dated April 18, 2007
Regulation S-K) pertaining to
April 2007 sale of 20,000,000
shares of CEL-SCI's common stock,
10,000,000 Series L warrants and
10,000,000 Series M Warrants.

23 Consent of BDO Seidman, LLP
-------------------------------

31 Rule 13a-14(a) Certifications
-------------------------------

32 Section 13

CEL-SCI CORPORATION

Consolidated Financial Statements for the Years
Ended September 30, 2008, 2007, and 2006, and
Report of Independent Registered Public Accounting Firm

CEL-SCI CORPORATION

TABLE OF CONTENTS

Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F- 2

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
SEPTEMBER 30, 2008, 2007, AND 2006:

Consolidated Balance Sheets F- 3

Consolidated Statements of Operations F- 5

Consolidated Statements of Stockholders' Equity F- 6

Consolidated Statements of Cash Flows F- 8

Notes to Consolidated Financial Statements F- 13

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
CEL-SCI Corporation
Vienna, Virginia

We have audited the accompanying consolidated balance sheets of CEL-SCI
Corporation as of September 30, 2008 and 2007 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended September 30, 2008. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CEL-SCI Corporation
at September 30, 2008 and 2007, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 2008, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has suffered recurring net
losses, negative cash flows, and negative working capital. The Company has
convertible debt that allows the debt holders to exercise a put option in August
2009. In December 2008, the Company was not in compliance with certain lease
requirements related with its facility lease. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ BDO SEIDMAN LLP

Bethesda, Maryland
January __, 2009

F-2

CEL-SCI CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND 2007

ASSETS 2008 2007
----------------- --------------
CURRENT ASSETS:
Cash and cash equivalents $ 711,258 $ 10,993,021
Short-term investments 200,000 -
Interest and other receivables - 57,476
Prepaid expenses 27,209 34,578
Inventory used for R&D and
manufacturing 395,170 385,650
Deposits 14,828 14,828
---------- ------------
Total current assets 1,348,465 11,485,553

RESEARCH AND OFFICE EQUIPMENT AND
LEASEHOLD IMPROVMENTS - less
accumulated depreciation of
$1,964,597 and $1,859,644 1,324,686 233,876

PATENT COSTS--less accumulated
amortization of $1,091,597 and
$896,407 587,439 541,380

RESTRICTED CASH 987,652 2,168,629

INTEREST RECEIVABLE - LONG TERM 199,593 -

DEPOSITS 1,575,000 -

DEFERRED RENT 8,660,837 6,301,364
---------- ------------
TOTAL ASSETS $14,683,672 $ 20,730,802
=========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY 2008 2007
-------- -------
CURRENT LIABILITIES:
Accounts payable $ 427,509 $ 248,120
Accrued expenses 113,179 98,603
Due to employees 36,077 26,735
Accrued interest on convertible debt 45,558 68,795
Short-term loan 200,000 -
Deposits held - 3,000
Derivative instruments - current
portion 3,018,697 782,732
---------- ------------
Total current liabilities 3,841,020 1,227,985
Deferred rent 6,617 1,466
Derivative instruments - noncurrent
portion - 4,831,252
---------- ------------
Total liabilities 3,847,637 6,060,703
---------- ------------

F-3

CEL-SCI CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND 2007
(continued)

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value--authorized
100,000 shares, issued and outstanding,
-0- Common stock, $.01 par value--authorized
300,000,000 shares; issued and outstanding,
120,796,094 and 115,678,662 shares at
September 30, 2008 and 2007, respectively 1,207,961 1,156,787

Additional paid-in capital 134,324,370 130,081,378

Accumulated deficit (124,696,296) (116,568,066)
------------ ------------

Total stockholders' equity 10,836,035 14,670,099
------------ ------------
TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY $ 14,683,672 $ 20,730,802
============ ============

See notes to consolidated financial statements

F-4

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006

2008 2007 2006
----- ----- ----

GRANT REVENUE AND OTHER $ 5,065 $ 57,043 $ 125,457

OPERATING EXPENSES:
Research and development (excluding
R&D depreciation of $124,705,
$91,292 and $74,043 respectively,
included below) 4,101,563 2,528,528 1,896,976

Depreciation and amortization 215,060 176,186 170,903

General & administrative 5,200,735 6,704,538 3,406,774
---------- ---------- ----------
Total operating expenses 9,517,358 9,409,252 5,474,653
---------- ---------- ----------

NET OPERATING LOSS (9,512,293) (9,352,209) (5,349,196)

GAIN ON DERIVATIVE INSTRUMENTS 1,799,393 868,182 2,325,784

COSTS ASSOCIATED WITH CONVERTIBLE DEBT - - (4,791,548)

INTEREST INCOME 483,252 562,973 92,487

INTEREST EXPENSE (473,767) (1,708,603) (216,737)
---------- ---------- ----------

NET LOSS (7,703,415) (9,629,657) (7,939,210)

DIVIDENDS (424,815) - -
---------- ---------- ----------

NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $(8,128,230) $(9,629,657) $(7,939,210)
============ =========== ===========
NET LOSS PER COMMON SHARE

BASIC $ (0.07) $ (0.10) $ (0.10)

DILUTED $ (0.07) $ (0.10) $ (0.11)

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
BASIC 117,060,866 97,310,488 78,971,290

DILUTED 117,060,866 97,310,488 93,834,078

See notes to consolidated financial statements.

F-5

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006

Additional
Common Stock Paid-In Unearned Accumulated
Shares Amount Capital Compensation Deficit Total
--------------------------------------------------------------------------------------

BALANCE SEPTEMBER 30, 2005 74,494,206 $ 744,942 $100,359,296 $ - $ (98,999,199) $ 2,105,039
Stock issued to nonemployees
for service 980,000 9,800 611,250 621,050
Exercise of stock options 150,000 1,500 37,217 38,717
Issuance of stock options to
non-employees 271,893 271,893
Extension of options 86,864 86,864
401(k) contributions paid
in common stock 132,989 1,330 84,150 85,480
Issuance of common stock to
employees 583,815 5,838 317,468 323,306
Issuance of common stock
for equity line of credit 1,419,446 14,194 663,533 677,727
Payment of interest on
convertible debt in common stock 68,500 685 37,228 37,913
Penalty shares issued 186,250 1,863 130,624 132,487
Exercise of warrants 1,300,000 13,000 652,000 665,000
Cashless exercise of warrants 882,222 8,822 (8,822) -
Private placement 2,500,000 25,000 975,000 1,000,000
Reclassification of derivatives 797,835 797,835
SFAS 123R cost of employee
options 180,298 180,298
Financing costs (15,000) (15,000)
Net loss (7,939,210) (7,939,210)
----------- -------- ------------ --------- ------------ ------------
BALANCE, SEPTEMBER 30, 2006 82,697,428 $826,974 $105,180,834 - $(106,938,409) $ (930,601)

F-6

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006
(continued)

Additional
Common Stock Paid-In Unearned Accumulated
Shares Amount Capital Compensation Deficit Total
--------------------------------------------------------------------------------------

Private placement 20,043,331 200,433 14,832,067 15,032,500
401(k) contributions paid
in common stock 137,546 1,376 88,347 89,723
Issuance of common stock to
employees 1,663,830 16,638 308,140 324,778
Exercise of stock options 1,337,364 13,374 599,092 612,466
Penalty shares issued 245,000 2,450 153,900 156,350
Stock issued to non-employee
for service 3,466,300 34,663 2,512,736 2,547,399
Issuance of stock options to
non-employees 1,556,228 1,556,228
Payment of principal on
convertible debt in common stock 343,099 3,431 229,724 233,155
Conversion of convertible debt
into common stock 5,744,764 57,448 4,323,279 4,380,727
SFAS 123R cost of employee
options 307,201 307,201
Financing costs (10,170) (10,170)
Net loss (9,629,657) (9,629,657)
----------- -------- ------------ --------- ------------ ------------
BALANCE, SEPTEMBER 30, 2007 115,678,662 1,156,787 130,081,378 - (116,568,066) 14,670,099

Sale of common stock 1,383,389 13,834 1,023,708 1,037,542
401(k) contributions paid
in common stock 205,125 2,051 106,539 108,590
Issuance of common stock to
employees 1,789,451 17,894 1,306,580 1,324,474
Exercise of stock options 50,467 505 13,898 14,403
Correction of stock overpayment pricing 1,471 1,471
Stock issued to non-employees
for service 1,689,000 16,890 251,858 268,748
Issuance of stock options to
non-employees 12,342 12,342
SFAS 123R cost of employee
options 561,387 561,387
Modification of stock options 564,189 564,189
Financing costs (23,795) (23,795)
Dividends 424,815 (424,815) -
Net loss (7,703,415) (7,703,415)
----------- -------- ------------ --------- ------------ -----------
BALANCE, SEPTEMBER 30, 2008 120,796,094 1,207,961 134,324,370 - (124,696,296) 10,836,035
=========== ========= ============ ========= ============ ===========

F-7

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006

2008 2007 2006
-------- --------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(7,703,415) $ (9,629,657) $(7,939,210)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 215,060 176,186 170,902
Issuance of stock options to
nonemployees for services 12,342 191,455 271,893
Issuance of common stock for services 268,748 2,547,399 621,050
Correction of stock overpayment pricing 1,471 - -
Penalty shares issued to nonemployees - 156,350 132,487
Modification of stock options 564,189 - 86,864
Issuance of stock to employees 1,324,474 324,778 323,306
Employee option cost 561,387 307,201 180,298
Common stock contributed to 401(k)
plan 108,590 89,723 85,480
Impairment loss on abandonment of
patents 8,114 34,122 -
Loss on retired equipment 595 - 645
Deferred rent 5,151 1,466 -
Amortization of discount on
convertible note 249,106 1,180,421 104,351
Gain on derivative instruments (1,799,393) (868,182) (2,325,784)
Change in assets and liabilities:
Increase in deposits (1,575,000) - -
Increase in interest and
other receivables (142,117) (14,753) (14,462)
Decrease (increase) in prepaid
expenses 7,369 491,920 (454,651)
(Increase) decrease in inventory
used in R&D and manufacturing (9,520) 4,994 (29,839)
Increase (decrease) in accounts
payable (36,622) 89,159 3,637
Increase in accrued expenses 14,576 23,709 275
Increase (decrease) in accrued
interest on convertible debt (23,237) (5,678) 112,386
Increase (decrease) in due to
employees 9,342 9,310 (5,455)
Decrease in deposits held (3,000) - -
------------ ---------- ----------
Net cash used in operating activities (7,978,544) (4,890,077) (8,675,827)
------------ ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deferred rent on manufacturing
facility - (4,936,591) -
Additional investment in
manufacturing facility (2,359,473) - -
(Increase) decrease in restricted cash 1,180,977 (2,168,629) -
Investment in available-for-sale
securities (6,000,000) - -
Sale of investments in
available-for-sale securities 5,800,000 - -
Purchases of equipment (1,023,011) (181,459) (1,885)
Expenditures for patent costs (121,616) (137,884) (88,819)
------------ ---------- ----------
Net cash used in investing activities (2,486,369) (7,424,563) (90,704)
------------ ---------- ----------

(continued)

See notes to consolidated financial statements.

F-8

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006
(continued)

2008 2007 2006
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock $ 1,037,542 $ 15,032,500 $ 1,000,000
Proceeds from exercise of warrants - - 665,000
Draw-downs on equity line of credit - - 677,727
Proceeds from exercise of stock options 14,403 612,466 38,717
Proceeds from short-term loan 1,956,803 - -
Repayment of short-term loan (1,756,803) - -
Proceeds from convertible debt - - 8,300,000
Fair value adjustment for convertible debt - - 3,163,265
Fair value adjustment for warrants issued
in relation to convertible debt - - 835,666
Principal payments on convertible debt (1,045,000) (407,500) -
Warrants issued to placement agent - - 223,907
Costs for equity related transactions (23,795) (10,170) (15,000)
------------ ------------ -----------
Net cash provided by financing activities 183,150 15,227,296 14,889,282
------------ ------------ -----------
NET INCREASE (DECREASE)IN CASH
AND CASH EQUIVALENTS (10,281,763) 2,912,656 6,122,751

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 10,993,021 8,080,365 1,957,614
------------ ------------ -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 711,258 $ 10,993,021 $ 8,080,365
============ ============ ===========

(continued)

See notes to consolidated financial statements.

F-9

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006
(continued)

2008 2007 2006
------------ ------------ -----------
CONVERSION OF CONVERTIBLE DEBT
INTO COMMON STOCK:
Decrease in convertible debt $ - $ 4,373,631 $ -
Increase in receivables - 7,096 -
Increase in common stock - (57,448) -
Increase in additional paid-in capital - (4,323,279) -
------------ ------------ -----------
$ - $ - $ -
============ ============ ===========
CONVERSION OF INTEREST ON
CONVERTIBLE DEBT INTO COMMON STOCK:
Decrease in accrued liabilities $ - $ - $ 37,913
Increase in common stock - - (685)
Increase in additional paid-in capital - - (37,228)
----------- ------------ -----------
$ - $ - $ -
=========== ============ ===========
PAYMENT OF CONVERTIBLE DEBT PRINCIPAL WITH
COMMON STOCK:
Decrease in convertible debt $ - 233,155 $ -
Increase in common stock - (3,431) -
Increase in additional paid-in capital - (229,724) -
----------- ------------ -----------
$ - $ - $ -
============ ============ ===========
ISSUANCE OF WARRANTS:
Increase in additional paid-in capital $ (891,336) $ (5,598,655) $ -
Decrease in additional paid-in capital 891,336 5,598,655 -
----------- ------------ -----------
$ - $ - $ -
=========== ============ ===========
WARRANTS ISSUED TO LESSOR:
Increase in deferred rent $ - 1,364,773 $ -
Increase in additional paid-in capital - (1,364,773) -
----------- ------------ -----------
$ - $ - $ -
=========== ============ ===========
PATENT COSTS INCLUDED IN
ACCOUNTS PAYABLE:
Increase in patent costs $ 14,013 $ 8,429 $ 20,065
Increase in accounts payable (14,013) (8,429) (20,065)
---------- ------------ -----------
$ - $ - $ -
=========== ============ ===========
EQUIPMENT COSTS INCLUDED IN
ACCOUNTS PAYABLE:
Increase in research and office
equipment 201,998 52,476 -
Increase in accounts payable (201,998) (52,476) -
---------- ------------ -----------
$ - $ - $ -
========== ============ ===========
CASHLESS EXERCISE OF WARRANTS:
Increase in common stock $ - $ - $ (8,822)
Increase in additional paid-in capital - - 8,822
---------- ------------ -----------
$ - $ - $ -
========== ============ ===========

(continued)

See notes to consolidated financial statements.

F-10

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006
(continued)

2008 2007 2006
------------ ------------ -----------
MODIFICATION OF WARRANTS:
Increase in additional paid-in capital $ (173,187) $ - $ -
Decrease in additional paid-in capital 173,187 - -
----------- ----------- ----------
$ - $ - $ -
=========== =========== ==========

(continued)

See notes to consolidated financial statements.

F-11

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2008, 2007 AND 2006
(continued)

2008 2007 2006
------------ ------------ -----------
RECLASSIFICATION OF DERIVATIVE
INSTRUMENTS:
Decrease in derivative instruments $ - $ - $797,835
Increase in additional paid-in capital - - (797,835)
--------- ---------- --------
$ - $ - $ -
========= ========== ========
FAIR VALUE ADJUSTMENT FOR CONVERTIBLE
DEBT AND RELATED WARRANTS:
Increase in convertible debt - - 3,998,931
Increase in costs associated with
convertible debt - - (3,998,931)
--------- ---------- ----------
$ - $ - $ -
========= ========== ==========
COST OF NEW WARRANTS AND REPRICING OF
OLD WARRANTS ON PRIVATE PLACEMENT:
Increase in additional paid-in capital - - 1,192,949
Decrease in additional paid-in capital - - (1,192,949)
--------- ---------- ----------
$ - $ - $ -
========= ========== ==========

STOCK MODIFICATION RECORDED AS DIVIDEND
Increase additional paid-in capital $(424,815) $ - $ -
Increase accumulated deficit 424,815 - -
--------- ---------- ----------
$ - $ - $ -
========= ========== ==========

See notes to consolidated financial statements.

SUPPLEMENTAL DISCLOSURE OF CASH
FLOWS INFORMATION

Cash expenditure for interest expense 224,662 528,182 -

F-12

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CEL-SCI Corporation (the "Company") was incorporated on March 22, 1983, in
the state of Colorado, to finance research and development in biomedical
science and ultimately to engage in marketing and selling products.

CEL-SCI's lead product, Multikine(R), is being developed for the treatment of
cancer. Multikine is a patented immunotherapeutic agent consisting of a
mixture of naturally occurring cytokines, including interleukins,
interferons, chemokines and colony-stimulating factors, currently being
developed for the treatment of cancer. Multikine is designed to target the
tumor micro-metastases that are mostly responsible for treatment failure. The
basic concept is to add Multikine to the current cancer treatments with the
goal of making the overall cancer treatment more successful. Phase II data
indicated that Multikine treatment resulted in a substantial increase in the
survival of patients. The lead indication is advanced primary head & neck
cancer. Since Multikine is not tumor specific, it may also be applicable in
many other solid tumors.

Significant accounting policies are as follows:

a. Principles of Consolidation--The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiary, Viral
Technologies, Inc. (VTI). All significant intercompany transactions have been
eliminated upon consolidation.

b. Cash and Cash Equivalents--For purposes of the statements of cash flows, cash
and cash equivalents consists principally of unrestricted cash on deposit and
short-term money market funds. The Company considers all highly liquid
investments with a maturity when purchased of less than three months, as cash
and cash equivalents.

c. Restricted Cash--The restricted cash is money held in escrow pursuant to the
lease agreement for the manufacturing facility.

d. Interest and other receivables--Interest and other receivables consists of
interest accrued on any investments and on the deferred rent. Interest on the
deferred rent is calculated at 3% on the funds deposited on the manufacturing
facility. This interest income will be used to offset future rent.

e. Prepaid Expenses and Inventory--Prepaid expenses consist of expenses which
benefit a substantial period of time. Inventory consists of manufacturing
production advances and bulk purchases of laboratory supplies to be consumed
in the manufacturing of the Company's product for clinical studies.

f. Deposits--The deposits are both deposits on the office ($14,828) and the
deposit on the manufacturing facility ($1,575,000) required by the lease
agreement.

F-13

g. Research and Office Equipment--Research and office equipment is recorded at
cost and depreciated using the straight-line method over estimated useful
lives of five to seven years. Leasehold improvements are depreciated over the
shorter of the estimated useful life of the asset or the terms of the lease.
Repairs and maintenance which do not extend the life of the asset are
expensed when incurred. The fixed assets are reviewed on a quarterly basis to
determine if any of the assets are impaired. Depreciation expense for the
years ended September 30, 2008, 2007 and 2006 totaled $133,604, $92,176 and
$90,664, respectively.

h. Patents--Patent expenditures are capitalized and amortized using the
straight-line method over the shorter of the expected useful life or the
legal life of the patent (17 years). In the event changes in technology or
other circumstances impair the value or life of the patent, appropriate
adjustment in the asset value and period of amortization is made. An
impairment loss is recognized when estimated future undiscounted cash flows
expected to result from the use of the asset, and from disposition, is less
than the carrying value of the asset. The amount of the impairment loss is
the difference between the estimated fair value of the asset and its carrying
value. During the years ended September 30, 2008, 2007 and 2006, the Company
recorded patent impairment charges of $8,114, $34,122 and $-0-, respectively,
for the net book value of patents abandoned during the year. These
abandonments included the write off in the year ended September 30, 2007 of
the unamortized patent costs in Viral Technologies, Inc., the Company's
wholly owned subsidiary, totaling $34,122. These amounts are included in
general and administrative expenses. Amortization expense for the years ended
September 30, 2008, 2007 and 2006 totaled $81,456, $84,010 and $80,238,
respectively. The Company estimates that amortization expense will be $82,000
for each of the next five years, totaling $410,000.

i. Deferred Rent--On September 30, 2008, the Company has included in deferred
rent the following: 1) deposit on the manufacturing facility ($3,150,000);
2) the fair value of the warrants issued to lessor ($1,364,773); 3)
additional investment ($2,359,473); and 4) deposit on the cost of the
leasehold improvements for the manufacturing facility ($1,786,591). On
September 30, 2007, the Company has included in deferred rent the
following: 1) deposit on the manufacturing facility ($3,150,000); 2) the
fair value of the warrants issued to lessor ($1,364,773); and 3) deposit on
the cost of the leasehold improvements for the manufacturing facility
($1,786,591).

j. Deferred Rent (liability)-The deferred rent (liability) is amortized on a
straight-line basis over the term of the lease with the offset going against
rent expense.

k. Derivative Instruments--The Company has entered into financing arrangements
that consist of freestanding derivative instruments or are hybrid instruments
that contain embedded derivative features. The Company accounts for these
arrangement in accordance with Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities",
("SFAS No. 133") and Emerging Issues Task Force Issue No. 00-19, "Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in,
a Company's Own Stock", ("EITF 00-19"), as well as related interpretations of
these standards. In accordance with accounting principles generally accepted
in the United States ("GAAP"), derivative instruments and hybrid instruments
are recognized as either assets or liabilities in the statement of financial
position and are measured at fair value with gains or losses recognized in
earnings or other comprehensive income depending on the nature of the
derivative or hybrid instruments. Embedded derivatives that are not clearly
and closely related to the host contract are bifurcated and recognized at
fair value with changes in fair value recognized as either a gain or loss in

F-14

earnings if they can be reliably measured. When the fair value of embedded
derivative features cannot be reliably measured, the Company measures and
reports the entire hybrid instrument at fair value with changes in fair value
recognized as either a gain or loss in earnings. The Company determines the
fair value of derivative instruments and hybrid instruments based on
available market data using appropriate valuation models, giving
consideration to all of the rights and obligations of each instrument and
precluding the use of "blockage" discounts or premiums in determining the
fair value of a large block of financial instruments. Fair value under these
conditions does not necessarily represent fair value determined using
valuation standards that give consideration to blockage discounts and other
factors that may be considered by market participants in establishing fair
value.

l. Research and Development Grant Revenues--The Company's grant arrangements are
handled on a reimbursement basis. Grant revenues under the arrangements are
recognized as grant revenue when costs are incurred. The grants which the
Company had been receiving have been exhausted in fiscal year 2007 and the
Company is currently not receiving funds from any grants.

m. Research and Development Costs--Research and development expenditures are
expensed as incurred. Total research and development costs, excluding
depreciation, were $4,101,563, $2,528,528 and $1,896,976 for the years ended
September 30, 2008, 2007 and 2006.

n. Net Loss Per Common Share--Net loss per common share is computed by dividing
the net loss by the weighted average number of common shares outstanding
during the period. Potentially dilutive common stock equivalents, including
convertible preferred stock, convertible debt and options to purchase common
stock, were included in the calculation unless it was antidilutive.

o. Concentration of Credit Risk--Financial instruments, which potentially
subject the Company to concentrations of credit risk, consist of cash and
cash equivalents. The Company maintains its cash and cash equivalents with
high quality financial institutions. At times, these accounts may exceed
federally insured limits. The Company has not experienced any losses in such
bank accounts. The Company believes it is not exposed to significant credit
risk related to cash and cash equivalents.

p. Income Taxes--The Company adopted the provisions of FASB Interpretation No.
48, Accounting for Uncertainty in Income Taxes, on October 1, 2007. The
Company has net operating loss carryforwards approximately $98,093,100. The
Company uses the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating and tax loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. The Company records a
valuation allowance to reduce the deferred tax assets to the amount that is

F-15

more likely than not to be recognized. There has been no change in the
Company's financial position and results of operations due to the adoption of
FIN 48.

q. Use of Estimates--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Accounting for derivatives is
based upon valuations of derivative instrument determined using various
valuation techniques including the Black-Scholes and binomial pricing
methodologies. The Company considers such valuations to be significant
estimates.

r. Recent Accounting Pronouncements--In September 2006, the FASB issued SFAS
No. 157, "Fair Value Measurements". The statement defines fair value,
establishes a framework for measuring fair value in GAAP and expands
disclosures about fair value measurements. The statement is effective for
financial statements issued for fiscal years beginning after November 15,
2007 and interim periods within those fiscal years. In February 2008, the
FASB issued FASB Staff Position ("FSP") No. 157-2, Effective Data of FASB
Statement No. 157. FSP 157-2 delays the effective date of SFAS 157 to
fiscal years beginning after November 15, 2008, for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed
at fair value in the financial statements on a recurring basis (at least
annually). The Company is evaluating whether this statement will affect its
current practice in valuing fair value of its derivatives each quarter. The
effect of the adoption is expected to be immaterial.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations", which replaces SFAS No. 141. The statement retains the
purchase method of accounting for acquisitions, but requires a number of
changes, including changes in the way assets and liabilities are recognized
in the purchase accounting. It also changes the recognition of assets
acquired and liabilities assumed arising from contingencies, requires the
capitalization of in-process research and development at fair value, and
requires the expensing of acquisition-related costs as incurred. SFAS No.
141R is effective beginning October 1, 2009 and will apply prospectively to
business combinations completed on or after that date.

F-16

the noncontrolling interest will be included in consolidated net income on
the face of the income statement and, upon loss of control, the interest
sold, as well as any interest retained, will be recorded at fair value with
any gain or loss recognized in earnings. SFAS No. 160 is effective beginning
October 1, 2009 and will apply prospectively, except for the presentation and
disclosure requirements, which will apply retrospectively.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No. 133",
which changes disclosure requirements for derivative instruments and hedging
activities. The statement is effective for periods ending on or after
November 15, 2008, with early application encouraged. The Company is
currently assessing the additional requirements of this statement.

In April 2008, the FASB staff issued PSP FAS 142-3, "Determination of the
Useful Life of Intangible Assets", which amends the factors that should be
considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FASB Statement No.
142, "Goodwill and Other Intangible Assets". The staff position is intended
to improve the consistency between the useful life of a recognized intangible
asset under Statement 142 and the period of expected cash flows used to
measure the fair value of the asset under FASB Statement No. 141, "Business
Combinations", and other U.S. generally accepted accounting principles
(GAAP). The Company is currently assessing the potential impact of this staff
position on its consolidated financial statements.

In June 2008, the FASB finalized EITF 07-5, "Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock". The
EITF lays out a procedure to determine if the debt instrument is indexed to
its own common stock. The EITF is effective for fiscal years beginning after
December 15, 2008. The Company believes it will have an impact on the
convertible debt and certain warrants and it could be material.

In September 2008, the FASB staff issued PSP FAS 133-1 and FIN 45-4,
"Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of
the Effective Date of FASB Statement No. 161". The FSP applies to credit
derivatives within the scope of Statement 133 and hybrid instruments that
have embedded credit derivatives. It deals with disclosures related to these
derivatives and is effective for reporting periods ending after November 15,
2008. It also clarifies the effective date of SFAS No. 161 as any reporting
period beginning after November 15, 2008. The Company is currently assessing
the potential impact of this staff position on its consolidated financial
statements.

F-17

s. Stock-Based Compensation-- In December 2004, the FASB issued SFAS No. 123R,
"Share-Based Payment". SFAS No. 123R requires companies to recognize
compensation expense in an amount equal to the fair value of the share-based
payment (stock options and restricted stock) issued to employees. 123R
applies to all transactions involving issuance of equity by a Company in
exchange for goods and services, including transactions with employees. SFAS
No. 123R was effective for the first fiscal period in the fiscal year
beginning after June 15, 2005. The Company recognized expense of $ 561,387
for options issued or vested during the fiscal year ended September 30, 2008,
expense of $307,201 for options issued or vested during the fiscal year ended
September 30, 2007 and expense of $180,298 for options issued or vested
during the fiscal year ending September 30, 2006. This expense was recorded
as general and administrative expense. The following table summarizes stock
option activity for the year ended September 30, 2008.

Non-Qualified Stock Option Plan

Outstanding Exercisable
------------------------------------------------ ---------------------------------------------------
Weighted Weighted
Weighted Average Weighted Average
Number Average Remaining Aggregate Number Average Remaining Aggregate
of Exercise Contractual Intrinsic of Exercise Contractual Intrinsic
Shares Price Term (Years) Value Shares Price Term (Years) Value
------------------------------------------------ ---------------------------------------------------
Outstanding at
October 1, 2007 6,907,698 $0.70 5.17 1,162,496 5,467,712 $0.64 4.02 $1,085,252
Vested 616,328 $0.59
Granted 1,038,000 $0.61 9.47 1,038,000 $0.61 9.47
Exercised (50,467) $0.59 3.99 $ 5,784 (50,467) $0.59 3.99 $ 5,784
Forfeited (9,332) $0.57 (9,332) $0.57
Expired (34,634) $1.07 (34,634) $1.07
Outstanding at
September 30, 2008 7,851,265 $0.65 5.30 $ 293,449 5,998,939 $0.66 4.15 $ 293,449

Incentive Stock Option Plan
---------------------------

Outstanding Exercisable
------------------------------------------------ ---------------------------------------------------
Weighted Weighted
Weighted Average Weighted Average
Number Average Remaining Aggregate Number Average Remaining Aggregate
of Exercise Contractual Intrinsic of Exercise Contractual Intrinsic
Shares Price Term (Years) Value Shares Price Term (Years) Value
------------------------------------------------ ---------------------------------------------------
Outstanding at
October 1, 2007 4,601,933 $0.64 5.38 $1,078,567 3,998,601 $0.63 4.52 $1,050,067
Vested 280,001 $0.58
Granted 300,000 $0.62 9.50 300,000 $0.62 9.50
Exercised
Forfeited
Expired (156,667) $3.83 (156,667) $3.83
Outstanding at
September 30, 2008 4,745,266 $0.53 5.30 $454,200 4,121,935 $0.52 4.45 $ 454,200

F-18

The total intrinsic value of options exercised during the fiscal years
2008, 2007 and 2006 was $5,784, $257,463 and $67,432, respectively.

A summary of the status of the Company's non-vested options as of
September 30, 2008 is presented below:

Non-qualified Stock Option Plan:
Weighted
Number of Average
Shares Price
---------- ---------

Nonvested at October 1, 2005 1,572,470 $0.25
Vested (1,538,821)
Granted 1,091,000
Forfeited -
Expired -
----------

Nonvested at September 30, 2006 1,124,649 $0.23
Vested (554,663)
Granted 870,000
Forfeited -
Expired -
----------

Nonvested at September 30, 2007 1,439,986 $0.51
Vested (616,328)
Granted 1,038,000
Forfeited (9,332)
Expired -
-----------

Nonvested at September 30, 2008 1,852,326 $0.61

Incentive Stock Option Plan:
Weighted
Number of Average
Shares Price
--------- -------

Nonvested at October 1, 2005 1,086,665 $0.21
Vested (939,999)
Granted 370,000
Forfeited -
Expired -
---------

Nonvested at September 30, 2006 516,666 $0.46
Vested (213,334)
Granted 300,000
Forfeited -
Expired -
----------

F-19

Nonvested at September 30, 2007 603,332 $0.49
Vested (280,001)
Granted 300,000
Forfeited -
Expired -
-----------

Nonvested at September 30, 2008 623,331 $0.62

The weighted average fair value at the date of grant for options granted
during fiscal years 2008, 2007 and 2006 was $0.51, $0.53 and $0.58,
respectively.

In fiscal year 2008, CEL-SCI issued 1,338,000 stock options to employees and
directors at a fair value of $677,661, or weighted average $0.51 per share.
In September 2007, CEL-SCI issued 1,170,000 stock options to employees and
directors at a fair value of $616,977, or $0.53 per share. In September 2006,
CEL-SCI issued 1,086,000 stock options to employees and directors at a fair
value of $543,699, or $0.50 per share. The fair value of each option grant
was estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions:

2008 2007 2006
---- ---- ----

Expected stock risk volatility 79-81% 80% 78%
Risk-free interest rate 3.68-4.53% 4.67% 4.88%
Expected life options 10 Years 10 Years 10 Years
Expected dividend yield - - -

The Company's stock options are not transferable, and the actual value of the
stock options that an employee may realize, if any, will depend on the excess
of the market price on the date of exercise over the exercise price. The
Company has based its assumption for stock price volatility on the variance
of monthly closing prices of the Company's stock. The risk-free rate of
return used for fiscal years 2008, 2007 and 2006 equals the yield on ten-year
zero-coupon U.S. Treasury issues on the grant date. Historical data was used
to estimate option exercise and employee termination within the valuation
model. The expected term of options represents the period of time that
options granted are expected to be outstanding and has been determined based
on an analysis of historical exercise behavior. No discount was applied to
the value of the grants for non-transferability or risk of forfeiture.

At the annual shareholders' meeting on March 3, 2008, the following plans
were adopted:

o CEL-SCI's 2008 Incentive Stock Option Plan which provides that up to
1,000,000 shares of common stock may be issued upon the exercise of
options granted pursuant to the Incentive Stock Option Plan.

o CEL-SCI's 2008 Non-Qualified Stock Option Plan which provides that up to
1,000,000 shares of common stock may be issued upon the exercise of
options granted pursuant to the Non-Qualified Stock Option Plan.

F-20

o CEL-SCI's 2008 Stock Bonus Plan which provides that up to 1,000,000 shares
of common stock may be issued to persons granted stock bonuses pursuant to
the Stock Bonus Plan.

o CEL-SCI's Stock Compensation Plan was amended to provide for the issuance
of up to 1,000,000 additional restricted shares of common stock to
CEL-SCI's directors, officers, employees and consultants for services
provided to CEL-SCI.

2. SERIES K CONVERTIBLE DEBT

In August 2006, the Company issued $8,300,000 million in aggregate
principal amount of convertible notes (the "Series K Notes") together with
warrants to purchase 4,825,581 shares of the Company's common stock (the
"Series K Warrants"). Additionally, in connection with issuance of the
Series K Notes and Series K Warrants, the placement agent received a fee of
$498,000 and 386,047 fully vested warrants (the "Placement Agent Warrants")
to purchase shares of the Company's common stock. Net proceeds were
$7,731,290, net of $568,710 in direct transaction costs, including the
placement agent fee.

Features of the Convertible Debt Instrument and Warrants

The Series K Notes were convertible into 9,651,163 shares of the Company's
common stock at the option of the holder at any time prior to maturity at a
conversion price of $0.86 per share, subject to adjustment for certain
events described below. The Series K Warrants were exercisable over a
five-year period from February 4, 2007 through February 4, 2012 at $0.95
per share.

The Series K Notes bear interest at the greater of 8% or LIBOR plus 300
basis points, and are required to be repaid in thirty equal monthly
installments of $95,000 beginning on March 4, 2007 and continuing through
September 4, 2010. The remaining principal balance of $950,000 is required
to be repaid on August 4, 2011; however, holders of the Series K Notes may
require repayment of the entire remaining principal balance at any time
after August 4, 2009, accordingly, the debt has been classified as current
as of September 30, 2008. Interest has been payable quarterly beginning in
September 30, 2006. Each payment of principal and accrued interest may be
settled in cash or in shares of common stock at the option of the Company.
The number of shares deliverable under the share-settlement option is
determined based on the lower of (a) $0.86 per share, as adjusted pursuant
to the terms of the Series K Notes or (b) 90% applied to the arithmetic
average of the volume-weighted-average trading prices for the twenty day
period immediately preceding each share settlement.

In the event of default, as defined in the Series K Notes, all amounts due
and outstanding thereunder shall become, at the option of the holders,
immediately due and payable in cash, in an amount that equals the sum of
(i) the greater of (a) 115% of the outstanding balance plus all accrued and
unpaid interest or (b) 115% of the arithmetic average of the
volume-weighted-average trading prices for the five day period immediately
preceding notice requiring repayment, and (ii) all other amounts due in
connection with the Series K Notes and associated agreements. Additionally,
if a certain breach occurs under a related registration rights agreement,
the Company will be required to pay, as liquidated damages, 1.5% per month

F-21

of the outstanding balance of the Series K Notes, until such default is
cured (or 2% per month if such breach occurs after 180 days following
closing of the transaction). Events of default include circumstances in
which the Company either fails to have a registration statement for shares
into which the Series K Notes can be converted be declared effective by the
SEC within 180 days of the issuance date of the Series K Notes or that the
registration statement's effectiveness lapses for any reason.

The Company may not make payments in shares if such payments would result
in the cumulative issuance of shares of its common stock exceeding 19.999%
of the shares outstanding on the day immediately preceding the issuance
date of the Series K Notes, unless prior approval is given by vote of at
least a majority of the shares outstanding. The Company received such
approval on November 17, 2006. The Company cannot determine at this time if
it will be required to issue shares in excess of the Issuable Maximum
because the number of shares issuable as payments of principal and interest
under the Series K Notes will depend on future share prices. The conversion
price of the Series K Notes and exercise price of the Series K Warrants are
each subject to certain anti-dilution protections, including for stock
splits, stock dividends, change in control events and dilutive issuances of
common stock or common stock equivalents, such as stock options, at an
effective price per share that is lower than the then conversion price. In
the event of a dilutive issuance of common stock or common stock
equivalents, the conversion price and exercise price would be reduced to
equal the lower per share price of the subsequent transaction.

Accounting for the Convertible Debt Instrument and Warrants

The Company is accounting for the Series K Warrants as derivative
liabilities in accordance with SFAS No. 133. The Company has determined
that the Series K Notes constitute a hybrid instrument that has the
characteristics of a debt host contract containing several embedded
derivative features that would require bifurcation and separate accounting
as a derivative instrument pursuant to the provisions of FAS 133. The
Company has determined that certain of these features can not be reliably
measured and, in accordance with the requirements of SFAS No. 133, has
measured the entire hybrid instrument at fair value with changes in fair
value recognized as either a gain or loss.

Upon issuance of the Series K Notes and Series K Warrants, the Company
allocated proceeds received to the Series K Notes and the Series K Warrants
on a relative fair value basis. As a result of such allocation, the Company
determined the initial carrying value of the Series K Notes to be
$6,565,528. The Series K Notes were immediately marked to fair value
resulting in a derivative liability in the amount of $9,728,793 and
recognized a charge of $3,163,265, which was recorded as costs associated
with convertible debt. As of September 30, 2008, the fair value of the
Series K Notes is $1,943,240, and the Company recognized a total gain of
$1,799,393 on the convertible debt and associated warrants during the year
ended September 30, 2008. A debt discount in the amount of $1,734,472 is
being amortized to interest expense using the effective interest method
over the expected term of the Series K Notes. During the year ended
September 30, 2008, the Company recorded interest expense of $249,106 in
related amortization of the debt discount over the term of the Series K
Notes.

F-22

Upon issuance, the Series K Warrants and Placement Agent Warrants did not
meet the requirements for equity classification set forth in EITF Issue No.
00-19, "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock," because such warrants (a)
must be settled in registered shares and (b) are subject to substantial
liquidated damages if the Company is unable to maintain the effectiveness
of the resale registration of the shares. Therefore such warrants must be
accounted for as freestanding derivative instruments pursuant to the
provisions of FAS 133. Accordingly, the Company allocated $2,570,138 of the
initial proceeds to the Series K Warrants and immediately marked them to
fair value resulting in a derivative liability of $2,570,138 and recognized
a charge of $835,666, which was recorded as costs associated with
convertible debt. As of September 30, 2008, the fair value of the Series K
Warrants is $995,793. The Company paid $568,710 in cash transaction costs
and incurred another $223,907 in costs based upon the fair value of the
Placement Agent Warrants, which was recorded as costs associated with
convertible debt. Such costs were expensed immediately as part of fair
value adjustments required in connection with the convertible debt
instrument and the Company's irrevocable election to initially and
subsequently measure the Series K Notes at fair value. As of September 30,
2008, the fair value of the Placement Agent Warrants was $79,664.

During the year ended September 30, 2007, $4,399,285 in convertible debt
was converted into 5,744,764 shares of common stock. No debt was converted
into common stock during the year ended September 30, 2008.

The following summary comprises the total of the fair value of the
convertible debt at September 30, 2008 and 2007:

2008 2007
---- ----

Face value of debt $2,240,715 $3,285,715
Discount on debt (193,980) (443,086)
Investor warrants 1,734,472 1,734,472
Placement agent warrants 79,664 192,826
Fair value adjustment-convertible debt (103,495) 168,207
Fair value adjustment-investor warrants (738,679) 675,850
----------- ------------
Total fair value $3,018,697 $5,613,984
========== ==========

3. OPERATIONS AND FINANCING

The Company has incurred significant costs since its inception in connection
with the acquisition of certain patented and unpatented proprietary
technology and know-how relating to the human immunological defense system,
patent applications, research and development, administrative costs,
construction of laboratory facilities, and clinical trials. The Company has
funded such costs with proceeds realized from the public and private sale of
its common and preferred stock. The Company will be required to raise
additional capital or find additional long-term financing in order to
continue with its research efforts. To date, the Company has not generated
any revenue from product sales. The ability of the Company to complete the
necessary clinical trials and obtain Federal Drug Administration (FDA)
approval for the sale of products to be developed on a commercial basis is

F-23

uncertain. Ultimately, the Company must complete the development of its
products, obtain the appropriate regulatory approvals and obtain sufficient
revenues to support its cost structure.

CEL-SCI has two partners who have agreed to participate in and pay for part
of the Phase III clinical trial for Multikine. However in light of the
current capital market environment, CEL-SCI believes it is prudent not to
start the Phase III clinical trial until it has firm commitments in the form
of partnerships and/or money raised for a substantial amount of cash to
support the Phase III clinical trial. In the meantime, CEL-SCI will operate
at significantly reduced cash expenditure levels and additional cash may be
raised by offering contract manufacturing services to the pharmaceutical
industry in its new manufacturing facility. CEL-SCI expects that it will need
to raise additional capital in fiscal year 2009 in the form of corporate
partnerships and/or equity financings to support its operations at its
current rate. CEL-SCI is currently working towards a transaction which it
expects to complete in fiscal 2009 which will finance its Phase III clinical
trial of Multikine. CEL-SCI believes that it will be able to obtain
additional financing since Multikine is a Phase III product designed to treat
cancer, an area that pharmaceutical companies are increasingly targeting.
CEL-SCI is working on a sale-leaseback program for the equipment it owns
which would provide CEL-SCI approximately $1.5 million in additional cash. It
is important to note that CEL-SCI's expenditures for fiscal year 2008
included several very large non-recurring expenses that amounted to several
million dollars, mostly related to the build out of the manufacturing
facility. These expenses will not recur in fiscal year 2009, thereby reducing
CEL-SCI's expenditures significantly. Beyond those savings CEL-SCI has also
made other very significant cuts in its expenditures and certain vendors have
agreed to take common stock in lieu of cash payments. In addition, CEL-SCI
has put in place a $5 million Equity Line of Credit (see Note 15).
With this Equity Line of Credit in place CEL-SCI believes it will have the
required capital to continue operations into January 2010. However, if
necessary CEL-SCI can make further reductions in expenditures by a reduction
in force or by implementation of a salary reduction program. The Company has
determined that the convertible debt holders of the Series K Notes may
require repayment of the entire remaining principal balance at any time after
August 4, 2009. This debt can be paid in stock and would not require a cash
payment. In addition, CEL-SCI is currently in negotiation with the Landlord
of the manufacturing facility for rent deferral on the lease in order to
conserve its cash. If we do not renegotiate the lease, we plan to either get
an additional loan from Mr. de Clara or use the equity line of credit to
make the rent payments.

The Company has determined that the convertible debt holders of the Series
K Notes may require repayment of the entire remaining principal balance at
any time after August 4, 2009. This debt can be paid in stock and may not
require a cash payment. In addition, in December 2008, CEL-SCI was not in
compliance with certain lease requirements (i.e., failure to pay an
installment of Base Annual Rent). However, the landlord has not declared
CEL-SCI formally in default under the terms of the lease. The landlord
currently has the right to declare CEL-SCI in default if CEL-SCI fails to
pay any installment of the Base Annual Rent when such failure continues for
a period of 5 business days after CEL-SCI's receipt of written notice
thereof from the Landlord, provided that if CEL-SCI fails to pay any of the
foregoing within 5 business days more than two (2) times in any twelve (12)
month period during the lease term, the Landlord shall not be required to
provide CEL-SCI with any further notice and CEL-SCI shall be deemed to be
in default. CEL-SCI is currently in negotiation with the Landlord for rent
deferral on the lease in order to conserve its cash. If we do not
renegotiate the lease we plan to either get an additional loan from Mr.
deClara or use the equity line of credit to make the rent payments.

While there can be no assurance that the debt holders will not exercise
their put option, and the landlord of the manufacturing facility will not
issue a default notice, the Company continues to work on solutions for
additional financing and ways to reduce expenses. The Company has shown in
the past that they are able to secure financing to continue operations.
There is no assurance the Company can do so in the future. These financial
statements do not reflect any adjustments that might result from this
uncertainty.

4. RESEARCH AND OFFICE EQUIPMENT

Research and office equipment at September 30, 2008 and 2007, consists of the
following:
2008 2007
---- ----

Research equipment $3,125,982 $1,931,459
Furniture and equipment 118,881 119,020
Leasehold improvements 44,419 43,041
------------ ----------
3,289,283 2,093,520

Less: Accumulated depreciation and
amortization (1,964,597) (1,859,644)
------------ -----------
Net research and office equipment $ 1,324,686 $ 233,876
============ ===========

F-24

5. INCOME TAXES

At September 30, 2008 the Company had a federal net operating loss
carryforward of approximately $98.1 million expiring from 2009 through 2028.

In addition, the Company has a general business credit as a result of the
credit for increasing research activities of $2,342,000 and $1,950,700 at
September 30, 2008 and 2007, respectively. These tax credits begin expiring
after twenty years from the year in which the credit was generated. The
components of the deferred taxes at September 30, 2008 and 2007 are comprised
of the following:

2008 2007
---- ----

Net operating loss $37,235,972 $35,596,301

R&D credit 2,341,994 1,950,699
Amortization of debt discount 584,771 502,349
FAS 123R 207,635 -
Vacation 5,533 -
----------- -----------
Total deferred tax assets 40,375,905 38,049,349

Derivative gain (1,895,479) (1,242,453)
----------- -----------
Total deferred tax liability (1,895,479) -

Valuation allowance (38,480,426) (36,806,896)
----------- -----------
Net Deferred Tax Asset $ - $ -
============ ============

In assessing the realization of the deferred tax assets, management
considered whether it was more likely than not that some portion or all of
the deferred tax asset will be realized. The ultimate realization of the
deferred tax assets are dependent upon the generation of future taxable
income. Management has considered the history of the Company's operating
losses and believes that the realization of the benefit of the deferred tax
assets cannot be determined. In addition, under the Internal Revenue Code
Section 382, the Company's ability to utilize these net operating loss
carryforwards may be limited or eliminated in the event of a change in
ownership in the future. Internal Revenue Code Section 382 generally defines
a change in ownership as the situation where there has been a more than 50
percent change in ownership of the value of the Company within the last three
years.

The Company's effective tax rate is different from the applicable federal
statutory tax rate. The reconciliation of these rates for the years ended
September 30 is as follows:

2008 2007 2006
---- ---- ----

Federal Rate 34.0% 35.0% 35.0%
State tax rate, net of federal benefit 3.96% 3.96% 3.9%
R&D credit 5.06% 0% 0%
Nondeductible expenses (0.04%) (0.10%) (6.4%)
Valuation allowance (42.98%) (38.86%) (32.50%)

Effective tax rate 0.0% 0.0% 0.0%

F-25

The Company adopted the provisions of FIN No. 48, "Accounting for
Uncertainty in Income Taxes" on October 1, 2007 which requires financial
statement benefits be recognized for positions taken for tax return
purposes, when it is more likely than not that the position will be
sustained. The Company has concluded that it has properly filed its tax
returns and does not believe that any of the positions it has taken would
result in a disallowance of any of these tax positions. Therefore, the
Company has concluded that adoption of FIN No. 48 had no impact on its
financial positions. It is the Company's policy to record interest and
penalties, if any, related to unrecognized tax benefits as part income tax
expense for financial reporting purposes. No interest or penalties were
accrued as of October 1, 2007 as a result of adoption of FIN No. 48. In the
United States, the Company is still open to examination from 2004 forward.

6. STOCK OPTIONS, BONUS PLAN AND WARRANTS

Non-Qualified Stock Option Plan--At September 30, 2008, the Company has
collectively authorized the issuance of 13,760,000 shares of common stock
under the Non-Qualified Stock Option Plan. Options typically vest over a
three-year period and expire no later than ten years after the grant date.
Terms of the options are to be determined by the Company's Compensation
Committee, which administers all of the plans. The Company's employees,
directors, officers, and consultants or advisors are eligible to be granted
options under the Non-Qualified Stock Option Plan.

Information regarding the Company's Non-Qualified Stock Option Plan is
summarized as follows:

Outstanding Exercisable
--------------------- --------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------- --------- -------- ---------
Options outstanding,
October 1, 2005 6,215,363 $0.66 4,642,893 $0.76
Options granted 1,466,000 $0.63
Options exercised (150,001) $0.26
Options forfeited (20,000) $1.05
----------

Options outstanding,
September 30, 2006 7,511,362 $0.66 6,011,713 $0.69
Options granted 1,395,000 $0.66
Options exercised (1,403,664) $0.47
Options forfeited (40,000) $2.15
----------

Options outstanding,
September 30, 2007 7,462,698 $0.69 5,972,712 $0.67
Options granted 1,038,000 $0.60
Options exercised (50,467) $0.29
Options forfeited (43,966) $0.96
----------

Options outstanding,
September 30, 2008 8,406,265 $0.68 6,553,939 $ 0.64

F-26

In April 2005, the Company extended the expiration date on 1,625,333 options
from the Nonqualified Stock Option Plan with exercise prices ranging from
$1.05 to $1.94. The options originally would have expired from June 2005 to
October 2005 and were extended for three years to expiration dates ranging
from June 2008 to October 2008. This extension was considered a new
measurement date with respect to the modified options. At the date of
modification, the exercise price of the options exceeded the fair market
value of the Company's common stock and no compensation expense was recorded.
As of September 30, 2008, 1,622,833 options remain outstanding.

In September 2006, the Company extended the expiration date on 126,666
options from the Nonqualified Stock Option Plan with an exercise price of
$1.05. The options originally would have expired from September 2006 to May
2007 and were extended for three years to expiration dates ranging from
September 2009 to May 2010. This extension was considered a new measurement
date with respect to the modified options. At the date of modification,
compensation expense of $30,468 was recorded. As of September 30, 2008, all
of these options remain outstanding.

In December 2007, the Company extended the expiration date on 1,680,533
options from the Nonqualified Stock Option Plan with exercise prices ranging
from $1.05 to $1.94. The options originally would have expired between
February 2008 to October 2008 and were extended for five years to expiration
dates ranging from February 2013 to October 2013. This extension was
considered a new measurement date with respect to the modified options. At
the date of modification, the additional cost of the options was $410,471. As
of September 30, 2008, all of these options remain outstanding.

Incentive Stock Option Plan--At September 30, 2008, the Company has
collectively authorized the issuance of 10,100,000 shares of common stock
under the Incentive Stock Option Plan. Options vest over a one-year to
three-year period and expire no later than ten years after the grant date.
Terms of the options are to be determined by the Company's Compensation
Committee, which administers all of the plans. Only the Company's employees
and directors are eligible to be granted options under the Incentive Plan.

Information regarding the Company's Incentive Stock Option Plan is summarized
as follows:

Outstanding Exercisable
--------------------- --------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------- --------- -------- ---------

Options outstanding,
October 1, 2005 3,972,633 $0.68 2,885,968 $0.81
Options granted 370,000 $0.58
Options exercised -
Options forfeited (15,700) $5.36
----------

F-27

Options outstanding,
September 30, 2006 4,326,933 $0.65 3,810,267 $0.66
Options granted 300,000 $0.63
Options exercised -
Options forfeited (25,000) $3.12
---------

Options outstanding,
September 30, 2007 4,601,933 $0.64 3,998,601 $0.63
Options granted 300,000 $0.62
Options exercised
Options forfeited (156,667) $3.83
---------

Options outstanding,
September 30, 2008 4,745,266 $0.53 4,121,935 $0.52

In April 2005, the Company extended the expiration date on 128,100 options
from the Incentive Stock Option Plan with exercise prices ranging from $1.05
to $1.94. The options originally would have expired from July 2005 to
December 2005 and were extended for three years to expiration dates ranging
from July 2008 to December 2008. This was considered a new measurement date
with respect to all of the modified options. At each of the dates of
modification, the exercise price of the options exceeded the fair market
value of the Company's common stock and no compensation expense was recorded.
As of September 30, 2008, all options remain outstanding.

In September 2006, the Company extended the expiration date on 268,166
options from the Incentive Stock Option Plan with an exercise price of $1.05.
The options originally would have expired from September 2006 to August 2007
and were extended for three years to expiration dates ranging from September
2009 to August 2010. This extension was considered a new measurement date
with respect to the modified options. At the date of modification,
compensation expense of $56,396 was recorded. As of September 30, 2008, all
of these options remain outstanding.

In December 2007, the Company extended the expiration date on 225,100 options
from the Incentive Stock Option Plan with exercise prices ranging from $1.05
to $1.94. The options originally would have expired between February 2008 to
December 2008 and were extended for five years to expiration dates ranging
from February 2013 to December 2013. This extension was considered a new
measurement date with respect to the modified options. At the date of
modification, the additional cost of the options was $54,537. As of September
30, 2008, all of these options remain outstanding.

Other Options and Warrants

In February 2005, the Company granted a consultant options to purchase 15,000
shares of the Company's common stock at a price of $0.73 per share. The
options vest over a three year period and expire in February 2015. The
expense for these options was determined using the Black Scholes pricing
methodology with the following assumptions:

Expected stock risk volatility 93%
Risk-free interest rate 3.89%
Expected life of warrant 5 Years
Expected dividend yield -0-

F-28

The fair value of the options was recorded as general and administrative
expense. Expense of $7,972 was recorded for the year ended September 30,
2005.

On July 18, 2005, CEL-SCI sold 1,250,000 shares of its common stock and
375,000 warrants to one investor for $500,000. The warrants vested
immediately. Each warrant entitles the holder to purchase one share of
CEL-SCI's common stock at a price of $0.65 per share at any time prior to
July 18, 2009. The shares of common stock and warrants are "restricted"
securities as defined in Rule 144 of the Securities and Exchange Commission.
The warrants were valued at $155,671 and recorded as a debit and a credit to
additional paid-in capital.

The value was determined using the Black Scholes pricing methodology with the
following assumptions:

Expected stock risk volatility 75%
Risk-free interest rate 3.92%
Expected life of warrant 5 Years
Expected dividend yield -0-

On October 14, 2005, CEL-SCI granted a consultant options to purchase 80,000
shares of the Company's common stock at a price of $1.00 per share and 80,000
shares of the Company's common stock at a price of $2.00 per share. The
options vested immediately. The options expire in October 2010. The expense
for these options of $66,718, recorded as general and administrative expense
was determined using the Black Scholes pricing methodology with the following
assumptions:

Expected stock risk volatility 75%
Risk-free interest rate 4.33%
Expected life of warrant 5 Years
Expected dividend yield -0-

On October 31, 2005 in connection with the 2005 Equity Line of Credit,
CEL-SCI granted options to purchase 271,370 shares of the Company's common
stock at a price of $0.55 per share. The options vested immediately. The
options expire in October 2010. The options were recorded as a derivative
instrument at the time of issuance but reverted back to equity on December
27, 2005. The expense for these options at the time of issuance of $104,721,
recorded as general and administrative expense, was determined using the
Black Scholes pricing methodology with the following assumptions:

Expected stock risk volatility 87%
Risk-free interest rate 4.33%
Expected life of warrant 5 Years
Expected dividend yield -0-

On February 9, 2006, CEL-SCI sold 2,500,000 shares of its common stock and
750,000 warrants to one investor for $1,000,000. The warrants vested
immediately. Each warrant entitles the holder to purchase one share of
CEL-SCI's common stock at a price of $0.56 per share at any time prior to
February 9, 2011. The warrants were valued at $238,986 and recorded as a
debit and credit to additional paid-in capital. In addition, 441,176 warrants

F-29

previously issued to the investor were repriced and extended for one year.
The revaluing of the warrants was valued at $76,122 and recorded as a debit
and a credit to additional paid-in capital. The Black Scholes pricing
methodology was used with the following assumptions:

New Warrants Extended Warrants

Expected stock risk volatility 78% 78%
Risk-free interest rate 4.57% 4.67%
Expected life of warrant 5 Years 1.83 years
Expected dividend yield -0- -0-

On April 1, 2006, CEL-SCI granted a consultant options to purchase 375,000
shares of the Company's common stock at a price of $0.73 per sharey. The
options vested over a three-month period. In March 2007 66,300 options were
exercised. The expiration date on the remaining 308,700 options was extended
to May 1, 2007. All options were exercised. As of September 30, 2007, there
were no remaining options. The fair value of $87,007 was recorded as general
and administrative expense over the service period of April 1, 2006 to March
31, 2007. The fair valuye for these options was determined using the Black
Scholes pricing methodology with the following assumptions:

Expected stock risk volatility 77%
Risk-free interest rate 4.86%
Expected life of warrant 1 Year
Expected dividend yield -0-

On April 12, 2006, CEL-SCI granted a consultant options to purchase 100,000
shares of the Company's common stock at a price of $1.50 per share and vested
immediately. The options expire in April 2009. The general and administrative
expense of $79,976 for these options was determined using the Black Scholes
pricing methodology with the following assumptions:

Expected stock risk volatility 77%
Risk-free interest rate 4.90%
Expected life of warrant 3 Years
Expected dividend yield -0-

On April 17, 2006, 800,000 warrants were issued to an investor. These
warrants granted the investor the right to purchase shares of the Company's
common stock at a price of $1.25 and vested immediately. The warrants were
given to the investor to induce the investor to exercise 700,000 warrants at
$0.47 for unregistered common stock. The warrants expired in June 2008. These
warrants were extended for 5 years and will expire in June 2013. The expense
of $460,920 recorded as a debit and a credit to additional paid-in capital
and was determined using the Black Scholes pricing methodology with the
following assumptions:

Original Extended
Warrants Warrants

Expected stock risk volatility 77% 72%
Risk-free interest rate 4.91% 5.50%
Expected life of warrant 2.17 Years 5.50 Years
Expected dividend yield -0- -0-

On May 18, 2006, the Company issued 800,000 warrants to an investor to
purchase shares of the Company's common stock at a price of $0.82 per share
and vested immediately. The warrants were given to the investor to induce the
investor to exercise 600,000 warrants at $0.56 for unregistered common stock
and will expire on May 17, 2011. The expense of $416,921 was recorded as a
debit and a credit to additional paid-in capital and was determined using the
Black Scholes pricing methodology with the following assumptions:

F-30

Expected stock risk volatility 73%
Risk-free interest rate 4.96%
Expected life of warrant 5 Years
Expected dividend yield -0-

Series K Warrants were issued in connection with the issuance of convertible
debt in August 2006. The Series K Warrants allow the holders to purchase up
to 4,825,581 shares of the Company's common stock at a price equal to $0.95
per share between February 4, 2007 and February 4, 2012. The exercise price
of the Series K warrants, as well as the shares issuable upon the exercise of
the warrants, will be proportionately adjusted in the event of any stock
splits. 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 K 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 CEL-SCI sells
any additional shares of common stock, or any securities convertible into
common stock at a price above the exercise price but below the market price
of CEL-SCI's common stock, the exercise price of the Series K warrants will
be lowered to a price determined by a formula contained in the warrants.

On September 29, 2006, CEL-SCI granted a consultant options to purchase
375,000 shares of the Company's common stock at a price of $0.62 per share.
The options vested over a three month period and would have expired in
September 2007. All options were exercised. The general and administrative
expense of $74,992 for these options was determined using the Black Scholes
pricing methodology with the following assumptions:

Expected stock risk volatility 78%
Risk-free interest rate 5.08%
Expected life of warrant 1 Year
Expected dividend yield -0-

In February 2007, 50,000 options were issued to each of two consultants to
purchase shares of common stock at $0.70 and $0.81. The options vested in 3
months and 3 1/2 months respectively and expire in 1.5 and two years. The
options were valued at $30,375 using the Black Scholes pricing methodology,
using the following assumptions, and the cost was recorded as a debit to
general and administrative expense. In August 2008, 50,000 of these options
were extended for one year. The revaluing of the options was valued at less
than the original value, so no additional cost needed to be recognized.

Original Extended
Warrants Warrants

Expected stock risk volatility 74.0% 74.0%
Risk-free interest rate 4.85% 4.85%
Expected life of warrant 1.5 and 2 Years 1 Year

F-31

On April 5, 2007, 375,000 options were issued to a consultant to purchase
shares of common stock at $0.72 per share and vested immediately. The options
were valued at $76,617 using the Black Scholes pricing methodology, using the
following assumptions, and the cost was recorded as a debit to general and
administrative expense. In December 2007, these warrants were extended for
five years. The revaluing of the warrants was valued at an additional $99,181
and recorded as general and administrative expense. The Black Scholes pricing
methodology was used with the following assumptions:

Original Extended
Warrants Warrants

Expected stock risk volatility 68.02% 68.02%
Risk-free interest rate 4.73% 4.73%
Expected life of warrant 1 Year 5.33 Years

On May 29, 2007, 100,000 options were issued to a consultant to purchase
shares of common stock at $0.84 and vested immediately. The options were
valued at $45,583 using the Black Scholes pricing methodology, using the
following assumptions, and the cost was recorded as a debit to general and
administrative expense:

Expected stock risk volatility 66.93%
Risk-free interest rate 4.60%
Expected life of warrant 4 Years

In July 2007, the Company issued 3,000,000 warrants to VIF II CEL-SCI
Partners LLC in connection with the manufacturing facility lease agreement.
The warrants vested immediately. The cost of the warrants, $1,403,654 was
recorded as an increase in deferred rent and will be expensed over the life
of the lease.

In September 2007, 50,000 options were issued to a consultant and valued at
$12,342. The options vested and were recorded as a general and administrative
expense in January 2008.

In November and December 2007, the Company extended 2,016,176 investor and
consultant warrants. The options and warrants were due to expire from
December 1, 2007 through December 31, 2008. All options and warrants were
extended for an additional five years from the original expiration date. The
cost of the extension of investor warrants of $424,815 was recorded as a
debit to accumulated deficit (dividend) and a credit to additional paid-in
capital. The cost of the extension of the consultant warrants of $99,181 is
recorded as a debit to general and administrative expense and a credit to
additional paid-in capital. The additional cost of the extension of investor
and consultant warrants was determined using the Black Scholes method.

F-32

Stock Bonus Plan -- At September 30, 2008, the Company had been authorized to
issue up to 7,940,000 shares of common stock under the Stock Bonus Plan. All
employees, directors, officers, consultants, and advisors are eligible to be
granted shares. During the year ended September 30, 2006, 132,989 shares were
issued to the Company's 401(k) plan for a cost of $85,480. During the year
ended September 30, 2007, 137,546 shares were issued to the Company's 401(k)
plan for a cost of $89,722. During the year ended September 30, 2008, 205,125
shares were issued to the Company's 401(k) plan for a cost of $108,590.

Stock Compensation Plan-- At September 30, 2008, 5,500,000 shares were
authorized for use in the Company's stock compensation plan. During the year
ended September 30, 2006, 266,355 shares were issued in lieu of salary
increases extending through August 31, 2007. These shares were issued at
$0.58 per share for a total cost of $154,486. During the year ended September
30, 2007, 1,075,000 shares were issued at $0.63 per share for a total cost of
$677,250. During the year ended September 30, 2008, 1,789,451 shares were
issued at the weighted average $0.62 per share for a total cost of
$1,324,474.

7. EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution retirement plan, qualifying
under Section 401(k) of the Internal Revenue Code, subject to the Employee
Retirement Income Security Act of 1974, as amended, and covering
substantially all Company employees. Each participant's contribution is
matched by the Company with shares of common stock that have a value equal to
100% of the participant's contribution, not to exceed the lesser of $10,000
or 6% of the participant's total compensation. The Company's contribution of
common stock is valued each quarter based upon the closing bid price of the
Company's common stock. The expense for the years ended September 30, 2008,
2007, and 2006, in connection with this Plan was $110,670, $92,035, and
$88,054, respectively.

8. COMMITMENTS AND CONTINGENCIES

Operating Leases-The future minimum annual rental payments due under
noncancelable operating leases for office and laboratory space are as
follows:

Year Ending September 30,

2009 $ 1,711,320
2010 1,727,368
2011 1,779,188
2012 1,805,169
2013 1,751,83
2014 and thereafter 29,437,792
-----------
Total minimum lease payments: $ 38,212,676
============

Rent expense for the years ended September 30, 2008, 2007, and 2006, was
$253,526, $240,914 and $250,994, respectively. Minimum payments have not been
reduced by minimum sublease rental receivable under future cancelable
subleases. These leases expire between September 2008 and August 2028.

F-33

In August 2007 CEL-SCI leased a building near Baltimore, Maryland. The
building was be remodeled in accordance with CEL-SCI's specifications so that
it can be used by CEL-SCI to manufacture Multikine for CEL-SCI's Phase III
clinical trial and sales of the drug if approved by the FDA. The Company took
possession of the building in October 2008.

The lease is for a term of twenty years and requires annual base rent
payments of $1,575,000 during the first year of the lease. The annual base
rent escalates each year at 3%. CEL-SCI is also required to pay all real and
personal property taxes, insurance premiums, maintenance expenses, repair
costs and utilities. The lease allows CEL-SCI, at its election, to extend the
lease for two ten-year periods or to purchase the building at the end of the
20-year lease. The lease required CEL-SCI to pay $3,150,000 towards the
remodeling costs, which will be recouped by reductions in the annual base
rent of $303,228 in years six through twenty of the lease, subject to CEL-SCI
maintaining compliance with the lease covenants. Included on the consolidated
balance sheet is an asset of $8,660,837 shown as deferred rent. Included in
deferred rent are the following: 1) deposit on the manufacturing facility
($3,150,000); 2) warrants issued to lessor ($1,364,773); 3) deposit on the
cost of the leasehold improvements for the manufacturing facility
($1,786,591); and 4) additional investment in the manufacturing facility
during the year ended September 30, 2008 ($2,359,473). Also included on the
consolidated balance sheet is restricted cash of $987,652. The restricted
cash amount includes funds for the following: 1) contingency escrow of
$551,155; and 2) movable equipment escrow of $436,497. In July 2008, the
Company was required to deposit the equivalent of one year of base rent in
accordance with the contract. The $1,575,000 included in noncurrent assets
was required to be deposited when the amount of cash the Company had dipped
below the amount stipulated in the contract. In December 2008, CEL-SCI was
not in compliance with certain lease requirements (i.e., failure to pay an
installment of Base Annual Rent). However, the landlord has not declared
CEL-SCI formally in default under the terms of the lease. The landlord
currently has the right to declare CEL-SCI in default if CEL-SCI fails to pay
any installment of the Base Annual Rent when such failure continues for a
period of 5 business days after CEL-SCI's receipt of written notice thereof
from the Landlord, provided that if CEL-SCI fails to pay any of the foregoing
within 5 business days more than two (2) times in any twelve (12) month
period during the lease term, the Landlord shall not be required to provide
CEL-SCI with any further notice and CEL-SCI shall be deemed to be in default.
CEL-SCI is currently in negotiation with the Landlord for rent deferral on
the lease. In order to conserve its cash, if CEL-SCI does not renegotiate
the lease it plans to either get an additional loan from Mr. de Clara or use
the equity line of credit to make the rent payments.

Employment Contracts--In April 2005 the Company entered into a three year
employment agreement with its President and Chairman of the Board which
expired April 30, 2008. However, on September 8, 2006 CEL-SCI agreed to
extend its employment agreement with Maximilian de Clara, CEL-SCI's
President, to April 30, 2010. During the term of the employment agreement,
CEL-SCI will pay Mr. de Clara an annual salary of $363,000.

The employment agreement, as amended, also provided that on September 8,
2006, March 8, 2007, September 8, 2007, March 8, 2008, September 8, 2008 and
March 8, 2009, each date being a "Payment Date", CEL-SCI will issue Mr. de
Clara shares of its common stock equal in number to the amount determined by
dividing $200,000 by the average closing price of CEL-SCI's common stock for
the twenty trading days preceding the Payment Date. A total of 673,431
shares were issued to Mr. de Clara during the fiscal year ended September
30, 2008.

F-34

The employment agreement provides that CEL-SCI will pay him an annual salary
of $363,000 during the term of the agreement. In the event that there is a
material reduction in his authority, duties or activities, or in the event
there is a change in the control of the Company, then the agreement allows
him to resign from his position at the Company and receive a lump-sum payment
from CEL-SCI equal to 18 months salary. For purposes of the employment
agreement, a change in the control of CEL-SCI means the sale of more than 50%
of the outstanding shares of CEL-SCI's Common Stock, or a change in a
majority of CEL-SCI's directors.

In September 2006, CEL-SCI agreed to extend its employment agreement with
Geert R. Kersten, CEL-SCI's Chief Executive Officer, to September 2011. The
employment agreement, which is essentially the same as Mr. Kersten's prior
employment agreement, provides that during the term of the agreement CEL-SCI
will pay Mr. Kersten an annual salary of $370,585 plus any increases approved
by the Board of Directors during the period of the employment agreement. In
the event there is a change in the control of the Company, the agreement
allows him to resign from his position at the Company and receive a lump-sum
payment from the Company equal to 24 months of salary. For purposes of the
employment agreement a change in the control of the Company means: (1) the
merger of the Company with another entity if after such merger the
shareholders of the Company do not own at least 50% of voting capital stock
of the surviving corporation; (2) the sale of substantially all of the assets
of the Company; (3) the acquisition by any person of more than 50% of the
Company's common stock; or (4) a change in a majority of the Company's
directors which has not been approved by the incumbent directors.

9. CONVERTIBLE DEBT

As of September 30, 2008, the Company has outstanding convertible debt with a
fair value of $3,018,697. As of September 30, 2007, the Company had
outstanding convertible debt with a fair value totaling $5,613,984. In August
2006, the Company sold Series K Notes and Series K warrants to a group of
private investors for proceeds of $8,300,000, less transaction costs of
$568,710. For a further discussion of this transaction, see Note 2.

10. SHORT-TERM INVESTMENTS/EQUITY LINES OF CREDIT

At September 30, 2008, the Company had $200,000 of a short-term investment
in Auction Rate Cumulative Preferred Shares (ARPs), liquidation preference
of $25,000 per share, of an income mutual fund. On May 6, 2008, the fund
company announced the redemption of $300 million or, 85.7% of the ARPs on
various dates between May 19, 2008 and May 23, 2008 subject to the
investment fund lottery system. All of the Company's ARPs, except for the
currently held $200,000, were redeemed.

In conjunction with the ARPs, the Company has a line of credit to borrow up
to 100% of the ARPs at an interest rate of prime minus 1% (prime equals 5%
on September 30, 2008). During the fiscal year, the Company borrowed
$1,956,803 against the ARPs and paid back $1,756,803 in May 2008. On
September 30, 2008, the Company had a $200,000 outstanding loan balance

F-35

secured by the investment balance of ARPs. On November 4, 2008, the $200,000
loan was repaid when the ARPs were redeemed at face value. During the fiscal
year, the Company paid $7,522 in interest expense on the loan.

11. STOCKHOLDERS' EQUITY

On July 18, 2005, CEL-SCI sold 1,250,000 shares of its common stock and
375,000 warrants to one investor for $500,000. Each warrant entitles the
holder to purchase one share of CEL-SCI's common stock at a price of $0.65
per share at any time prior to July 18, 2009. The shares of common stock and
warrants are "restricted" securities as defined in Rule 144 of the Securities
and Exchange Commission.

On February 9, 2006, CEL-SCI sold 2,500,000 shares of its common stock and
750,000 warrants to one investor for $1,000,000. Each warrant entitles the
holder to purchase one share of CEL-SCI's common stock at a price of $0.56
per share at any time prior to February 9, 2011. The warrants were valued at
$238,986. In addition, 441,176 warrants previously issued to the investor
were repriced and extended for one year. The revaluing of the warrants was
valued at $76,122, as discussed in Note 6.

On April 18, 2007, the Company completed a $15 million private financing.
Shares were sold at $0.75, a premium over the closing price of the previous
two weeks. The financing was accompanied by 10 million warrants with an
exercise price of $0.75 and 10 million warrants with an exercise price of
$2.00. The warrants are known as Series L and Series M warrants,
respectively. The shares were registered in May 2007.

The financing resulted in the issuance of 19,999,998 shares of common stock
to the investors. The warrants issued with the financing qualified for
equity treatment. The Series L warrants were recorded as a debit and a
credit to additional paid-in capital at a value of $5,164,355 and the
Series M warrants were recorded as a debit and a credit to additional
paid-in capital at a fair value of $434,300.

In September 2008, 2,250,000 of the original Series L warrants were repriced
at $0.56 and extended for one year to April 17, 2013. The increase in the
value of the warrants of $173,187 was recorded as a debit and a credit to
additional paid-in capital in accordance with the original accounting for the
Series L warrants.

As a result of the financing, and in accordance with the original Series K
agreement, the Series K conversion price of the shares were repriced to $0.75
from the original $0.86 and the warrants were repriced to $0.75 from the
original $0.95. The Series K convertible debt and warrants were revalued with
the new conversion price and were adjusted to their new fair value.

On August 18, 2008, the Company sold 1,383,389 shares of common stock and
2,075,084 warrants in a private financing for $1,037,542. The shares were
sold at $0.75, a significant premium over the closing price of the Company's
common stock. The warrants were valued at $891,336 and recorded as a debit
and a credit to additional paid-in capital. Each warrant entitles the holder
to purchase one share of CEL-SCI's common stock at a price of $0.75 per share
at any time prior to August 18, 2014. The shares have no registration rights.

F-36

On February 26, 2008, the Company issued a total of 258,000 shares of
restricted common stock to two consultants at $0.53 per share for a total
cost of $136,740 of which $70,312 had been expensed at September 30, 2008.
This stock will be expensed over the period of the contracts with the
consultants. In April 2008, an additional 258,000 shares of restricted common
stock to two consultants were issued at $0.69 for a total cost of $178,020,
of which $86,984 had been expensed at September 30, 2008. The stock will be
expensed over the remaining period of the contracts with the consultants.

During the fourth quarter, an additional 1,173,000 shares were issued to
consultants at prices ranging from $0.55 to $0.578. The total cost of
$649,994 will be expensed to general and administrative expense. At September
30, 2008, $111,452 had been expensed to general and administrative expense.

12. NET LOSS PER COMMON SHARE

Basic earnings per share (EPS) excludes dilution and is computed by dividing
net income by the weighted average of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other common stock equivalents (convertible preferred stock,
convertible debt, warrants to purchase common stock and common stock options)
were exercised or converted into common stock. The following table provides a
reconciliation of the numerators and denominators of the basic and diluted
per-share computations:

2008 2007 2006
---- ---- ----

Net loss - basic $ (8,128,230) $ (9,629,657) $ (7,939,210)
Add: Interest on
convertible debt - - 216,737
Gain on derivative instruments - - (2,276,358)

Net loss - diluted $ (8,128,230) $ (9,629,657) $ (9,998,831)

Weighted average number of
shares - basic 117,060,866 97,310,488 78,971,290
Incremental shares from:
Warrants - - 5,211,628
Convertible debt - - 9,651,160

Weighted average number of
shares - diluted 117,060,866 97,310,488 93,834,078

Earnings per share - basic $ (0.07) $ (0.10) $ (0.10)
Earnings per share - diluted $ (0.07) $ (0.10) $ (0.11)

F-37

Excluded from the above computations of weighted-average shares for diluted
net loss per share were options and warrants to purchase 14,488,124,
11,054,492 and 4,075,446 shares of common stock as of September 30, 2008,
2007 and 2006, respectively. These securities were excluded because their
inclusion would have an anti-dilutive effect on net loss per share. The
calculation of diluted earnings per share for the year ended September 30,
2008 equals the basic earnings per share because the calculation would have
been anti-dilutive.

13. SEGMENT REPORTING

SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information" establishes standards for reporting information regarding
operating segments in annual financial statements and requires selected
information for those segments to be presented in interim financial reports
issued to stockholders. SFAS No. 131 also establishes standards for related
disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate
discrete financial information is available for evaluation by the chief
operating decision maker, or decision-making group, in making decisions how
to allocate resources and assess performance. The Company's chief decision
maker, as defined under SFAS No. 131, is the Chief Executive Officer. To
date, the Company has viewed its operations as principally one segment, the
research and development of certain drugs and vaccines. As a result, the
financial information disclosed herein, materially represents all of the
financial information related to the Company's principal operating segment.

14. QUARTERLY INFORMATION (UNAUDITED)

The following quarterly data are derived from the Company's consolidated
statements of operations.

Financial Data

Fiscal 2008

Three Three Three Three
Months Months Months Months
ended ended ended ended Year ended
December 31, March 31, June 30, September 30, September 30,
2007 2008 2008 2008 2008
------------------------------------------------------------------------

Revenue $ 1,530 $ - $ 3,535 $ - $ 5,065
Operating expenses 2,868,968 2,085,098 2,180,214 2,383,078 9,517,358
Non-operating (expense)
income 34,715 35,741 (18,705) (42,266) 9,485
Gain (loss) on derivative
Instruments 989,988 (1,160,937) 206,106 1,764,236 1,799,393
Net loss (1,842,735) (3,210,294) (1,989,278) (661,108) (7,703,415)
Dividends (424,815) - - - (424,815)
Net loss available to
common shareholders (2,267,550) (3,210,294) (1,989,278) (661,108) (8,128,230)
Loss per common share
- basic (0.02) (0.03) (0.02) (0.01) (0.07)
Loss per common share
- diluted (0.02) (0.03) (0.02) (0.01) (0.07)

F-38

Fiscal 2007

Three Three Three Three
Months Months Months Months
ended ended ended ended Year ended
December 31, March 31, June 30, September 30, September 30,
2006 2007 2007 2007 2007
------------------------------------------------------------------------

Revenue $ 20,793 $ 24,722 $ 6,449 $ 5,079 $ 57,043
Operating expenses 1,600,704 2,037,327 3,782,712 1,988,509 9,409,252
Non-operating (expense)
Income (251,695) (263,924) (688,242) 58,231 (1,145,630)
Gain (loss) on derivative
instruments 719,247 (447,356) (1,090,471) 1,686,762 868,182
Net loss (1,112,359) (2,723,885) (5,554,976) (238,437) (9,629,657)
Loss per common
share - basic $ (0.01) $ (0.03) $ (0.05) $ (0.00) $ (0.10)
Loss per common
share - diluted $ (0.01) $ (0.03) $ (0.05) $ (0.00) $ (0.10)

The Company has experienced large swings in its quarterly losses in 2008 and
2007. These swings are caused by the changes in the fair value of the
convertible debt each quarter. These changes in the fair value of the debt
are recorded on the consolidated statements of operations. In addition, the
cost of options granted to consultants has affected the quarterly losses
recorded by the Company.

15. SUBSEQUENT EVENTS

On November 3, 2008, the Company extended its licensing agreement for
Multikine with Orient Europharma. The new agreement extends the Multikine
collaboration to also cover South Korea, the Philippines, Australia and New
Zealand. The licensing agreement initially focuses on the areas of head and
neck cancer, nasopharyngeal cancer and potentially cervical cancer. As part
of this new agreement, Orient Europharma invested $500,000 in the Company.

Effective December 3, 2008, Dr. Daniel Zimmerman, the Company's Senior Vice
President of Research, Cellular Immunology, and John Cipriano, the Company's
Senior Vice President of Regulatory Affairs, have agreed to become
consultants to the Company on an as needed basis thereby ending their full
time employment with the Company. The stock and options owned by these two
employees will fully vest on January 1, 2009.

On December 30, 2008, the Company entered into an Equity Line of Credit
agreement as a source of funding for the Company. For a two-year period, the
agreement allows the Company, at its discretion, to sell up to $5 million of
the Company's common stock at the volume weighted average price of the day
minus 9%. The Company may request a drawdown once every ten trading days,
although the company is under no obligation to request any drawdowns under
the equity line of credit. The equity line of credit expires on January 6,
2011.

F-39

SIGNATURES

In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 12th day of January 2009.

CEL-SCI CORPORATION

By: /s/ Maximilian de Clara
------------------------------
Maximilian de Clara, President

By: /s/ Geert R. Kersten
-------------------------------
Geert R. Kersten, Chief Executive,
Principal Accounting and Principal
Financial Officer

Pursuant to the requirements of the Securities Act of l934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

Signature Title Date

/s/ Maximilian de Clara Director January 12, 2009
----------------------
Maximilian de Clara

/s/ Geert R. Kersten Director January 12, 2009
----------------------
Geert R. Kersten

/s/ Alexander G. Esterhazy Director January 12, 2009
----------------------
Alexander G. Esterhazy

/s/ Dr. C. Richard Kinsolving Director January 12, 2009
----------------------
Dr. C. Richard Kinsolving

/s/ Dr. Peter R. Young Director January 12, 2009
----------------------
Dr. Peter R. Young

CEL-SCI CORPORATION

FORM 10-K

EXHIBITS