Filed Pursuant to Rule 424(b)(3)
Registration No. 333-59798
CEL-SCI CORPORATION
Prospectus Supplement
(To Prospectus Dated May 24, 2002)
Prospective investors should read this prospectus supplement and the
related prospectus carefully before investing in CEL-SCI's common stock. Both
documents contain information prospective investors should consider when making
an investment decision.
The attached prospectus relates to the resale of shares acquired by Paul
Revere Capital Partners, Ltd. pursuant to an equity line of credit. Because Paul
Revere Capital Partners may sell some or all of these shares, and since there
are currently no agreements, arrangements or understandings with respect to the
sale of any of these shares, CEL-SCI cannot estimate the actual number of shares
that Paul Revere Capital Partners will hold after the completion of the
offering.
The following provides information concerning the latest drawdown
requested by CEL-SCI.
Date of Shares Average Sale Net Proceeds
Sale Sold Price Per Share to CEL-SCI
-------- -------- --------------- ---------------
09/20/02 171,181 $0.23 $39,000
CEL-SCI's common stock is quoted on the American Stock Exchange under the
symbol "CVM". On September 19, 2002 the closing price for one share of CEL-SCI's
common stock was $0.22.
CEL-SCI expects to use the proceeds from the sale of these shares for
general and administrative expenses, research and clinical trials.
The date of this prospectus supplement is September 20, 2002.
Recent Developments
Convertible Notes and Series G Warrants
In July and September 2002 CEL-SCI sold convertible notes, plus Series G
warrants, to a group of private investors for $1,300,000. The notes bear
interest at 7% per year, are due and payable on July 12, 2004 and are secured by
substantially all of CEL-SCI's assets. Interest is payable quarterly with the
first interest payment due on October 1, 2002. If CEL-SCI fails to make any
interest payment when due, the notes will become immediately due and payable.
At the holder's option the notes are convertible into shares of CEL-SCI's
common stock equal in number to the amount determined by dividing each $1,000 of
note principal to be converted by the Conversion Price. The Conversion Price is
70% of the average of the three lowest daily trading prices of CEL-SCI's common
stock on the American Stock Exchange during the 15 trading days immediately
prior to the conversion date. The Conversion Price may not be less than $0.18.
However, if CEL-SCI's common stock trades for less than $0.24 per share for a
period of 20 consecutive trading days, the $0.18 minimum price will no longer be
applicable. The Conversion Price will decline from 70% to 60% if (i) on any
trading day after the effective date of the registration statement relating to
this prospectus the closing daily price of CEL-SCI's common stock multiplied by
the total number of shares of common stock traded on that day is less than
$29,977, (ii) CEL-SCI defaults in the performance of any material covenant,
condition or agreement with the holders of the notes or, (iii) CEL-SCI's common
stock is delisted from the American Stock Exchange.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price, the Conversion Price will be lowered to the price at which the shares
were sold or the lowest price at which the securities are convertible, as the
case may be. If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price below the market price of
CEL-SCI's common stock, the Conversion Price will lowered by a percentage equal
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be, divided by the then prevailing
market price of CEL-SCI's common stock. However the Conversion Price will not be
adjusted as the result of shares issued in connection with a Permitted
Financing. A Permitted Financing involves shares of common stock issued or sold:
- in connection with a merger or acquisition;
- upon the exercise of options or the issuance of common stock to the
Company's employees, officers, directors, consultants and vendors in
accordance with the Company's equity incentive policies;
- pursuant to the conversion or exercise of securities which were outstanding
prior to July 12, 2002;
- pursuant to the Company's equity line of credit;
- to key officers of the Company in lieu of their respective salaries.
CEL-SCI's agreement with the note holders places the following
restrictions on CEL-SCI's operations. Any of the following restrictions may be
waived with the written consent of the holders of a majority of the principal
amount of the notes outstanding at the time the consent is required.
o So long as the notes are outstanding, and except as required by the terms
of CEL-SCI's Series E Preferred stock, CEL-SCI may not:
- declare or pay any dividends (other than a stock dividend or
stock split) or make any distributions to any holders of its
common stock, or
- purchase or otherwise acquire for value, directly or indirectly,
any common or preferred stock.
o Until the later of January 1, 2003 or the date that 50% of the notes are no
longer outstanding CEL-SCI may not sell any common stock or any securities
convertible into common stock. However, this restriction will not apply to
shares issued in a Permitted Financing.
o If CEL-SCI maintains a balance of less than $1,000,000 in its bank account
in any month, it may draw down the maximum amount allowable for such month
under its equity line of credit. If CEL-SCI maintains a balance of greater
than $1,000,000 in its bank account in any month, it may only draw down a
maximum of $235,000 per month under the equity line of credit. After
January 1, 2003 the minimum balance requirement will be increased to
$1,500,000 when 50% of the balance of each Note is no longer outstanding
and 50% of all of the Notes in the aggregate are no longer outstanding.
So long as the notes remain outstanding, the note holders will have a
first right of refusal to participate in any subsequent financings involving
CEL-SCI. If CEL-SCI enters into any subsequent financing on terms more favorable
than the terms governing the notes and warrants, then the note holders may
exchange notes and warrants for the securities sold in the subsequent financing.
Upon the occurrence of any of the following events CEL-SCI is required to
redeem the notes at a price equal to 130% of then outstanding principal balance
of the notes:
- the suspension from listing or the failure of CEL-SCI's common
stock to be listed on the American Stock Exchange for a period
of five consecutive trading days; or
- the effectiveness of the Registration Statement lapses for any
reason or the Registration Statement is unavailable to the note
holders and the lapse or unavailability continues for a period
of ten consecutive trading days, provided the cause of the lapse
or unavailability is not due to factors primarily within the
control of the note holders.
- any representation or warranty made by CEL-SCI to the note
holders proves to be materially inaccurate or CEL-SCI fails to
perform any material covenant or condition in its agreement with
the note holders.
- the completion of a merger or other business combination
involving CEL-SCI and as a result of which CEL-SCI is not the
surviving entity.
- a purchase, tender or exchange offer accepted by the holders of
more than 30% of CEL-SCI's outstanding shares of common stock.
- CEL-SCI's shareholders fail to approve the issuance of the
shares of CEL-SCI's common stock upon the conversion of the
notes or the exercise of the Series G warrants
- CEL-SCI files for protection from its creditors under the
federal bankruptcy code.
- CEL-SCI exceeds its draw down limits under it equity line of
credit.
The Series G warrants allow the holders to initially purchase up to
900,000 shares of CEL-SCI's common stock at a price of $0.25 per share at any
time prior to July 12, 2009.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable warrant
exercise price, the warrant exercise price will be lowered to the price at which
the shares were sold or the lowest price at which the securities are
convertible, as the case may be. If the warrant exercise price is adjusted, the
number of shares of common stock issuable upon the exercise of the warrant will
be increased by the product of the number of shares of common stock issuable
upon the exercise of the warrant immediately prior to the sale multiplied by the
percentage by which the warrant exercise price is reduced.
If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the market price of CEL-SCI's
common stock, the warrant exercise price will be lowered by a percentage equal
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be, divided by the then prevailing
market price of CEL-SCI's common stock. If the warrant exercise price is
adjusted, the number of shares of common stock issuable upon the exercise of the
warrant will be increased by the product of the number of shares of common stock
issuable upon the exercise of the warrant immediately prior to the sale
multiplied by the percentage determined by dividing the price at which the
shares were sold by the market price of CEL-SCI's common stock on the date of
sale.
However, neither the warrant exercise price nor the shares issuable upon
the exercise of the warrant will be adjusted as the result of shares issued in
connection with a Permitted Financing.
Every three months after September 9, 2002, the warrant exercise price
will be adjusted to an amount equal to 110% of the Conversion Price on such
date, provided that the adjusted price is lower than the warrant exercise price
on that date.
The actual number of additional shares issuable upon the conversion of
the notes which remain outstanding will vary depending upon a number of factors,
including the price of CEL-SCI's common stock at certain dates. Accordingly, the
number of shares which may be issued upon the conversion of the notes cannot be
determined at this time. However, based upon the market price of CEL-SCI's
common stock on August 30, 2002, CEL-SCI would be required to issue
approximately 7,300,000 shares of common stock if all of the notes, including
notes in the principal amount of $800,000 sold in September 2002, were converted
on August 30, 2002.
CEL-SCI has filed a registration statement with the Securities and
Exchange Commission, in order that the shares of common stock issued upon the
conversion of the notes or the exercise of the Series G warrants may be resold
in the public market.
Summary Financial Data for Nine Months Ended June 30, 2002
Results of Operations:
Investment Income and Other
Revenues: $ 670,092 $ 376,805
Expenses:
Research and Development 7,762,213 3,993,047
Depreciation and Amortization 209,121 170,317
General and Administrative 3,432,437 1,282,948
Interest Expense -- 1,900,504
---------------- ---------
Net Loss $(10,733,679) $(6,970,011)
============= ============
Loss per common share
(basic and diluted) $(0.51) $(0.32)
Weighted average common
Shares outstanding 21,824,273 26,508,757
Balance Sheet Data:
September 30, 2001 June 30, 2002
------------------ -------------
Working Capital $2,807,229 $ 313,250
Total Assets 4,508,920 3,356,153
Long-Term Liabilities 507,727 79,625
Shareholders' Equity 4,001,193 1,351,700