Edgar Filing: CEL SCI CORP

As filed with the Securities and Exchange Commission on February __, 2002

Registration No. 333-59798

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
POST-EFFECTIVE AMENDMENT NO. 1

Registration Statement Under
THE SECURITIES ACT OF 1933

CEL-SCI CORPORATION
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(Exact name of registrant as specified in charter

Delaware 2831 52-2278236
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(State or other jurisdiction (Primary Standard Classi- (IRS Employer
of incorporation) fication Code Number) I.D. Number)

8229 Boone Blvd. #802
Vienna, Virginia 22182
(703) 506-9460
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(Address and telephone number of principal executive offices)

Geert Kersten
8229 Boone Blvd. #802
Vienna, Virginia 22182
(703) 506-9460
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(Name, address and telephone number of agent for service)

Copies of all communications, including all
communications sent to the agent for
service, should be sent to:

William T. Hart, Esq.
Hart & Trinen, LLP
1624 Washington Street
Denver, Colorado 80203
303-839-0061

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box [X].

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]

CALCULATION OF REGISTRATION FEE
================================================================================

Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (3) Price Fee
---------- ---------- --------- -------- ------------

Common stock (1) 8,000,000 $1.44 $11,520,000 $3,041
--------------------------------------------------------------------------------
Common stock (2) 200,800 $1.44 289,152 77

Total $11,809,152 $3,118
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(1) Represents shares issuable to Paul Revere Capital Partners, Ltd. under
equity line of credit.
(2) Represents shares issuable upon the exercise of warrants held by Paul
Revere Capital Partners, Ltd.
(3) Offering price computed in accordance with Rule 457(c).

Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for issuance
upon the exercise of the options or warrants as a result of any adjustment in
the number of securities issuable by reason of the options or warrants.

The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

PROSPECTUS

CEL-SCI CORPORATION

Common Stock

This prospectus may be used only in connection with sales of the common
stock of CEL-SCI Corporation by Paul Revere Capital Partners, Ltd. Paul Revere
Capital Partners will sell shares of common stock purchased from CEL-SCI under
an equity line of credit agreement and up to 200,800 shares of common stock
which may be issued upon the exercise of warrants. The warrants were issued to
Paul Revere Capital Partners upon the signing of the equity line of credit
agreement.

CEL-SCI will not receive any proceeds from the sale of the common stock
by the selling stockholders. CEL-SCI will pay for the expenses of this offering.

The following provides information concerning the first two drawdowns
requested by Cel-Sci.

Date of Shares Average Sale Net Proceeds
Sale Sold Price Per Share to Cel-Sci
--------- ----- --------------- ------------

11/09/01 277,684 $1.08 $299,000
01/08/02 333,993 $0.87 $290,404

CEL-SCI's common stock is quoted on the American Stock Exchange under
the symbol "CVM." On January __, 2002 the closing price for one share of the
CEL-SCI's common stock was $____.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

These securities are speculative and involve a high degree of risk. For
a description of certain important factors that should be considered by
prospective investors, see "Risk Factors" beginning on page 5 of this Prospectus

The date of this prospectus is February __, 2002

PROSPECTUS SUMMARY

THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.

CEL-SCI

CEL-SCI Corporation was formed as a Colorado corporation in 1983.
CEL-SCI is involved in the research and development of certain drugs and
vaccines. CEL-SCI manufactures MULTIKINE, its first, and main product, using
CEL-SCI's proprietary cell culture technologies, which involve a combination, or
"cocktail", of natural human interleukin-2 and certain lymphokines and
cytokines. CEL-SCI is testing MULTIKINE to determine if it is effective in
creating an anti-cancer immune response in head and neck cancer patients, and in
HIV-infected women with Human Papilloma Virus induced cervical dysplasia, the
precursor stage before the development of cervical cancer.

Another technology CEL-SCI is developing, Ligand Epitope Antigen
Presentation System (LEAPS), is a T-cell modulation technology which CEL-SCI is
testing to determine if it is effective in developing potential treatments
and/or vaccines against various diseases. Present target diseases are AIDS,
herpes simplex, malaria, prostate cancer and breast cancer.

Before human testing can begin with respect to a drug or biological
product, preclinical studies are conducted in laboratory animals to evaluate the
potential efficacy and the safety of a product. Human clinical studies generally
involve a three-phase process. The initial clinical evaluation, Phase I,
consists of administering the product and testing for safe and tolerable dosage
levels. Phase II trials continue the evaluation of safety and determine the
appropriate dosage for the product, identify possible side effects and risks in
a larger group of subjects, and provide preliminary indications of efficacy.
Phase III trials consist of testing for actual clinical efficacy within an
expanded group of patients at geographically dispersed test sites.

CEL-SCI has funded the costs associated with the clinical trials
relating to CEL-SCI's technologies, research expenditures and CEL-SCI's
administrative expenses with the public and private sales of shares of CEL-SCI's
common stock and borrowings from third parties, including affiliates of CEL-SCI.

CEL-SCI does not expect to develop commercial products for several
years, if at all. CEL-SCI has had operating losses since its inception, had an
accumulated deficit of approximately $(71,840,000) at September 30, 2001, and
expects to incur substantial losses for the foreseeable future.

CEL-SCI's executive offices are located at 8229 Boone Blvd., #802,
Vienna, Virginia 22182, and its telephone number is (703) 506-9460.

The Offering

In order to provide a possible source of funding for CEL-SCI's current
activities and for the development of its current and planned products, CEL-SCI
has entered into an equity line of credit agreement with Paul Revere Capital
Partners.

Under the equity line of credit agreement, Paul Revere Capital Partners
has agreed to provide CEL-SCI with up to $10,000,000 of funding prior to June
22, 2003. During this period, CEL-SCI may request a drawdown under the equity
line of credit by selling shares of its common stock to Paul Revere Capital
Partners, and Paul Revere Capital Partners will be obligated to purchase the
shares. The minimum amount CEL-SCI can draw down at any one time is $100,000,
and the maximum amount CEL-SCI can draw down at any one time will be determined
at the time of the drawdown request using a formula contained in the equity line
of credit agreement. CEL-SCI may request a drawdown once every 22 trading days,
although CEL-SCI is under no obligation to request any drawdowns under the
equity line of credit.

During the 22 trading days following a drawdown request, CEL-SCI will
calculate the amount of shares it will sell to Paul Revere Capital Partners and
the purchase price per share. The purchase price per share of common stock will
be based on the daily volume weighted average price of CEL-SCI's common stock
during each of the 22 trading days immediately following the drawdown date, less
a discount of 11%.

For more details on the maximum drawdown amount, the calculation of the
purchase price and the number of shares CEL-SCI will sell, see "Equity Line of
Credit Agreement" beginning on page 40 of this prospectus.

CEL-SCI is registering the shares of common stock issuable to Paul
Revere Capital Partners under the equity line of credit, as well as the 200,800
shares underlying the warrants that CEL-SCI granted to Paul Revere Capital
Partners. These shares may be offered for sale from time to time by means of
this prospectus by or for the account of Paul Revere Capital Partners. CEL-SCI
will prepare and file amendments and supplements to this prospectus as may be
necessary in order to keep this prospectus effective as long as the selling
shareholders hold shares of CEL-SCI's common stock or until these shares can be
sold under an appropriate exemption from registration. CEL-SCI has agreed to
bear the expenses of registering the shares, including Paul Revere Capital
Partners's legal fees of $35,000, but not the expenses associated with selling
the shares, such as broker discounts and commissions.

As of January 15, 2002, CEL-SCI had 24,183,956 shares of common stock
issued and outstanding. The number of outstanding shares does not give effect to
shares which may be issued pursuant to the equity-line of credit or upon the
exercise and/or conversion of options, warrants or convertible notes. See
"Comparative Share Data".

CEL-SCI will not receive any proceeds from the sale of the shares by
Paul Revere Capital Partners. However, CEL-SCI will receive proceeds from any
sale of common stock to Paul Revere Capital Partners under the equity line of
credit agreement and upon the exercise of warrants held by Paul Revere Capital
Partners, when, and if, its pays the exercise price in cash. CEL-SCI expects to
use substantially all the net proceeds for general and administrative expenses,
research and clinical trials.

The purchase of the securities offered by this prospectus involves a
high degree of risk. Risk factors include the lack of revenues and history of
loss, and the need for additional capital. See the "Risk Factors" section of
this prospectus for additional Risk Factors.

Summary Financial Data

The financial data presented below should be read in conjunction with
the more detailed financial statements and related notes which are included
elsewhere in this prospectus along with the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operation."

Results of Operations:

Year Ended
September 30, 2001

Investment Income and Other
Revenues: $ 670,092

Expenses:
Research and Development 7,762,213
Depreciation and Amortization 209,121
General and Administrative 3,432,437
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Net Loss $(10,733,679)
=============

Loss per common share
(basic and diluted) $(0.51)

Weighted average common
Shares outstanding 21,824,273

Balance Sheet Data:
September 30, 2001

Working Capital $2,807,229
Total Assets 4,508,920
Long-Term Liabilities 507,727
Shareholders' Equity 4,001,193

Forward Looking Statements

This prospectus contains various forward-looking statements that are
based on CEL-SCI's beliefs as well as assumptions made by and information
currently available to CEL-SCI. When used in this prospectus, the words
"believe", "expect", "anticipate", "estimate" and similar expressions are
intended to identify forward-looking statements. Such statements may include
statements regarding seeking business opportunities, payment of operating
expenses, and the like, and are subject to certain risks, uncertainties and
assumptions which could cause actual results to differ materially from
projections or estimates. Factors which could cause actual results to differ
materially are discussed at length under the heading "Risk Factors". Should one
or more of the enumerated risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. Investors should not place undue
reliance on forward-looking statements, all of which speak only as of the date
made.

RISK FACTORS

Investors should be aware that this offering involves certain risks,
including those described below, which could adversely affect the value of their
holdings of common stock. CEL-SCI does not make, nor has it authorized any other
person to make, any representation about the future market value of CEL-SCI's
common stock. In addition to the other information contained in this prospectus,
the following factors should be considered carefully in evaluating an investment
in the Shares offered by this prospectus.

CEL-SCI Has Earned Only Limited Revenues and Has a History of Losses.
--------------------------------------------------------------------

CEL-SCI has had only limited revenues since it was formed in 1983.
Since the date of its formation and through September 30, 2001 CEL-SCI incurred
net losses of approximately $(71,840,000). During the years ended September 30,
1999, 2000 and 2001 CEL-SCI suffered losses of $(7,490,725), $(8,478,397) and
$(10,733,679) respectively. CEL-SCI has relied principally upon the proceeds of
public and private sales of securities to finance its activities to date. All of
CEL-SCI's potential products are in the early stages of development, and any
commercial sale of these products will be many years away. Accordingly, CEL-SCI
expects to incur substantial losses for the foreseeable future.

There can be no assurance CEL-SCI will be profitable. At the present
time, CEL-SCI intends to use available funds to finance CEL-SCI's operations.
Accordingly, while payment of dividends rests within the discretion of the Board
of Directors, no common stock dividends have been declared or paid by CEL-SCI.
CEL-SCI does not presently intend to pay dividends on its common stock and there
can be no assurance that common stock dividends will ever be paid.

If Cel-Sci cannot obtain additional capital, Cel-Sci may have to delay or
postpone development and research expenditures which may influence Cel-Sci's
ability to produce a timely and competitive product.

Clinical and other studies necessary to obtain approval of a new drug
can be time consuming and costly, especially in the United States, but also in
foreign countries. The different steps necessary to obtain regulatory approval,
especially that of the Food and Drug Administration, involve significant costs
and may require several years to complete. CEL-SCI expects that it will need
additional financing over an extended period of time in order to fund the costs
of future clinical trials, related research, and general and administrative
expenses. Although CEL-SCI's equity line of credit agreement is expected to be a
source of funding, the amounts which CEL-SCI is able to draw from the equity
line during each drawdown period may not satisfy CEL-SCI's capital needs.

Shares Issuable Upon the Conversion of Options, Warrants and Convertible
Securities or in Connection with the Equity Line of Credit May Depress the Price
of CEL-SCI's Common stock.

Options

CEL-SCI has issued options to its officers, directors, employees and
consultants which allow the holders to acquire additional shares of CEL-SCI's
common stock. In some cases CEL-SCI has agreed that, at its expense, it will
make appropriate filings with the Securities and Exchange Commission so that the
securities issuable upon the exercise of the options will be available for
public sale. Such filings could result in substantial expense to CEL-SCI and
could hinder future financings by CEL-SCI.

Until the options expire, the holders will have an opportunity to
profit from any increase in the market price of CEL-SCI's common stock without
assuming the risks of ownership. Holders of the options may exercise them at a
time when CEL-SCI could obtain additional capital on terms more favorable than
those provided by the options. The exercise of the options will dilute the
voting interest of the owners of presently outstanding shares of CEL-SCI's
common stock and may adversely affect the ability of CEL-SCI to obtain
additional capital in the future. The sale of the shares of common stock
issuable upon the exercise of the options could adversely affect the market
price of CEL-SCI's stock.

Series E Preferred Stock and Warrants

In December 1999 and January 2000, CEL-SCI sold 1,148,592 shares of its
common stock, plus Series A and Series B warrants, to three private investors.
The Series A warrants permitted the holders of the warrants to purchase 402,007
shares of CEL-SCI's common stock at a price of $2.925 per share at any time
prior to December 8, 2002. The Series B warrants allowed the holders to acquire
additional shares of CEL-SCI's common stock at a nominal price in the event the
price of CEL-SCI's common stock fell below $2.4375 per share prior to certain
fixed vesting dates, the first of which in December 2000. On the first fixed
vesting date the price of CEL-SCI's common stock was $1.54. Pursuant to the
terms of the Series B warrants, which have since expired, the holders of the
warrants, in December 2000, received 274,309 additional shares of CEL-SCI's
common stock. The share of common stock sold by CEL-SCI in the December 1999 and

January 2000 private offerings have since been resold by the investors, and as a
result no additional shares are issuable by the terms of the Series B warrants.

In March 2000, CEL-SCI sold an additional 1,026,666 shares of its
common stock, plus Series C and Series D warrants, to the same three private
investors. The Series C warrants permitted the holders of the warrants to
purchase 413,344 shares of CEL-SCI's common stock at a price of $8.50 per share
at any time prior to March 21, 2003. The Series D warrants originally allowed
the holders, to the extent they held any shares purchased in the March 2000
offering, to acquire additional shares of CEL-SCI's common stock at a nominal
price in the event the price of CEL-SCI's common stock fell below $7.50 per
share prior to certain fixed vesting dates, the first of which was in March
2001. On the first fixed vesting date the price of CEL-SCI's common stock was
$1.47 and on the second, and final vesting date, the price of CEL-SCI's common
stock was $1.08. As a result, and in accordance with the terms of the Series D
warrants, the private investors were entitled to receive 5,734,155 additional
shares of CEL-SCI's common stock of which 3,520,123 shares had been issued and
959,340 shares had been sold as of August 15, 2001.

On August 16, 2001 the three private investors exchanged the shares of
CEL-SCI's common stock which they owned, plus their unexercised Series D
Warrants, for 6,288 shares of CEL-SCI's Series E Preferred stock. Each Series E
Preferred share is convertible into shares of CEL-SCI's common stock on the
basis of one Series E Preferred share for shares of common stock equal in number
to the amount determined by dividing $1,000 by the lesser of $5 or 93% of the
average closing bid prices (the "Conversion Price") of CEL-SCI's common stock on
the American Stock Exchange for the five days prior to the date of each
conversion notice.

As part of this transaction the three private investors also exchanged
their Series A and Series C warrants for new Series E warrants. The Series E
warrants collectively allow the holders to purchase up to 815,351 additional
shares of CEL-SCI's common stock at a price of $1.19 per share at any time prior
to August 16, 2004.

The sale of common stock issued or issuable upon the exercise of the
Series E warrants, or the conversion of the Series E Preferred stock, or the
perception that such sales could occur, could adversely affect the market price
of CEL-SCI's common stock.

Equity Line of Credit

An unknown number of shares of common stock, which may be sold by means
of a separate registration statement filed with the Securities and Exchange
Commission, are issuable under a equity line of credit arrangement to Paul
Revere Capital Partners. As CEL-SCI sells shares of its common stock to Paul
Revere Capital Partners under the equity line of credit, and Paul Revere Capital
Partners sells the common stock to third parties, the price of CEL-SCI's common
stock may decrease due to the additional shares in the market. If CEL-SCI
decides to draw down on the equity line of credit as the price of its common
stock decreases, CEL-SCI will be required to issue more shares of its common
stock for any given dollar amount invested by Paul Revere Capital Partners,
subject to the minimum selling price specified by CEL-SCI. The more shares that
are issued under the equity line of credit, the more CEL-SCI's then outstanding
shares will be diluted and the more CEL-SCI's stock price may decrease. Although
Paul Revere Capital Partners has agreed not to engage in any short selling
during the term of the equity line of credit, any decline in the price of

CEL-SCI's common stock may encourage short sales by others, which could place
further downward pressure on the price of CEL-SCI's common stock. Short selling
is a practice of selling shares which are not owned by a seller with the
expectation that the market price of the shares will decline in value after the
sale.

Convertible Notes and Warrants

In December 2001 and January 2002 CEL-SCI sold convertible notes, plus
Series F warrants, to a group of private investors for $1,600,000. At the
holder's option the notes are convertible into shares of CEL-SCI's common stock
equal in number to the amount determined by dividing each $1,000 of note
principal to be converted by the Conversion Price. The Conversion Price is 76%
of the average of the three lowest daily trading prices of CEL-SCI's common
stock on the American Stock Exchange during the 20 trading days immediately
prior to the conversion date. If CEL-SCI sells any additional shares of common
stock, or any securities convertible into common stock at a price below the then
applicable Conversion Price or the market price of its common stock, the
Conversion Price may be subject to adjustment.

CEL-SCI has filed a registration statement with the Securities and
Exchange Commission in order that the shares of common stock issuable upon the
conversion of the notes or the exercise of the warrants may be resold in the
public market.

See "Description of Securities - Convertible Notes and Series F
Warrants" for information concerning potential adjustments to the conversion
price, the warrant exercise price, and other terms of the notes and the Series F
warrants.

The sale of common stock upon the conversion of the notes or the
exercise of the Series F warrants, or the perception that such sales could
occur, could adversely affect the market price of CEL-SCI's common stock.

CEL-SCI may be required to make payments to the holders of the Convertible Notes
and the Series F warrants.

As explained in the preceding risk factor the shares of CEL-SCI's
common stock issuable upon the conversion of the promissory notes will be issued
at a discount to the market price of CEL-SCI's common stock. In addition the
terms of the Series F warrants provide that the exercise price of the Series F
warrants may be adjusted to a price which is below the market price of CEL-SCI's
common stock on the date the warrants were issued ($0.94).

The actual number of shares issuable upon the conversion of the notes
and the exercise of the Series F warrants (if any) will vary depending upon a
number of factors, including the price of CEL-SCI's common stock at certain
dates.

CEL-SCI's common stock trades on the American Stock Exchange. The rules
of the AMEX require a corporation, the securities of which are listed on the
AMEX, to obtain shareholder approval if 20% or more of a corporation's common
stock will be sold in a private offering and below the greater of the book value
or market price of the corporation's common stock.

For purposes of applying this particular rule to the convertible notes
and Series F warrants, the AMEX will consider the issuance of any common stock
upon the conversion of the notes to be a sale of CEL-SCI's common stock at less
than market price. If any of the Series F warrants are exercised at a price
below the market price of CEL-SCI's common stock on the date the warrants were
issued the AMEX will consider these shares to have been sold at less than market
price.

Consequently, the AMEX rule would prohibit CEL-SCI from issuing more
than 4,668,868 shares of common stock as a result of the conversion of the notes
or the exercise of the Series F warrants, if exercised at a price which is less
than $0.94 per share, unless shareholder approval is obtained for the issuance
of the additional shares.

It is possible, depending upon the future market price of CEL-SCI's
common stock, that more than 4,668,868 shares could be issued upon the
conversion of the notes and the exercise, at price below $0.94 per share, of the
Series F warrants.

In order to avoid any violation of the AMEX rules relating to the
issuance of shares below the market price of CEL-SCI's common stock, the terms
of the notes and the Series F warrants provide that no more than 4,668,868
shares may be issued unless CEL-SCI obtains shareholder approval for the
issuance of such additional shares.

If CEL-SCI fails to obtain or elects not to obtain shareholder approval
for the issuance of the additional shares CEL-SCI will be required to pay the
holders of the notes 130% of the then outstanding principal balance of the notes
plus an amount equal to the then market value of the shares which would
otherwise be issuable upon the exercise of the Series F warrants had shareholder
approval been obtained.

If Cost Estimates for Clinical Trials and Research Are Inaccurate, CEL-SCI Will
Require Additional Funding.

CEL-SCI's estimates of the costs associated with future clinical trials
and research may be substantially lower than the actual costs of these
activities. If CEL-SCI's cost estimates are incorrect, CEL-SCI will need
additional funding for its research efforts.

Any failure to obtain or any delay in obtaining required regulatory approvals
may adversely affect the ability of CEL-SCI or potential licensees to
successfully market any products they may develop.

Therapeutic agents, drugs and diagnostic products are subject to
approval, prior to general marketing, by the FDA in the United States and by
comparable agencies in most foreign countries. The process of obtaining FDA and
corresponding foreign approvals is costly and time consuming, particularly for
pharmaceutical products such as those which might ultimately be developed by
CEL-SCI, VTI or its licensees, and there can be no assurance that such approvals
will be granted. Also, the extent of adverse government regulations which might
arise from future legislative or administrative action cannot be predicted.

CEL-SCI has, at the present time, only one source of multikine and if this
source could not, for any reason, supply CEL-SCI with Multikine, CEL-SCI
estimates that it would take approximately six to ten months to obtain supplies
of Multikine under an alternative manufacturing arrangement.

CEL-SCI has an agreement with an unrelated corporation for the
production, until 2006, of Multikine. CEL-SCI does not know what cost it would
incur to obtain an alternative source of supply.

There can be no assurance that CEL-SCI will achieve or maintain a competitive
position or that other technological developments will not cause CEL-SCI's
proprietary technologies to become uneconomical or obsolete.

The biomedical field in which CEL-SCI is involved is undergoing rapid
and significant technological change. The successful development of therapeutic
agents from CEL-SCI's compounds, compositions and processes through
CEL-SCI-financed research or as a result of possible licensing arrangements with
pharmaceutical or other companies, will depend on its ability to be in the
technological forefront of this field.

Many pharmaceutical and biotechnology companies are developing products
for the prevention or treatment of cancer and infectious diseases. Many of these
companies have substantial financial, research and development, and marketing
resources and are capable of providing significant long-term competition either
by establishing in-house research groups or by forming collaborative ventures
with other entities. In addition, both smaller companies and non-profit
institutions are active in research relating to cancer and infectious diseases
and are expected to become more active in the future.

CEL-SCI's Patents Might Not Protect CEL-SCI's Technology from Competitors.

Certain aspects of CEL-SCI's technologies are covered by U.S. and
foreign patents. In addition, CEL-SCI has a number of patent applications
pending. There is no assurance that the applications still pending or which may
be filed in the future will result in the issuance of any patents. Furthermore,
there is no assurance as to the breadth and degree of protection any issued
patents might afford CEL-SCI. Disputes may arise between CEL-SCI and others as
to the scope and validity of these or other patents. Any defense of the patents
could prove costly and time consuming and there can be no assurance that CEL-SCI
will be in a position, or will deem it advisable, to carry on such a defense.

Other private and public concerns, including universities, may have filed
applications for, or may have been issued, patents and are expected to obtain
additional patents and other proprietary rights to technology potentially useful
or necessary to CEL-SCI. The scope and validity of such patents, if any, the
extent to which CEL-SCI may wish or need to acquire the rights to such patents,
and the cost and availability of such rights are presently unknown. Also, as far
as CEL-SCI relies upon unpatented proprietary technology, there is no assurance
that others may not acquire or independently develop the same or similar
technology. CEL-SCI's first MULTIKINE patent expired in 2000. Since CEL-SCI does
not know if it will ever be able to sell MULTIKINE on a commercial basis,
CEL-SCI cannot predict what effect the expiration of this patent will have on
CEL-SCI. Notwithstanding the above, CEL-SCI believes that trade secrets and
later issued patents will protect the technology associated with Multikine.

CEL-SCI's Product Liability Insurance May Not Be Adequate to Protect CEL-SCI
from Possible Losses.

Although CEL-SCI has product liability insurance for Multikine and its
HGP-30 vaccine, the successful prosecution of a product liability case against
CEL-SCI could have a materially adverse effect upon its business if the amount
of any judgment exceeds CEL-SCI's insurance coverage.

The Loss of Management and Scientific Personnel Could Adversely Affect CEL-SCI.
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CEL-SCI is dependent for its success on the continued availability of
its executive officers. The loss of the services of any of CEL-SCI's executive
officers could have an adverse effect on CEL-SCI's business. CEL-SCI does not
carry key man life insurance on any of its officers. CEL-SCI's future success
will also depend upon its ability to attract and retain qualified scientific
personnel. There can be no assurance that CEL-SCI will be able to hire and
retain such necessary personnel.

The Market Price for CEL-SCI's Common Stock is Volatile.

The market price of CEL-SCI's common stock, as well as the securities
of other biopharmaceutical and biotechnology companies, have historically been
highly volatile, and the market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. Factors such as fluctuations in CEL-SCI's operating
results, announcements of technological innovations or new therapeutic products
by CEL-SCI or its competitors, governmental regulation, developments in patent
or other proprietary rights, public concern as to the safety of products
developed by CEL-SCI or other biotechnology and pharmaceutical companies, and
general market conditions may have a significant effect on the market price of
CEL-SCI's common stock.

COMPARATIVE SHARE DATA

Number of Note
Shares Reference

Shares outstanding as of January 15, 2002 24,183,956

Shares to be sold in this Offering:

Shares issuable pursuant to equity line
of credit: Unknown A

Shares issuable upon exercise of warrants issued
in connection with equity line of credit 200,800 A

The number of shares outstanding as of January 15, 2002 excludes shares
which may be issued in connection with CEL-SCI's line of credit or upon the
exercise of other options or warrants previously issued by CEL-SCI. See table
below.

Other Shares Which May Be Issued:
--------------------------------

The following table lists additional shares of CEL-SCI's common stock
which may be issued pursuant to the equity line of credit agreement and as the
result of the exercise of other outstanding options or warrants issued by
CEL-SCI:

Number of Note
Shares Reference

Shares issuable upon conversion of Series E Unknown B
preferred stock

Shares issuable upon exercise of Series E 815,351 B
warrants

Shares issuable upon conversion of promissory 2,050,000 C
notes

Shares issuable upon exercise of Series F warrants 960,000 C

Shares issuable upon exercise of options 275,000 D
granted to investor relations consultants

Shares issuable upon exercise of options and 4,976,642 E
warrants granted to CEL-SCI's officers,
directors, employees, consultants, and third parties

A. Under the equity line of credit agreement, Paul Revere Capital Partners has
agreed to provide CEL-SCI with up to $10,000,000 of funding prior to June 22,
2003. During this twenty-four month period, CEL-SCI may request a drawdown under

the equity line of credit by selling shares of its common stock to Paul Revere
Capital Partners and Paul Revere Capital Partners will be obligated to purchase
the shares. CEL-SCI may request a drawdown once every 22 trading days, although
CEL-SCI is under no obligation to request any drawdowns under the equity line of
credit.

CEL-SCI may request a drawdown by faxing a drawdown notice to Paul
Revere Capital Partners, Ltd., stating the amount of the drawdown and the lowest
daily volume weighted average price, if any, at which CEL-SCI is willing to sell
the shares. The lowest volume weighted average price will be set by CEL-SCI's
Chief Executive Officer in his sole and absolute discretion.

If CEL-SCI sets a minimum price which is too high and CEL-SCI's stock
price does not consistently meet that level during the 22 trading days after its
drawdown request, the amount CEL-SCI can draw and the number of shares CEL-SCI
will sell to Paul Revere Capital Partners will be reduced. On the other hand, if
CEL-SCI sets a minimum price which is too low and its stock price falls
significantly but stays above the minimum price, CEL-SCI will have to issue a
greater number of shares to Paul Revere Capital Partners based on the reduced
market price.

The following provides information concerning the first two sales made
by Cel-Sci pursuant to the equity line of credit.

Date of Shares Average Sale Net Proceeds
Sale Sold Price Per Share to Cel-Sci
--------- ------ --------------- ------------

11/09/01 277,684 $1.08 $299,000
01/08/02 333,993 $0.87 $290,404

Depending on the number and amount of the additional drawdowns
requested by CEL-SCI, an unknown additional number of shares of common stock may
be issued under the equity line of credit agreement between CEL-SCI and Paul
Revere Capital Partners.

As consideration for extending the equity line of credit, CEL-SCI
granted Paul Revere Capital Partners warrants to purchase 200,800 shares of
common stock at a price of $1.64 per share at any time prior to April 11, 2004.

B. In December 1999 and January 2000, CEL-SCI sold 1,148,592 shares of its
common stock, plus Series A and Series B warrants, to Advantage Fund II, Koch
Investment Group Limited and Mooring Capital Fund LLC for $2,800,000. The Series
A warrants allowed the holders to purchase up to 402,007 shares of CEL-SCI's
common stock at a price of $2.925 per share at any time prior to December 8,
2002. CEL-SCI issued 274,309 shares of common stock upon the exercise of the
Series B warrants, which have since expired.

In March 2000, CEL-SCI sold 1,026,666 shares of its common stock, plus
Series C and Series D warrants, to the same private investors referred to above
for $7,700,000. The Series C warrants allowed the holders to purchase up to
413,344 shares of CEL-SCI's common stock at a price of $8.50 per share at any
time prior to March 21, 2003. The Series D warrants allowed the holders, to the
extent they held any shares purchased in the March 2000 offering, to acquire
additional shares of CEL-SCI's common stock at a nominal price in the event the
price of CEL-SCI's common stock fell below $7.50 per share prior to certain
fixed vesting dates. On the first fixed vesting date the price of CEL-SCI's
common stock was $1.47 and on the second, and final vesting date, the price of
CEL-SCI's common stock was $1.08. As a result, and in accordance with the terms
of the Series D warrants, the private investors were entitled to receive
5,734,155 additional shares of CEL-SCI's common stock, of which 3,520,123 shares
had been issued and 959,340 shares had been sold as of August 15, 2001.

On August 16, 2001 CEL-SCI, Advantage Fund II and Koch Investment Group
agreed to restructure the terms of the Series A, C and D warrants in the
following manner:

Advantage Fund II, Koch Investment Group Limited and Mooring Capital
Fund LLC exchanged the 3,588,564 shares of CEL-SCI's common stock which they
owned, plus their unexercised Series D Warrants, for 6,288 shares of CEL-SCI's
Series E Preferred stock. At the holder's option, each Series E Preferred share
is convertible into shares of CEL-SCI's common stock on the basis of one Series
E Preferred share for shares of common stock equal in number to the amount
determined by dividing $1,000 by the lesser of $5 or 93% of the average closing
bid prices (the "Conversion Price") of CEL-SCI's common stock on the American
Stock Exchange for the five days prior to the date of each conversion notice.

Notwithstanding the above, the maximum number of common shares issuable
upon the conversion of each Series E Preferred share prior to August 16, 2003
will be 923 shares.

Each Series E Preferred share can be redeemed by CEL-SCI at a price of
$1,200 per share, plus accrued dividends, at any time prior to July 18, 2003. At
any time on or after July 18, 2003 and prior to the close of business on August
16, 2003 CEL-SCI may redeem any outstanding Series E Preferred shares at a price
of $1,000 per share.

Preferred shares that have not been redeemed or converted by August 16,
2003 will automatically convert to twice the number of shares of common stock
which such shares would otherwise convert into based upon the Conversion Price
on such date. On August 16, 2003 CEL-SCI will also be required to issue the
holders of any Series E Preferred shares which are then outstanding Series E
warrants which will allow the holders of the warrants to purchase shares of
CEL-SCI's common stock equal in number to 33% of the common shares which were
issued upon the conversion of the remaining Series E Preferred shares. These
warrants, if issued, will be exercisable at any time prior to August 17, 2006 at
a price equal to 110% of the volume weighted average price of CEL-SCI's common
stock for the five days prior to August 16, 2003.

Each Series E Preferred share is entitled to a quarterly dividend of
$60 per share, payable in cash. Dividends not declared will accumulate. Except
as otherwise provided by law the Series E Preferred shares do not have any
voting rights. The Series E Preferred shares have a liquidation preference over
CEL-SCI's common stock.

As part of this transaction the three investors exchanged their Series
A and Series C warrants for new Series E warrants. The Series E warrants
collectively allow the holders to purchase up to 815,351 additional shares of
CEL-SCI's common stock at a price of $1.19 per share at any time prior to August
16, 2004.

With respect to the shares issuable upon the conversion of the Series E
Preferred shares, or the exercise of the Series E warrants, Advantage II and
Koch have agreed to limit their respective weekly sales of CEL-SCI's common
stock to 9% of the average of the four prior weeks traded volume as listed by
Bloomberg, while Mooring Financial will limit its weekly sales of CEL-SCI's
common stock to 2.14% of the average of the four prior weeks trading volume as
listed by Bloomberg. If CEL-SCI's trading volume reaches 200,000 shares or more
on any given day, each of Advantage II and Koch will be allowed to sell an
additional 4.5% of that day's trading volume on each of that day and the
following day, while Mooring Financial will be allowed to sell an additional 1%
of that day's trading volume on each of that day and the following day.

As of January 15, 2002 1,811 Series E Preferred shares had been
converted into 1,638,090 shares of CEL-SCI's common stock. The actual number of
shares issuable upon the conversion of the Series E Preferred shares will vary
depending upon a number of factors, including the price of CEL-SCI's common
stock at certain dates. Accordingly, the number of shares of common stock which
will be issued upon the conversion of the Series E Preferred shares cannot be
determined at this time. However, prior to August 16, 2003, CEL-SCI would not be
required to issue more than 4,132,271 shares of its common stock upon the
conversion of the Series E Preferred shares.

C. In December 2001 and January 2002, CEL-SCI sold convertible notes, plus
Series F warrants, to a group of private investors for $1,600,000. At the
holder's option the notes are convertible into shares of CEL-SCI's common stock
equal in number to the amount determined by dividing each $1,000 of note
principal to be converted by the Conversion Price. The Conversion Price is 76%
of the average of the 3 lowest daily trading prices of CEL-SCI's common stock on
the American Stock Exchange during the 20 trading days immediately prior to the
conversion date. If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price below the then applicable
Conversion Price or the market price of its common stock, the Conversion Price
may be subject to adjustment.

The Series F warrants presently allow the holders to purchase up to
960,000 shares of CEL-SCI's common stock at a price of $0.65 per share at any
time prior to December 31, 2008. If CEL-SCI sells any additional shares of
common stock, or any securities convertible into common stock, at a price below
the then applicable warrant exercise price or the market price of CEL-SCI's
common stock, the warrant exercise price and the number of shares of common
stock issuable upon the exercise of the warrant may be subject to adjustment.
Every three months after January 17, 2002 the warrant exercise price will be
adjusted to an amount equal to 110% of the Conversion Price of the notes on that
date, provided that the adjusted price is lower than the warrant exercise price
on that date.

The actual number of shares issuable upon the conversion of the notes
will vary depending upon a number of factors, including the price of CEL-SCI's
common stock at certain dates. Accordingly, the number of shares which may be
issued upon the conversion of the notes cannot be determined at this time.
However, based upon the market price of CEL-SCI's common stock on January 15,

2002, CEL-SCI would be required to issue approximately 2,050,000 shares of
common stock if all of the notes were converted on January 15, 2002.

D. CEL-SCI has granted options for the purchase of 275,000 shares of common
stock to certain investor relations consultants in consideration for services
provided to CEL-SCI. The options are exercisable at prices ranging between $1.63
and $5.00 per share and expire between September 2002 and June 2006.

E. The options are exercisable at prices ranging from $0.98 to $11.00 per share.
CEL-SCI may also grant options to purchase additional shares under its Incentive
Stock Option and Non-Qualified Stock Option Plans.

The shares referred to in Notes B through E are being, or will be,
offered for sale by means of separate registration statements which have been
filed with the Securities and Exchange Commission.

MARKET FOR CEL-SCI'S COMMON STOCK

As of January 15, 2002 there were approximately 2,800 record holders of
CEL-SCI's common stock. CEL-SCI's common stock is traded on the American Stock
Exchange. Set forth below are the range of high and low quotations for CEL-SCI's
common stock for the periods indicated as reported the American Stock Exchange.
The market quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.

Quarter Ending High Low
-------------- ---- ---
12/31/98 $3.50 $1.50
3/31/99 $2.75 $1.63
6/30/99 $3.38 $1.81
9/30/99 $3.81 $1.88

12/31/99 $3.06 $2.18
3/31/00 $9.87 $2.25
6/30/00 $6.37 $2.75
9/30/00 $3.56 $2.20

12/31/00 $2.54 $1.00
3/31/01 $3.30 $1.30
6/30/01 $1.85 $1.16
9/30/01 $1.94 $1.02

Holders of common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefor
and, in the event of liquidation, to share pro rata in any distribution of
CEL-SCI's assets after payment of liabilities. The Board 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.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following selected financial data should be read in conjunction
with the more detailed financial statements, related notes and other financial
information included in this prospectus.

For the Years Ended September 30,
----------------------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----

Investment Income and
Other Revenues: $ 670,092 $442,551 $469,518 $792,994 $ 438,145

Expenses:
Research and Development 7,762,213 4,978,714 4,461,051 3,833,854 6,011,670
Depreciation and Amortization 209,121 220,994 268,210 295,331 313,547
General and Administrative 3,432,437 3,721,240 3,230,982 3,106,492 2,302,386
--------- --------- --------- --------- ---------

Net Loss $(10,733,679) $(8,478,397) $(7,490,725) $(6,442,683) $(8,189,458)
============= ============ ============ =========== ============

Loss per common share
(basic and diluted) $(0.51) $(0.52) $(0.74) $(1.00) $(1.16)

Weighted average common
Shares outstanding 21,824,273 14,484,352 11,379,437 9,329,419 6,425,316

Balance Sheet Data:
------------------

September 30
---------------------------------------------------------------------------------------------

2001 2000 1999 1998 1997
---- ---- ---- ---- ----

Working Capital $2,807,229 $11,725,940 $6,152,715 $12,926,014 $4,581,247
Total Assets 4,508,920 13,808,882 7,559,772 14,431,813 6,334,397
Total Liabilities 507,727 847,423 461,586 456,529 508,617
Shareholders' Equity 4,001,193 12,961,459 7,098,186 13,975,284 5,825,780

No dividends have been declared on CEL-SCI's common stock.

The Company's net losses for each fiscal quarter during the two years
ended September 30, 2001 are shown below:

Quarter Net Loss Net Loss per Share

12-31-99 $(1,704,408) $(0.10)

03-31-00 $(2,857,840) $(0.15)

06-30-00 $(2,165,107) $(0.11)

09-30-00 $(1,791,642) $(0.09)

12-31-00 $(2,543,489) $(0.12)

03-31-01 $(3,633,943) $(0.18)

06-30-01 $(2,045,155) $(0.09)

09-30-01 $(2,511,092) $(0.12)

Results of Operations

Fiscal 2001

Interest income during the year ending September 30, 2001 reflects
interest accrued on investments. Research and development expenses in 2001 are
substantially higher than the prior period due to costs involved in
manufacturing substantial quantities of MULTIKINE for use in future clinical
trials and costs involved in validating the manufacturing process. General and
Administrative expenses increased slightly due to compensation charges of
$593,472 for options to employees that were repriced and compensation charges of
$316,500 for options and common stock granted to persons other than employees
for services rendered to CEL-SCI. These increases were offset by a decrease of
$288,000 for compensation charges related to the common stock bonus granted to
an officer.

Fiscal 2000

Interest income during the year ended September 30, 2000 reflects
interest received and accrued on investments. Research and development expense
in 2000 is higher than in 1999 because CEL-SCI is running more and larger
clinical trials. General and administrative expenses have increased due to the
lawsuit brought by former directors which was settled in May of 2000.

Fiscal 1999

Interest income during the year ending September 30, 1999 reflects
interest received and accrued on investments. Interest income decreased as
CEL-SCI used the proceeds of the sale of the Series D Preferred Stock. Research
and development expense in 1999 was higher than in 1998 because CEL-SCI is
running more and larger clinical trials. General and administrative expenses
have increased due to the addition of more employees needed for the increased
activity level.

Liquidity and Capital Resources

CEL-SCI has had only limited revenues from operations since its
inception in March l983. CEL-SCI has relied upon proceeds realized from the
public and private sale of its Common Stock 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 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
Company-sponsored research and development, 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.

During fiscal 2002, CEL-SCI expects that it will spend significant
amounts on research, development, and clinical trials. CEL-SCI plans to use its
existing financial resources as well as the proceeds from the sale of its common
stock under the equity line of credit agreement with Paul Revere Capital
Partners to fund its capital requirements during this period.

Other than funding its research and development program, CEL-SCI does
not have any material capital commitments.

It should be noted that substantial additional funds will be needed for
more extensive clinical trials 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.

CEL-SCI's cash flow and earnings are subject to fluctuations due to
changes in interest rates in its investment portfolio of debt securities, to the
fair value of equity instruments held, and, to an immaterial extent, to foreign
currency exchange rates. CEL-SCI maintains an investment portfolio of various
issuers, types and maturities. These securities are generally classified as

available-for-sale and, consequently, are recorded on the balance sheet at fair
value with unrealized gains or losses reported as a separate component of
stockholder's equity. Other-than-temporary losses are recorded against earnings
in the same period the loss was deemed to have occurred. CEL-SCI does not
currently hedge this exposure and there can be no assurance that
other-than-temporary losses will not have a material adverse impact on CEL-SCI's
results of operations in the future.

Cambrex Bio Science Promissory Note

In November 2001 CEL-SCI gave a promissory note to Cambrex Bio
Sciences, Inc., the owner of the manufacturing facility used by CEL-SCI to
produce MULTIKINE for CEL-SCI's clinical trials. The promissory note is in the
principal amount of $1,159,000 and represents the cost of CEL-SCI's use of the
Cambrex manufacturing facility for the three months ended January 10, 2002.
CEL-SCI's short term needs for MULTIKINE were satisfied in January 2002 and as a
result, during the fiscal year ended September 30, 2002, CEL-SCI will no longer
incur the expense associated with the use of the Cambrex facility. The amount
borrowed from Cambrex is due and payable on January 2, 2003, beginning November
16, 2002 will bear interest at the prime interest rate, which is adjusted
monthly, and is secured by the equipment used by CEL-SCI to manufacture
MULTIKINE.

Convertible Notes and Series F Warrants

In December 2001 and January 2002, CEL-SCI sold convertible notes, plus
Series F warrants, to a group of private investors for $1,600,000. The notes
bear interest at 7% per year, are due and payable on December 31, 2003, and are
secured by substantially all of CEL-SCI's assets. Interest is payable quarterly
except that the first interest payment is not due until July 1, 2002. If CEL-SCI
fails to make any interest payment when due, the notes will become immediately
due and payable. The proceeds to CEL-SCI from the sale of these notes, net of
transaction costs, was approximately $1,400,000.

See "Description of Securities-Convertible Notes and Series F Warrants"
for more information concerning the terms of these securities.

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 has
no derivative financial instruments or debt. Further, there is 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, 2001.

Recent Accounting Pronouncements

Effective October 1, 2001, CEL-SCI adopted SFAS No. 133, issued by
FASB, "Accounting for Derivative Instruments and Hedging Activities", (as
amended by SFAS No. 137 and SFAS No. 138). This statement requires companies to
record qualifying derivatives on their balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in the values of

those derivatives would be accounted for depending on the use of the derivative
and whether it qualifies for hedging accounting. CEL-SCI had no derivative or
hedging activity in any of the periods presented and therefore there is no
impact of these Standards on its financial position or the results of its
operations.

In June 2001, the FASB issued SFAS No. 141, Accounting for Business
Combinations. SFAS No. 141 requires that all business combinations initiated
after June 30, 2001, be accounted for under the purchase method and addresses
the initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. CEL-SCI has not yet determined the impact
that the adoption of SFAS No. 141 will have on its results of operations.

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 provides that intangible assets with finite useful lives be
amortized and that goodwill and intangible assets with indefinite lives not be
amortized but will rather be tested at least annually for impairment. CEL-SCI
will adopt SFAS No. 142 on October 1, 2002. CEL-SCI has not yet determined the
impact that the adoption of SFAS No. 142 will have on its results of operations.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. CEL-SCI has not yet determined the impact
Statement of Financial Accounting Standards No. 143 will have on its financial
position or the results of operations when such statement is adopted.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets. It
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of, and the accounting and reporting
provisions of APB 30, Reporting the Results of Operations--Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the disposal of a segment of
a business. CEL-SCI is required to adopt SFAS No. 144 on October 1, 2002.
CEL-SCI has not yet determined the impact that the adoption of SFAS No. 144 will
have on its results of operations or its financial position.

BUSINESS

CEL-SCI Corporation was formed as a Colorado corporation in 1983.
CEL-SCI is involved in the research and development of the drugs and vaccines
described below.

MULTIKINE

CEL-SCI's first, and main, product, MULTIKINE(TM), manufactured using
CEL-SCI's proprietary cell culture technologies, is a combination, or
"cocktail", of natural human interleukin-2 ("IL-2") and certain lymphokines and
cytokines. MULTIKINE is being tested to determine if it is effective in
improving the immune response of cancer patients.

MULTIKINE has been tested in over 160 patients in the past few years 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 tumor response data
suggests that further studies are warranted. CEL-SCI is currently conducting one
additional Phase II head and neck cancer study and one study with HIV-infected
women with HPV induced cervical dysplasia.

At the present time CEL-SCI's primary focus for the development of
MULTIKINE is to prove its usefulness in the treatment of HIV-infected women with
Human Papilloma Virus induced cervical dysplasia, the precursor stage before the
development of cervical cancer.

The function of the immunological system is to protect the body against
infectious agents, including viruses, bacteria, parasites and malignant (cancer)
cells. An individual's ability to respond to infectious agents and to other
substances (antigens) recognized as foreign by the body's immune system is
critical to health and survival. When the immune response is adequate, infection
is usually combated effectively and recovery follows. Severe infection can occur
when the immune response is inadequate. Such immune deficiency can be present
from birth but, in adult life, it is frequently acquired as a result of intense
sickness or as a result of the administration of chemotherapeutic drugs and/or
radiation. It is also recognized that, as people reach middle age and
thereafter, the immune system grows weaker.

Two classes of white blood cells, macrophages and lymphocytes, are
believed to be primarily responsible for immunity. Macrophages are large cells
whose principal immune activity is to digest and destroy infectious agents.
Lymphocytes are divided into two sub-classes. One sub-class of lymphocytes,
B-cells, produces antibodies in response to antigens. Antibodies have unique
combining sites (specificities) that recognize the shape of particular antigens
and bind with them. The combination of an antibody with an antigen sets in
motion a chain of events which may neutralize the effects of the foreign
substance. The other sub-class of lymphocytes, T-cells, regulates immune
responses. T-cells, for example, amplify or suppress antibody formation by
B-cells, and can also directly destroy "foreign" cells by activating "killer
cells."

It is generally recognized that the interplay among T-cells, B-cells
and the macrophages determines the strength and breadth of the body's response
to infection. It is believed that the activities of T-cells, B-cells and
macrophages are controlled, to a large extent, by a specific group of hormones
called cytokines. Cytokines regulate and modify the various functions of both
T-cells and B-cells. There are many cytokines, each of which is thought to have
distinctive chemical and functional properties. IL-2 is but one of these
cytokines and it is on IL-2 and its synergy with other cytokines that CEL-SCI
has focused its attention. Scientific and medical investigation has established
that IL-2 enhances immune responses by causing activated T-cells to proliferate.
Without such proliferation no immune response can be mounted. Other cytokines
support T-cell and B-cell proliferation. However, IL-2 is the only known
cytokine which causes the proliferation of T-cells. IL-2 is also known to
activate B-cells in the absence of B-cell growth factors.

Although IL-2 is one of the best characterized cytokines with
anticancer potential, CEL-SCI is of the opinion that to have optimum therapeutic
value, IL-2 should be administered not as a single substance but rather as a
mixture of IL-2 and certain cytokines, i.e. as a "cocktail". This approach,
which was pioneered by CEL-SCI, makes use of the synergism between these

cytokines. It should be noted, however, that neither the FDA nor any other
agency has determined that CEL-SCI's MULTIKINE product will be effective against
any form of cancer.

It has been reported by researchers in the field of cytokine research
that IL-2 can increase the number of killer T-cells produced by the body, which
improves the body's capacity to selectively destroy specific tumor cells.
Research and human clinical trials sponsored by CEL-SCI have indicated a
correlation between administration of MULTIKINE to cancer patients and
immunological responses. On the basis of these experimental results, CEL-SCI
believes that MULTIKINE may have application for the treatment of solid tumors
in humans.

In November 1990, the Florida Department of Health and Rehabilitative
Services ("DHRS") gave the physicians at a southern Florida medical institution
approval to start a clinical cancer trial in Florida using CEL-SCI's MULTIKINE
product. The focus of the trial was unresectable head and neck cancer.

In 1991, four patients with regionally advanced squamous cell cancer of
the head and neck were treated with CEL-SCI's MULTIKINE product. The patients
had previously received radical surgery followed by x-ray therapy but developed
recurrent tumors at multiple sites in the neck and were diagnosed with terminal
cancer. The patients had low levels of lymphocytes and evidence of immune
deficiency (generally a characteristic of this type of cancer).

Significant tumor reduction occurred in three of the four patients as a
result of the treatment with MULTIKINE. Negligible side effects were observed
and the patients were treated as outpatients. Notwithstanding the above, it
should be noted that these trials were only preliminary and were only conducted
on a small number of patients. It remains to be seen if MULTIKINE will be
effective in treating any form of cancer.

These results caused CEL-SCI to embark on a major manufacturing program
for MULTIKINE with the goal of being able to produce a drug that would meet the
stringent regulatory requirements for advanced human studies. This program
included building a pilot scale manufacturing facility.

Since that time, MULTIKINE has been well tolerated in clinical studies
involving more than 160 patients. Some of the more recent clinical data were
presented at the 5th International Congress on Head and Neck Cancer in San
Francisco in August, 2000. The study enrolled advanced primary head and neck
cancer patients who were treated prior to surgery and/or radiation for 2 weeks.
Dr. Dudkevitch from the Department of Otolaryngology at the Rabin Medical
Center, Israel, presented data showing that, of the 12 patients treated, two
patients had a complete tumor response (100% tumor reduction) following the
2-week treatment with the MULTIKINE regimen. He also noted that upon
histopathological examination of the tissue removed during surgery, no tumor
residues were found in those patients. Another 4 patients showed a partial
(greater than 50%) tumor reduction and six patients had tumor reductions of less
than 50%. Two patients refused surgery after treatment with MULTIKINE.

In May 2001 CEL-SCI also started a Phase I clinical trial at the
University of Maryland Biotechnology Institute's (UMBI). The principle
investigator of this study was Dr. Edmund Tramont, who is now the Director of
the Division of AIDS at the National Institute of Allergy and Infectious
Diseases (NIAID), a subdivision of the National Institutes of Health (NIH). The
focus of this study is 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 is 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 will help correct this defect and safely
boost the patients' immune systems to a point where their immune systems can
fight and 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/morality 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.

The study is designed to enroll up to a total of 15 women at 3 dose
levels. As of October 8, 2001 eight patients have completed the study. All eight
patients treated thus far in the ongoing phase I dose escalating study showed
clinical improvement by colposcopic (stereoscopic, binocular magnification of
the cervix under a focused beam of light) examination. Six out of eight patients
(75%) had no evidence of dysplasia on biopsy seven to eight weeks after the
final injection. One patient's final biopsy was performed at a later date. All
of the patients tolerated the injections well and without any associated serious
adverse reactions. As a result of this study, CEL-SCI has decided that, barring
some unforeseen circumstances, it will give the highest priority to clinical
trials in women with HPV-induced cervical dysplasia. CEL-SCI plans to meet with
the FDA to determine the best way to proceed with future clinical trials. Given
the large unmet medical need in HPV-induced cervical dysplasia, CEL-SCI is
hopeful that its meetings with the FDA will lead to the initiation of a clinical
trial in patients with HPV-induced cervical dysplasia during 2002, potentially
under fast track designation.

In November 2000, CEL-SCI concluded a development, supply and
distribution agreement with Orient Europharma of Taiwan. The agreement gives
Orient Europharma the exclusive marketing rights to Multikine for all cancer
indications in Taiwan, Singapore, Hong Kong and Malaysia. The agreement provides
for Orient Europharma to fund the clinical trials needed to obtain marketing
approvals in the four 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.

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.

Proof of efficacy for anti-cancer drugs is a lengthy and complex
process. At this early 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.

CEL-SCI uses an unrelated corporation for certain aspects of the
production of MULTIKINE for research and testing purposes. The agreement with
this corporation expires in 2006.

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 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.

CEL-SCI intends to use this technology to develop potential treatments
and/or vaccines against various diseases. Present target diseases are herpes
simplex, AIDS, malaria, tuberculosis, prostate cancer and breast cancer.

CEL-SCI is involved in the following publicly announced studies which
are designed to determine the effectiveness of the L.E.A.P.S. technology in
preclinical studies.

Cooperative Research and Development Agreement ("CRADA") with the Naval
Medical Research Institute of the U.S. Navy to jointly develop a potential
malaria vaccine using the L.E.A.P.S. technology. While at present the number of
malaria cases is not a major problem in the continental U.S., there are an
increasing number of cases involving Americans bringing the disease home from
overseas travels. Currently, there is no approved malaria vaccine anywhere in
the world.

Development of a herpes simplex virus vaccine based on the L.E.A.P.S.
technology with funding from the National Institute of Allergy and Infectious
Diseases.

Collaborative study for the treatment, and possible prevention, of
autoimmune myorcarditis with researchers at the Department of Pathology, the
Johns Hopkins Medical Institutions, Baltimore, Maryland.

Research collaboration agreement with research scientists at the
Max-Delbruck Center for Molecular Medicine in Berlin, Germany to develop a
therapeutic vaccine for breast and/or colon cancer.

RESEARCH AND DEVELOPMENT

Since 1983, and through September 30, 2001, approximately $40,000,000
has been expended on CEL-SCI-sponsored research and development, including
approximately $7,762,000, $5,186,000 and $4,662,000, respectively during the
years ended September 30, 2001, 2000 and 1999.

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 shares of CEL-SCI's common
stock and borrowings from third parties, including affiliates of CEL-SCI.

CEL-SCI has a Scientific Advisory Board ("SAB") comprised of scientists
distinguished in biomedical research in the field of cytokines and related
areas. From time to time, members of the SAB advise CEL-SCI on its research
activities. Institutions with which members of the SAB are affiliated have in
the past conducted and may in the future conduct Company-sponsored research. The
SAB has in the past and may in the future, at its discretion, invite other
scientists to opine in confidence on the merits of CEL-SCI-sponsored research.
Members of the SAB receive $500 per month from CEL-SCI.

The members of CEL-SCI's SAB are:

Evan M. Hersh, M.D. - Professor of Medicine, Microbiology and Immunology,
Assistant Director of Experimental Therapeutics and Translational Research,
Arizona Cancer Center, Tucson.

Michael J. Mastrangelo, M.D. - Professor of Medicine, Jefferson Medical
College, Philadelphia, Pennsylvania; and Associate Clinical Director, Jefferson
Cancer Center, Philadelphia, Pennsylvania.

Alan B. Morris, Ph.D. - Professor, Department of Biological Sciences,
University of Warwick, Coventry, U.K.

GOVERNMENT REGULATION

The investigational agents and future products of CEL-SCI are regulated
in the United States under the Federal Food, Drug and Cosmetic Act, the Public
Health Service Act, and the laws of certain states. The Federal Food and Drug
Administration (FDA) exercises significant regulatory control over the clinical
investigation, manufacture and marketing of pharmaceutical and biological
products.

Prior to the time a pharmaceutical product can be marketed in the
United States for therapeutic use, approval of the FDA must normally be
obtained. Certain states, however, have passed laws which allow a state agency
having functions similar to the FDA to approve the testing and use of
pharmaceutical products within the state. In the case of either FDA or state
regulation, preclinical testing programs on animals, followed by three phases of
clinical testing on humans, are typically required in order to establish product
safety and efficacy.

The first stage of evaluation, preclinical testing, must be conducted
in animals. After lack of toxicity has been demonstrated, the test results are

submitted to the FDA (or state regulatory agency) along with a request for
clearance to conduct clinical testing, which includes the protocol that will be
followed in the initial human clinical evaluation. If the applicable regulatory
authority does not object to the proposed study, the investigator can proceed
with Phase I trials. Phase I trials consist of pharmacological studies on a
relatively few number of humans under rigidly controlled conditions in order to
establish lack of toxicity and a safe dosage range.

After Phase I testing is completed, one or more Phase II trials are
conducted in a limited number of patients to test the product's ability to treat
or prevent a specific disease, and the results are analyzed for clinical
efficacy and safety. If the results appear to warrant confirmatory studies, the
data is submitted to the applicable regulatory authority along with the protocol
for a Phase III trial. Phase III trials consist of extensive studies in large
populations designed to assess the safety of the product and the most desirable
dosage in the treatment or prevention of a specific disease. The results of the
clinical trials for a new biological drug are submitted to the FDA as part of a
product license application ("PLA"), a New Drug Application ("NDA") or Biologics
License Application ("BLA"), depending on the type or derivation of the product
being studied.

In addition to obtaining FDA approval for a product, a biologics
establishment license application ("ELA") may need to be filed in the case of
biological products derived from blood, or not considered to be sufficiently
well characterized, in order to obtain FDA approval of the testing and
manufacturing facilities in which the product is produced. To the extent all or
a portion of the manufacturing process for a product is handled by an entity
other than CEL-SCI, CEL-SCI must similarly receive FDA approval for the other
entity's participation in the manufacturing process. Domestic manufacturing
establishments are subject to inspections by the FDA and by other Federal, state
and local agencies and must comply with Good Manufacturing Practices ("GMP") as
appropriate for production. In complying with GMP regulations, manufacturers
must continue to expend time, money and effort in the area of production,
quality control and quality assurance to ensure full technical compliance.

The process of drug development and regulatory approval requires
substantial resources and many years. Approval of drugs and biologicals by
regulatory authorities of most foreign countries must also be obtained prior to
initiation of clinical studies and marketing in those countries. The approval
process varies from country to country and the time period required in each
foreign country to obtain approval may be longer or shorter than that required
for regulatory approval in the United States.

There are no assurances that clinical trials conducted under approval
from state authorities or conducted in foreign countries will be accepted by the
FDA. Product licensure in a foreign country does not mean that the product will
be licensed by the FDA and there are no assurances that CEL-SCI will receive any
approval of the FDA or any other governmental entity for the manufacturing
and/or marketing of a product. Consequently, the commencement of the marketing
of any Company product is, in all likelihood, many years away.

There can be no assurance that CEL-SCI will be successful in obtaining
approvals from any regulatory authority to conduct further clinical trials or to
manufacture and sell its products. The lack of regulatory approval for CEL-SCI's
products will prevent CEL-SCI from generally marketing its products. Delays in
obtaining regulatory approval or the failure to obtain regulatory approval in
one or more countries may have a material adverse impact upon CEL-SCI's
operations.

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. The
establishment by these large companies of in-house research groups and of joint
research ventures with other entities is already occurring in these areas and
will probably become even more prevalent. In addition, 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 IL-2-like compounds.
CEL-SCI believes, however, that it is the only producer of a patented IL-2
product using a patented cell-culture technology with normal human cells.
CEL-SCI foresees that its principle competition will come from producers of
genetically-engineered IL-2-like products. However, it is CEL-SCI's belief,
based upon growing scientific evidence, that its natural IL-2 products have
advantages over the genetically engineered, IL-2-like products. Evidence
indicates that genetically engineered, IL-2-like products, which lack sugar
molecules and typically are not water soluble, may be recognized by the
immunological system as a foreign agent, leading to a measurable antibody
build-up and thereby possibly voiding their therapeutic value. Furthermore,
CEL-SCI's research has established that to have optimum therapeutic value IL-2
should be administered not as a single substance but rather as an IL-2-rich
mixture of certain cytokines and other proteins, i.e. as a "cocktail". If these
differences prove to be of importance, and if the therapeutic value of its
MULTIKINE product is conclusively established, CEL-SCI believes it will be able
to establish a strong competitive position in a future market.

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 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
immunotherapy.

CEL-SCI may encounter problems, delays and additional expenses in
developing marketing plans with outside firms. In addition, 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.

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 which are
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.

PROPERTIES

CEL-SCI leases office space at 8229 Boone Blvd., Suite 802, Vienna,
Virginia at a monthly rental of approximately $7,600. CEL-SCI believes this
arrangement is adequate for the conduct of its present business.

In October 2000, CEL-SCI expanded its fully-equipped laboratory
facilities by 6,200 square feet to 17,900 square feet. This space is leased by
CEL-SCI for approximately $10,600 per month. The laboratory lease expires in
2004, with extensions available until 2014.

MANAGEMENT

Name Age Position

Maximilian de Clara 71 Director and President
Geert R. Kersten, Esq. 42 Director, Chief Executive Officer,
Secretary and Treasurer
Patricia B. Prichep 49 Senior Vice President of Operations
M. Douglas Winship 52 Senior Vice President of Regulatory
Affairs and Quality Assurance
Dr. Eyal Talor 45 Senior Vice President of Research and
Manufacturing
Dr. Daniel H. Zimmerman 59 Senior Vice President of Research,
Cellular Immunology
Alexander G. Esterhazy 56 Director
Dr. C. Richard Kinsolving 66 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
Securities and Exchange Commission.

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

Maximilian de Clara. Mr. 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 R. Kersten, Esq. Mr. Kersten was Director of Corporate and Investment
Relations for CEL-SCI between February 1987 and October 1987. In October of
1987, he was appointed Vice President of Operations. In December 1988, Mr.
Kersten was appointed Director of CEL-SCI. Mr. Kersten also became CEL-SCI's
Secretary and Treasurer in 1989. In May 1992, Mr. Kersten was appointed Chief
Operating Officer and in February 1995, Mr. Kersten became CEL-SCI's Chief
Executive Officer. In previous years, Mr. Kersten worked as a financial analyst
with Source Capital, Ltd., an investment advising firm in McLean, Virginia. Mr.
Kersten is a stepson of Maximilian de Clara, who is the President and a Director
of CEL-SCI. Mr. Kersten attended George Washington University in Washington,
D.C. where he earned a B.A. in Accounting and an M.B.A. with emphasis on
International Finance. He also attended law school at American University in
Washington, D.C. where he received a Juris Doctor degree.

Patricia B. Prichep 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. From June 1990 to December 1992, Ms. Prichep
was the Manager of Quality and Productivity for the NASD's Management, Systems
and Support Department. Between 1982 and 1990, Ms. Prichep was Vice President
and Operations Manager for Source Capital, Ltd.

M. Douglas Winship has been CEL-SCI's Senior Vice President of Regulatory
Affairs and Quality Assurance since April 1994. Between 1988 and April 1994, Mr.
Winship held various positions with Curative Technologies, Inc., including Vice
President of Regulatory Affairs and Quality Assurance (1991-1994).

Eyal Talor, Ph.D. has been CEL-SCI's Senior Vice President of Research
and Manufacturing since March 1994. From October 1993 until March 1994, Dr.
Talor was Director of Research, Manufacturing and Quality Control, as well as
the Director of the Clinical Laboratory, for Chesapeake Biological Laboratories,
Inc. From 1991 to 1993, Dr. Talor was a scientist with SRA Technologies, Inc.,
as well as the director of SRA's Flow Cytometry Laboratory (1991-1993) and
Clinical Laboratory (1992-1993). During 1992 and 1993, Dr. Talor was also the
Regulatory Affairs and Safety Officer For SRA. Since 1987, Dr. Talor has held
various positions with the John Hopkins University, including course coordinator
for the School of Continuing Studies (1989-Present), research associate and
lecturer in the Department of Immunology and Infectious Diseases (1987-1991),
and associate professor (1991-Present).

Daniel H. Zimmerman, Ph.D. has been CEL-SCI's Senior Vice President of
Cellular Immunology since January 1996. Dr. Zimmerman founded CELL-MED, Inc. and
was its president from 1987-1995. From 1973 to 1987 Dr. Zimmerman served in
various positions at Electronucleonics, Inc. including Scientist, Senior
Scientist, Technical Director and Program Manager. From 1969-1973 Dr. Zimmerman
was a Senior Staff Fellow at NIH.

Alexander G. Esterhazy 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 the Company 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).

All of CEL-SCI's officers devote substantially all of their time to
CEL-SCI's business. Messrs. Esterhazy and Kinsolving, as directors, devote only
a minimal amount of time to CEL-SCI.

CEL-SCI has an audit committee and compensation committee. The members of
the audit committee are Alexander G. Esterhazy and C. Richard Kinsolving. The
members of the compensation committee are Maximilian de Clara, Alexander
Esterhazy and C. Richard Kinsolving.

Executive 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
fiscal year ended September 30, 2001.

All
Other Other
Annual Restric- Com-
Compen- ted Stock Options pensa-
Name and Princi- Fiscal Salary Bonus sation Awards Granted tion
pal Position Year (1) (2) (3) (4) (5) (6)
-------------------- ------ ------- ------- ----------- ----------- ----------- ---------

Maximilian de Clara, 2001 $357,167 -- $52,186 $262,000 95,000 $ 64
President 2000 $345,583 -- $72,945 $550,000 60,000 $ 64
1999 $335,292 -- $72,945 $435,625 145,000 $ 63

Geert R. Kersten, 2001 $265,175 -- $10,462 $ 8,313 655,000 $4,114
Chief Executive 2000 $303,049 -- $15,349 $10,375 60,000 $4,114
Officer, Secretary 1999 $268,480 $15,154 $10,000 145,000 $4,113
and Treasurer

Patricia B. Prichep 2001 $104,505 -- $3,000 $6,270 260,000 $ 63
Senior Vice President 2000 $114,430 -- $3,000 $6,998 23,000 $ 63
of Operations

M. Douglas Winship, 2001 $163,725 -- $2,400 $9,824 65,000 $ 64
Senior Vice President 2000 $154,658 -- $2,400 $9,280 20,000 $ 64
of Regulatory Affairs 1999 $146,609 -- $2,400 $8,797 27,500 $ 63
and Quality Assurance

Eyal Talor, Ph.D. 2001 $157,420 -- $3,000 $9,269 200,000 $ 63
Senior Vice President 2000 $150,334 -- $3,000 $9,020 50,000 $ 63
of Research and 1999 $139,085 -- $3,000 $8,345 30,000 $ 63
Manufacturing

Daniel Zimmerman, 2001 $117,145 -- $3,000 $6,962 175,000 $ 64
Ph.D., 2000 $124,165 -- $3,000 $7,450 20,000 $ 64
Senior Vice President 1999 $114,806 -- $3,000 $6,888 45,000 $ 63
of Cellular Immunology

(1) The dollar value of base salary (cash and non-cash) received.

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

(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
Amounts in the table represent automobile, parking and other
transportation expenses, plus, in the case of Maximilian de Clara and
Geert Kersten, director's fees of $8,000.

(4) 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, the shares were issued in
consideration for past services rendered to CEL-SCI. 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.

As of September 30, 2001, the number of shares of CEL-SCI's common
stock, owned by the officers included in the table above, and the value of such
shares at such date, based upon the market price of CEL-SCI's common stock were:

Name Shares Value

Maximilian de Clara 195,071 $247,741
Geert R. Kersten 157,173 $199,610
Patricia B. Prichep 16,843 $ 21,391
M. Douglas Winship 14,360 $ 18,237
Eyal Talor, Ph.D. 29,837 $ 37,893
Daniel Zimmerman, Ph.D. 31,299 $ 39,750

Dividends may be paid on shares of restricted stock owned by CEL-SCI's
officers and directors, although CEL-SCI has no plans to pay dividends.

(5) The shares of Common Stock to be received upon the exercise of all stock
options granted during the periods covered by the Table. Includes certain
options issued in connection with CEL-SCI's Salary Reduction Plans as well
as certain options purchased from CEL-SCI. See "Options Granted During
Fiscal Year Ended September 30, 2001" below.

(6) All other compensation received that CEL-SCI could not properly report in
any other column of the Table including annual Company 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. Amounts in the table represent
life insurance premiums.

Long Term Incentive Plans - Awards in Last Fiscal Year

None.

Employee Pension, Profit Sharing or Other Retirement Plans

During 1993 CEL-SCI implemented a defined contribution retirement plan,
qualifying under Section 401(k) of the Internal Revenue Code and covering
substantially all CEL-SCI's employees. Prior to January 1, 1998 CEL-SCI's
contribution was equal to the lesser of 3% of each employee's salary, or 50% of
the employee's contribution. Effective January 1, 1998 the plan was amended such
that CEL-SCI's contribution is now made in shares of CEL-SCI's common stock as
opposed to cash. 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 CEL-SCI's common stock. The fiscal 2001
expenses for this plan were $93,705. 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

Standard Arrangements. CEL-SCI currently pays its directors $2,000 per
quarter, plus expenses. CEL-SCI has no standard arrangement pursuant to which
directors of CEL-SCI are compensated for any services provided as a director or
for committee participation or special assignments.

Other Arrangements. CEL-SCI has from time to time granted options to its
outside directors. See Stock Options below for additional information concerning
options granted to CEL-SCI's directors.

Employment Contracts

Effective April 12, 1999, CEL-SCI entered into a three-year employment
agreement with Mr. de Clara. The employment agreement provides that CEL-SCI will
pay Mr. de Clara an annual salary of $363,000 during the term of the agreement.
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.
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.

Effective August 1, 2000, 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 $336,132, subject to minimum annual increases of 5% per year. 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. 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.

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, 2001, 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, 2001, 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 set forth information concerning the options
granted during the fiscal year ended September 30, 2001, to the persons named
below, and the fiscal year-end value of all unexercised options (regardless of
when granted) held by these persons.

Options Granted During Fiscal Year Ended September 30, 2001
Individual Grants
--------------------------------------------------------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Granted to Exercise Price Appreciation
Options Employees in Price Per Expiration for Option Term (1)
-------------------
Name Granted (#) Fiscal Year Share Date 5% 10%
------ ----------- ------------ ------------ ------------ ----- -----

Maximilian de Clara 35,000 (2) 2.04% $1.67 12/1/04 $16,100 $35,700
60,000 3.49% $1.38 3/22/11 $45,600 $132,000
------
95,000

Geert R. Kersten 35,000 (2) 2.04% $1.67 12/1/04 $16,100 $35,700
60,000 3.49% $1.38 3/22/11 $45,600 $132,000
560,000 (2) 32.62% $1.05 7/16/05 $162,400 $358,400
-------
655,000

Patricia B. Prichep 35,000 (2) 2.04% $1.67 12/1/04 $12,600 $35,700
25,000 1.46% $1.18 12/8/10 $30,000 $47,000
200,000 (2) 11.65% $1.05 7/16/05 $58,000 $128,000
-------
260,000

Individual Grants
--------------------------------------------------------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Granted to Exercise Price Appreciation
Options Employees in Price Per Expiration for Option Term (1)
-------------------
Name Granted (#) Fiscal Year Share Date 5% 10%
------ ----------- ------------ ------------ ------------ ----- -----

Eyal Talor, Ph.D. 25,000 1.46% $1.76 11/10/10 $27,500 $70,125
15,000 (2) 0.87% $1.67 12/1/04 $ 6,900 $15,300
160,000 (2) 9.32% $1.05 7/16/05 $46,400 $102,400
-------
200,000

M. Douglas Winship 25,000 1.46% $1.39 04/5/11 $21,750 $55,250
40,000 (2) 2.33% $1.05 7/16/05 $11,600 $25,600
------
65,000

Daniel Zimmerman, Ph.D. 35,000 (2) 2.04% $1.67 12/1/04 $16,100 $35,700
20,000 1.16% $1.85 1/26/11 $23,200 $59,000
120,000 (2) 6.99% $1.05 7/16/05 $34,800 $76,800
-------
175,000

(1) The potential realizable value of the options shown in the table assuming
the market price of CEL-SCI's Common Stock appreciates in value from the
date of the grant to the end of the option term at 5% or 10%.
(2) Options were granted in accordance with CEL-SCI's Salary Adjustment Plan.
Pursuant to the Salary Adjustment Plan, any employee of CEL-SCI was
allowed to receive options (exercisable at market price at the time of
grant) in exchange for a one-time reduction in such employee's salary.

Option Exercises and Year-End Option Values
Value (in $) of
Unexercised
Number of In-the-Money
Unexercised Options at Fiscal
Shares Options (3) Year-End (4)
------------ -----------------
Acquired On Value Exercisable/ Exercisable/
Name Exercise (1) Realized (2) Unexercisable Unexercisable
---- ------------ ------------ ------------- ------------------

Maximilian de Clara -- -- 348,333/151,666 55,733/12,467
Geert R. Kersten -- -- 1,073,334/711,666 215,233/135,667
Patricia Prichep -- -- 203,501/285,999 34,320/51,970
Eyal Talor 82,500/206,666 15,950/36,667
M. Douglas Winship -- -- 94,167/83,333 19,067/12,833
Daniel Zimmerman -- -- 107,667/193,333 17,087/30,433

(1) The number of shares received upon exercise of options during the fiscal
year ended September 30, 2001.

(2) With respect to options exercised during CEL-SCI's fiscal year ended
September 30, 2001, the dollar value of the difference between the option
exercise price and the market value of the option shares purchased on the
date of the exercise of the options.

(3) The total number of unexercised options held as of September 30, 2001,
separated between those options that were exercisable and those options
that were not exercisable.

(4) For all unexercised options held as of September 30, 2001, the market value
of the stock underlying those options as of September 30, 2001.

Ten-Year Option/SAR Repricings

In July 2001 CEL-SCI lowered the exercise price on options held by
thirty-three of CEL-SCI's officers, directors and employees to $1.05 per share.
The options subject to this repricing allowed for the purchase of up to
2,117,165 shares of CEL-SCI's common stock and included options previously
granted to those persons listed below. CEL-SCI's Board of Directors lowered the
exercise of these options since at the time of repricing (July 17, 2001), the
options no longer provided a benefit to the option holders due to the difference
between the exercise price of the options and the market price of CEL-SCI's
common stock. The following table provides more information concerning the
repricing of these options.

Length of
Number of Market Exercise Original
Securities Price of Price at Option Term
Underlying Stock at Time of Remaining
Options/SARs Repricing Repricing New at Date of
Name and Date of Repriced or or Amend- or Amend- Exercise Repricing or
Principal Position Repricing Amended (#) ment (#) ment (#) Price ($) Admendment
--------------------------------------------------------------------------------------------------------------------------

Maximilan de Clara, 7/17/01 60,000 1.05 3.06 1.05 8.75 yrs
President 70,000 1.05 5.62 1.05 5.17 yrs
56,666 1.05 3.25 1.05 5.83 yrs
50,000 1.05 4.68 1.05 6.83 yrs
50,000 1.05 2.06 1.05 7.75 yrs
23,333 1.05 3.87 1.05 4.00 yrs

Geert R. Kersten, 7/17/01 60,000 1.05 3.06 1.05 8.75 yrs
Chief Executive 50,000 1.05 2.06 1.05 7.75 yrs
Officer and 163,000 1.05 3.12 1.05 1.50 yrs
Treasurer 114,000 1.05 2.94 1.05 1.50 yrs
50,000 1.05 5.62 1.05 5.17 yrs
150,000 1.05 3.25 1.05 6.83 yrs
50,000 1.05 4.68 1.05 6.83 yrs
50,000 1.05 3.87 1.05 4.00 yrs
200,000 1.05 2.38 1.05 0.92 yrs
24,000 1.05 2.38 1.05 0.92 yrs
4,000 1.05 2.87 1.05 1.25 yrs
10,000 1.05 2.87 1.05 1.25 yrs
10,000 1.05 2.87 1.05 1.67 yrs
50,000 1.05 2.87 1.05 1.25 yrs
50,000 1.05 2.87 1.05 3.00 yrs

Patricia B. Prichep, 7/17/01 17,000 1.05 2.31 1.05 7.42 yrs
Senior Vice 15,000 1.05 2.06 1.05 7.75 yrs
President of 23,000 1.05 4.00 1.05 8.58 yrs
Operations and 30,000 1.05 3.12 1.05 1.50 yrs
Secretary 32,000 1.05 2.94 1.05 1.50 yrs
3,000 1.05 4.25 1.05 5.42 yrs
35,000 1.05 4.68 1.05 5.67 yrs
9,500 1.05 3.87 1.05 4.00 yrs
6,000 1.05 2.87 1.05 1.42 yrs
1,500 1.05 2.87 1.05 2.67 yrs
10,000 1.05 2.94 1.05 4.33 yrs

M. Douglas Winship, 7/17/01 20,000 1.05 5.37 1.05 8.75 yrs
Senior Vice President 15,000 1.05 2.06 1.05 7.75 yrs
of Regulatory Affairs 45,000 1.05 4.31 1.05 5.75 yrs
and Quality Assurance 5,000 1.05 3.87 1.05 4.00 yrs
15,000 1.05 2.87 1.05 2.75 yrs

Eyal Talor, Ph.D., 7/17/01 20,000 1.05 2.06 1.05 8.00 yrs
Senior Vice President 12,000 1.05 2.94 1.05 1.50 yrs
of Research and 16,666 1.05 5.18 1.05 5.67 yrs
Manufacturing 15,000 1.05 3.31 1.05 7.00 yrs
15,500 1.05 3.87 1.05 4.00 yrs

Daniel Zimmerman, Ph.D., 7/17/01 15,000 1.05 2.06 1.05 7.75 yrs
Senior Vice President 20,000 1.05 4.00 1.05 8.58 yrs
of Cellular Immunology 24,000 1.05 2.94 1.05 1.50 yrs
3,000 1.05 4.25 1.05 5.42 yrs
7,000 1.05 3.94 1.05 5.92 yrs
15,000 1.05 5.06 1.05 6.58 yrs
12,000 1.05 3.44 1.05 4.42 yrs

Stock Option and Bonus Plans

CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option
Plans and Stock Bonus Plans. 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
collectively authorize the issuance of up to 2,100,000 shares of CEL-SCI's
Common Stock to persons who exercise options granted pursuant to the Plan. Only
Company 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
collectively authorize the issuance of up to 5,760,000 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 the Committee but cannot
be less than the market price of CEL-SCI's Common Stock on the date the option
is granted.

Stock Bonus Plan. Up to 1,040,000 shares of Common Stock may be granted
under the Stock Bonus Plan. Such shares may consist, in whole or in part, of
authorized but unissued shares, or treasury shares. Under the Stock Bonus Plan,
CEL-SCI's employees, directors, officers, consultants and advisors are eligible
to receive a grant of CEL-SCI's shares, 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.

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 sets forth certain information, as of January
15, 2002, 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 2,100,000 1,250,100 N/A 763,315

Non-Qualified Stock Option
Plans 5,760,000 3,344,434 N/A 1,268,105

Stock Bonus Plans 1,040,000 N/A 838,241 177,109

Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 170,669
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.

During the year ended September 30, 1999 CEL-SCI issued 200,000 shares
of its common stock to Mr. de Clara for past services provided to CEL-SCI. In
January 2000 CEL-SCI issued Mr. de Clara an additional 200,000 shares of common
stock for past services provided to CEL-SCI. In September 2001 CEL-SCI issued
Mr. de Clara an additional 200,000 shares of common stock for past services
provided to CEL-SCI. In October 2001 CEL-SCI issued Mr. de Clara an additional
75,071 shares of common stock for past services provided to CEL-SCI.

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of January 15, 2002, information
with respect to the only persons owning beneficially 5% or more of CEL-SCI's
common stock and the number and percentage of outstanding shares owned by each
director and officer of CEL-SCI and by all 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 493,404 2%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland

Geert R. Kersten 1,865,887 (2) 7.2%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Patricia B. Prichep 486,351 2%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

M. Douglas Winship 162,044 *
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Eyal Talor, Ph.D. 308,473 1.3%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Daniel H. Zimmerman, Ph.D. 318,146 1.3%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Alexander G. Esterhazy 30,000 *
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland

C. Richard Kinsolving 31,000 *
5414 61st Street East
Bradenton, FL 34203

All Officers and Directors 3,695,305 13.5%
as a Group (8 persons)

* Less than 1%

(1) Includes shares issuable prior to March 31, 2002 upon the exercise of
options or warrants granted to the following persons:

Options or Warrants Exercisable
Name Prior to March 31, 2002
---- -------------------------------

Maximilian de Clara 403,333
Geert R. Kersten 1,688,334
Patricia B. Prichep 460,168
M. Douglas Winship 134,167
Eyal Talor, Ph.D. 265,834
Daniel H. Zimmerman, Ph.D. 276,001
Alexander G. Esterhazy 30,000
C. Richard Kinsolving 20,000

(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.

EQUITY LINE OF CREDIT AGREEMENT

Overview

On April 11, 2001, CEL-SCI entered into an equity line of credit
agreement with Paul Revere Capital Partners, Ltd. in order to establish a
possible source of funding for the development of CEL-SCI's technologies. The
equity line of credit agreement establishes what is sometimes also referred to
as an equity drawdown facility.

Under the equity line of credit agreement, Paul Revere Capital
Partners, Ltd. has agreed to provide CEL-SCI with up to $10,000,000 of funding
during the twenty-four month period following the date of this prospectus.
During this twenty-four month period, CEL-SCI may request a drawdown under the
equity line of credit by selling shares of its common stock to Paul Revere
Capital Partners and Paul Revere Capital Partners will be obligated to purchase
the shares. CEL-SCI may request a drawdown once every 22 trading days, although
CEL-SCI is under no obligation to request any drawdowns under the equity line of
credit.

Calculation of Drawdown Amount, Purchase Price and Number of Shares Sold

The minimum amount CEL-SCI can draw down at any one time is $100,000.
Without the consent of Paul Revere Capital Partners, the maximum amount CEL-SCI
can draw down at any one time is the lesser of $2,000,000 or the amount equal
to:

o 4.5% of the weighted average price of CEL-SCI's common stock for the ninety
calendar day period prior to the date of the drawdown request
o multiplied by the total trading volume of CEL-SCI's common stock for the
ninety calendar day period prior to the date of the drawdown request.

On the day following the delivery of the drawdown notice, a valuation
period of 22 trading days will start:

o On each trading day during the valuation period where the daily
volume weighted average price of CEL-SCI's common stock on the
American Stock Exchange exceeds the minimum price, if any,

specified by CEL-SCI in the drawdown notice, the purchase price
will equal 89% of the volume weighted average price on that day.

o On each of the 22 trading days during the valuation period, the
number of shares to be sold to Paul Revere Capital Partners will
be determined by dividing 1/22 of the drawdown amount by the
purchase price on each trading day.

o If the volume weighted average price for CEL-SCI's common stock on
any trading day during the 22 trading day calculation period is
below the minimum price, then Paul Revere Capital Partners will
not purchase any shares on that day, and the drawdown amount will
be reduced by 1/22.

Payment for Shares Issued

The shares purchased on the first 11 trading days will be issued and
paid for on the 13th trading day following the drawdown request. The shares
purchased on the 12th through the 22nd trading days will be issued and paid for
on the 24th trading day following the drawdown request.

Upon closing of the equity line of credit Agreement, CEL-SCI paid
$35,000 to Paul Revere Capital Partners legal counsel, Epstein Becker & Green
P.C., to cover its legal and administrative expenses.

Grant of Warrants

As consideration for extending the equity line of credit, CEL-SCI
granted Paul Revere Capital Partners warrants to purchase 200,800 shares of
common stock at any time prior to April 11, 2004 at a price of $1.64 per share.
Paul Revere Capital Partners is not obligated to exercise any warrants.

CEL-SCI believes that the fair value of these warrants using the Black
Scholes pricing model is approximately $200,000. The fair value of these
warrants was reflected in CEL-SCI's financial statements and recorded as an
expense during the quarter ended June 30, 2001.

Restrictions on Future Financings

During the term of the equity line of credit agreement, CEL-SCI may not
raise capital through any other equity line of credit arrangement.

Termination of the Equity Line of Credit Agreement

The Equity Line of Credit Agreement will terminated if:

o any event, which has not been corrected within 30 days, has taken
place which has any material adverse effect on the business or
financial condition of CEL-SCI or which prohibits or interferes with

the ability of CEL-SCI to perform any of its material obligations
under the equity line of credit agreement,
o CEL-SCI's common stock is de-listed from the American Stock Exchange
unless the de-listing is in connection with CEL-SCI's subsequent
listing of its common stock on the NASDAQ National Market, the NASDAQ
SmallCap Market or the New York Stock Exchange, or
o CEL-SCI files for protection from its creditors under the Federal
Bankruptcy laws.

CEL-SCI may terminate the equity line of credit if Paul Revere Capital
Partners fails to honor more than one drawdown notice.

Indemnification

Paul Revere Capital Partners is entitled to customary indemnification
from CEL-SCI for any losses or liabilities it suffers based upon material
misstatements or omissions from the registration statement and this prospectus,
except as they relate to information Paul Revere Capital Partners supplied to
CEL-SCI for inclusion in the registration statement and prospectus.

SELLING SHAREHOLDER

This prospectus relates to sales of CEL-SCI's common stock by Paul
Revere Capital Partners. Paul Revere Capital Partners will receive shares of
CEL-SCI's common stock under an equity line of credit agreement and up to
200,800 shares of common stock upon the exercise of warrants. Paul Revere
Capital Partners is sometimes referred to in this prospectus as the selling
shareholder.

CEL-SCI will not receive any proceeds from the sale of the shares by
Paul Revere Capital Partners. Paul Revere Capital Partners may resell the shares
it acquires by means of this prospectus from time to time in the public market.
The costs of registering the shares offered by Paul Revere Capital Partners is
being paid by CEL-SCI. Paul Revere Capital Partners will pay all other costs of
the sale of the shares offered by them.

On November 9, 2001, and following CEL-SCI's first drawdown request,
Paul Revere Capital Partners purchased 277,684 shares of common stock from
CEL-SCI at an average price of $1.08 per share.

On January 8, 2002, and following CEL-SCI's second drawdown request,
Paul Revere Capital Partners purchased 333,993 shares of common stock from
CEL-SCI at an average price of $0.87 per share.

The following table shows the shares which are being offered for sale
by Paul Revere Capital Partners.

Shares Share
Shares Issuable Upon Shares to Be Ownership
Presently the Exercise Sold in this After
Name Owned of Warrants Offering Offering

Paul Revere Capital Partners (1) 200,800 (1) --

(1) The number of shares owned by Paul Revere Capital Partners will vary from
time-to-time and will depend upon the number of shares purchased from
CEL-SCI pursuant to the terms of the Equity Line Agreement.

Manner of Sale.

The shares of common stock owned, or which may be acquired, by Paul
Revere Capital Partners may be offered and sold by means of this prospectus from
time to time as market conditions permit in the over-the-counter market, or
otherwise, at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. These shares may be
sold by one or more of the following methods, without limitation:

o a block trade in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and o face-to-face transactions between sellers and
purchasers without a broker/dealer.

In effecting sales, brokers or dealers engaged by Paul Revere Capital
Partners may arrange for other brokers or dealers to participate. Such brokers
or dealers may receive commissions or discounts from Paul Revere Capital
Partners in amounts to be negotiated.

Paul Revere Capital Partners is an "underwriter" and any broker/dealers
who act in connection with the sale of the shares by means of this prospectus
may be deemed to be "underwriters" within the meaning of ss.2(11) of the
Securities Acts of 1933, and any commissions received by them and profit on any
resale of the shares as principal might be deemed to be underwriting discounts
and commissions under the Securities Act. CEL-SCI has agreed to indemnify Paul
Revere Capital Partners and any securities broker/dealers who may be deemed to
be underwriters against certain liabilities, including liabilities under the
Securities Act as underwriters or otherwise.

CEL-SCI has advised Paul Revere Capital Partners that it and any
securities broker/dealers or others who may be deemed to be statutory
underwriters will be subject to the prospectus delivery requirements under the
Securities Act of 1933. CEL-SCI has also advised Paul Revere Capital Partners,
Ltd. that in the event of a "distribution" of its shares Paul Revere Capital
Partners, any "affiliated purchasers", and any broker/dealer or other person who
participates in such distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. Rule 102 makes it unlawful for any person who is
participating in a distribution to bid for or purchase stock of the same class
as is the subject of the distribution. A "distribution" is defined in Rule 102
as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". CEL-SCI has also advised Paul Revere
Capital Partners, Ltd. that Rule 101 under the 1934 Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing
or stabilizing the price of the common stock in connection with this offering.

Grant of Registration Rights

CEL-SCI granted registration rights to Paul Revere Capital Partners,
Ltd. to enable it to sell the common stock it may acquire under the equity line
of credit agreement or upon the exercise of the warrants. Notwithstanding these
registration rights, CEL-SCI has no obligation:

o to assist or cooperate with Paul Revere Capital Partners, Ltd. in the
offering or disposition of their shares;

o to obtain a commitment from an underwriter relative to the sale of any the
shares; or

o to include the shares within any underwritten offering.

The registration rights agreement with Paul Revere Capital Partners,
Ltd. permits CEL-SCI to restrict the resale of the shares Paul Revere Capital
Partners, Ltd. has purchased under the equity line of credit agreement for a
period of time sufficient to permit CEL-SCI to amend or supplement this
prospectus to include material information. If CEL-SCI restricts the ability
Paul Revere Capital Partners, Ltd. to resell shares at any time during the
thirty-two trading days following the delivery of a drawdown notice, and
CEL-SCI's stock price declines during the restriction period, then, in order to
compensate Paul Revere Capital Partners, Ltd. for its inability to sell shares
during the restriction period, CEL-SCI will be required to pay Paul Revere
Capital Partners, Ltd. an amount determined by multiplying:

o the number of shares Paul Revere Capital Partners, Ltd. is committed to
purchase following the delivery of the drawdown notice, and

o the difference between the highest daily weighted average price of
CEL-SCI's common stock during the restriction period and the weighted
average price of CEL-SCI's common stock on the day after the restriction
period ends.

DESCRIPTION OF SECURITIES

Common Stock

CEL-SCI is authorized to issue 100,000,000 shares of common stock, (the
"common stock"). Holders of common stock are each entitled to cast one vote for
each share held of record on all matters presented to shareholders. Cumulative
voting is not allowed; hence, the holders of a majority of the outstanding
common stock can elect all directors.

Holders of common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefor
and, in the event of liquidation, to share pro rata in any distribution of
CEL-SCI's assets after payment of liabilities. The board is not obligated to
declare a dividend. It is not anticipated that dividends will be paid in the
foreseeable future.

Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by CEL-SCI. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock . All of the
outstanding shares of Common stock are fully paid and non-assessable.

Preferred Stock

CEL-SCI is authorized to issue up to 200,000 shares of preferred stock.
CEL-SCI's Articles of Incorporation provide that the Board of Directors has the
authority to divide the preferred stock into series and, within the limitations
provided by Colorado statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As the Board of Directors has authority to establish the terms of,
and to issue, the preferred stock without shareholder approval, the preferred
stock could be issued to defend against any attempted takeover of CEL-SCI.

See "Comparative Share Data" for information concerning CEL-SCI's
Series E Preferred stock.

Convertible Notes and Series F Warrants

In December 2001 and January 2002, CEL-SCI sold convertible notes, plus
Series F warrants, to a group of private investors for $1,600,000. The notes
bear interest at 7% per year, are due and payable on December 31, 2003 and are
secured by substantially all of CEL-SCI's assets. Interest is payable quarterly
except that the first interest payment is not due until July 1, 2002. If the
Company fails to make any interest payment when due, the notes will become
immediately due and payable.

At the holder's option the notes are convertible into shares of
CEL-SCI's common stock equal in number to the amount determined by dividing each
$1,000 of note principal to be converted by the Conversion Price. The Conversion
Price is 76% of the average of the three lowest daily trading prices of
CEL-SCI's common stock on the American Stock Exchange during the 20 trading days
immediately prior to the conversion date. The Conversion Price may not be less
than $0.57. However, if CEL-SCI's common stock trades for less than $0.57 per
share for a period of 20 consecutive trading days, the $0.57 minimum price will
no longer be applicable.

If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price below the then applicable
Conversion Price, the Conversion Price will be lowered to the price at which the
shares were sold or the lowest price at which the securities are convertible, as
the case may be. If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price below the market price of
CEL-SCI's common stock, the Conversion Price will lowered by a percentage equal
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be, divided by the then prevailing
market price of CEL-SCI's common stock. However the Conversion Price will not be
adjusted as the result of shares issued in connection with a Permitted
Financing. A Permitted Financing involves shares of common stock issued or sold:

- in connection with a merger or acquisition;

- upon the exercise of options or the issuance of common
stock to CEL-SCI's employees, officers, directors,
consultants and vendors in accordance with the Company's
equity incentive policies;

- pursuant to the conversion or exercise of securities
which were outstanding prior to December 31, 2001;

- pursuant to CEL-SCI's equity line of credit;

- to key officers of CEL-SCI 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 earlier of September 30, 2002 or the date all of the notes are no
longer outstanding CEL-SCI may not sell any common stock or any securities
convertible into common stock. However, this restriction will not apply to
shares issued in a Permitted Financing.

o If CEL-SCI maintains a balance of less than $1,000,000 in its bank account in
any month, it may draw down the maximum amount allowable for such month under
its equity line of credit. If CEL-SCI maintains a balance of greater than
$1,000,000 in its bank account in any month, it may only draw down a maximum of
$235,000 per month under the equity line of credit.

So long as the notes remain outstanding, the note holders will have a
first right of refusal to participate in any subsequent financings involving
CEL-SCI. If CEL-SCI enters into any subsequent financing on terms more favorable
than the terms governing the notes and warrants, then the note holders may
exchange notes and warrants for the securities sold in the subsequent financing.

Upon the occurrence of any of the following events CEL-SCI is required
to redeem the notes at a price equal to 130% of then outstanding principal
balance of the notes:

- the suspension from listing or the failure of CEL-SCI's
common stock to be listed on the American Stock Exchange
for a period of five consecutive trading days; or

- the effectiveness of the Registration Statement lapses
for any reason or the Registration Statement is
unavailable to the note holders and the lapse or

unavailability continues for a period of ten consecutive
trading days, provided the cause of the lapse or
unavailability is not due to factors primarily within the
control of the note holders.

- any representation or warranty made by CEL-SCI to the
note holders proves to be materially inaccurate or
CEL-SCI fails to perform any material covenant or
condition in its agreement with the note holders.

- the completion of a merger or other business combination
involving CEL-SCI and as a result of which CEL-SCI is not
the surviving entity.

- a purchase, tender or exchange offer accepted by the
holders of more than 30% of CEL-SCI's
outstanding shares of common stock.

- CEL-SCI's shareholders fail to approve the issuance of
the shares of CEL-SCI's common stock upon the conversion
of the notes or the exercise of the warrants

- CEL-SCI files for protection from its creditors under the
federal bankruptcy code.

- CEL-SCI exceeds its draw down limits under it equity line
of credit.

The Series F warrants initially allowed the holders to initially
purchase up to 960,000 shares of CEL-SCI's common stock at a price of $0.95 per
share at any time prior to December 31, 2008. On January 17, 2002 the warrant
exercise price, in accordance with the terms of the warrant, was adjusted to
$0.65 per share. Every three months after January 17, 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.

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.

Transfer Agent

Computershare Trust Company, Inc. of Denver, Colorado, is the transfer
agent for CEL-SCI's common stock.

LEGAL PROCEEDINGS

CEL-SCI is not involved in any pending or threatened legal proceeding.

EXPERTS

The consolidated financial statements of CEL-SCI Corporation as of
September 30, 2001 and 2000, and for each of the three years in the period ended
September 30, 2001 included as part of this prospectus, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report and have
been so included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

INDEMNIFICATION

CEL-SCI's bylaws authorize indemnification of a director, officer,
employee or agent of CEL-SCI against expenses incurred by him in connection with
any action, suit, or proceeding to which he is named a party by reason of his
having acted or served in such capacity, except for liabilities arising from his
own misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of CEL-SCI who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling CEL-SCI pursuant to the foregoing provisions, CEL-SCI has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

ADDITIONAL INFORMATION

CEL-SCI is subject to the requirements of the Securities Exchange Act
of l934 and is required to file reports, proxy statements and other information
with the Securities and Exchange Commission. Copies of any such reports, proxy
statements and other information filed by CEL-SCI can be read and copied at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.,
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding CEL-SCI. The address of that site is
http://www.sec.gov.

CEL-SCI has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of l933, as amended, with
respect to the securities offered by this prospectus. This prospectus does not
contain all of the information set forth in the Registration Statement. For

further information with respect to CEL-SCI and such securities, reference is
made to the Registration Statement and to the exhibits filed with the
Registration Statement. Statements contained in this prospectus as to the
contents of any contract or other documents are summaries which are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. The
Registration Statement and related exhibits may also be examined at the
Commission's internet site.

CEL-SCI CORPORATION

Consolidated Financial Statements for the Years
Ended September 30, 2001, 2000, and 1999,
and Independent Auditors' Report

6744 - 11\01
CEL-SCI CORPORATION

TABLE OF CONTENTS
--------------------------------------------------------------------------------

Page

INDEPENDENT AUDITORS' REPORT F-1

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
SEPTEMBER 30, 2001, 2000, AND 1999:

Consolidated Balance Sheets F-2

Consolidated Statements of Operations F-3

Consolidated Statements of Comprehensive Loss F-4

Consolidated Statements of Stockholders' Equity F-5

Consolidated Statements of Cash Flows F-6 - F-7

Notes to Consolidated Financial Statements F-8 - F-24

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of CEL-SCI Corporation:

We have audited the accompanying consolidated balance sheets of CEL-SCI
Corporation and subsidiaries (the Company) as of September 30, 2001 and 2000,
and the related consolidated statements of operations, comprehensive loss,
stockholders' equity, and cash flows for each of the three years in the period
ended September 30, 2001. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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
and subsidiaries as of September 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2001, in conformity with accounting principles generally accepted
in the United States of America.

Deloitte & Touche LLP
McLean, Virginia

December 20, 2001

CEL-SCI CORPORATION

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2001 AND 2000
------------------------------------------------------------------------------

ASSETS 2001 2000

CURRENT ASSETS:
Cash and cash equivalents $1,783,990 $6,909,263
Investment securities available for sale
593,384 3,760,922
Interest and other receivables
40,376 39,252
Prepaid expenses
866,058 1,838,376
Advances to officer/shareholder and employees - 728
-------- ---------

Total current assets 3,283,808 12,548,541

RESEARCH AND OFFICE EQUIPMENT - Less accumulated
depreciation of $1,864,182 and $1,721,336 620,608 594,919

DEPOSITS 139,828 139,828

PATENT COSTS - Less accumulated amortization
of $623,235 and $574,362 464,676 525,594
----------- ---------
$ 4,508,920 $13,808,882
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 476,048 $ 822,601
Due to officer/shareholder and employees 461 -
----- -------

Total current liabilities 476,509 822,601

DEFERRED RENT 31,218 24,822
------- -------
Total liabilities 507,727 847,423
------- -------
STOCKHOLDERS' EQUITY:
Series E cumulative convertible redeemable
preferred stock, $.01 par value, $1,000
liquidation value - authorized, 6,288 shares;
issued and outstanding, 5,863 and -0-
shares at September 30, 2001 and 2000,
respectively 59 -
Common stock, $.01 par value - authorized,
100,000,000 shares; issued and outstanding,
21,952,082 and 20,459,700 shares at September
30, 2001 and 2000, respectively 219,521 204,597

Additional paid-in capital 75,641,365 73,924,653
Unearned compensation (19,636) -
Accumulated other comprehensive loss (210) (61,564)
Accumulated deficit (71,839,906) (61,106,227)
---------- -----------

Total stockholders' equity $4,001,193 $12,961,459
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,508,920 $13,808,882
========== ===========

See notes to consolidated financial statements.

CEL-SCI CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2001, 2000,
AND 1999
-------------------------------------------------------------------------------

2001 2000 1999

INVESTMENT INCOME $ 376,221 $ 402,011 $ 402,831

OTHER INCOME 293,871 40,540 66,687
------------ ------------ --------

Total income 670,092 442,551 469,518
--------- --------- --------

OPERATING EXPENSES:
Research and development
7,762,213 5,186,065 4,662,226
Depreciation and amortization
209,121 220,994 268,210
General and administrative 3,432,437 3,513,889 3,029,807
----------- ----------- ---------

Total operating expenses 11,403,771 8,920,948 7,960,243
------------ ----------- ---------

NET LOSS (10,733,679) (8,478,397) (7,490,725)

ACCRUED DIVIDENDS ON PREFERRED STOCK (53,153) - -

ACCRETION OF BENEFICIAL CONVERSION
FEATURE ON PREFERRED STOCK (317,419) - -
---------- -------- --------

NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(11,104,251) $(8,478,397) $(7,490,725)
============= ============ ============

LOSS PER COMMON SHARE (BASIC) $ (0.51) $ (0.44) $ (0.52)
============= =========== ===========

LOSS PER COMMON SHARE (DILUTED) $ (0.51) $ (0.44) $ (0.52)
============= =========== ===========

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 21,824,273 19,259,190 14,484,352
=========== =========== ==========

See notes to consolidated financial statements.

CEL-SCI CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
YEARS ENDED SEPTEMBER 30, 2001, 2000, AND 1999
------------------------------------------------------------------------------

2001 2000 1999

NET LOSS (10,733,679) (8,478,397) (7,490,725)

OTHER COMPREHENSIVE LOSS - Unrealized
gain (loss) on investments 61,354 55,095 (68,368)
-------- -------- -----------

COMPREHENSIVE LOSS (10,672,325) (8,423,302) (7,559,093)
============ =========== ============

See notes to consolidated financial statements.

CEL-SCI CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2001, 2000, AND 1999
-------------------------------------------------------------------------------

Accumu-
Preferred Preferred lated other
Series D Stock Series E Stock Common Stock Additional Unearned comprehen- Accumu-
------------- --------------- ----------------- Paid-In Compen- sive (Loss) lated
Shares Amount Shares Amount Shares Amount Capital sation Income Deficit Total
------ ------ ------ ------ ------ ------ ------- -------- ---------- -------- -----
BALANCE,OCTOBER 1,1998 9,002 $ 90 - $ - 11,972,695 $119,726 $59,040,864 $ - $(48,291) $(45,137,105)$13,975,284

Exercise of stock
options - - - - 28,500 285 70,965 - - - 71,250
Stock options issued to
non-employees for
services - - - - - - 88,166 - - - 88,166
Preferred Series D
conversion (9,002) (90) - - 4,760,126 47,602 (47,512) - - - -
401(k) contributions - - - - 41,020 410 86,544 - - - 86,954
Stock bonus to officer - - - - 200,000 2,000 433,625 - - - 435,625
Change in unrealized gain
(loss) of investment
securities available for
sale - - - - - - - - (68,368) - (68,368)
Net loss - - - - - - - - - (7,490,725) (7,490,725)
---- ---- ---- ---- --- --- ---- ---- ------ ----------- ----------

BALANCE, SEPTEMBER 30,
1999 - - - - 17,002,341 170,023 59,672,652 - (116,659) (52,627,830) 7,098,186

Exercise of stock options - - - - 1,047,612 10,476 3,646,991 - - - 3,657,467
Issuance - common stock - - - - 2,175,258 21,753 9,958,247 - - - 9,980,000
401(k) contributions - - - - 34,489 345 98,762 - - - 99,107
Stock bonus to officer - - - - 200,000 2,000 548,000 - - - 550,000
Change in unrealized gain
(loss) of investment
securities available for
sale - - - - - - - - 55,095 - 55,095
Net loss - - - - - - - - - (8,478,397) (8,478,397)
---- ---- ---- ---- ----- ------ ------- ---- ------- ----------- -----------

BALANCE, SEPTEMBER 30,
2000 - - - - 20,459,700 204,597 73,924,653 - (61,564) (61,106,227) 12,961,459

Exercise of warrants - - - - 3,794,432 37,944 (37,593) - - - 351
Stock issued to employees
for service - - - - 114,867 1,149 113,718 - - - 114,867
Repriced options - - - - - - 613,108 (19,636) - - 593,472
Stock options issued to
non-employees for
services - - - - - - 167,087 - - - 167,087
Stock issued to non-
employees for service - - - - 34,546 346 34,201 - - - 34,547
Exchange of common stock
for Preferred Series E - - 6,288 63 (3,589,289) (35,893) 35,830 - - - -
Conversion of Preferred
Series E to common stock - - (425) (4) 348,841 3,488 (3,484) - - - -
Issuance - common stock - - - - 522,108 5,221 584,779 - - - 590,000
401(k) contributions - - - - 66,877 669 93,036 - - - 93,705
Stock bonus to officer - - - - 200,000 2,000 260,000 - - - 262,000
Costs for equity-related
transactions - - - - - - (143,970) - - - (143,970)
Change in unrealized gain
(loss) of investment
securities available
for sale - - - - - - - - 61,354 - 61,354
Net loss - - - - - - - - - (10,733,679)(10,670,218)
---- ---- --- ---- ---- ---- ------- ---- ------ ---------- ------------

BALANCE, SEPTEMBER 30,
2001 - - 5,863 59 21,952,082 219,521 75,641,365 (19,636) (210) (71,839,906) 4,001,193
==== ==== ====== === =========== ======= ========== ======== ===== ============ =========

See notes to consolidated financial statements

CEL-SCI CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2001, 2000, AND 1999
------------------------------------------------------------------------------

2001 2000 1999

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(10,733,679) $(8,478,397) $(7,490,725)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 209,121 220,994 268,210
Issuance of stock options for
services 167,087 - 88,166
Repriced options 593,472 - -

Common stock bonus granted to
officer 262,000 550,000 435,625

Issuance of common stock for
services 149,414 - -

Common stock contributed to
401(k) plan 93,705 99,107 86,954

Net realized loss on sale of
securities 9,831 49,963 151,349
Impairment loss on abandonment of
patents 30,439 - -
Changes in assets and liabilities:
(Increase) decrease in interest
and other receivables (1,124) 23,573 6,984
Decrease (increase) in prepaid
expenses 972,318 (1,323,804) 209,262
Decrease (increase) in advances 728 68,720 (69,275)
Increase in deposits - (125,000) -
(Decrease) increase in accounts
payable and accrued expenses (346,553) 389,336 6,118
Increase in due to officer/
shareholder and employees 461 - -
Increase (decrease) in deferred
rent 6,396 (3,499) (1,061)
------- -------- -------

Net cash used in
operating activities (8,586,384) (8,529,007) (6,308,393)
------------ ----------- ------------

CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES:

Purchases of investments - (2,000,587) (235,698)
Sales and maturities of investments 3,219,064 1,436,289 6,499,801
Repayment on note receivable from
shareholder - - 70,809
Expenditures for property and
equipment (168,537) (284,043) (60,552)
Expenditures for patents (35,797) (98,500) (102,798)
--------- --------- ---------

Net cash provided by (used
in) investing activities 3,014,730 (946,841) 6,171,562
----------- ---------- ---------

(Continued)

See notes to consolidated financial statements

CEL-SCI CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2001, 2000, AND
1999
-------------------------------------------------------------------------------

2001 2000 1999

CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES:
Cash proceeds from issuance of
preferred and common stock
and warrant conversion for cash 590,351 13,637,467 71,250

Costs for equity-related
transactions (143,970) - -
--------- -------- -------

Net cash provided by
financing activities 446,381 13,637,467 71,250
--------- ---------- --------

NET (DECREASE) INCREASE IN CASH (5,125,273) 4,161,619 (65,581)

CASH, BEGINNING OF YEAR 6,909,263 2,747,644 2,813,225
----------- ----------- ---------

CASH, END OF YEAR $ 1,783,990 $6,909,263 $2,747,644
=========== =========== =========

SUPPLEMENTAL DISCLOSURES:

At September 30, 2001, 2000, and 1999, the net unrealized gain (loss) on
investments available-for-sale was $(210), $(61,564), and $(116,659),
respectively.

During the year ended September 30, 2001, 3,589,289 shares of common stock were
exchanged for 6,288 shares of Series E Preferred Stock and 425 shares of Series
E Preferred Stock were converted into 348,841 shares of common stock. Pursuant
to these transactions, $53,153 of dividends were accrued on the preferred stock
and $317,419 was accreted for the beneficial conversion feature on the preferred
stock.

The Company extended the expiration date and repriced Series A Warrants during
the year ended September 30, 2001 resulting in a deemed dividend to the common
shareholders in the amount of $43,842 for the incremental value of the warrants
at the date of modification.

During the year ended September 30, 2001, 200,800 common stock purchase warrants
were issued pursuant to the equity line of credit and 272,108 common stock
purchase warrants were issued in connection with a private offering of common
stock resulting in transaction costs of $200,000 and $224,000, respectively.

During the year ended September 30, 1999, 9,002 shares of Series D Preferred
Stock were converted into 4,760,126 shares of common stock.

See notes to consolidated financial statements. (Concluded)

CEL-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
----------------------------------------------------------------------------

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 products.

Significant accounting policies are as follows:

Principles of Consolidation - The consolidated financial statements
include the accounts of CEL-SCI Corporation and its wholly owned
subsidiaries, Viral Technologies, Inc., and MaxPharma AG. All
significant intercompany transactions have been eliminated upon
consolidation.

Investments - Investments that may be sold as part of the liquidity
management of the Company or for other factors are classified as
available-for-sale and are carried at fair market value. Unrealized
gains and losses on such securities are reported as a separate component
of stockholders' equity. Realized gains and losses on sales of
securities are reported in earnings and computed using the specific
identified cost basis.

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 are expensed
when incurred.

Research and Development Costs - Research and development expenditures
are expensed as incurred. The Company has an agreement with an unrelated
corporation for the production of MULTIKINE, which is the Company's only
product source.

Research and Development Grant Revenues - The Company's grant
arrangements are handled on a reimbursement basis. Grant revenues under
the arrangements are recognized as other income when costs are incurred.

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 would be the difference between the
estimated fair value of the asset and its carrying value. During the
year ended September 30, 2001, the Company recorded patent impairment
charges of $30,439 for the net book value of patents abandoned during
the year and such amount is included in general and administrative
expenses. There were no impairment charges for the fiscal years ended
September 30, 2000 and 1999.

Net Loss Per Share - Net loss per common share is computed by dividing
the net loss, after increasing the loss for the effect of any accrued
dividends on the preferred stock and the accretion of the beneficial

conversion feature related to the preferred stock, by the weighted
average number of common shares outstanding during the period. Common
stock equivalents, including convertible preferred stock and options to
purchase common stock, were excluded from the calculation for all
periods presented as they were antidilutive.

Prepaid Expenses - The majority of prepaid expenses consist of
manufacturing production advances and bulk purchases of laboratory
supplies to be consumed in the manufacturing of the Company's product
for clinical studies.

Income Taxes - Income taxes are accounted for using the liability method
under which deferred tax liabilities or assets are determined based on
the difference between the financial statement and tax bases of assets
and liabilities (i.e., temporary differences) and are measured at the
enacted tax rates. Deferred tax expense is determined by the change in
the liability or asset for deferred taxes.

The difference in the Company's U.S. Federal statutory income tax rate
and the Company's effective rate is primarily attributed to the
recording of a valuation allowance due to the uncertainty of the amount
of future tax benefits that will be realized because it is more likely
than not that future taxable income will not be sufficient to realize
such tax benefits.

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 to be cash equivalents.

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.

Reclassifications - Certain reclassifications have been made to the
fiscal year 2000 and 1999 financial statements to conform with the
current-year presentation.

2. OPERATIONS AND FINANCING

The Company has incurred significant costs since its inception in connection
with the acquisition of an exclusive worldwide license to 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 stock. The Company will be required to
raise additional capital or find additional long-term financing in order to
continue with its research efforts. The Company expects to receive
additional funding from private investors subsequent to September 30, 2001
(see Note 14); however, there can be no assurances that the Company will be
able to raise additional capital or obtain additional financing. Also, the
ability of the Company to complete the necessary clinical trials and obtain
FDA approval for the sale of products to be developed on a commercial basis
is uncertain.

The Company plans to seek continued funding of the Company's development by
raising additional capital. If necessary, the Company plans to reduce
discretionary expenditures in order to meet its obligations; however such
reductions would delay the development of the Company's products. It is the

opinion of management that sufficient funds will be available from external
financing and additional capital and/or expenditure reductions in order to
meet the Company's liabilities and commitments as they come due during
fiscal year 2002. Ultimately, the Company must complete the development of
its products and obtain sufficient revenues to support its operations.

3. INVESTMENTS

The carrying values and estimated market values of investments
available-for-sale at September 30, 2001 and 2000, are as follows:

September 30, 2001
-----------------------------------------------------
Gross Gross Market Value
Amortized Unrealized Unrealized at September 30,
Cost Gains Losses 2001
---------- ---------- ----------- ----------------
Fixed income mutual
funds $ 593,594 $ -- $ (210) $ 593,384
---------- ------- ---------- -------------

Total $ 593,594 $ -- $ (210) $ 593,384
============ ======= ========== =============

September 30, 2000
Gross Gross Market Value
Amortized Unrealized Unrealized at September 30,
Cost Gains Losses 2000
---------- ---------- ----------- ----------------
Bonds $2,000,000 $ 4,720 $ - $ 2,004,720
Fixed income mutual
funds 1,822,486 - (66,284) 1,756,202
-------------- --------- --------- ------------

Total $3,822,486 $ 4,720 $(66,284) $ 3,760,922
========== ======== ========= =============

The gross realized gains and losses of sales of investments available-for-sale
for the years ended September 30, 2001, 2000, and 1999, are as follows:

2001 2000 1999

Realized gains $ 14,997 $ -- $ --

Realized losses (24,828) (49,963) (151,349)
---------- --------- ----------

Net realized loss $ (9,831) $(49,963) $ (151,349)
======== ========= ==========

4. RESEARCH AND OFFICE EQUIPMENT

Research and office equipment at September 30, 2001 and 2000, consist of the
following:

2001 2000

Research equipment $ 2,177,553 $ 2,052,082

Furniture and equipment 265,581 258,780

Leasehold improvements 41,656 5,393
----------- -----------

2,484,790 2,316,255

Less accumulated depreciation and
amortization (1,864,182) (1,721,336)
------------ -----------

Net research and office equipment $ 620,608 $ 594,919
======== ============

5. INCOME TAXES

The approximate tax effect of each type of temporary difference and
carryforward that gave rise to the Company's deferred tax assets and
liabilities at September 30, 2001 and 2000, is as follows:

2001 2000
---- ------

Depreciation $ (23,140) $(28,964)

Prepaid expenses (300,068) (697,848)

Net operating loss carryforward 25,902,462 22,905,872

Compensation expense for
repriced options 225,282 -

Other 11,883 9,422

Less: Valuation allowance (25,816,419) (22,188,482)
----------- -----------

Net deferred $ -- $ --
=========== =========

The Company has available for income tax purposes net operating loss
carryforwards of approximately $68,236,200, expiring from 2002 through 2021.
In the event of a significant change in the ownership of the Company, the
utilization of such carryforwards could be substantially limited.

For fiscal years 2001 and 2000, the Company's statutory tax rate was 35%,
and its effective tax rate was 0%. The difference between the rates was
primarily attributable to net operating loss carryforwards and
non-recognition of deferred taxes due to the valuation allowance.

6. STOCK OPTIONS, BONUS PLAN, AND WARRANTS

Non-Qualified Stock Option Plan - At September 30, 2001, the Company has
collectively authorized the issuance of 5,760,000 shares of common stock
under the Non-Qualified 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 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, 1998 1,959,700 $3.32 1,315,002 $3.10

Options granted 470,959 2.02

Options forfeited (56,602) 4.78
------- ------

Options outstanding,
September 30, 1999 2,374,057 2.80 1,595,934 3.09

Options granted 262,500 3.09

Options exercised (789,085) 3.41

Options forfeited (46,266) 2.34
---------

Options outstanding,
September 30, 2000 1,801,206 3.18 1,547,445 3.19

Options granted 1,673,500 1.20

Options exercised - -

Options forfeited (114,640) 2.82
----------

Options outstanding,
September 30, 2001 3,360,066 1.29 1,640,047 1.38
=========

At September 30, 2001, options outstanding and exercisable were as follows:

Weighted
Average Weighted Weighted
Exercise Average Average
Range of Number Price Remaining Number Exercise
Exercise 0ut- out- Contractual Exer- Price
Prices standing standing Life cisable Exercisable

$1.05 - $1.51 2,495,434 $1.07 3.1 years 1,178,938 $1.05
$1.67 - $2.38 780,652 $1.81 3 years 378,795 $1.95
$2.94 - $3.31 77,680 $3.06 1.9 years 77,680 $3.06
$3.87 - $4.63 5,500 $4.00 6.1 years 3,834 $4.00
$6.25 800 $6.25 7 years 800 $6.25

During fiscal year 1999, the Company extended the expiration dates on
approximately 35,750 options from the Nonqualified Stock Option Plan with
exercise prices of 2.87 originally expiring in March 1999 to expiration
dates in March 2000. This date was considered a new measurement date with
respect to all of the modified options. As of March 30, 2000, all options
had been exercised.

During March 2000, the Company agreed to restore and vest 40,000 options at
prices ranging from $5.25 to 5.62, to one former Director and one Director
as part of a settlement agreement. The options will expire on September 25,
2006. As of September 30, 2001, 20,000 options had been exercised.

In October 2000 and April 2001, the Company extended the expiration dates on
approximately 1,056,000 options from the Nonqualified Stock Option Plan with
exercise prices ranging from $2.38 to $5.25. The options originally expired
from October 2000 to January 2001 but were extended to expiration dates
ranging from October 2001 to January 2002. Each of these two dates was
considered a new measurement date with respect to all of the modified
options; however, on each date the exercise price of the options exceeded
the fair market value of the Company's common stock. As of September 30,
2001, all options remain outstanding.

In July 2001, the Company repriced 1,298,098 outstanding employee and
director stock options under the Nonqualified Plans that were priced over
$2.00 down to $1.05. In accordance with Financial Interpretation No. 44 (FIN
44), such repriced options are considered to be variable options. During the
year ended September 30, 2001, compensation charges of $364,532 were
recorded in the consolidated statement of operations and unearned
compensation of $11,916 was recorded on the consolidated balance sheet as of
September 30, 2001. The compensation expense was determined based upon the
difference between the fair market value of the Company's common stock at
the date of modification and the exercise price of each stock option. On
September 30, 2001, the incremental compensation expense was determined
based on the difference between the fair market value of the stock on
September 30, 2001 and the exercise price, less the previously recorded
expense. Changes in the fair market value of the Company's common stock will
result in future changes in compensation expenses. As of September 30, 2001,
all options remain outstanding.

Incentive Stock Option Plan - At September 30, 2001, the Company has
collectively authorized the issuance of 2,100,000 shares of common stock
under the Incentive Stock Option Plan. Options vest after 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, 1998 772,384 $ 4.06 311,622 $3.64

Options granted 206,500 2.14

Options forfeited (2,034) 3.70
----------

Options outstanding,
September 30, 1999 976,850 3.71 520,688 3.86

Options granted 140,000 3.77

Options exercised (68,418) 4.47

Options forfeited (1,666) 3.38
----------

Options outstanding,
September 30, 2000 1,046,766 3.62 722,435 3.98

Options granted 130,000 1.24

Options exercised - -

Options forfeited (6,666) 3.36
--------

Options outstanding,
September 30, 2001 1,170,100 1.65 862,103 2.33
===========

At September 30, 2001, options outstanding and exercisable were as follows:

$1.05 - $1.39 866,066 $ 1.08 6.4 years 640,069 $ 1.05
$1.88 - $2.87 134,167 $ 2.35 4.0 years 110,167 $ 2.43
$3.25 - $3.87 30,167 $ 3.40 5.9 years 30,167 $ 3.40
$4.50 - $5.75 39,100 $ 5.06 6.7 years 81,100 $ 5.08
$11.00 600 $ 11.00 4.7 years 600 $ 11.00

During fiscal year 1999, the Company extended the expiration date on 23,000
options at $3.25 from the Incentive Stock Option Plan. The options were to
expire February 21, 1999, and were extended to February 21, 2000. The
options had originally been granted in February 1996. All options were
exercised as of September 30, 2000.

During fiscal year 2001, the Company extended the expiration date on 50,000
options at $2.87 from the Incentive Stock Option Plan. The options were to
expire November 1, 2001, and were extended to November 1, 2002. The options
had originally been granted in November 1991. November 1, 2001 was
considered a new measurement date; however, the exercise price on all the
options modified exceeded the fair market value of the Company's common
stock. All options remain outstanding as of September 30, 2001.

In July 2001, the Company repriced 816,066 outstanding employee and director
stock options under the Incentive Stock Option Plan that were priced over
$2.00 down to $1.05. In accordance with FIN 44, such repriced options are
considered to be variable options. During the year ended September 30, 2001,
compensation charges of $228,940 were recorded in the consolidated statement
of operations and unearned compensation of $7,720 was recorded on the
consolidated balance sheet as of September 30, 2001. The compensation
expense was determined based upon the difference between the fair market
value of the Company's common stock at the date of modification and the
exercise price of each stock option. On September 30, 2001 the incremental
compensation expense was determined based on the difference between the fair
market value of the stock on September 30, 2001 and the exercise price, less
the previously recorded expense. Changes in the fair market value of the
Company's common stock will result in future changes in compensation
expenses. As of September 30, 2001, all options remain outstanding.

Stock Bonus Plan - At September 30, 2001, the Company has authorized the
issuance of 1,040,000 shares of common stock under the Stock Bonus Plan. All
employees, directors, officers, consultants, and advisors are eligible to be
granted options. During the year ended September 30, 2001, 266,877 shares
with related expenses of $355,705 were issued under the Plan and recorded in
the consolidated statement of operations.

Other Options and Warrants - In connection with the 1992 public offering,
5,175,000 common stock purchase warrants were issued and outstanding at
September 30, 1997. Every ten warrants entitled the holder to purchase one
share of common stock at a price of $15.00 per share. Subsequently, the
expiration date of the warrants was extended to February 1998. Effective
June 1, 1997, the exercise price of warrants was lowered from $15 to $6 and
only five warrants, rather than 10 warrants, were required to purchase one
share of common stock. Subsequent to September 30, 1997, warrant-holders who
tendered five warrants and $6.00 between January 9, 1998, and February 7,
1998, would receive one share of the Company's common stock and one new
warrant. The new warrants would permit the holder to purchase one share of
the Company's common stock at a price of $10.00 per share prior to February
7, 2000. During fiscal year 1998, the expiration date of the original
warrants was extended to July 31, 1998, and 582,025 original warrants were
tendered for 116,405 common shares. As of September 30, 1999, the 4,592,975
original warrants had expired. In January 2001, the Company extended the
expiration date on the remaining 116,405 warrants to August 2001 and
repriced them from $10.00 to $3.00 per share. In July 2001, the Company
extended the expiration date further to February 2002. The incremental value
at the date of these modifications collectively of $43,842 is considered a
deemed dividend and is recorded as an addition to additional paid-in capital
and also a charge to additional paid-in capital since the Company is in an
accumulated deficit position. The deemed dividend was valued using the
Black-Scholes pricing methodology. All warrants remained outstanding as of
September 30, 2001.

During fiscal year 1995, the Company granted a consultant options to
purchase 17,858 shares of the Company's common stock. These shares became
exercisable on November 2, 1995, and were to expire November 1, 1999. In
February 2000, the Company extended the expiration date on the options by
one year to February 6, 2001. These options are exercisable at $5.60 per
share and as of September 30, 2000, all 17,858 options remain outstanding.
All outstanding options expired during the year ended September 30, 2001.

In June and September 1995, the Company completed private offerings whereby
it sold a total of 1,150,000 units at $2.00 per unit. Each unit consisted of
one share of Common Stock and one warrant. Each warrant entitled the holder
to purchase one additional share of Common Stock at a price of $3.25 per
share at any time prior to June 30, 1997. All warrants sold in this Offering
were exercised during fiscal year 1996. Additionally, the Company issued to
the underwriter warrants to purchase 230,000 equity units. Each unit
consisted of one share of the Company's common stock. For the June 1995
private placement, 57,500 equity units were issued at $2.00 per unit and
another 57,500 equity units were issued at $3.25 per unit. All units issued
in the June 1995 private placement were exercised at September 30, 1996. For
the September 1995 private placement, 57,500 equity units were issued at
$2.40 per unit and another 57,500 equity units were issued at $3.25 per
unit. As of September 30, 1996, 21,890 equity units had been exercised at
$3.25 per unit and 21,890 equity units had been exercised at $2.40 per unit.
As of September 30, 1997, 35,610 equity units had been exercised at $2.40
per unit and 25,610 equity units were exercised at $3.25 per unit. All
remaining 10,000 equity units expired on February 6, 2001.

During fiscal year 1997, the Company granted four consultants options to
purchase a total of 268,000 shares of the Company's common stock. The fair
value of the options is expensed over the life of the consultants'
contracts. Of the 268,000 options, 218,000 options became exercisable during
fiscal year 1997 at prices ranging from $2.50 to $4.50. The remaining 50,000
options became exercisable during fiscal year 1998 at $5.00. During fiscal
year 1997, 50,000 options were exercised at $3.50. During fiscal year 1998,
114,500 options were exercised at prices ranging from $3.50 to $4.50. During
fiscal year 1999, 18,500 options were exercised at prices ranging from $3.50
to $4.50. In December 1999, the Company extended the expiration date on
10,000 options exercisable at $3.25 per share to June 30, 2000.
Subsequently, the expiration date was extended to June 30, 2001. During
fiscal year 2000, 25,000 options were exercised at prices ranging from $2.50
to $3.94. At September 30, 2000, 60,000 options related to the four
consultants remained outstanding at prices ranging from $3.50 to $5.00. On
June 30, 2001, the 10,000 options at $3.25 per share expired. Of the
remaining 50,000 options at $5.00, 25,000 options expire in November 2002
and 25,000 options expire in February 2003. All 50,000 options remain
outstanding as of September 30, 2001.

In connection with the December 1997 private offering of common stock, the
Company issued to the underwriters warrants to purchase 50,000 shares of
common stock at $8.63 per share. The warrants were exercisable at any time
prior to December 22, 2000. At September 30, 2000, all warrants remained
outstanding and subsequently expired in December 2000.

During fiscal year 1998, the Company granted seven consultants options to
purchase a total of 282,000 shares of the Company's common stock. The fair
value of the options is expensed over the life of the consultants'
contracts. All options became exercisable during 1998 and were exercisable
at prices ranging from $3.50 to $7.31. During fiscal year 1998, 22,000
options were exercised at prices ranging from $3.50 to $4.50. During fiscal
year 1999, 75,000 options expired ranging in price from $5.06 to $7.31, and
10,000 options were exercised at a price of $2.50. In December 1999, the
Company extended the expiration date on 20,000 options exercisable at $3.94
per share and 10,000 options exercisable at $3.50 per share to June 30,
2000. Subsequently, the expiration date was extended to June 30, 2001.
During fiscal year 2000, 165,000 options were exercised at prices ranging
from $2.50 to $5.62. At September 30, 2000, 5,000 options related to the
consultants remained outstanding at a price of $3.50 per common share. All
remaining options expired during the year ended September 30, 2001.

During fiscal year 1999, the Company granted one consultant options to
purchase a total of 50,000 shares of the Company's common stock. The fair
value of the options is expensed over the life of the consultant's contract.
All 50,000 options became exercisable during fiscal year 1999 at $2.50 per
share. At September 30, 2001 and 2000, all 50,000 options remained
outstanding.

In January 1999, the Company revised the terms of 23,500 and 125,000 options
granted to consultants in fiscal years 1997 and 1998, respectively. The
terms of the agreements set the exercise price of the 148,500 options at
$4.00 and set the expiration date of the options at December 31, 1999.
During 1999, 28,500 options to purchase shares were exercised at $2.50 per
share. The options were further revised in December 1999 to extend the
expiration date to June 30, 2001. During fiscal year 2000, all 120,000
options to purchase shares were exercised at $2.50 per share.

In connection with the December 1999 private offering of common stock, the
Company issued 402,007 common stock purchase warrants (Series A Warrants).
Each warrant entitled the holder to purchase one share of common stock at
$2.925 per share, expiring December 2002. The investors in this private
offering also received warrants that allow investors under certain
circumstances to acquire additional shares of the Company's common stock at
a nominal price (the Series B Warrants). At September 30, 2000, all warrants
were outstanding. In December 2000, the terms of the Series B Warrants were
fixed because the common stock price reached $1.54 and entitled the holder
to purchase 274,309 shares of common stock at an exercise price of $0.001.
All shares of the Series B Warrants were exercised during the year ended
September 30, 2001. As discussed in Note 10, the Series A Warrants were
exchanged for new series E Warrants, which entitles the holder to purchase
one share of common stock at $1.19 per share, expiring August 16, 2004.

In connection with the March 2000 private offering of common stock, the
Company issued 413,334 common stock purchase warrants (Series C Warrants).
Each warrant entitled the holder to purchase one share of common stock at
$8.50 per share, expiring March 2003. The investors in this private offering
also received warrants that allow investors under certain circumstances to
acquire additional shares of the Company's common stock at a nominal price
(the Series D Warrants). At September 30, 2000, all warrants were
outstanding. During the year ended September 30, 2001, the terms of the
Series D Warrants were fixed on two separate vesting dates, the first of
which entitled the holder to purchase 4,207,865 shares of common stock at a
price of $0.001 because the common stock price reached $1.47 and the second
of which entitled the holder to purchase 1,526,290 shares of common stock at
$0.001 because the common stock price reached $1.088. As a result, and in
accordance with the terms of the Series D Warrants, the holders were
entitled to receive 5,734,155 additional shares of the Company's common
stock, of which 3,520,123 shares had been issued as of September 30, 2001.
The remaining 2,214,032 Series D Warrants were canceled pursuant to the
exchange of common shares and warrants for Series E Preferred Stock as
discussed in Note 10. Additionally, as discussed in Note 10, the Series C
Warrants were exchanged for new Series E Warrants, which entitles the holder
to purchase one share of common stock at $1.19 per share, expiring August
16, 2004.

During fiscal year 2001, the Company granted options to consultants to
purchase a total of 180,000 shares of the Company's common stock at exercise
prices ranging from $1.05 to $1.63 expiring from June 2006 to May 2007. As
of September 30, 2001, all options remain outstanding. The fair value of
30,000 options was expensed immediately. The fair value of the remaining
150,000 options is expensed on a monthly basis as the options are earned and
vest over a period of one year. Compensation expense of $101,759 was
recorded in the consolidated statement of operations for the year ended
September 30, 2001. The compensation expense was determined using the
Black-Scholes pricing methodology with the following assumptions:

Expected stock risk volatility 98% to 104%
Risk-free interest rate 4.12%
Expected life of option 3
Expected dividend yield -0-

In connection with the April 2001 common stock purchase agreement discussed
in Note 10, the Company issued 200,800 common stock purchase warrants. Each
warrant entitles the holder to purchase one share of common stock at $1.64
per share, expiring in April 2004. The warrants have a relative fair value
of $200,000 calculated using the Black Scholes pricing methodology with the
following assumptions:

Expected stock risk volatility 98%
Risk-free interest rate 3.12%
Expected life of warrant 3
Expected dividend yield -0-

The fair value of the warrants has been recorded as an addition to
additional paid-in capital and also a charge to additional paid-in capital
since the Company is in an accumulated deficit position.

In August 2001, the Company issued 272,108 common stock purchase warrants in
connection with a private offering of common stock as discussed in Note 10.
Each warrant entitles the holder to purchase one share of common stock at
$1.75 per share, expiring July 2004. The warrants have a relative fair value
of $224,000 calculated using the Black Scholes pricing methodology with the
following assumptions:

Expected stock risk volatility 98%
Risk-free interest rate 3.12%
Expected life of warrant 3
Expected dividend yield -0-

The fair value of the warrants has been recorded as an addition to
additional paid-in capital and also a charge to additional paid-in capital
since the Company is in an accumulated deficit position.

In October 1996, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). This statement encourages but does not require
companies to account for employee stock compensation awards based on their
estimated fair value at the grant date with the resulting cost charged to
operations. The Company has elected to continue to account for its employee
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations. If the Company had elected to
recognize compensation expense based on the fair value of the awards
granted, consistent with the provisions of SFAS No. 123, the Company's net
loss and net loss per common share would have been increased to the pro
forma amounts indicated below:

Year Ended September 30,
-----------------------------------------
2001 2000 1999

Net loss:
As reported $ (10,733,679) $(8,478,397) $ (7,490,725)

Pro forma $ (12,308,073) $(8,908,999) $ (8,124,159)

Net loss per common share:
As reported $ (0.51) $ (0.44) $ (0.52)
Pro forma (0.58) (0.46) (0.56)

The weighted average fair value at the date of grant for options granted
during 2001, 2000, and 1999, was $0.90, $2.57, and $1.21, per option,
respectively.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:

2001 2000 1999
---- ---- ----

Expected stock risk volatility 98 to 109% 98% 91%
Risk-free interest rate 3.12 to 4.12% 6.32% 5.48%
Expected life options 1 to 6 4.91% 3.23%
Expected dividend yield - - -

The effects of applying SFAS No. 123 in this pro forma disclosure are not
necessarily indicative of the effect on future amounts.

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 equals the yield on one- to three-year zero-coupon U.S.
Treasury issues on the grant date. No discount was applied to the value of
the grants for nontransferability or risk of forfeiture.

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. Prior to January 1, 1998, the employer
contributed an amount equal to 50% of each employee's contribution not to
exceed 3% of the participant's salary. Effective January 1, 1998, the plan
was amended such that the Company's contribution is now made in shares of
the Company's common stock as opposed to cash. 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 price of the Company's common stock. The expense for the years ended
September 30, 2001, 2000, and 1999, in connection with this plan was
$93,705, $99,107, and $86,954, respectively.

8. OPTIONAL SALARY ADJUSTMENT PLAN

In July 2001, the Company issued an "Optional Salary Adjustment Plan" (the
Plan). The terms of the Plan allow certain employees the option to forgo
salary increments of $6,000 in exchange for stock options for the period
beginning from July 16, 2001, through October 15, 2001. In accordance with
the Plan, employees will receive 40,000 stock options for each salary
increment of $6,000. The total amount of options to be granted under the
Plan is limited to 1,200,000. For the year ended September 30, 2001, 900,000
options were issued in lieu of compensation in the amount of $135,000.
Additionally, 180,000 options were issued in lieu of compensation of $27,000
related to the year ended September 30, 2002. No compensation expense was
recorded for the options since such options were issued with exercise prices
equal to the fair market value of the Company's common stock on the date of
grant.

9. LEASE COMMITMENTS

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,

2002 $229,424
2003 202,649
2004 57,395
2005 -
2006 -
--------
Total minimum lease payments $489,468
========

Rent expense for the years ended September 30, 2001, 2000, and 1999, was
$220,903, $233,559, and $214,205, respectively.

10. STOCKHOLDERS' EQUITY

During December 1997, the Company issued 10,000 shares of Series D Preferred
Stock for $10,000,000. The issuance included 550,000 Series A Warrants and
550,000 Series B Warrants. The number of common shares issuable upon
conversion of the Preferred Shares is determinable by dividing $1,000 by
$8.28 prior to September 19, 1998, or at any time at which the Company's
common stock is $3.45 or less for five consecutive days. On or after
September 19, 1998, the number of common shares to be issued upon conversion
is determined by dividing $1,000 by the lesser of (1) $8.28 or (2) the
average price of the stock for any two trading days during the ten trading
days preceding the conversion date. The Series A Warrants are exercisable at
any time for $8.62 prior to December 22, 2001, and the Series B Warrants are
exercisable at any time for $9.31 prior to December 22, 2001. Each warrant
entitles the holder to purchase one share of common stock. At September 30,
1998, 998 shares of Series D Preferred Stock had been converted into 441,333
shares of common stock. At September 30, 1999, 9,002 shares of Series D
Preferred Stock had been converted into 4,760,127 shares of common stock.
There are no remaining shares of Series D Preferred Stock. All Series A and
Series B Warrants issued remain outstanding at September 30, 2001 and 2000.
In connection with the Company's December 1997 $10,000,000 Series D
Preferred Stock offering, the Series A and Series B warrants were assigned a
relative fair value of $1,980,000 in accordance with APB No. 14, Accounting
for Convertible Debt and Debt Issued with Stock Purchase Warrants, (APB 14)
and have been recorded as additional paid-in capital. The $1,980,000
allocated to the warrants was accreted immediately.

In April 2001, the Company signed a common stock purchase agreement that
allows the Company at its discretion to draw up to $10 million of Common
Stock in increments of a minimum of $100,000 and the maximum of $2 million
for general operating requirements. The Company is restricted from entering
into any other equity line of credit arrangement and the agreement expires
in June 2003. As discussed in Note 6, the Company issued 200,800 warrants to
the issuer pursuant to this agreement. On November 9, 2001, the Company sold
277,684 shares of its common stock pursuant to this agreement for proceeds
of approximately $300,000.

During 2001, the Company issued 522,108 shares of common stock in two
private offerings of common stock. Pursuant to the private offerings, one of
the investors also received warrants to purchase 272,108 shares of common
stock as discussed in Note 6.

During August 2001, three private investors exchanged shares of the
Company's common stock and remaining Series D Warrants, which they owned,
for 6,288 shares of the Company's Series E Preferred Stock. These investors
also exchanged their Series A and Series C Warrants for new Series E
Warrants as discussed in Note 6. The preferred shares are entitled to
receive cumulative annual dividends in an amount equal to $60 per share and
have liquidation preferences equal to $1,000 per share. Each Series E
Preferred share is convertible into shares of the Company's common stock on
the basis of one Series E Preferred share for shares of common stock equal
in number to the amount determined by dividing $1,000 by the lesser of $5 or
93% of the average closing bid prices (Conversion Price) of the Company's
common stock for the five days prior to the date of each conversion notice.
The Series E Preferred stock has no voting rights and is redeemable at the
Company's option at a price of 120% plus accrued dividends until August 2003
when the redemption price will be fixed at 100%. As of September 30, 2001,
accrued dividends in the amount of $53,000 are included in the accompanying
financial statements.

All outstanding shares of the Company's Series E Preferred Stock will be
automatically converted after two years (the Automatic Conversion Date) into
common shares (the Automatic Conversion Shares). The number of common shares
for the conversion is 200% times the quotient obtained by dividing $1,000 by
the Conversion Price. The automatic conversion is subject to suspension for
certain occurrences. If the automatic conversion is suspended as a result of
limitations on beneficial ownership as defined by Section 13(d) of the
Securities and Exchange Act of 1934, the conversion price will be fixed on
the Automatic Conversion Date and the dividends payable will be increased to
20% until such time that conversion is permitted.

In addition, the Company will issue a common stock purchase warrant for each
share of the Series E Preferred stock outstanding after two years to acquire
shares equal to 33% of the Automatic Conversion Shares at an exercise price
of 110% of the volume weighted average price for the five trading days
preceding the date of issuance. The issuance of the warrants is not subject
to suspension. Since the terms of these warrants are contingent, no
accounting has been given to such warrants in the accompanying consolidated
financial statements as of September 30, 2001.

The common stock, preferred stock and warrants exchanged had different
rights, preferences and terms. However, since the equity securities were
exchanged for equity securities, the exchange had no effect on the Company's
total stockholders' equity. In connection with the exchange, the total
implied value of the equity securities received was $8,957,000 of which
$848,000 represented the relative fair value of the warrants which was
recorded to additional paid-in capital and the remaining value of $8,109,000
was allocated to preferred stock. The Series E Warrants were valued using
the Black-Scholes pricing methodology with the following assumptions:

Expected stock risk volatility 105%
Risk-free interest rate 3.12%
Expected life of option 3
Expected dividend yield -0-

Pursuant to the exchange, the holders received a beneficial conversion
discount in the amount of $5,365,381, which is being accreted to additional
paid-in capital over a two-year period. During the year ended September 30,
2001, $317,419 of the beneficial conversion discount was accreted. During
the year ended September 30, 2001, 425 shares of the Series E Preferred
Stock were converted into 348,841 shares of common stock.

11. LOSS PER SHARE

Basic EPS excludes dilution and is computed by dividing net income or loss
attributable to common stockholders by the weighted average of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock
(convertible preferred stock, warrants to purchase common stock and common
stock options using the treasury stock method) were exercised or converted
into common stock. The Company had 6,876,972 potentially dilutive securities
outstanding at September 30, 2001 that were not included in the computation
of diluted loss per share because to do so would have been anti-dilutive for
all periods presented. The loss attributable to common stockholders includes
the impact of the accretion of the beneficial conversion feature of Series E
Preferred Stock and the accrual of cumulative preferred stock dividends.

2001 2000 1999
---- ---- ----
Net loss per common share (basic
and diluted) $(0.51) $(0.44) $(0.52)
======= ======= =======

12. SEGMENT REPORTING

The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information (SFAS No.
131) in the fiscal year ended September 30, 1999. SFAS No. 131 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.

13. NEW ACCOUNTING PRONOUNCEMENTS

Effective October 1, 2000, the Company adopted SFAS No. 133, issued by FASB,
"Accounting for Derivative Instruments and Hedging Activities", (as amended
by SFAS No. 137 and SFAS No. 138). This statement requires companies to
record qualifying derivatives and their balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes
in the values of those derivatives would be accounted for depending on the
use of the derivative and whether it qualifies for hedging accounting. The
Company had no derivative or hedging activity in any of the periods
presented, and therefore there is no impact of these Standards on its
financial position or the results of its operations.

In June 2001, the FASB issued SFAS No. 141, Accounting for Business
Combinations. SFAS No. 141 requires that all business combinations initiated
after June 30, 2001, be accounted for under the purchase method and
addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. The Company has not
yet determined the impact that the adoption of SFAS No. 141 will have on its
results of operations.

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 provides that intangible assets with finite useful
lives be amortized and that goodwill and intangible assets with indefinite
lives not be amortized but will rather be tested at least annually for
impairment. The Company will adopt SFAS No. 142 on October 1, 2002. Upon
adoption of SFAS 142, the Company has not yet determined the impact that the
adoption of SFAS No. 142 will have on its financial position or the results
of operations.

In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Company has not yet determined the
impact that adopting Statement of Financial Accounting Standards No. 143
will have on its financial position or the results of operations when such
statement is adopted.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived
assets. It supersedes SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets To Be Disposed Of, and the
accounting and reporting provisions of APB 30, Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business. The Company is
required to adopt SFAS No. 144 on October 1, 2002. The Company has not yet
determined the impact that the adoption of SFAS No. 144 will have on its
results of operations or its financial position.

14. SUBSEQUENT EVENTS

On November 15, 2001, the Company signed a promissory note to cover certain
production costs with the owner of the Company's manufacturing facility in
the amount of $1,159,000, which was payable on November 15, 2002. In
December 2001, the note was amended to extend the due date to January 2,
2003. Unpaid principal will begin accruing interest on November 16, 2002, at
the Prime Rate plus 3%. The note is collateralized by certain laboratory
equipment.

In October 2001, the Company issued 150,000 shares of common stock in a
private offering. The investor also received warrants which entitled the
holder to purchase 75,000 shares of common stock at $1.50 per share,
expiring October 2004.

In December 2001, the Company agreed to sell redeemable convertible notes
and Series F warrants, to a group of private investors for proceeds of
$730,000, net of transaction costs of $70,000, subject to the satisfaction
of certain closing conditions. The notes will bear interest at 7% per year
and will be due and payable two years from the closing date. Interest will
be payable quarterly beginning July 1, 2002. The notes will be secured by
substantially all of the Company's assets and contain certain restrictions,
including limitations on such items as indebtedness, sales of common stock
and payment of dividends.

The notes will be convertible into shares of the Company's common stock at
the holder's option determinable by dividing each $1,000 of note principal
by 76% of the average of the three lowest daily trading prices of the
Company's common stock on the American Stock Exchange during the twenty
trading days immediately prior to the closing date. The conversion price may
not be less than a floor of 75% of the closing price which will be 75% of
the average of the three lowest daily trading prices of the Company's common
stock during the twenty trading days immediately prior to the closing;
however the floor may be lowered if the Company sells any shares of common
stock or securities convertible to common stock at a price below the market

price of the Company's common stock. Additionally, the notes are required to
be redeemed by the Company at 130% upon certain occurrences such as failure
to file a Registration Statement to register the notes with the Securities
and Exchange Commission (SEC) or the effectiveness of such statement lapses,
delisting of the Company's common stock, completion of certain mergers or
business combinations, filing bankruptcy and exceeding its draw down limits
under the Company's equity line of credit.

So long as the notes remain outstanding, the note holders will have a first
right of refusal to participate in any subsequent financings involving the
Company. If the Company 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.

The Series F warrants will allow the holders to purchase up to 960,000
shares of the Company's common stock at a price equal to 110% of the closing
price per share at any time prior to the date which is seven years after the
closing of the transaction. The warrant price is adjustable if the Company
sells any additional shares of its common stock or convertible securities
for less than fair market value or at an amount lower than the exercise
price of the Series F warrants. If the warrant exercise price is adjusted,
the number of shares of common stock issuable upon exercise of the warrant
will also be adjusted accordingly. On the date that the registration
statement which the Company has agreed to file is declared effective by the
SEC, and every three months following the effective date, the warrant
exercise price will be adjusted to an amount equal to 110% of the conversion
price of the convertible notes on such date, provided that the adjusted
price is lower than the warrant exercise price on that date.

No dealer salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this prospectus.
Any information or representation not contained in this prospectus must not be
relied upon as having been authorized by CEL-SCI. This prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any state or other jurisdiction to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of CEL-SCI
since the date of this prospectus.

TABLE OF CONTENTS

Page
Prospectus Summary.........................................
Risk Factors...............................................
Comparative Share Data.....................................
Market for CEL-SCI's Common Stock..........................
Management's Discussion and Analysis of.
Financial Condition and Results of Operations............
Business...................................................
Management.................................................
Principal Shareholders.....................................
Equity Line of Credit Agreement............................
Selling Shareholder........................................
Description of Securities..................................
Legal Proceedings..........................................
Experts....................................................
Indemnification............................................
Additional Information.....................................

Common stock

CEL-SCI CORPORATION

PROSPECTUS

PART II
Information Not Required in Prospectus

Item 13. Other Expenses of Issuance and Distribution

SEC Filing Fee $3,118
Blue Sky Fees and Expenses --
Printing and Engraving Expenses 100
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 5,000
Miscellaneous Expenses 1,782
-----
TOTAL $30,000
=======

All expenses other than the S.E.C. filing fees are estimated.

Item 14. Indemnification of Officers and Directors.
-----------------------------------------

It is provided by Section 7-109-102 of the Colorado Revised Statutes
and CEL-SCI's Bylaws that CEL-SCI may indemnify any and all of its officers,
directors, employees or agents or former officers, directors, employees or
agents, against expenses actually and necessarily incurred by them, in
connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in the best interest of CEL-SCI.

Item 15. Recent Sales of Unregistered Securities.

In December 1999 and January 2000 the Company sold 1,148,592 shares of
its common stock, plus Series A and Series B warrants, to three private
investors for $2,800,000. As of August 16, 2001 all of the Series B warrants had
expired.

In March 2000 the Company sold 1,026,666 shares of its common stock,
plus Series C and Series D warrants, to the same private investors referred to
above for $7,700,000.

In August 2001 the three investors exchanged 3,588,654 shares of the
Company's common stock which they owned, plus their unexercised Series D
Warrants, for 6,288 shares of the Company's Series E Preferred stock. As part of
this transaction the three investors also exchanged their Series A and Series C
warrants for new Series E warrants. The Series E warrants collectively allow the
holders to purchase up to 815,351 additional shares of the Company's common
stock at a price of $1.19 per share at any time prior to August 16, 2004.

Between August 21, 2001 and December 12, 2001 the Company issued
327,361 shares of its common stock to eighteen persons including eight persons
who were officers, directors or employees of the Company. The shares were issued
in payment of accrued salaries, consulting fees, outstanding liabilities and
directors fees.

The foregoing securities were not issued under the Securities Act of
1933 but were issued or sold in reliance upon the exemption provided by Section
4(2) of the Act. The persons who acquired these securities were either

accredited or sophisticated investors. The securities were acquired for
investment purposes only and without a view to distribution. The persons who
acquired these securities were informed and advised about matters concerning the
Company, including the Company's business, financial affairs and other matters.
The investors acquired these shares for their own accounts. The certificates
representing the securities bear legends stating that they may not be offered,
sold or transferred other than pursuant to an applicable exemption from
registration. The preferred shares and warrants are "restricted" securities as
that term is defined in Rule 144 of the Securities and Exchange Commission.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits Page Number

3(a) Articles of Incorporation Incorporated by reference to
Exhibit 3(a) of CEL-SCI's
combined Registration Statement
on Form S-1 and Post-Effective
Amendment ("Registration
Statement"), Registration Nos.
2-85547-D and 33-7531.

(b) Amended Articles Incorporated by reference to
Exhibit 3(a) of CEL-SCI's
Registration Statement on Form
S-1, Registration Nos.
2-85547-D and 33-7531.

(c) Amended Articles Incorporated by reference to
Exhibit (Name change only) 3(c)
filed with Registration Statement
on Form S-1 (No. 33-34878).

(d) Bylaws Incorporated by reference to
Exhibit 3(b) of CEL-SCI's
Registration Statement on Form
S-1, Registration Nos.
2-85547-D and 33-7531.

4(a) Specimen copy of Stock Incorporated by reference to
Certificate Exhibit 4(a) of CEL-SCI's
Registration Statement on Form
S-1, Registration Nos.
2-85547-D and 33-7531.

4(b) Designation of Series E Incorporated by reference to
Preferred Stock Exhibit 4 to report on Form 8-K
dated August 21, 2001.

4(c) Form of Common Stock Incorporated by reference to
Exhibit Purchase Warrant 4(c)
filed as an exhibit to CEL-SCI's
Registration Statement on Form
S-1 (Registration No. 33-43281).

5 Opinion of Counsel Filed as an exhibit to Pre-
Effective Amendment No. 1 to this
Registration Statement.

10(e) Employment Agreement with Incorporated by reference to
Geert Kersten Exhibit 10(e) of the Company's
report on Form 10-K for
the year ended September 30, 2000.

10(q) Common Stock Purchase Agreement Filed with original Registration
with Paul Revere Capital Statement.
Partners Ltd.

10(r) Stock Purchase Warrant issued to Filed with original Registration
Paul Revere Capital Partners, Ltd. Statement.

10(s) Securities Exchange Agreement Incorporated by reference to
to (together with Schedule Exhibit 10.1 report on Form 8-K
required by Instruction 2 to dated August 21, 2001.
Item 601 Regulation S-K).

10(t) Form of Series E Warrant Incorporated by reference to
Exhibit 10.2 to report on Form 8-K
dated August 21, 2001.

10(u) Form of Secondary Warrant Incorporated by reference to
Exhibit 10.3 to report on Form 8-K
dated August 21, 2001.

10(v) Note and Warrant (Series F) Incorporated by reference to
Purchase Agreement, together Exhibit 10(v) to CEL-SCI's
with Schedule required by Registration Statement on Form S-3
Instruction 2 to Item (Commission File No. 333-76396).
601 Regulation S-K

23(a) Consent of attorneys Filed as an exhibit to Pre-
Effective Amendment No. 1 to
this Registration Statement.

23(b) Consent of Independent Auditors ________________________________

(b) Financial statement schedules. None

Item 17. Undertakings.
------------

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement.

(i) To include any prospectus required by Section l0(a)(3)
of the Securities Act of l933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement, including
(but not limited to) any addition or deletion of a managing underwriter.

(2) That, for the purpose of determining any liability under the
Securities Act of l933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

Insofar as indemnification for liabilities arising under the
Securities Act of l933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

POWER OF ATTORNEY

The registrant and each person whose signature appears below
hereby authorizes the agent for service named in this Registration Statement,
with full power to act alone, to file one or more amendments (including
post-effective amendments) to this Registration Statement, which amendments may
make such changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Registration Statement.

SIGNATURES

Pursuant to the requirements of the Securities Act of l933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vienna, State of Virginia, on the 30th day of January
2002.

CEL-SCI CORPORATION

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

Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date

/s/ Maximilian de Clara Director and Principal January 30, 2002
-------------------------- Executive Officer
Maximilian de Clara

/s/ Geert R. Kersten Director, Principal January 30, 2002
-------------------------- Financial Officer
Geert R. Kersten and Chief Executive Officer

Director January __, 2002
--------------------------
Alexander G. Esterhazy

/s/ C. Richard Kinsolving Director January 30, 2002
--------------------------
C. Richard Kinsolving

CEL-SCI CORPORATION
REGISTRATION STATEMENT ON
FORM S-3
POST-EFFECTIVE AMENDMENT NO. 1

EXHIBITS