VIENNA, Va., Jan. 18 /PRNewswire-FirstCall/ -- CEL-SCI CORPORATION announces that it was unable to file its 10-K with the SEC on time. It made a request on January 17, 2006 to the American Stock Exchange (AMEX) for an extension to file its 10-K no later than February 28, 2006 and distribute its annual report for the fiscal year ended September 30, 2005, to its shareholders no later than April 15, 2006. This inability to file was a result of a review by our current auditors of prior financings between 2001 and 2003 and whether they should have been accounted for under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, (“FAS 133") and under 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"). CEL-SCI has hired an outside valuation expert to help it complete this work as quickly as possible.
All of the potential restatements discussed herein are of a non-cash nature and do not affect CEL-SCI’s cash position. CEL-SCI is working to complete its evaluation of the transactions in question, which involve certain financial instruments issued by CEL-SCI between August 18, 2001 and November 28, 2003. Although CEL-SCI has not completed its evaluation, it has tentatively concluded that these instruments contain derivatives or embedded derivatives which will need to be accounted for under FAS 133 and EITF 00-19. Simplistically, these instruments should be accounted for as liabilities and marked-to-market at the end of each reporting period until certain conditions have been met, the instruments expire, or the instruments are converted to equity. When such instruments no longer require mark-to-market accounting, such instruments will be reclassified from a liability to equity.
During the year ended September 30, 2005 CEL-SCI does not believe that it had any outstanding warrants which would be classified as liabilities under EITF 00-19 or derivatives which would be classified under FAS 133. CEL-SCI further believes that the errors in its fiscal year 2005 quarterly reporting periods of December 31, 2004, March 31, 2005 and June 30, 2005 are limited to the same classification issue in the components of equity as listed above. The anticipated prior year restatements for the components of the financings between August 18, 2001 and November 28, 2003 are expected to result in changes to components of equity which, once restated, will continue to affect the components of equity in subsequent periods through June 30, 2005. As of and subsequent to September 30, 2004, these potential restatements are not expected to affect the Company’s assets, liabilities or its total equity, only the components of total equity. However, the Company has very recently been notified that an equity line of credit in 2004 and 2005 may potentially be treated as a derivative. If that is the final determination, the Company believes, after consultation with its outside valuation expert, that this derivative would then be recorded as an asset (subject to final valuation) increasing total equity.
Geert Kersten, Chief Executive Officer, stated, “CEL-SCI has never previously been late for any of its financial filings. We are diligently trying to resolve these very complicated issues.”
As an indication of its results during fiscal 2005, CEL-SCI is publishing preliminary financial statements. These statements are unaudited and preliminary and may still be subject to change. The components of Equity are not listed because it is known that they will change, however, total equity should not change unless new derivatives are found.
Preliminary, Unaudited Balance Sheet for Fiscal Year Ended September 30, 2005 ASSETS 2005 CURRENT ASSETS: Cash and cash equivalents $ 1,957,614 Interest and other receivables 21,164 Prepaid expenses 432,652 Total current assets 2,411,430 RESEARCH AND OFFICE EQUIPMENT -- Less accumulated depreciation of $1,690,788 and $1,651,759 181,541 PATENT COSTS -- Less accumulated amortization of $816,169 and $745,321 484,553 DEPOSITS 14,828 $ 3,092,352 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 74,354 Accrued expenses 74,620 Due to employees 22,880 Total current liabilities 171,854 Deposits held 3,000 Total liabilities 174,854 STOCKHOLDERS’ EQUITY: Total stockholders’ equity 2,917,498 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,092,352 Preliminary, Unaudited Income Statement for Fiscal Year Ended September 30, 2005 2005 GRANT REVENUE AND OTHER $ 269,925 OPERATING EXPENSES: Research and development (excluding R&D depreciation of $96,442, $110,297 and $115,420 respectively, included below) 2,229,729 Depreciation and amortization 190,420 General and administrative 1,930,543 Total operating expenses 4,350,692 NET OPERATING LOSS (4,080,767) OTHER INCOME 625,472 INTEREST INCOME 52,660 INTEREST EXPENSE - NET LOSS (3,402,635) ACCRUED DIVIDENDS ON PREFERRED STOCK - ACCRETION OF BENEFICIAL CONVERSION FEATURE ON PREFERRED STOCK - NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (3,402,635) NET LOSS PER COMMON SHARE (BASIC) $ (0.05) NET LOSS PER COMMON SHARE (DILUTED) $ (0.05) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 72,703,395
When used in this report, the words “intends,” “believes,” “anticipated” and “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include, an inability to duplicate the clinical results demonstrated in clinical studies, timely development of any potential products that can be shown to be safe and effective, receiving necessary regulatory approvals, difficulties in manufacturing any of the Company’s potential products, inability to raise the necessary capital and the risk factors set forth from time to time in CEL-SCI Corporation’s SEC filings, including but not limited to its report on Form 10- K/A for the year ended September 30, 2004. The Company undertakes no obligation to publicly release the result of any revision to these forward- looking statements which may be made to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
CEL-SCI Corporation
CONTACT: Gavin de Windt of CEL-SCI Corporation, +1-703-506-9460; orInvestor Relations: Mike Lucci of Lucci Financial Group, LLC,+1-248-723-3330, for CEL-SCI Corporation
Web site: http://www.cel-sci.com/
