Edgar Filing: CEL SCI CORP

As filed with the Securities and Exchange Commission on December __, 2003.

Registration No. 333-109070

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1/A
AMENDMENT NO. 2

Registration Statement
Under
THE SECURITIES ACT OF 1933

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

Colorado
---------------------
(State or other jurisdiction of incorporation)

8229 Boone Blvd. #802
Vienna, Virginia 22182
84-09l6344 (703) 506-9460
----------------------- --------------------------------
(IRS Employer I.D. (Address, including zip code, and
Number) telephone number including area
of principal executive offices)

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

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

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

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

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]

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

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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

Common stock (1) 14,000,000 $0.81 $11,340,000 $1,044
------------------------------------------------------------------------------
Common stock (2) 395,726 $0.81 $ 320,538 30
------------------------------------------------------------------------------
Total $11,660,538 $1,074
------------------------------------------------------------------------------

(1) Represents shares issuable to Rubicon Group Ltd. under the equity line of
credit.
(2) Represents shares issuable upon the exercise of warrants held by Rubicon
Group 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 warrants as a result of any adjustment in the number of
securities issuable by reason of stock splits or similar capital
reorganizations.

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 up to
14,395,726 shares of the common stock of CEL-SCI Corporation by Rubicon Group
Ltd. Rubicon Group will sell shares of common stock purchased from CEL-SCI under
an equity line of credit agreement and up to 395,726 shares of common stock
which may be issued upon the exercise of warrants. The warrants were issued to
Rubicon Group upon the signing of the equity line of credit agreement. CEL-SCI
will pay for the expenses of this offering. Rubicon Group Ltd. is an
"underwriter" as that term is defined in the Securities Act of 1933.

CEL-SCI's common stock is quoted on the American Stock Exchange under
the symbol "CVM." On _____, 2003 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 7 of this Prospectus

The date of this prospectus is _________, 2003

PROSPECTUS SUMMARY

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

CEL-SCI

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

LEAPS, another technology of CEL-SCI, is being tested by CEL-SCI to
determine if it is effective in developing potential treatments and/or vaccines
against various diseases. Present target diseases are herpes simplex, malaria
and autoimmune myocarditis.

Using the LEAPS technology, CEL-SCI discovered a peptide, named CEL-1000,
which is currently being tested in animals for the prevention/treatment of
herpes simplex, malaria, viral encephalitis, smallpox, vaccinia and a number of
other indications. CEL-1000 is also being tested as a bio-terrorism agent by the
National Institute of Allergy and Infectious Diseases and by the U.S. Army
Research Institute of Infectious Diseases.

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

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

All of CEL-SCI's products are in the development stage. As of December 1,
2003, CEL-SCI was not receiving any revenues from the sale of MULTIKINE or any
other products which CEL-SCI was developing.

CEL-SCI does not expect to develop commercial products for several years,
if at all. CEL-SCI has had operating losses since its inception, had an
accumulated deficit of approximately $(86,600,000) at September 30, 2003 and
expects to incur substantial losses for the foreseeable future.

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

THE OFFERING

Securities Offered:

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 Rubicon Group Ltd.

Under the equity line of credit agreement, Rubicon Group 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 Rubicon Group, and Rubicon Group 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 24 trading days, although CEL-SCI is under no obligation to request
any drawdowns under the equity line of credit.

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

Using the formula contained in the equity line of credit agreement, if
CEL-SCI had requested a drawdown on November __, 2003, the maximum amount
CEL-SCI could draw down during the subsequent 22 trading days would have been
$_______. Based upon the daily volume weighted average of CEL-SCI's common stock
during these 22 trading days, CEL-SCI would have sold ______ shares of its
common stock to Rubicon Group and would have received $______ from the sale of
these shares. 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 __ of this prospectus.

CEL-SCI is registering the shares of common stock issuable to Rubicon Group
under the equity line of credit, as well as the 395,726 shares underlying the
warrants that CEL-SCI granted to Rubicon Group. These shares may be offered for
sale from time to time by means of this prospectus by or for the account of
Rubicon Group. 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
legal fees of $10,000 payable to Rubicon Group's attorneys, but not the expenses
associated with selling the shares, such as broker discounts and commissions.

As of December 1, 2003, CEL-SCI had 65,121,384 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. If all
outstanding warrants and convertible securities were exercised and converted,
CEL-SCI would have 79,766,479 outstanding shares of common stock. See
"Comparative Share Data".

CEL-SCI will not receive any proceeds from the sale of the shares by
Rubicon Group. However, CEL-SCI will receive proceeds from any sale of common
stock to Rubicon Group under the equity line of credit agreement and upon the
exercise of warrants held by Rubicon Group, when, and if, it 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.

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

AMEX Symbol: CVM

Summary Financial Data

Results of Operations: Years Ended September 30,
--------------------------
2003 2002

Grant Revenue and Other: $318,204 $ 384,939
-------- ----------
Expenses:
Research and Development 1,915,501 4,699,909
Depreciation and Amortization 199,117 226,514
General and Administrative 2,287,019 1,754,332
Interest Income (52,502) (85,322)
Interest Expense 2,340,667 2,131,750
--------- ---------
Net Loss $(6,371,498) $(8,342,244)
Net Loss Attributable to
Common Stockholders $(6,480,319) $(9,989,988)
============ ============

Net loss per common share
(basic and diluted) $(0.13) $ (0.35)
=============== ============

Weighted average common shares
outstanding 50,961,457 28,746,341
=============== ===========

Balance Sheet Data:
September 30,
2003 2002
---- ----

Working Capital $ 531,742 $ 690,804
Total Assets 2,915,206 3,771,258
Convertible Debt * 32,882 639,288
Note Payable - Covance * 184,330 --
Note Payable - Cambrex* 656,076 1,135,017
Total Liabilities 1,690,100 2,709,087
Stockholders' Equity 1,225,106 1,062,171

* Included in Total Liabilities.

Forward Looking Statements

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

RISK FACTORS

Investors should be aware that this offering involves the risks described
below, which could adversely affect the price of CEL-SCI's common stock. In
addition to the other information contained in this prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
offered by this prospectus.

RISKS RELATED TO CEL-SCI

Since CEL-SCI Has Earned Only Limited Revenues and Has a History of Losses,
CEL-SCI Will Require Additional Capital to Remain in Operation.

CEL-SCI has had only limited revenues since it was formed in 1983. Since
the date of its formation and through September 30, 2003 CEL-SCI incurred net
losses of approximately $(86,600,000). During the years ended September 30,
2001, 2002 and 2003 CEL-SCI suffered losses of $(10,733,679), $(8,342,244) and
$(6,371,498) respectively. CEL-SCI has relied principally upon the proceeds of
public and private sales of securities and convertible notes to finance its
activities to date. All of CEL-SCI's potential products are in the early stages

of 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.

CEL-SCI Will Require Additional Capital for its Clinical Trials and Research.

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. In any event, CEL-SCI will need additional funding to continue its
clinical trials and research efforts.

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

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

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

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

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

of Multikine under an alternative manufacturing arrangement, in which case
CEL-SCI may have to delay its research and development activities.

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

CEL-SCI may not be able to achieve or maintain a competitive position and other
technological developments may result in CEL-SCI's proprietary technologies
becoming uneconomical or obsolete.

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

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

CEL-SCI's Patents Might Not Protect CEL-SCI's Technology from competitors, in
which case CEL-SCI may not have any advantage over competitors in selling any
products which it may develop.

Certain aspects of CEL-SCI's technologies are covered by U.S. and foreign
patents. In addition, CEL-SCI has a number of patent applications pending. There
is no assurance that the applications still pending or which may be filed in the
future will result in the issuance of any patents. Furthermore, there is no
assurance as to the breadth and degree of protection any issued patents might
afford CEL-SCI. Disputes may arise between CEL-SCI and others as to the scope
and validity of these or other patents. Any defense of the patents could prove
costly and time consuming and there can be no assurance that CEL-SCI will be in
a position, or will deem it advisable, to carry on such a defense. Other private
and public concerns, including universities, may have filed applications for, or
may have been issued, patents and are expected to obtain additional patents and
other proprietary rights to technology potentially useful or necessary to
CEL-SCI. The scope and validity of such patents, if any, the extent to which
CEL-SCI may wish or need to acquire the rights to such patents, and the cost and
availability of such rights are presently unknown. Also, as far as CEL-SCI
relies upon unpatented proprietary technology, there is no assurance that others
may not acquire or independently develop the same or similar technology.
CEL-SCI's first MULTIKINE patent expired in 2000. Since CEL-SCI does not know if

it will ever be able to sell MULTIKINE on a commercial basis, CEL-SCI cannot
predict what effect the expiration of this patent will have on CEL-SCI.
Notwithstanding the above, CEL-SCI believes that trade secrets and later issued
patents will protect the technology associated with MULTIKINE.

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

CEL-SCI is dependent for its success on the continued availability of its
executive officers and the loss of management and scientific personnel could
adversely affect CEL-SCI.

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

RISKS RELATED TO THIS OFFERING

Since the Market Price for CEL-SCI's Common Stock is Volatile, Investors in This
Offering May Not Be Able to Sell Any of CEL-SCI's Shares at a Profit.

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

Shares issuable upon the exercise of options and warrants, the conversion
of promissory notes or in connection with CEL-SCI's equity line of credit may
substantially increase the number of shares available for sale in the public
market and may depress the price of CEL-SCI's common stock.

Options

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

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.

Warrants Held by Private Investors

In April 2001, CEL-SCI entered into an equity line of credit agreement
with Paul Revere Capital Partners. As consideration for extending the equity
line of credit, which expired in June 2003, 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.

In August 2001, three private investors exchanged their warrants for
CEL-SCI's Series E warrants. The Series E warrants allow the holders to purchase
up to 570,627 shares of CEL-SCI's common stock at a price of $1.19 per share at
any time prior to August 16, 2004. In August 2003, in accordance with the terms
of the Series E preferred stock, CEL-SCI issued warrants which permit the
holders to purchase an additional 23,758 shares of CEL-SCI's common stock at a
price of $0.77 per share at any time prior to August 17, 2006.

In May 2003, CEL-SCI sold shares of its common stock plus Series I
warrants to a strategic partner. The Series I warrants allow the holder to
purchase 1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per
share at any time prior to May 30, 2008.

On December 1, 2003, CEL-SCI sold 2,999,964 shares of its common stock,
to a group of private institutional investors for approximately $2,550,000, or
$0.85 per share. As part of this transaction, the investors in the private
offering received Series J warrants which allow the investors to purchase
991,003 shares of CEL-SCI's common stock at a price of $1.32 per share at any
time prior to December 1, 2006.

The exercise price of the Series G and H warrants, and the number of
shares issuable upon the exercise of the Series G and H warrants, are subject to
adjustment under those conditions explained in the section of the prospectus
entitled "Description of Securities".

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

Cambrex Bio Sciences Note

In November 2001 CEL-SCI gave a promissory note in the principal amount of
$1,172,517 to Cambrex Bio Sciences, Inc. The note represented the cost of
CEL-SCI's use of the Cambrex manufacturing facility for the three months ended
January 10, 2002 to produce MULTIKINE for CEL-SCI's clinical trials. As of
December 1, 2003, the prime interest rate was 4% and the interest rate on the
amount due Cambrex was 7%. The amount due Cambrex bears interest at the prime
interest rate, plus 3%, which is adjusted monthly. The note is due in full,
including accrued interest, on January 2, 2004. As of December 1, 2003 CEL-SCI
had made $485,525 in principal payments on the note. Cambrex, at its option, may
convert all or part of the amount due Cambrex into shares of CEL-SCI's common
stock. The number of shares to be issued to Cambrex upon any conversion of the
note will be determined by dividing that portion of the note to be converted by
the Conversion Price. The "Conversion Price" is an amount equal to 90% of the
average of the closing prices of CEL-SCI's common stock for the three trading
days immediately prior to the conversion date. The Conversion Price may not be
less than $0.22. As of December 1, 2003 Cambrex had not converted any part of
the note into shares of CEL-SCI's common stock.

Equity Line of Credit

An unknown number of shares of common stock, which may be sold by means of
this prospectus, are issuable under an equity line of credit arrangement to
Rubicon Group Ltd. As CEL-SCI sells shares of its common stock to Rubicon Group
under the equity line of credit, and Rubicon Group sells the common stock to
third parties, the price of CEL-SCI's common stock may decrease due to the
additional shares in the market. If CEL-SCI decides to draw down on the equity
line of credit as the price of its common stock decreases, CEL-SCI will be
required to issue more shares of its common stock for any given dollar amount
invested by Rubicon Group, subject to the minimum selling price specified by
CEL-SCI. The more shares that are issued under the equity line of credit, the
more CEL-SCI's then outstanding shares will be diluted and the more CEL-SCI's
stock price may decrease. Any decline in the price of CEL-SCI's common stock may
encourage short sales, which could place further downward pressure on the price
of CEL-SCI's common stock. Short selling is a practice of selling shares which
are not owned by a seller with the expectation that the market price of the
shares will decline in value after the sale.

As consideration for extending the equity line of credit, CEL-SCI granted
Rubicon Group warrants to purchase 395,726 shares of common stock at any time
prior to September 16, 2008 at a price of $0.83 per share. Rubicon Group is not
obligated to exercise any warrants.

See "Equity Line of Credit Agreement" for more information concerning the
equity line.

COMPARATIVE SHARE DATA

Number of Note
Shares Reference

Shares outstanding as of December 1, 2003 65,121,384

Shares to be sold in this Offering:

Shares issuable pursuant to the Equity
Line of Credit Agreement Unknown A

Shares issuable upon exercise of 395,726 A
warrants

The number of shares outstanding as of December 1, 2003 excludes shares
which may be issued in connection with CEL-SCI's line of credit or upon the
exercise of other options, warrants, or convertible securities 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 exercise of warrants 3,886,188 B
held by private investors

Shares issuable upon conversion of Cambrex note 563,000 C

Shares issuable upon exercise of options and 10,600,181 D
warrants granted to CEL-SCI's officers,
directors, employees, consultants, and third
parties

Shares issuable upon exercise of options 200,000 E
granted to investor relations consultants

A. An unknown number of shares of common stock are issuable under the equity
line of credit agreement between CEL-SCI and Rubicon Group Ltd. As consideration
for extending the equity line of credit, CEL-SCI granted Rubicon Group warrants
to purchase 395,726 shares of common stock at a price of $0.83 per share at any
time prior to September 16, 2008. See the section of this prospectus captioned
"Equity Line of Credit Agreement" for more information regarding the equity
line.

B. In April 2001, CEL-SCI entered into an equity line of credit agreement with
Paul Revere Capital Partners. During the term of the equity line of credit,
which expired in June 2003, CEL-SCI received net proceeds of $2,074,692 from the
sale of 5,430,960 shares of common stock pursuant to the terms of the equity
line. As consideration for extending the equity line of credit, CEL-SCI granted
Paul Revere Capital Partners warrants to purchase 200,800 shares of common stock
at a price of $1.64 per share at any time prior to April 11, 2004.

In August 2001, three private investors exchanged their warrants for
CEL-SCI's Series E warrants. As of November 30, 2003 the Series E warrants
allowed the holders to purchase up to 570,627 shares of CEL-SCI's common stock
at a price of $1.19 per share at any time prior to August 16, 2004. In August
2003, in accordance with the terms of the Series E preferred stock, CEL-SCI
issued warrants which permit the holders to purchase an additional 23,758 shares
of CEL-SCI's common stock at a price of $0.77 per share at any time prior to
August 17, 2006.

In July and September 2002, CEL-SCI sold Series G convertible notes, plus
Series G warrants, to a group of private investors for $1,300,000. As of June
30, 2003 all of the Series G notes had been converted into 8,390,746 shares of
CEL-SCI's common stock. As of December 1, 2003 the Series G warrants allowed the
holders to purchase up to 450,000 shares of CEL-SCI's common stock at a price of
$0.145 per share at any time prior to July 12, 2009. Every three months after
September 9, 2003, the exercise price of the Series G warrants will be adjusted
to an amount equal to 84% of the average of the 3 lowest daily trading prices of
CEL-SCI's common stock on the American Stock Exchange during the 20 trading days
immediately prior to the three month adjustment date, provided that the adjusted
price is lower than the warrant exercise price on that date.

In January and July 2003, CEL-SCI sold Series H convertible notes, plus
Series H warrants, to a group of private investors for $1,350,000. As of
December 1, 2003 all of the Series H notes had been converted into 3,233,229
shares of CEL-SCI's common stock. As of December 1, 2003 the Series H warrants
allowed the holders to purchase up to 550,000 shares of CEL-SCI's common stock
at a price of $0.25 per share at any time prior to January 7, 2010. Every three
months after September 26, 2003 the exercise price of the Series H warrants will
be adjusted to an amount equal to 84% of the average of the 3 lowest daily
trading prices of CEL-SCI's common stock on the American Stock Exchange during
the 15 trading days immediately prior to the three month adjustment date,
provided that the adjusted price is lower than the warrant exercise price on
that date.

In May 2003, CEL-SCI sold shares of its common stock plus Series I warrants
to a strategic partner, at prices equal to or above the then current price of
CEL-SCI's common stock. The Series I warrants allow the holder to purchase
1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per share at any
time prior to May 30, 2008.

On December 1, 2003, CEL-SCI sold 2,999,964 shares of its common stock, to a
group of private institutional investors for approximately $2,550,000, or $0.85
per share. As part of this transaction, the investors in the private offering
received Series J warrants which allow the investors to purchase 991,003 shares
of CEL-SCI's common stock at a price of $1.32 per share at any time prior to
December 1, 2006.

If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series G or H warrants, the warrant exercise price will be lowered
to the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be. If the warrant exercise price is
adjusted, the number of shares of common stock issuable upon the exercise of the
warrant will be increased by the product of the number of shares of common stock
issuable upon the exercise of the warrant immediately prior to the sale
multiplied by the percentage by which the warrant exercise price is reduced.

If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the market price of CEL-SCI's
common stock, the exercise price of the Series G or H warrants will be lowered
by a percentage equal to the price at which the shares were sold or the lowest
price at which the securities are convertible, as the case may be, divided by
the then prevailing market price of CEL-SCI's common stock. If the warrant
exercise price is adjusted, the number of shares of common stock issuable upon
the exercise of the warrant will be increased by the product of the number of
shares of common stock issuable upon the exercise of the warrant immediately
prior to the sale multiplied by the percentage determined by dividing the price
at which the shares were sold by the market price of CEL-SCI's common stock on
the date of sale.

However, neither the exercise price of the Series G or H warrants nor the
shares issuable upon the exercise of the Series G or H warrants will be adjusted
as the result of shares issued in connection with a Permitted Financing. A
Permitted Financing involves shares of common stock issued or sold:

o in connection with a merger or acquisition or a strategic partnership;

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

o pursuant to the conversion or exercise of securities which were outstanding
prior to July 12, 2002 in the case of the Series G warrants and January 7,
2003 in the case of the Series H warrants;

o to key officers of CEL-SCI in lieu of their respective salaries.

C. In November 2001 CEL-SCI gave a promissory note in the principal amount of
$1,172,517 to Cambrex Bio Sciences, Inc. The note represented the cost of
CEL-SCI's use of the Cambrex manufacturing facility for the three months ended
January 10, 2002 to produce MULTIKINE for CEL-SCI's clinical trials. The amount
due Cambrex bears interest at the prime interest rate, plus 3%, which is

adjusted monthly. As of December 1, 2003, the prime interest rate was 4% and the
interest rate on the amount due Cambrex was 7%. The note is due in full,
including accrued interest, on January 2, 2004. As of December 1, 2003 CEL-SCI
had made $485,525 in principal payments on the note. Cambrex, at its option, may
convert all or part of the amount due Cambrex into shares of CEL-SCI's common
stock. The number of shares to be issued to Cambrex upon any conversion of the
note will be determined by dividing that portion of the note to be converted by
the Conversion Price. The "Conversion Price" is an amount equal to 90% of the
average of the closing prices of CEL-SCI's common stock for the three trading
days immediately prior to the conversion date. The Conversion Price may not be
less than $0.22. As of December 1, 2003 Cambrex had not converted any part of
the note into shares of CEL-SCI's common stock. The actual number of additional
shares issuable upon the conversion of the Cambrex note will vary depending upon
a number of factors, including the price of CEL-SCI's common stock at certain
dates. Accordingly, the number of shares which may be issued upon the conversion
of the Cambrex note cannot be determined at this time. However, based upon the
market price of CEL-SCI's common stock on December 1, 2003, CEL-SCI would be
required to issue approximately 563,000 shares of common stock if the
outstanding amount owed to Cambrex was converted on December 1, 2003.

D. The options are exercisable at prices ranging from $0.16 to $11.00 per share.
CEL-SCI may also grant options to purchase additional shares under its Incentive
Stock Option and Non-Qualified Stock Option Plans.

E. CEL-SCI has granted options for the purchase of 200,000 shares of common
stock to certain investor relations consultants in consideration for services
provided to CEL-SCI. The options are exercisable at prices ranging between $1.63
and $2.50 per share and expire between February 2004 and June 2006.

The shares referred to in Notes B and D 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 December 1, 2003 there were approximately 2,500 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 on 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

12/31/00 $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

12/31/01 $1.80 $0.72
3/31/02 $1.28 $0.52
6/30/02 $0.56 $0.27
9/30/02 $0.52 $0.16

12/31/02 $0.29 $0.19
3/31/03 $0.27 $0.15
6/30/03 $1.35 $0.20
9/30/03 $1.08 $0.61

Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore 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.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION

The following selected financial data should be read in conjunction with
the more detailed financial statements, related notes and other financial
information included herein. Certain amounts reported in previous years have
been reclassified to conform to the classifications being used as of and for the
year ended September 30, 2003.

For the Years Ended September 30,
-------------------------------------------------------------
2003 2002 2001 2000 1999
---- ---- ---- ---- ----

Grant Revenue and Other: $318,204 $ 384,939 $293,871 $ 40,540 $66,687
-------- --------- -------- -------- -------

Operating Expenses:
Research and Development 1,915,501 4,699,909 7,762,213 5,186,065 4,662,226
Depreciation and
Amortization 199,117 226,514 209,121 220,994 268,210
General and Adminis-
trative 2,287,019 1,754,332 3,432,437 3,513,889 3,029,807
Interest Income (52,502) ( 85,322) ( 376,221) (402,011) (402,831)
Interest Expense 2,340,667 2,131,750 -- -- --
--------- --------- --------- --------- --------

Net Loss $(6,371,498) $(8,342,244) $(10,733,679) $(8,478,397) $(7,490,725)
Net loss attributable to
common stock holders $(6,480,319) $(9,989,988) $(11,104,251) $(8,478,397) $(7,490,725)
=========== =========== ============ ============ ============
Net loss per common share
(basic and diluted) $ (0.13) $ (0.35) $ (0.51) $ (0.44) $ (0.52)
============ =========== ============ =========== ===========

Weighted average common
shares outstanding 50,961,457 28,746,341 21,824,273 19,259,190 14,484,352
========== ========== ========== ========== ==========

Balance Sheet Data: September 30,
--------------------------------------------------------------------

2003 2002 2001 2000 1999
---- ---- ---- ---- ----

Working Capital $531,742 $690,804 $2,801,299 $11,725,940 $6,152,715
Total Assets 2,915,206 3,771,258 4,508,920 13,808,882 7,559,772
Convertible Debt * 32,882 639,288 -- -- --
Note Payable - Covance * 184,330 -- -- -- --
Note Payable - Cambrex * 656,076 1,135,017 -- -- --
Total Liabilities 1,690,100 2,709,087 507,727 847,423 461,586
Stockholders' Equity 1,225,106 1,062,171 4,001,193 12,961,459 7,098,186

* Included in total liabilities

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

CEL-SCI's net losses for each fiscal quarter during the two years ended
September 30, 2003 and the nine months ended June 30, 2003.

Net Loss
Quarter Net Loss per Share

12-31-01 $(2,920,620) $(0.16)
03-31-02 $(1,937,912) $(0.10)
06-30-02 $(2,111,479) $(0.08)

09-30-02 $(1,372,233) $(0.05)
12-31-02 $(1,682,865) $(0.04)
03-31-03 $(1,032,181) $(0.02)
06-30-03 $(1,762,564) $(0.03)
09-30-03 $(1,893,888) $(0.03)

Results of Operations

Fiscal 2003

Grant revenues and other was lower during the year ended September 30,
2003 due to the winding down of a project for which CEL-SCI receives grant
money. The grant for this project generated $110,000 in revenue in fiscal year
2003 compared with $380,000 in revenue in fiscal year 2002. However, CEL-SCI has
received four additional grants, two grants in April 2003, one grant in May
2003, and one grant in September 2003 for other projects on which CEL-SCI is
working. These grants generated approximately $170,750 in revenue in fiscal year
2003. Research and development expenses declined because CEL-SCI completed its
current production of MULTIKINE(R) during fiscal year 2002. General and
administrative expenses were higher during the year ended September 30, 2003
since there was a reversal in 2002 of a 2001 fiscal year charge of $593,472
resulting from a decline in the intrinsic value of the options repriced to
employees. Interest income during the year ended September 30, 2003 was less
than it was during the same periods in fiscal year 2002 as a result of CEL-SCI's
smaller cash position and lower interest rates on interest bearing accounts.
During the years ended September 30, 2003 and 2002, interest expense was
$2,340,667 and $2,131,750, respectively. Interest expense for all periods
presented is primarily a non-cash item incurred to account for interest and
amortization of the discounts and deferred financing costs related to
convertible debt, the note payable to Covance AG and the convertible debt
payable to Cambrex Biosciences, Inc.

Fiscal 2002

Grant revenue and other is primarily grant money received in payment of
some research and development expenses. Research and development expenses in
fiscal year 2002 declined significantly because CEL-SCI completed its current
production of MULTIKINE(R) during the first quarter. This supply will be used in
future clinical trials. During the fiscal year, CEL-SCI instituted a cost
reduction program and reduced its workforce significantly. Hence, both research
and development costs and general and administrative costs declined from the
previous fiscal years. General and administrative expenses also declined due to
the reversal of compensation charges of $593,472 resulting from a decline in the
intrinsic value of options re-priced to employees. Interest income during the
year ended September 30, 2002 reflects interest accrued and received on
certificates of deposit. Because CEL-SCI issued Series F and Series G
convertible notes during fiscal year 2002, there is a significant charge to
interest expense during the year for the expensing of the discount on the notes
and the deferred financing costs incurred for the issuance of these notes. This
discount relates primarily to the value of the warrants received in the offering
and the value of the beneficial conversion feature of the notes.

Liquidity and Capital Resources

CEL-SCI has had only limited revenues from operations since its inception
in March l983. CEL-SCI has relied primarily upon proceeds realized from the
public and private sale of its common and preferred stock and convertible notes
to meet its funding requirements. Funds raised by CEL-SCI have been expended
primarily in connection with the acquisition of an exclusive worldwide license
to 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.

In fiscal year 2003, CEL-SCI reduced its discretionary expenditures. If
necessary, CEL-SCI plans to further reduce discretionary expenditures in fiscal
2004; however such reductions would further delay the development of CEL-SCI's
products.

CEL-SCI plans to use its existing financial resources, the proceeds from
the sale of its common stock to private investors, the proceeds from the sale of
common stock under the equity line of credit agreement with Rubicon Capital, and
the proceeds from the issuance of convertible debt to fund its capital
requirements during this period.

Other than funding operating losses, funding its research and development
program, and paying its liabilities, CEL-SCI does not have any material capital
commitments. Material future liabilities as of September 30, 2003 are as
follows:

Contractual Obligations: Years Ending September 30
----------------------------------
Total 2004 2005 2006
----- ---- ---- ----
Notes Payable
Cambrex $686,992 $ 686,992 $ -- $ --
Covance 184,330 184,330 -- --
Convertible Debt 100,000 100,000 -- --
Leases 93,910 93,910 -- --
Interest and Dividends 55,011 55,011 -- --
Employment Contracts 1,625,373 733,585 552,083 339,703
---------- -------- -------- ---------
$2,745,616 $ 1,853,828 $ 552,083 $ 339,703
========== ========== ======== ==========

On December 1, 2003, CEL-SCI sold 2,994,964 shares of its common stock, to a
group of private institutional investors for approximately $2,550,000, or $0.85
per share. As part of this transaction, the investors in the private offering
received Series J warrants which allow the investors to purchase 899,988 shares
of CEL-SCI's common stock at a price of $1.32 per share at any time prior to
December 1, 2006.

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. It is the opinion of management
that sufficient funds will be available from external financing and additional
capital and/or expenditure reduction in order to meet CEL-SCI's liabilities and
commitments as they come due during fiscal year 2004. Ultimately, CEL-SCI must
complete the development of its products, obtain appropriate regulatory
approvals and obtain sufficient revenues to support its cost structure.

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

Equity Line of Credit

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
entered into an equity line of credit agreement with Rubicon Group Ltd.

Under the equity line of credit agreement, Rubicon Group has agreed to
provide CEL-SCI with up to $10,000,000 of funding during a two year period
beginning on the date of this prospectus. During this period, CEL-SCI may
request a drawdown under the equity line of credit by selling shares of its
common stock to Rubicon Group, and Rubicon Group will be obligated to purchase
the shares. 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 number of shares it will sell to Rubicon Group and the purchase
price per share. The purchase price per share of common stock will be based on
the daily volume weighted average price of CEL-SCI's common stock during each of
the 22 trading days immediately following the drawdown date, less a discount of
11%.

Covance AG

On October 8, 2002, CEL-SCI signed an agreement with Covance AG (Covance),
a Swiss Corporation. Pursuant to the agreement, amounts owed to Covance totaling
$199,928 as of June 30, 2003 were converted to a note payable. The note is
payable on January 2, 2004. Interest will be payable monthly at an annual rate
of 8%. Until the entire amount has been paid to Covance, Covance is entitled to
receive 2% of any draw-down of CEL-SCI's equity credit line, 2% of any net funds
received from outside financings of less than $1 million, 3% of any net funds
received from outside financings greater than $1 million but less than $2

million and 4% of any net funds received from outside financings greater than $2
million. During the year ended September 30, 2003, CEL-SCI paid $15,598 on the
Covance note.

Eastern Biotech

In May 2003, CEL-SCI entered into an agreement with Eastern Biotech which
provided Eastern Biotech with the following (i) the exclusive right to
distribute MULTIKINE and CEL-1000 in Greece, Serbia and Croatia, (ii) a royalty
equal to 1% of CEL-SCI's net sales of MULTIKINE and CEL-1000 prior to May 30,
2033, (iii) 1,100,000 shares of CEL-SCI's common stock and, (iv) warrants which
allow Eastern Biotech to purchase an additional 1,100,000 shares of CEL-SCI's
common stock at a price of $0.47 per share at any time prior to May 30, 2008. In
consideration for the above Eastern Biotech paid CEL-SCI $500,000. Since the
shares issued to Eastern Biotech, as well as the shares issuable upon the
exercise of the Eastern Biotech warrants, were not registered for public sale by
September 30, 2003, the royalty percentage to Eastern Biotech increased to 2%.
Eastern Biotech will lose its exclusive right to distribute CEL-SCI's products
unless Eastern Biotech has enrolled at least 20 patients in a controlled,
mutually designed head and neck cancer clinical trial by June 1, 2004.

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 was in the
principal amount of $1,172,517 which represented the cost of CEL-SCI's use of
the Cambrex manufacturing facility for the three months ended January 10, 2002.
The amount due Cambrex bears interest at the prime interest rate, plus 3%, which
is adjusted monthly. As of December 1, 2003 the prime interest rate was 4% and
the interest rate on the amount due Cambrex was 7%. The note is due in full,
including accrued interest, on January 2, 2004. Pursuant to the agreement,
CEL-SCI surrendered a cash deposit and transferred title to certain equipment to
Cambrex, which reduced the amount due by $225,000. Until the note is paid in
full, CEL-SCI has agreed to pay Cambrex 10% of all amounts received by CEL-SCI,
net of financing costs, from any future financings, including amounts received
by CEL-SCI from its equity line of credit. As of December 1, 2003 CEL-SCI had
made $485,525 in principal payments on the note. Cambrex, at its option, may
convert all or part of the amount due Cambrex into shares of CEL-SCI's common
stock. The number of shares to be issued to Cambrex upon any conversion of the
note will be determined by dividing that portion of the note to be converted by
the Conversion Price. The "Conversion Price" is an amount equal to 90% of the
average of the closing prices of CEL-SCI's common stock for the three trading
days immediately prior to the conversion date. However, the Conversion Price may
not be less than $0.22. As of December 1, 2003 Cambrex had not converted any
part of the note into shares of CEL-SCI's common stock.

Convertible Notes

In December 2001 and January 2002, CEL-SCI sold Series F convertible
notes, plus Series F warrants, to a group of private investors for $1,600,000.
As of December 1, 2002 these notes had been converted into 6,592,461 shares of
CEL-SCI's common stock.

Critical Accounting Policies

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

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

Stock Options - In October 1996, the Financial Accounting Standards Board
(FASB) 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. CEL-SCI 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. In December 2002, the FASB issued SFAS
No. 148, "Accounting for Stock-Based Compensation - Transaction and Disclosure"
which amends SFAS No. 123. SFAS No. 148 provided alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation and requires more prominent and more
frequent disclosures in the financial statements of the effects of stock-based
compensation. The provisions of SFAS No. 148 are effective for periods beginning
after December 15, 2002. The Company has elected to continue to account for its
employee stock-based compensation using the intrinsic value method.

Asset Valuations and Review for Potential Impairments - CEL-SCI reviews
its fixed assets every fiscal quarter. This review requires that CEL-SCI make
assumptions regarding the value of these assets and the changes in circumstances
that would affect the carrying value of these assets. If such analysis indicates
that a possible impairment may exist, CEL-SCI is then required to estimate the
fair value of the asset and, as deemed appropriate, expense all or a portion of
the asset. The determination of fair value includes numerous uncertainties, such
as the impact of competition on future value. CEL-SCI believes that it has made
reasonable estimates and judgments in determining whether our long-lived assets
have been impaired; however, if there is a material change in the assumptions
used in our determination of fair values or if there is a material change in
economic conditions or circumstances influencing fair value, CEL-SCI could be
required to recognize certain impairment charges in the future. As a result of
the reviews, no changes in asset values are expected.

Convertible Notes - Convertible notes were issued during the year. CEL-SCI
initially offset a portion of the notes with a discount representing the
relative fair value of the warrants and a beneficial conversion feature
discount. This discount is amortized to interest expense over the period the
notes are outstanding and is accelerated pro-rata as the notes are converted.
The fair value of the warrants and the beneficial conversion discount are
calculated based on available market data using appropriate valuation models.
These valuations require that CEL-SCI make assumptions and estimates regarding
the convertible notes and warrants. Management uses its judgment, as well as
outside sources, to determine these assumptions and estimates.

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. 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, 2003. CEL-SCI has a note payable with an interest rate at prime
plus 3% and a note payable with an interest rate at 8%. This represents a market
risk if the prime interest rate rises. However, based on the most recent Federal
Reserve Board's actions, CEL-SCI believes that a large increase in the prime
rate is unlikely in the near future.

Recent Accounting Pronouncements

In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 149 "Amendment of SFAS
No. 133 on Derivative Instruments and Hedging Activities". The Statement amends
and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under SFAS 133. The amendments set forth in SFAS 149 improve financial reporting
by requiring that contracts with comparable characteristics be accounted
similarly. In particular, SFAS No. 149 clarifies under what circumstances a
contract with an initial net investment meets the characteristics of a
derivative as discussed in Statement 133. In addition, it clarifies when a
derivative contains a financing component that warrants special reporting in the
statement of cash flows. SFAS No. 149 amends certain other existing

pronouncements. Those changes will result in more consistent reporting of
contracts that are derivatives in their entirety or that contain embedded
derivatives that warrant separate accounting. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. The adoption of this SFAS No. 149
did not have a material effect on CEL-SCI's financing position, results of
operations or cash flows.

In May 2003, the FASB adopted SFAS No. 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This Statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have a material effect on CEL-SCI's financial position, results of
operations or cash flows.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, " (FIN 45). FIN 45 establishes new
disclosure and liability recognition requirements for direct and indirect debt
guarantees with specified characteristics. The initial recognition and
measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for financial statement of
interim or annual periods ending after December 15, 2002. CEL-SCI adopted FIN 45
as of December 31, 2002. CEL-SCI's implementation of FIN 45 did not have a
material effect on its financial position, results of operations or cash flows.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" (FIN 46). FIN 46 provides guidance on the
consolidation of certain entities, referred to as variable interest entities, in
which equity investors do not have the characteristics of a controlling
financial interest. FIN 46 was effective immediately for variable interest
entities created or acquired after January 31, 2003 and is effective July 1,
2003 for variable interest entities created or acquired on or before January 31,
2003. In October 2003, the FASB issued Staff Position FIN 46.6, which extended
the effective date of FIN 46 for variable interest entities created or acquired
before February 1, 2003 to the first interim or annual period ending after
December 15, 2003. CEL-SCI anticipates that the adoption of FIN 46 will not have
a material effect on its financial position, results of operations or cash
flows.

BUSINESS

CEL-SCI Corporation (the "Company") 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(R), 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 shown to
induce both an anti-cancer immune response and to significantly increase the
susceptibility of tumor cells to radiation therapy.

MULTIKINE has been tested in over 190 patients in clinical trials
conducted in the U.S., Canada, Europe and Israel. Most of these patients were
head and neck cancer patients, but some studies were also conducted in prostate
cancer patients, HIV-infected patients and HIV-infected women with Human
Papilloma Virus ("HPV")-induced cervical dysplasia, the precursor stage before
the development of cervical cancer. The safety profile was found to be very good
and CEL-SCI believes that the clinical data suggests that further studies are
warranted.

The 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.

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 radiation 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 approximately 190 patients. In one study twelve advanced primary head
and neck cancer patients were treated prior to surgery and/or radiation for two
weeks. Following treatment two patients had a complete tumor response (100%
tumor reduction) with no tumor residues. Another four 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 (UMBI). 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

may safely boost the patients' immune systems to the point where their immune
systems can eliminate the virally-induced cancer. Cervical cancer is the second
leading cause of cancer death in women worldwide.

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

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

Results from this ongoing Phase I clinical trial of MULTIKINE in cervical
dysplasia in HPV/HIV co-infected women indicated elimination or reduction of
dysplasia in seventy-one percent (71%) of the patients, excellent treatment
tolerance, and the confirmation of dysplasia elimination or reduction in
severity by histopathology. However, CEL-SCI plans to pursue this disease
indication only with grant or government funds.

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. The
Company 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.

CEL-SCI has an agreement with Eastern Biotech which provides Eastern
Biotech with the following (i) the exclusive right to distribute MULTIKINE and
CEL-1000 in Greece, Serbia and Croatia, (ii) a royalty equal to 1% of CEL-SCI's
net sales of MULTIKINE and CEL-1000 prior to May 30, 2033, (iii) 1,100,000
shares of CEL-SCI's common stock and, (iv) warrants which allow Eastern Biotech
to purchase an additional 1,100,000 shares of CEL-SCI's common stock at a price
of $0.47 per share at any time prior to May 30, 2008. In consideration for the
above Eastern Biotech paid CEL-SCI $500,000. Eastern Biotech will lose its
exclusive right to distribute CEL-SCI's products unless Eastern Biotech has
enrolled at least 20 patients in a controlled, mutually designed head and neck
cancer clinical trial by June 1, 2004.

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, malaria, and myocarditis.

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 myocarditis with researchers at the Department of Pathology, the
Johns Hopkins Medical Institutions, Baltimore, Maryland.

In the Spring of 2002, CEL-SCI, in conjunction with The Naval Medical
Research Center, announced that CEL-1000 provided 100% protection against
malaria infection in a mouse model. The same peptide also induced protective
effects in mouse models for herpes simplex virus and cancer. In the Fall of 2002
CEL-SCI announced that it had signed a Cooperative Research and Development
Agreement (CRADA) with the U.S. Navy for CEL-1000 in malaria. CEL-SCI also
announced an agreement with the Cincinnati Children's Hospital Medical Center
(CHMR) of the University of Cincinnati to evaluate CEL-1000 for protection
against herpes in the guinea pig vaginal challenge model for herpes.

CEL-SCI received two grants in April 2003, one grant in May 2003, and one
grant in September 2003. The first grant, totaling $1,100,000 and announced on
April 4, 2003, was awarded by the United States government to Northeastern Ohio
Universities College of Medicine and CEL-SCI. The grant is intended to support
the development of CEL-SCI's new compound, CEL-1000, as a possible treatment for
viral encephalitis, a potentially lethal inflammation of the brain. The grant
was awarded following a peer review process and will fund pre-clinical studies
leading up to toxicology studies. The grant is for a period of three years. The
second grant, announced on April 23, 2003, is a Phase I Small Business
Innovation Research (SBIR) grant from the National Heart, Lung and Blood
Institute (NHLBI), National Institutes of Health (NIH), in the amount of
$134,000 for the further development of a potential treatment for autoimmune
myocarditis, a heart disease. The work will be done in conjunction with
scientists at Johns Hopkins Medical Institutions in Baltimore, Maryland. The
third grant was announced on May 7, 2003. This grant for $162,000 is a Phase I
SBIR grant from the National Institutes of Allergy and Infectious Diseases
(NIAID), NIH, for the further development of CEL-1000 against Herpes Simplex.
The fourth grant, totaling $104,000, is a Phase I SBIR grant from the NIAID,
NIH, for the development of CEL-1000 as a potential therapeutic and prophylactic
agent against vaccinia and smallpox infections as a single agent and as an
adjuvant for vaccinia vaccines. Vaccinia is the virus used in the smallpox
vaccine.

In June 2003 CEL-SCI signed a Cooperative Agreement with the NIAID and the
U.S. Army Medical Research Institute of Infectious Disease (USAMRIID) to test
CEL-1000 against various bio-terrorism agents as well as other hard to treat
diseases.

RESEARCH AND DEVELOPMENT

Since 1983, and through September 30, 2003, approximately $46,622,000 has
been expended on CEL-SCI-sponsored research and development, including
approximately $1,916,000, $4,700,000 and $7,762,000, respectively during the
years ended September 30, 2003, 2002 and 2001.

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

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.
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 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 approvals
from 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 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 $7,800. The lease on the office
space expires in 2004. CEL-SCI believes this arrangement is adequate for the
conduct of its present business.

CEL-SCI has a 17,900 square foot laboratory which is leased by CEL-SCI at
a cost of approximately $11,200 per month. The laboratory lease expires in 2004,
with extensions available until 2014.

MANAGEMENT

Officers and Directors

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

Maximilian de Clara 74 Director and President
Geert R. Kersten, Esq. 44 Director, Chief Executive Officer
and Treasurer
Patricia B. Prichep 51 Senior Vice President of Operations and
Secretary
Dr. Eyal Talor 47 Senior Vice President of Research and
Manufacturing

Dr. Daniel H. Zimmerman 61 Senior Vice President of Research, Cellular
Immunology
Alexander G. Esterhazy 58 Director
Dr. C. Richard Kinsolving 68 Director
Dr. Peter R. Young 58 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 the Company. Mr.
Kersten also became CEL-SCI's 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 the Company's Senior Vice
President of Operations since March 1994. Between December 1992 and March
1994, Ms. Prichep was the Company's Director of Operations. Ms. Prichep
became CEL-SCI's Secretary in May 2000. 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.

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 Johns 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 CEL-SCI since April
2001. Since February 1999 Dr. Kinsolving has been the Chief Executive Officer of
BioPharmacon, a pharmaceutical development company. Between December 1992 and
February 1999 Dr. Kinsolving was the President of Immuno-Rx, Inc., a company
engaged in immuno-pharmaceutical development. Between December 1991 and
September 1995 Dr. Kinsolving was President of Bestechnology, Inc. a nonmedical
research and development company producing bacterial preparations for industrial
use. Dr. Kinsolving received his Ph.D. in Pharmacology from Emory University
(1970), his Masters degree in Physiology/Chemistry from Vanderbilt University
(1962), and his Bachelor's degree in Chemistry from Tennessee Tech. University
(1957).

Peter R. Young, Ph.D. has been a Director of CEL-SCI since August 2002.
Dr. Young has been a senior executive within the pharmaceutical industry in the
United States and Canada for most of his career. Over the last 20 years he has
primarily held positions of Chief Executive Officer or Chief Financial Officer
and has extensive experience with acquisitions and equity financings. Since
November 2001 Dr. Young has been the President of Agnus Dei, LLC, which acts as
a partner in an organization managing immune system clinics which treat patients
with diseases such as cancer, multiple sclerosis and hepatitis. Dr. Young is
also active in a pharmaceutical development venture that has recently filed for
patents relating to drug coating processes. Dr. Young received his Ph.D. in
Organic Chemistry from the University of Bristol, England (1969), and his
Bachelor's degree in Honors Chemistry, Mathematics and Economics also from the
University of Bristol, England (1966).

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

CEL-SCI has an audit committee and compensation committee. The members of
the audit committee are Alexander G. Esterhazy, C. Richard Kinsolving and Dr.
Peter Young. Dr. Peter Young serves as the audit committee's financial expert.
In this capacity, Dr. Young is independent, as that term is defined in the
listing standards of the American Stock Exchange. 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, 2003.

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, 2003 $363,000 -- $65,121 -- 574,999 --
President 2002 $363,000 -- $46,079 $ 89,334 75,000 --
2001 $357,167 -- $52,186 $ 262,000 95,000 $ 64

Geert R. Kersten, 2003 $354,087 -- $12,558 $ 9,244 1,890,000 --
Chief Executive 2002 $346,324 -- $15,044 $ 10,929 105,000 --
Officer and 2001 $265,175 -- $10,462 $ 8,313 655,000 $4,114
Treasurer

Patricia B. Prichep 2003 $147,904 -- $3,000 $ 4,902 580,000 --
Senior Vice President 2002 $140,464 -- $3,000 $ 5,597 90,500 --
of Operations and 2001 $104,505 -- $3,000 $ 6,270 260,000 $ 63
Secretary

Eyal Talor, Ph.D. 2003 $191,574 -- $3,000 $ 4,950 374,166 --
Senior Vice President 2002 $187,075 -- $3,000 $ 5,702 85,000 --
of Research and 2001 $157,420 -- $3,000 $ 9,269 200,000 $ 63
Manufacturing

Daniel Zimmerman,
Ph.D, 2003 $147,000 -- $3,000 $ 5,005 392,000 --
Senior Vice President 2002 $143,583 -- $3,000 $ 5,763 91,000 --
of Cellular Immunology 2001 $117,145 -- $3,000 $ 6,962 175,000 $ 64

(1) The dollar value of base salary (cash and non-cash) received. During the
year ended September 30, 2003, $701,397 of the total salaries paid to the
persons shown in the table were paid in restricted shares of CEL-SCI's
common stock.

(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. During the year ended September 30, 2003,
$25,000 of the total Other Annual compensation paid to the persons shown in
the table were paid in restricted shares of CEL-SCI's common stock.

(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 to the Company. 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, 2003, 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 1,782,295 $1,657,534
Geert R. Kersten 2,345,993 $2,181,773
Patricia B. Prichep 471,479 $ 438,475
Eyal Talor, Ph.D. 474,615 $ 441,392
Daniel Zimmerman, Ph.D. 438,776 $ 408,062

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, 2003" 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 the Company'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 the Company'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 the Company's common stock. The fiscal
2003 expenses for this plan were $48,437. 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.

In March 2002 the Company entered into a three-year employment agreement
with Mr. de Clara which expires March 31, 2005. 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 the Company, then the agreement allows Mr. de Clara to
resign from his position at the Company and receive a lump-sum payment from
CEL-SCI equal to 18 months salary. For purposes of the employment agreement, a
change in the control of CEL-SCI means the sale of more than 50% of the
outstanding shares of CEL-SCI's Common Stock, or a change in a majority of
CEL-SCI's directors.

Effective September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. The employment agreement provides that during the
term of the employment agreement CEL-SCI will pay Mr. Kersten an annual salary
of $370,585. 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, 2003, 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, 2003, 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, 2003, 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, 2003

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 574,999 11.20% $ 0.22 4/1/13 $ 63,302 $126,604

Geert R. Kersten 1,890,000 36.83% $ 0.22 4/1/13 $208,071 $416,142

Patricia B. Prichep 580,000 11.30% $ 0.22 4/1/13 $ 63,852 $127,705

Eyal Talor, Ph.D. 374,166 7.33% $ 0.22 4/1/13 $ 41,412 $82,825

Daniel Zimmerman, Ph.D. 392,000 7.64% $ 0.22 4/1/13 $ 43,155 $86,311

(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%.

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 -- -- 504,999/644,999 $9,750/$427,749
Geert R. Kersten -- -- 1,800,000/1,980,000 $13,650/$1,369,200
Patricia Prichep -- -- 511,334/648,666 $11,365/$434,530
Eyal Talor 309,167/439,165 $10,000/$285,658
Daniel Zimmerman -- -- 324,668/459,332 $15,330/$308,980

(1) The number of shares received upon exercise of options during the fiscal
year ended September 30, 2003.

(2) With respect to options exercised during CEL-SCI's fiscal year ended
September 30, 2003, 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, 2003,
separated between those options that were exercisable and those options
that were not exercisable.

(4) For all unexercised options held as of September 30, 2003, the market value
of the stock underlying those options as of September 30, 2003.

Stock Option and Bonus Plans

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

Incentive Stock Option Plan. The Incentive Stock Option Plans collectively
authorize the issuance of up to 4,100,000 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 7,760,000 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 1,940,000 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 the Company. 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 September 30,
2003, 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 4,100,000 3,801,100 N/A 212,315

Non-Qualified Stock Option 7,760,000 6,453,973 N/A 151,899
Plans

Stock Bonus Plans 1,940,000 N/A 1,225,036 714,964

Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 487,920
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.

The following table shows the weighted average exercise price of the
outstanding options granted pursuant to the Company's Incentive and
Non-Qualified Stock Option Plans as of September 30, 2003, CEL-SCI's most recent
fiscal year end. CEL-SCI's Incentive and Non-Qualified Stock Option Plans have
been approved by CEL-SCI's shareholders.

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

Incentive Stock
Option Plans 3,801,100 $0.68 212,315
Non-Qualified
Stock Option Plans 6,453,973 $0.74 151,899
---------- ----- -------
10,255,073 $0.72 364,214
========== ===== =======

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of November 30, 2003, information with
respect to the only persons owning beneficially 5% or more of the outstanding
Common Stock and the number and percentage of outstanding shares owned by each
director and officer and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of Common Stock.

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

Maximilian de Clara 2,238,044 3.6%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland

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

Geert R. Kersten 4,192,911 (2) 6.6%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Patricia B. Prichep 1,016,549 1.6%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Eyal Talor, Ph.D. 723,601 1.2%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Daniel H. Zimmerman, Ph.D. 744,860 1.2%
8229 Boone Blvd., Suite 802
Vienna, VA 22182

Alexander G. Esterhazy 55,000 *
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland

C. Richard Kinsolving 119,090 *
P.O. Box 20193
Bradenton, FL 34204-0193

Peter R. Young, Ph.D. 47,518 *
1904 Canterbury Drive
Westover Hills, TX 76107

All Officers and Directors 9,137,573 13.9%
as a Group (8 persons)
* Less than 1%

(1) Includes shares issuable prior to February 28, 2004 upon the exercise of
options or warrants granted to the following persons:

Options or Warrants Exercisable
Name Prior to February 28, 2004
--------------- -------------------------------

Maximilian de Clara 504,999
Geert R. Kersten 1,800,000
Patricia B. Prichep 529,667
Eyal Talor, Ph.D. 329,167
Daniel H. Zimmerman, Ph.D. 331,334

Options or Warrants Exercisable
Name Prior to February 28, 2004
--------------- -------------------------------

Alexander G. Esterhazy 55,000
C. Richard Kinsolving, Ph.D. 50,000
Peter R. Young, Ph.D. 6,667

(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 September 16, 2003, CEL-SCI entered into an equity line of credit
agreement with Rubicon Group 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, Rubicon Group 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 Rubicon Group and Rubicon Group will be
obligated to purchase the shares. CEL-SCI may request a drawdown once every 22
trading days, although CEL-SCI is under no obligation to request any drawdowns
under the equity line of credit.

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

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

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. 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 Rubicon Group 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 Rubicon Group will not purchase any shares on that day,
and the drawdown amount will be reduced by 1/22.

Using the formula described above, if CEL-SCI had requested a drawdown on
November __, 2003, the maximum amount CEL-SCI could draw down during the
subsequent 22 trading days would have been $______. Based upon the volume
weighted average of CEL-SCI's common stock during these 22 trading days, CEL-SCI
would have sold ____ shares of its common stock to Rubicon Group and would have
received proceeds from the sale of these shares equal to $______.

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

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 $10,000
to Feldman Weinstein LLP, legal counsel to Rubicon Group, for Rubicon Group's
legal expenses relating to the equity line of credit.

Grant of Warrants

CEL-SCI has determined that the fair value of these warrants using
customary pricing models is approximately $244,000. The fair value of these
warrants will be reflected in CEL-SCI's financial statements and recorded as
both a charge and an addition to additional paid-in capital for the year ended
September 30, 2003.

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 be 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, the
New York Stock Exchange, the OTC Bulletin Board, 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 Rubicon Group fails to
honor more than one drawdown notice.

Indemnification

Rubicon Group 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 Rubicon Group 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 Rubicon Group
Ltd. Rubicon Group will receive shares of CEL-SCI's common stock under an equity
line of credit agreement and up to 395,726 shares of common stock upon the
exercise of warrants. Rubicon Group 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
Rubicon Group. Rubicon Group 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 Rubicon Group is being paid by CEL-SCI. Rubicon Group will pay
all other costs of the sale of the shares offered by it. During the past three
years neither the Rubicon Group nor its controlling persons had any relationship
with CEL-SCI, or CEL-SCI's officers or directors.

The following table shows the shares which are being offered for sale by
Rubicon Group.

Share
Shares Shares to Be Ownership
Presently Sold in this After
Name Owned Offering Offering
-------- ---------- ---------- ----------

Rubicon Group Ltd. 395,726 (2) --

(1) Represents shares issuable upon the exercise of the warrants held by the
Rubicon Group, but excludes any shares which may be acquired by the Rubicon
Group under the Equity Line of Credit Agreement.

(2) The number of shares to be sold by the Rubicon Group in this offering 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 and upon
the exercise of warrants.

Rubicon Group is a private investment fund. David Bree, Karim Shariff and
Raahim Don have voting and investment power over the securities held by the
Rubicon Group. The sole shareholder of Rubicon Group is SDS Capital
International, Ltd. The sole director of SDS Capital International, Ltd. has the
same members and managing member as the general partner of SDS Merchant Fund,
L.P. Since December 2001 SDS Merchant Fund has entered into three separate
transactions (sometimes known as PIPE transactions) involving the purchase of
convertible notes and warrants from CEL-SCI. The total amount paid by SDS
Merchant Fund for these convertible notes and warrants was $2,050,000. SDS
Merchant Fund has sold the securities it has acquired from CEL-SCI by means of
three separate registration statements. As of the date of this prospectus SDS
Merchant Fund has not agreed to make any further investments in CEL-SCI.

Manner of Sale

The shares of common stock owned, or which may be acquired, by Rubicon
Group 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 Rubicon Group may
arrange for other brokers or dealers to participate. Such brokers or dealers may
receive commissions or discounts from Rubicon Group in amounts to be negotiated.

Rubicon Group 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 Rubicon Group 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 Rubicon Group 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 Rubicon Group that in the event of a
"distribution" of its shares Rubicon Group, 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 Rubicon Group 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 Rubicon Group 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 Rubicon Group 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 Rubicon Group permits CEL-SCI to
restrict the resale of the shares Rubicon Group 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 of Rubicon Group 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 Rubicon Group for its inability to sell shares during the restriction
period, CEL-SCI will be required to pay Rubicon Group an amount determined by
multiplying:

o the number of shares Rubicon Group 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.

Warrants Held by Private Investors

In August 2001, three private investors exchanged their warrants for
CEL-SCI's Series E warrants. As of November 30, 2003 the Series E warrants
collectively allow the holders to purchase up to 600,627 additional shares of
CEL-SCI's common stock at a price of $1.19 per share at any time prior to August
16, 2004 and 23,758 shares of CEL-SCI's common stock at a price of $0.77 per
share at any time prior to August 17, 2006.

As of December 1, 2003 the Series G warrants collectively allowed the
holders to purchase up to 450,000 shares of CEL-SCI's common stock at a price of
$0.145 per share at any time prior to July 12, 2009. Every three months after
December 9, 2003, the exercise price of the Series G warrants will be adjusted
to an amount equal to 84% of the average of the 3 lowest daily trading prices of
CEL-SCI's common stock on the American Stock Exchange during the 20 trading days
immediately prior to the three month adjustment date, provided that the adjusted
price is lower than the warrant exercise price on that date.

As of December 1, 2003 the Series H warrants collectively allowed the
holders to purchase up to 550,000 shares of CEL-SCI's common stock at a price of
$0.25 per share at any time prior to January 7, 2010. Every three months after
September 26, 2003 the exercise price of the Series H warrants will be adjusted
to an amount equal to 84% of the average of the 3 lowest daily trading prices of
CEL-SCI's common stock on the American Stock Exchange during the 15 trading days
immediately prior to the three month adjustment date, provided that the adjusted
price is lower than the warrant exercise price on that date.

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.

o in connection with a merger or acquisition or a strategic partnership;

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

o pursuant to the conversion or exercise of securities which were outstanding
prior to December 31, 2001 in the case of the Series F warrants, July 12,
2002 in the case of the Series G warrants and January 7, 2003 in the case
of the Series H warrants;

o to key officers of CEL-SCI in lieu of their respective salaries.

In May 2003, CEL-SCI sold shares of its common stock plus Series I
warrants to a strategic partner, at prices equal to or above the then current
price of CEL-SCI's common stock. As of December 1, 2003, the Series I warrants
allow the holder to purchase 1,100,000 shares of CEL-SCI's common stock at a
price of $0.47 per share at any time prior to May 30, 2008.

In September 2003, CEL-SCI entered into an equity line of credit agreement
with Rubicon Group Ltd. in order to establish a possible source of funding for
the development of CEL-SCI's technologies. As consideration for extending the
equity line of credit, CEL-SCI granted Rubicon Group warrants to purchase
395,726 shares of common stock at a price of $0.83 per share at any time prior
to September 16, 2008.

On December 1, 2003, CEL-SCI sold 2,999,964 shares of its common stock, to a
group of private institutional investors for approximately $2,550,000, or $0.85
per share. As part of this transaction, the investors and the sales agent in the
offering received Series J warrants which allow the holders to purchase 991,003
shares of CEL-SCI's common stock at a price of $1.32 per share at any time prior
to December 1, 2006.

Transfer Agent

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

EXPERTS

The financial statements included in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein and elsewhere in this Registration Statement, and are 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 will provide, without charge, to each person to whom a copy of
this prospectus is delivered, including any beneficial owner, upon the written
or oral request of such person, a copy of any or all of the documents
incorporated by reference below (other than exhibits to these documents, unless
the exhibits are specifically incorporated by reference into this prospectus).
Requests should be directed to:

CEL-SCI Corporation
8229 Boone Blvd., #802
Vienna, Virginia 22182
(703) 506-9460

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, 2003, 2002, and 2001,
and Independent Auditors' Report

CEL-SCI CORPORATION

TABLE OF CONTENTS

Page

INDEPENDENT AUDITORS' REPORT F-3

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED SEPTEMBER 30, 2003, 2002, AND 2001:

Consolidated Balance Sheets F-4

Consolidated Statements of Operations F-5

Consolidated Statements of Comprehensive Loss F-6

Consolidated Statements of Stockholders' Equity F-7 - F-9

Consolidated Statements of Cash Flows F-10 - F-13

Notes to Consolidated Financial Statements F-14 - F-31

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders of
CEL-SCI Corporation:

We have audited the accompanying consolidated balance sheets of CEL-SCI
Corporation and subsidiary (the Company) as of September 30, 2003 and 2002, 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, 2003. 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 the Company as of
September 30, 2003 and 2002, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 2003, in
conformity with accounting principles generally accepted in the United States of
America.

Deloitte & Touche LLP

McLean, Virginia
December 15, 2003

CEL-SCI CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND 2002
-----------------------------------------------------------------------------

ASSETS 2003 2002

CURRENT ASSETS:
Cash and cash equivalents $ 1,753,307 $ 2,079,276
Interest and other receivables 47,051 31,477
Prepaid expenses 357,531 452,123
Deposits 14,828 -
Deferred financing costs 16,243 176,995
--------- ---------

Total current assets 2,188,960 2,739,871

RESEARCH AND OFFICE EQUIPMENT--Less accumulated
depreciation of $2,002,232 and $2,027,225 278,706 473,555

DEPOSITS - 139,828

PATENT COSTS--Less accumulated amortization
of $704,522 and $641,711 447,540 418,004
--------- ---------
$ 2,915,206 $ 3,771,258
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 481,985 $ 735,646
Accrued expenses 99,172 148,812
Due to officer/shareholder and employees 227,115 29,592
Deposits held 3,000 -
Deferred rent 5,540 -
Note payable - Cambrex, net of discount 656,076 1,135,017
Note payable - Covance 184,330 -
--------- ---------
Total current liabilities 1,657,218 2,049,067

DEFERRED RENT - 20,732

CONVERTIBLE DEBT, NET 32,882 639,288
--------- ---------

Total liabilities 1,690,100 2,709,087
--------- ---------

STOCKHOLDERS' EQUITY:
Series E cumulative convertible redeemable
preferred stock, $.01 par value, $1,000
liquidation value--authorized, 6,288 shares;
issued and outstanding, -0- and 1,192
shares at September 30, 2003 and 2002, respectively - 12
Common stock, $.01 par value--authorized,
100,000,000 shares; issued and outstanding,
61,166,345 and 37,255,142 shares
at September 30, 2003 and 2002, respectively 611,663 372,551
Additional paid-in capital 87,167,091 80,871,758
Accumulated deficit (86,553,648) (80,182,150)
----------- -----------

Total stockholders' equity 1,225,106 1,062,171
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,915,206 $ 3,771,258
=========== ===========
See notes to consolidated financial statements.

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2003, 2002, AND 2001
-------------------------------------------------------------------------

2003 2002 2001

GRANT REVENUE AND OTHER $ 318,304 $ 384,939 $ 293,871

OPERATING EXPENSES:
Research and development 1,915,501 4,699,909 7,762,213
Depreciation and amortization 199,117 226,514 209,121
General and administrative 2,287,019 1,754,332 3,432,437
----------- ----------- -----------

Total operating expenses 4,401,637 6,680,755 11,403,771
----------- ----------- -----------

NET OPERATING LOSS (4,083,333) (6,295,816) (11,109,900)

INTEREST INCOME 52,502 85,322 376,221
INTEREST EXPENSE (2,340,667) (2,131,750) -
----------- ----------- -----------

NET LOSS (6,371,498) (8,342,244) (10,733,679)

ACCRUED DIVIDENDS ON
PREFERRED STOCK (32,101) (202,987) (53,153)

ACCRETION OF BENEFICIAL CONVERSION
FEATURE ON PREFERRED STOCK (76,720) (1,444,757) (317,419)
----------- ----------- -----------

NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(6,480,319) $(9,989,988) $(11,104,251)
=========== =========== ============

NET LOSS PER COMMON SHARE (BASIC) $ (0.13) $ (0.35) $ (0.51)
=========== =========== ============

NET LOSS PER COMMON SHARE (DILUTED)$ (0.13) $ (0.35) $ (0.51)
=========== =========== ============

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 50,961,457 28,746,341 21,824,273
=========== =========== ============

See notes to consolidated financial statements.

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
YEARS ENDED SEPTEMBER 30, 2003, 2002,
AND 2001
--------------------------------------------------------------------------------

2003 2002 2001

NET LOSS $ (6,371,498) $ (8,342,244) $ (10,733,679)

OTHER COMPREHENSIVE LOSS--Unrealized
gain on investments - 210 61,354
----------- ----------- ------------

COMPREHENSIVE LOSS $ (6,371,498) $ (8,342,034) $ (10,672,325)
============ ============ =============

See notes to consolidated financial statements.

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
YEARS ENDED SEPTEMBER 30, 2003, 2002,
AND 2001

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) (10,733,679)
----------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2001 5,863 59 21,952,082 219,521 75,641,365 (19,636) (210) (71,839,906) 4,001,193
Exercise of warrants 104,500 1,045 21,668 22,713
Stock issued to employees
for service 1,885,600 18,856 502,038 520,894
Repriced options (613,108) 19,636 (593,472)
Stock options issued to
non-employees for service (2,262) (2,262)
Stock issued to nonemployees
for service 45,596 456 45,140 45,596
Conversion of Preferred
Series E to common stock (4,671) (47) 4,282,150 42,822 (42,775) -
Dividends on Preferred Series
E paid in common stock 122,760 1,227 131,875 133,102
Dividends accrued on Preferred
Series E stock (202,987) (202,987)
Issuance of Series F
convertible debt with warrants -
and beneficial conversion feature 1,600,000 1,600,000
Conversion of Series F
convertible debt 5,611,344 56,113 1,403,885 1,459,998
Interest on Series F convertible
debt paid in common stock 1,269 13 752 765

(Continued)

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2003, 2002,
AND 2001

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

Accumulated
Preferred Additional Unearned Other Compre-
Series E Stock Common Stock Paid-In Compen- hensive Accumulated
Shares Amount Shares Amount Capital sation (Loss) Income Deficit Total
--------------------------------------------------------------------------------------------------
Issuance of Series G
convertible debt with warrants
and beneficial conversion
feature 690,709 690,709
Conversion of Series G
convertible debt 277,778 2,777 47,225 50,002
Issuance--common stock 150,000 1,500 148,500 150,000
401(k) contributions 193,818 1,938 69,885 71,823
Stock bonus to officer 75,071 751 88,583 89,334
Issuance of common stock for
equity line 2,553,174 25,532 1,341,265 1,366,797
Change in unrealized gain
(loss) of investment securities
available for sale 210 210
Net loss (8,342,244) (8,342,244)
---------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2002 1,192 12 37,255,142 372,551 80,871,758 - - (80,182,150) 1,062,171
Exercise of warrants 1,435,500 14,355 255,027 269,382
Stock issued to employees for
service 4,409,932 44,099 920,117 964,216
Stock options issued to
non-employees for service 6,727 6,727
Stock issued to non-employees
for service 559,089 5,591 123,100 128,691
Conversion of Preferred Series
E to common stock (1,192) (12) 1,018,439 10,184 (10,172) -
Dividends on Preferred Series
E paid in common stock 97,389 974 98,650 99,624
Dividends accrued on Preferred
Series E stock (21,189) (21,189)
Conversion of Series F
convertible debt 979,670 9,797 130,203 140,000
Interest on Series F
convertible debt paid in 22,608 226 4,040 4,266
common stock
Conversion of Series G
convertible debt 8,076,420 80,764 1,169,236 1,250,000
Interest on Series G convertible
debt paid in common stock 109,428 1,094 20,378 21,472

(Continued)

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2003, 2002,
AND 2001

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

See notes to consolidated financial statements.

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2003, 2002, AND
2001
-------------------------------------------------------------------------------

2003 2002 2001

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,371,498) (8,342,244) (10,733,679)
Adjustments to reconcile net loss to
net cash used for operating
activities:
Depreciation and amortization 199,117 226,514 209,121
Issuance of stock options for
services 6,727 (2,262) 167,087
Repriced options - (593,472) 593,472
Common stock bonus granted to officer - 89,334 262,000
Issuance of common stock for services 1,092,907 566,490 149,414
Common stock contributed to 401(k)
plan 47,051 71,823 93,705
Net realized (gain) loss on sale of
securities - (2,758) 9,831
Impairment loss on abandonment of
patents 9,828 39,960 30,439
Gain on retired equipment (5,913) - -
Gain on sale of equipment (26,463) - -
R&D expenses paid with note payable - 872,517 -
Amortization of deferred financing
costs 385,170 276,785 -
Amortization of discount on note
payable 113,300 262,500 -
Amortization of discount on
convertible debt 1,738,241 1,539,994 -
Changes in assets and liabilities:
(Increase) decrease in interest and
other receivables (15,574) 8,899 (1,124)
Decrease in prepaid expenses 87,752 413,935 972,318
Decrease in advances - - 728
Increase (decrease) in accounts
payable and accrued expenses 15,216 321,297 (346,553)
Increase in due to officer/shareholder
and employees 197,523 29,131 461
Increase in deposits held 3,000 - -
(Decrease) increase in deferred rent (15,192) (10,486) 6,396
----------- ----------- -----------
Net cash used for operating
activities (2,538,808) (4,232,043) (8,586,384)
----------- ----------- -----------
CASH FLOWS PROVIDED BY (USED FOR)
INVESTING ACTIVITIES:
Sales and maturities of investments - 596,352 3,219,064
Proceeds from disposal of equipment 7,812 - -
Purchases of equipment (6,905) (15,313) (168,537)
Expenditures for patent costs (93,509) (39,439) (35,797)
--------- --------- --------
Net cash (used for) provided
by investing activities (92,602) 541,600 3,014,730
--------- -------- ---------

(Continued)

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2003, 2002, AND
2001
---------------------------------------------------------------------------

2003 2002 2001

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:

Proceeds from issuance of
common stock 500,000 150,000 590,000
Proceeds from exercise of warrants 269,382 22,713 351
Draw-downs on equity line (net) 725,000 1,366,797 -
Exercise of stock options 2,200 - -
Proceeds from short-term loan 25,000 - -
Payment on short-term loan (25,000) - -
Payments on notes payable (276,122) - -
Proceeds from convertible debt 1,350,000 2,900,000 -
Costs for convertible debt
transactions (224,419) (453,781) -
Costs for equity related transactions (40,600) - (143,970)
---------- --------- --------
Net cash provided by
financing activities 2,305,441 3,985,729 446,381
---------- --------- -------
NET (DECREASE) INCREASE IN CASH (325,969) 295,286 (5,125,273)
---------- --------- ---------
CASH, BEGINNING OF YEAR 2,079,276 1,783,990 6,909,263
----------- ----------- --------

CASH, END OF YEAR $1,753,307 $2,079,276 $1,783,990
========== ========== ==========

(Continued)

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2003, 2002, AND 2001
------------------------------------------------------------------------------

SUPPLEMENTAL INFORMATION ON NONCASH
TRANSACTIONS 2003 2002 2001

CONVERSION OF COMMON STOCK INTO
PREFERRED STOCK:
Increase in preferred stock $ - $ - $ 63
Decrease in common stock - - (35,893)
Increase in additional paid-in capital - - 35,830
------ ------ ---------
$ - $ - $ -
======= ====== ========

CONVERSION OF PREFERRED STOCK INTO
COMMON STOCK:
Decrease in preferred stock $ (12) $ (47) $ (4)
Increase in common stock 10,184 42,822 3,488
Decrease in additional paid-in capital (10,172) (42,775) (3,484)
------- -------- --------
$ - $ - $ -
======= ====== ========

COMMON STOCK IN LIEU OF CASH DIVIDENDS
AND INTEREST ON PREFERRED STOCK:
Decrease in accrued liabilities $($99,625) (133,102) $ -
Increase in common stock 974 1,227 -
Increase in additional paid-in capital 98,651 131,875 -
--------- --------- --------
$ - $ - $ -
========= ======== ========

ACCRUAL OF DIVIDENDS ON PREFERRED STOCK:
Increase in accrued liabilities $ 21,189 $202,987 $ 53,153
Decrease in additional paid-in capital (21,189) (202,987) (53,153)
---------- -------- --------
$ - $ - $ -
========= ======== ========

ISSUANCE OF CONVERTIBLE DEBT WITH WARRANTS
AND BENEFICIAL CONVERSION:
Decrease in convertible debt $(1,054,647) $(2,290,709) $ -
Increase in additional paid-in capital 1,054,647 2,290,709 -
---------- --------- ---------
$ - $ - $ -
========= ======== =========

CONVERSION OF CONVERTIBLE DEBT INTO
COMMON STOCK:
Decrease in convertible debt $(2,640,000) $(1,510,000) $ -
Increase in common stock 120,600 58,890 -
Increase in additional paid-in capital 2,519,400 1,451,110 -
--------- --------- ---------
$ - $ - $ -
=========== ========= ==========

CONVERSION OF INTEREST ON CONVERTIBLE DEBT
INTO COMMON STOCK:
Decrease in accrued liabilities $(51,968) $ (765) $ -
Increase in common stock 2,120 13 -
Increase in additional paid-in capital 49,848 752 -
--------- --------- ---------
$ - $ - $ -
========== ========= ==========
CHANGES IN UNEARNED COMPENSATION
FOR VARIABLE OPTIONS:
Decrease in additional paid-in
capital $ - $ (19,636) $ -
Decrease in unearned compensation $ - $ 19,636 $ -
---------- --------- ----------
$ - $ - $ -
========= ======== =========

(Continued)

CEL-SCI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2003, 2002, AND 2001
------------------------------------------------------------------------------

SUPPLEMENTAL INFORMATION ON NONCASH TRANSACTIONS 2003 2002 2001

ACCRETION TO THE BENEFICIAL CONVERSION
ON PREFERRED STOCK:
Increase in additional paid-in capital $ 76,720 $ 1,444,757 $317,419
Decrease in additional paid-in capital (76,720) (1,444,757) (317,419)
---------- ----------- ---------
$ - $ - $ -
========= ========== ========

EQUIPMENT COSTS INCLUDED IN ACCOUNTS PAYABLE:
Increase in equipment costs $ (157) $ (677) $ -
Increase in accounts payable 157 677 -
--------- ---------- --------
$ - $ - $ -
========= ========== ========

PATENT COSTS INCLUDED IN ACCOUNTS PAYABLE:
Increase in patent costs $ (11,659) $ (17,321) $ -
Increase in accounts payable 11,659 17,321 -
---------- ---------- --------
$ - $ - $ -
========= ========== ========

BENEFICIAL CONVERSION FEATURE OF NOTE PAYABLE:
Increase in additional paid-in capital $ 106,716 $ - $ -
Decrease in notes payable (106,716) - -
--------- ---------- -------
$ - $ - $ -
========= ========== ========

SURRENDER OF DEPOSIT AND SALE OF EQUIPMENT TO
REDUCE NOTE PAYABLE:
Decrease in deposits $ 125,000 $ - $ -
Decrease in equipment, net 100,000 - -
Decrease in notes payable (225,000) - -
--------- --------- ---------
$ - $ - $ -
========= ========== ========

CONVERSION OF ACCOUNTS PAYABLE INTO NOTES PAYABLE:
Decrease in accounts payable $(199,928) $ - $ -
Increase in notes payable 199,928 - -
--------- --------- ---------
$ - $ - $ -
========= ========== ========
RECLASS OF INVENTORY TO EQUIPMENT:
Decrease in inventory $ 6,839 $ - $ -
Increase in equipment (6,839) - -
--------- --------- ---------
$ - $ - $ -
========= ========== ========

See notes to consolidated financial statements.

CEL-SCI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2003, 2002 AND 2001

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Significant accounting policies are as follows:

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

b. 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.

c. 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.

d. 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.

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

f. 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 years ended September 30, 2003, 2002 and
2001, the Company recorded patent impairment charges of $9,828, $39,960 and
$30,439 for the net book value of patents abandoned during the year. These
amounts are included in general and administrative expenses.

g. Net Loss Per Common 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.

h. 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.

i. Deferred Financing Costs--Deferred financing costs are capitalized and
expensed over the shorter of the period the notes are outstanding or on a
pro-rata basis as the notes are converted.

j. Income Taxes--Income taxes are accounted for using the asset and liability
method under which deferred tax liabilities or assets are determined based
on the difference between the financial statement and tax basis 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.

k. 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, and those investments that are readily convertible to known
amounts of cash and are so close to maturity that they bear no interest
rate risk, as cash and cash equivalents.

l. Convertible Debt--Convertible debt issued by the Company is initially
offset by a discount representing the relative fair value of the warrants
and beneficial conversion feature. This discount is amortized to interest
expense over the period the debt is outstanding and accelerated pro-rata as
the notes are converted. The fair value of the warrants and beneficial
conversion discount are calculated based on available market data using
appropriate valuation models. Notes 6 and 12 provide additional information
on the valuation of the warrants and beneficial conversion discount.

m. 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.

n. Reclassifications--Certain reclassifications have been made to the fiscal
year 2001 financial statements to conform with the presentation of fiscal
years 2003 and 2002.

o. New Accounting Pronouncements--In April 2003, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
(" SFAS") No. 149 "Amendment of SFAS No. 133 on Derivative Instruments and
Hedging Activities". The Statement amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities under SFAS No. 133. The
amendments set forth in SFAS No.149 improve financial reporting by
requiring that contracts with comparable characteristics be accounted for
similarly. In particular, SFAS No. 149 clarifies under what circumstances a
contract with an initial net investment meets the characteristics of a
derivative as discussed in SFAS No. 133. In addition, it clarifies when a
derivative contains a financing component that warrants special reporting
in the statement of cash flows. SFAS No. 149 amends certain other existing
pronouncements. Those changes will result in more consistent reporting of
contracts that are derivatives in their entirety or that contain embedded
derivatives that warrant separate accounting. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. The adoption of this SFAS No.
149 did not have a material effect on the Company's financial position,
results of operations or cash flows.

In May 2003, the FASB adopted SFAS No. 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". This Statement establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after
June 15, 2003. The adoption of SFAS No. 150 did not have a material effect
on the Company's financial position, results of operations or cash flows.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others", (FIN 45). FIN 45 establishes new
disclosure and liability recognition requirements for direct and indirect
debt guarantees with specified characteristics. The initial recognition
and measurement provisions of FIN 45 are applicable on a prospective basis
to guarantees issued or modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for financial statements
of interim or annual periods ending after December 15, 2002. The Company
adopted FIN 45 as of December 31, 2002 and the implementation did not have
a material effect on the Company's financial position, results of
operations or cash flows.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities", (FIN 46). FIN 46 provides guidance on the
consolidation of certain entities in which equity investors do not have
the characteristics of a controlling financial interest. Such entities are
referred to as variable interest entities. FIN 46 was effective
immediately for variable interest entities created or acquired after
January 31, 2003 and is effective July 1, 2003 for variable interest
entities created or acquired on or before January 31, 2003. In October
2003, the FASB issued Staff Position FIN 46.6, which extended the
effective date of FIN 46 for variable interest entities created or
acquired before February 1, 2003 to the first interim or annual period
ending after December 15, 2002. The Company anticipates that the adoption
of FIN 46 will not have a material effect on the Company's financial
position, results of operations or cash flows.

p. Stock-Based Compensation--In October 1996, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation". 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 APB No. 25, "Accounting for Stock Issued to
Employees, and related Interpretations". In December 2002, the FASB issued
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure" which amends SFAS No. 123. SFAS 148 provides alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation and requires
more prominent and more frequent disclosures in the financial statements
of the effects of stock-based compensation. The provisions of SFAS 148 are
effective for fiscal years ending after December 15, 2002. The Company has
elected to continue to account for its employee stock-based compensation
using the intrinsic value method. 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,
---------------------------------------
2003 2002 2001
---- ---- ----

Net loss:
As reported $(6,371,498) $(8,342,244) $(10,733,679)

Add/(subtract):
Recording of and reversal of
compensation expense for
stock-based performance
awards included in reported
net loss, net of related
tax effects - (593,472) 593,472
Add: Total stock-based
employee compensation expense
determined under fair-value
based method for all awards,
net of related tax effects (971,076) (990,949) (2,167,866)
--------- ---------- ----------
Pro forma $(7,342,574) $(9,926,665) $(12,308,073)

Net loss per common share:
As reported $ (0.13) $ (0.35) $ (0.51)
Pro forma $ (0.14) $ (0.40) $ (0.58)

The weighted average fair value at the date of grant for options granted
during fiscal years 2003, 2002 and 2001 was $0.22, $0.49, and $0.90, 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:

2003 2002 2001
---- ---- ----

Expected stock risk volatility 77% 90 to 93% 98 to 109%

Risk-free interest rate 3.12% 4.10 to 4.12% 3.12 to 4.12%

Expected life options 5 Years 5 Years 1 to 6Years

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 for fiscal years 2003 and 2002 equals the
yield on five-year zero-coupon U.S. Treasury issues on the grant date. The
risk-free rate of return used for fiscal year 2001 equals the yield on one
to six year zero-coupon U.S. Treasury issues in the date of grant. No
discount was applied to the value of the grants for nontransferability or
risk of forfeiture.

2. OPERATIONS AND FINANCING

The Company has incurred significant costs since its inception in connection
with the acquisition of certain patented and unpatented proprietary
technology and know-how relating to the human immunological defense system,
patent applications, research and development, administrative costs,
construction of laboratory facilities, and clinical trials. The Company has
funded such costs with proceeds realized from the public and private sale of
its common and preferred stock. The Company will be required to raise
additional capital or find additional long-term financing in order to
continue with its research efforts. The Company expects to receive additional
funding from private investors subsequent to September 30, 2003; however,
there can be no assurances that the Company will be able to raise additional
capital or obtain additional financing. To date, the Company has not
generated any revenue from product sales. The ability of the Company to
complete the necessary clinical trials and obtain 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. In fiscal year 2003 and fiscal year 2002, the
Company reduced its discretionary expenditures. If necessary, the Company
plans to further reduce discretionary expenditures in fiscal year 2004;
however such reductions would further 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 2004. Ultimately, the Company must complete the
development of its products, obtain the appropriate regulatory approvals and
obtain sufficient revenues to support its cost structure.

3. INVESTMENTS

There were no investments or associated unrealized gains or losses as of
September 30, 2003. The gross realized gains and losses of sales of
investments available-for-sale for the years ended September 30, 2003, 2002,
and 2001, are as follows:

2003 2002 2001
---- ---- ----
Realized gains
$ - $ 2,758 $14,997
Realized losses - - (24,828)
------ -------- --------
Net realized gain (loss) $ - $ 2,758 $(9,831)
====== ======== ========

4. RESEARCH AND OFFICE EQUIPMENT

Research and office equipment at September 30, 2003 and 2002, consist of the
following:

2003 2002
---- ----

Research equipment $ 1,999,475 $ 2,192,054
Furniture and equipment 238,422 265,685
Leasehold improvements 43,041 43,041
----------- ------------
2,280,938 2,500,780

Less: Accumulated depreciation and
amortization (2,002,232) (2,027,225)
------------ -----------

Net research and office equipment $ 278,706 $ 473,555
========== ===========

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, 2003 and 2002, are as follows:

2003 2002
---- ----

Depreciation $ (16,367) $ (17,244)
Prepaid expenses (135,719) (171,626)
Net operating loss carryforward 32,658,426 31,578,427
Other 2,103 7,870
Less: Valuation allowance (32,508,443) (31,397,427)
----------- -----------
Net deferred $ - $ -
============ ============

The Company has available for income tax purposes net operating loss
carryforwards of approximately $86,428,896, expiring from 2004 through 2023.
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 2003, 2002 and 2001, the Company's federal statutory tax
rate was 35%, and the state tax rate was 6%. The effective tax rate was 0%.
The difference between the rates was primarily attributable to the effect of
state taxes and the 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, 2003, the Company has
collectively authorized the issuance of 7,760,000 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,
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

Options granted 860,000 0.44
Options exercised - -
Options forfeited (146,632) 1.50
---------

Options outstanding, September 30,
2002 4,073,434 1.10 3,159,938 1.25

Options granted 2,582,165 0.22
Options exercised (6,667) 0.33
Options forfeited (194,959) 1.44
----------

Options outstanding, September 30,
2003 6,453,973 0.74 3,319,317 1.18
=========

At September 30, 2003, options outstanding and exercisable were as follows:

Weighted Weighted Weighted
Average Average Average
Range of Number Exercise Remaining Exercise
Exercise Out- Price Out- Contractual Number Price
Prices standing standing Life Exercisable Exercisable

$0.16 - $0.24 2,572,165 $0.22 9.49 years 6,667 $ 0.16
$0.33 - $0.50 443,333 $0.34 8.62 years 133,337 $ 0.33
$0.54 - $0.81 291,500 $0.54 8.51 years 97,167 $ 0.54
$1.05 - $1.58 2,443,266 $1.07 2.65 years 2,390,436 $ 1.06
$1.67 - $2.51 677,109 $1.79 1.96 years 665,110 $ 1.79
$3.25 - $4.88 25,800 $3.34 3.57 years 25,800 $ 3.34
$6.25 - $9.38 800 $6.25 5.00 years 800 $ 6.25

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, 2003, 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, and therefore, no
compensation expense was recorded.

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 originally 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. During the year ended September 30, 2002, the change in
the market value of the Company's common stock resulted in the reversal of
$364,532 of compensation expense. Changes in the fair market value of the
Company's stock may result in future changes to compensation expense. There
was no expense recorded during the year ended September 30, 2003. As of
September 30, 2003, all options remain outstanding.

In November 2001, the Company extended the expiration date on 242,000 options
at $1.05 from the Nonqualified Plans. The options were to expire between June
2002 and October 2002 and were extended by one year to June 2003 through
October 2003. The options had originally been granted between October 1989 to
December 1995. These dates were considered a new measurement date with
respect to all of the modified options. In addition, in February, April, and
July of 2002, the Company modified options outstanding to employees who had
been terminated in conjunction with their change in employee status so that
all options vested on the date of termination. These dates were considered a
new measurement date with respect to all of the newly vested options. At each
of the dates of modification, the exercise price of the options exceeded the
fair market value of the Company's common stock and no compensation expense
was recorded.

In November 2002 and March 2003, the Company extended the expiration date on
897,000 options from the Nonqualified Stock Option Plan with exercise prices
ranging from $1.05 to $1.94. The options originally expired from January 2003
to October 2003, but were extended to expiration dates ranging from January
2005 to October 2005. Each of these two dates was considered a new
measurement date. At each of the dates of modification, the exercise price of
the options exceeded the fair market value of the Company's common stock and
no compensation expense was recorded. As of September 30, 2003, all options
remain outstanding.

Incentive Stock Option Plan--At September 30, 2003, the Company has
collectively authorized the issuance of 4,100,000 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,
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

Options granted 81,000 1.08
Options exercised - -
Options forfeited - -
------

Options outstanding,
September 30, 2002 1,251,100 1.62 1,062,769 1.69

Options granted 2,550,000 0.22
Options exercised - -
Options forfeited - -
---------
Options outstanding,
September 30, 2003 3,801,100 0.68 1,162,768 1.65
=========

At September 30, 2003, options outstanding and exercisable were as follows:

Weighted Weighted Weighted
Average Average Average
Range of Number Exercise Remaining Exercise
Exercise Out- Price Out- Contractual Number Price
Prices standing standing Life Exercisable Exercisable

$0.22 - $0.33 2,550,000 $ 0.22 9.50 years - $ 0.00
$1.00 - $1.50 1,006,066 $ 1.08 4.75 years 924,400 $ 1.07
$1.85 - $2.78 81,167 $ 2.00 3.87 years 74,501 $ 2.02
$2.87 - $4.31 33,167 $ 3.35 1.07 years 33,167 $ 3.35
$4.50 - $6.75 129,600 $ 5.06 4.69 years 129,600 $ 5.06
$9.00 - $13.50 1,100 $ 10.09 2.73 years 1,100 $10.09

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, and
therefore, no compensation expense was recorded.

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 originally 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. During the year ended September 30, 2002,
this charge was completely reversed as the stock price declined. No expense
was recorded during the year ended September 30, 2003 related to these
options. As of September 30, 2003, all options remain outstanding. Changes in
the fair market value of the Company's common stock will result in future
changes in compensation expenses.

In November 2001, the Company extended the expiration date on 56,000 options
at $1.05 from the Incentive Stock Option Plan. The options were to expire
between November 2002 and December 2002, and were extended by one year to
November 2003 to December 2003. The options had originally been granted
between November 1999 and December 1992. This date was considered a new
measurement date with respect to the modified options. In addition, in
February, April, and July of 2002, the Company modified options outstanding
to employees who had been terminated in conjunction with their change in
employee status so that all options vested on the date of termination. At
each of the dates of modification, the exercise price of the options exceeded
the fair market value of the Company's common stock and no compensation
expense was recorded.

In March 2003, the Company extended the expiration date on 105,500 options
from the Incentive Stock Option Plan with exercise prices ranging from $1.05
to $1.94. The options originally expired from August 2003 to March 2004 but
were extended to expiration dates ranging from August 2005 to March 2006.
This was considered a new measurement date with respect to all of the
modified options. At each of the dates of modification, the exercise price of
the options exceeded the fair market value of the Company's common stock and
no compensation expense was recorded. As of September 30, 2003, all options
remain outstanding.

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
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 January 2002, the Company extended the expiration date further
to February 6, 2003. The additional incremental value at the date of the
modification of $5,997 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 fair value was valued using the
Black-Scholes pricing methodology. All warrants expired on February 6,
2003.

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. All outstanding options expired during the year ended
September 30, 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. On June 30, 2001, these 10,000
options expired. 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. In September 2002, the remaining 50,000 options at $5.00
expired. 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 were expensed over the life of the consultant's
contracts. All remaining options expired during the year ended 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 which time they expired.

During fiscal year 1999, the Company granted a 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. The
options expire February 4, 2004. At September 30, 2003, all 50,000 options
remained outstanding.

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 to July of 2006. As of
September 30, 2003, all options were outstanding. The fair value of 30,000
options was expensed immediately. The fair value of the remaining 150,000
options was expensed on a monthly basis as the options were earned and vested
over a period of one year. Total compensation of $77,206 was expensed for
these options. 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 3.12% to 4.12%
Expected life of option 3 Years
Expected dividend yield -0-

In connection with the April 2001 common stock purchase agreement discussed
in Note 13, 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 Years
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 13.
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 Years
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.

Series E warrants were issued in connection with the issuance of preferred
stock in August 2001. The Series E warrants allowed the holders to purchase
up to 815,351 shares of the Company's common stock at a price of $1.19 per
share at any time prior to August 16, 2004. In August 2003, in accordance
with the Series E agreement discussed in Note 13, the Company issued 23,758
warrants to purchase shares of common stock at a price of $0.77 per share.
The warrants are exercisable at any time prior to August 17, 2006. These
warrants were valued using the Black Scholes pricing methodology with the
following assumptions:

Expected stock risk volatility 94%
Risk-free interest rate 2.00%
Expected life of warrant 3 Years
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. These warrants are considered
a deemed dividend and the fair value, as determined using Black-Scholes, of
$10,912 is included in the accrued dividends on preferred stock in the
statements of operations for the year ended September 30, 2003.

As of September 30, 2003, all Series E warrants remained outstanding. As of
November 10, 2003, 244,724 warrants were exercised for proceeds of $291,222.

Warrants were issued in connection with the issuance of the convertible debt
in December 2001 and January 2002. The Series F warrants allowed 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. The warrant price is
adjusted every three months 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 the warrant exercise price is
adjusted, the number of shares of common stock issuable upon exercise of the

warrant would also be adjusted accordingly. On the date that the registration
statement was declared effective by the Securities and Exchange Commission
(SEC), and every three months following the effective date, the warrant
exercise price was adjusted to an amount equal to 110% of the conversion
price of the convertible debt on such date, provided that the adjusted price
was lower than the warrant exercise price on that date. In accordance with
the terms of the warrants, the exercise price was adjusted to $0.65 per share
on January 17, 2002. On April 17, 2002, the price was adjusted to $0.24, on
July 17, the price was adjusted to $0.19, and on October 17, 2002 the price
was adjusted to $0.153. There have been no further adjustments in accordance
with the terms of the warrants since the adjusted price would have been
higher. As of September 30, 2002, $1,460,000 of the notes had been converted
into 5,611,344 shares of common stock. As of November 30, 2002, all
convertible debt had been converted into a total of 6,592,461 shares of the
Company's common stock. In addition, 104,500 warrants were exercised during
the year ended September 30, 2002, for proceeds of $22,713. During the year
ended September 30, 2003, 435,500 warrants were exercised for proceeds of
$66,632. As of September 30, 2003, 420,000 warrants remained outstanding.

Warrants were also issued in connection with the issuance of the convertible
debt in July and September 2002. The Series G warrants allowed the holders to
purchase up to 900,000 shares of the Company's common stock at a price equal
to $0.25 per share at any time prior to July 12, 2009. If the Company 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 were convertible, as the
case may be. The warrant exercise price is adjusted every three months 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 the
warrant exercise price is adjusted, the number of shares of common stock
issuable upon the exercise of the warrant would 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 was reduced. In accordance with the terms of the
warrants, the exercise price was adjusted to $0.18 on December 9, 2002. The
exercise price was adjusted to $0.145 on March 9, 2003. In accordance with
the terms of the warrants, there were no further adjustments since the price
would have been higher. As of September 30, 2002, $50,000 of the notes had
been converted into 277,778 shares of common stock. During the year ended
September 30, 2003, all of the remaining convertible debt were converted into
8,076,420 shares of common stock for a total conversion of 8,354,198 shares
of common stock for Series G convertible debt. In addition, interest totaling
$21,472 was converted into 109,428 shares of common stock during the year
ended September 30, 2003. During the year ended September 30, 2003, 450,000
warrants were exercised for proceeds of $65,250. As of September 30, 2003,
450,000 warrants remain outstanding.

Warrants were also issued in connection with the issuance of the convertible
debt in January and July 2003. The Series H warrants allowed the holders to
purchase up to 1,100,000 shares of the Company's common stock at a price
equal to $0.25 per share at any time prior to January 7, 2010. If the Company
sells any additional shares of common stock, or any securities convertible
into common stock at a price below the then applicable exercise price of the
Series H warrants, the exercise price of the Series H warrants will be
lowered to the price at which the shares were sold or the lowest price at
which the securities are convertible. If the exercise price of the Series H
warrants is adjusted, the number of shares of common stock issuable upon the
exercise of the Series H warrants will be increased by the product of the
number of shares of common stock issuable upon the exercise of the warrant
immediately prior to the sale multiplied by the percentage by which the
warrant exercise price is reduced. However, neither the exercise price nor
the shares issuable upon the exercise of the Series H warrants will be
adjusted as the result of shares issued in connection with a permitted
financing. Every three months after June 26, 2003, the exercise price of the
Series H warrants will be adjusted to an amount equal to 110% of the
conversion price on such date, provided that the adjusted price is lower than
the warrant exercise price on that date. During the year ended September 30,
2003, $1,250,000 of the total Series H convertible debt were converted into
3,003,929 shares of common stock. Additionally, interest of $26,230 was
converted into 80,010 shares of common stock. As of October 2, 2003, all of
the Series H notes had been converted into a total of 3,183,358 shares of
common stock and total interest of $32,914 had been converted into 83,227
shares of common stock. During the year ended September 30, 2003, 550,000
warrants were exercised at $0.25 for proceeds of $137,500. As of September
30, 2003, 550,000 warrants remain outstanding.

Warrants were issued in connection with obtaining an equity line of credit in
September 2003, discussed in Note 13. There were 395,726 warrants issued at
an exercise price of $0.83, which expire in September 2008. The fair value of
these warrants of $244,867 was determined 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 5 Years
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 addition, 30,000 options were issued to a consultant in May 2003 at a
price of $0.41. The options vest over a three year period and expire in May
2013. The compensation expense for these options was determined using the
Black Scholes pricing methodology with the following assumptions:

Expected stock risk volatility 84%
Risk-free interest rate 2.0%
Expected life of warrant 3 Years
Expected dividend yield -0-

The fair value of the options was recorded as general and administrative
expense. Compensation expense of $6,727 was recorded for the year ended
September 30, 2003.

In connection with an agreement with a private investor in May 2003, which is
discussed in Note 14, 1,100,000 warrants were issued with an exercise price
of $0.47. The warrants initially expired May 30, 2006. In accordance with the
terms of the agreement, the expiration was extended to May 30, 2008 on
September 30, 2003. The fair value of these warrants of $710,919 was
determined using the Black-Scholes pricing methodology with the following
assumptions:

Expected stock risk volatility 93%
Risk-free interest rate 2.00%
Expected life of options 5 Years
Expected dividend yield -0-

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

Stock Bonus Plan--At September 30, 2003, the Company had been authorized to
issue up to 1,940,000 shares of common stock under the Stock Bonus Plan. All
employees, directors, officers, consultants, and advisors are eligible to be
granted shares. During the year ended September 30, 2002, 327,530 shares with
related expenses of $186,594 were issued under the Plan and recorded in the
consolidated statement of operations. During the year ended September 30,
2003, 134,336 shares with related expenses of $47,051 were issued under the
Plan and recorded in the consolidated statement of operations.

7. EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution retirement plan, qualifying
under Section 401(k) of the Internal Revenue Code, subject to the Employee
Retirement Income Security Act of 1974, as amended, and covering
substantially all Company employees. Each participant's contribution is
matched by the Company with shares of common stock that have a value equal to
100% of the participant's contribution, not to exceed the lesser of $10,000
or 6% of the participant's total compensation. The Company's contribution of
common stock is valued each quarter based upon the closing bid price of the
Company's common stock. The expense for the years ended September 30, 2003,
2002, and 2001, in connection with this Plan was $48,437, $71,823, and
$93,705, 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. During the year ended September 30, 2003, there were no options issued
in lieu of compensation.

9. COMMITMENTS AND CONTINGENCIES

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

Year Ending September 30, 2004 $93,910
=======

Rent expense for the years ended September 30, 2003, 2002, and 2001, was
$276,564, $229,428 and $220,903, respectively. Minimum payments have not been
reduced by minimum sublease rental receivable under future noncancelable
subleases totaling $7,500.

Employment Contracts--In March 2002 the Company entered into a three-year
employment agreement with its President and Director which expires March 31,
2005. The employment agreement provides that Company will pay him an annual
salary of $363,000 during the term of the agreement. In the event that there
is a material reduction in his authority, duties or activities, or in the
event there is a change in the control of the Company, then the agreement
allows him to resign from his position at the Company and receive a lump-sum
payment from the Company equal to 18 months salary. For purposes of the
employment agreement, a change in the control of the Company means the sale
of more than 50% of the outstanding shares of the Company's Common Stock, or
a change in a majority of the Company's directors.

Effective September 1, 2003, the Company entered into a three-year employment
agreement with its Chief Executive and Financial Officer. The employment
agreement provides that during the term of the employment agreement the
Company will pay him an annual salary of $370,585. In the event there is a
change in the control of the Company, the agreement allows him to resign from
his position at the Company and receive a lump-sum payment from the Company
equal to 24 months salary. For purposes of the employment agreement a change
in the control of the Company means: (1) the merger of the Company with
another entity if after such merger the shareholders of the Company do not
own at least 50% of voting capital stock of the surviving corporation; (2)
the sale of substantially all of the assets of the Company; (3) the
acquisition by any person of more than 50% of the Company's common stock; or
(4) a change in a majority of the Company's directors which has not been
approved by the incumbent directors.

10.CAMBREX NOTE PAYABLE

On November 15, 2001, the Company signed an agreement with Cambrex Bio
Science, Inc., (Cambrex) in which Cambrex provided manufacturing space and
support to the Company during November and December 2001 and January 2002. In
exchange, the Company signed a note with Cambrex to pay a total of
$1,172,517, to Cambrex. In December 2001, the note was amended to extend the
due date to January 2, 2003. Unpaid principal began accruing interest on
November 16, 2002, at the Prime Rate plus 3%. The note is collateralized by
certain equipment. The imputed interest on this note has been capitalized and
is being expensed over the life of the loan. As shown in the consolidated
balance sheet, this liability is recorded at September 30, 2002, along with
an unamortized discount of $37,500 representing imputed interest. Interest
expense of $262,500 has been recorded on the note for the year ended
September 30, 2002. In December 2002, the Company negotiated an extension of
the note with Cambrex. Per the agreement, the Company gave Cambrex certain
equipment and surrendered a security deposit, which reduced the amount owed
by $225,000. The remaining balance is payable pursuant to a note due January
2, 2004. In addition, the agreement required the Company to pay $150,000 on
the note from the Series H convertible debt and 10% of all other future
financing transactions, including draws on the equity line-of-credit. During
the year ended September 30, 2003, the Company paid down the note by
$485,524. The Company also recorded interest expense of $49,486 and amortized
the remaining discount of $37,500 from the year ended September 30, 2002.
There are also conversion features allowing Cambrex to convert either all or
part of the note into shares of the Company's common stock. The principal
balance of the note and any accrued interest are convertible into common

stock at 90% of the average of the closing prices of the common stock for the
three trading days immediately prior to the conversion date subject to a
floor of $0.22 per share. A beneficial conversion cost of $106,716 was
recorded during the year for the difference between the conversion price of
the stock and the market price of the stock. Of this amount, $75,800 was
amortized during the year ended September 30, 2003, leaving $30,916 as a
discount to the note recorded in the balance sheet at September 30, 2003. As
of September 30, 2003, there is $686,992 in principal remaining unpaid.

11. COVANCE NOTE PAYABLE

On October 8, 2002, the Company signed an agreement with Covance AG
(Covance), a Swiss Corporation. Pursuant to the agreement, amounts owed to
Covance totaling $199,928 as of June 30, 2003 were converted to note payable.
The note is payable on January 2, 2004. Interest will be payable at an annual
rate of 8%. Until the entire amount has been paid to Covance, Covance is
entitled to receive 2% of any draw-down of the Company's equity credit line,
2% of any net funds received from outside financings of less than $1 million,
3% of any net funds received from outside financings greater than $1 million
but less than $2 million and 4% of any net funds received from outside
financings greater than $2 million. During the year ended September 30, 2003,
the Company paid $15,598 on the note payable to Covance in accordance with
the agreement.

12. CONVERTIBLE DEBT

In December 2001, the Company agreed to sell redeemable convertible debt and
Series F warrants, to a group of private investors for proceeds of
$1,600,000, less transaction costs of $276,410 of which $15,116 was included
in deferred financing costs in the accompanying balance sheet as of September
30, 2002. The notes bore interest at 7% per year and would have been due and
payable December 31, 2003. Interest was payable quarterly beginning July 1,
2002. The notes were 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 were 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 $0.57; however the floor could have been lowered if the
Company sold 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 were 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 drawdown limits under the Company's equity line
of credit.

So long as the notes remained outstanding, the note-holders had a first right
of refusal to participate in any subsequent financings involving the Company.
If the Company had entered into any subsequent financing on terms more
favorable than the terms governing the notes and warrants, then the
note-holders could have exchanged notes and warrants for the securities sold
in the subsequent financing.

The entire balance of the convertible debt was initially offset by a discount
of $1,600,000 which represented the relative fair value of the Series F
warrants of $763,000 and a beneficial conversion discount of $837,000. The
discount on outstanding convertible debt was amortized to interest expense as
the notes were converted. As of September 30, 2002, $1,460,000 of the notes
had been converted into 5,611,344 shares of common stock. In addition,
$1,512,500 of the discount had been amortized to interest expense as of
September 30, 2002. As of November 30, 2002, all convertible debt had been
converted into a total of 6,592,461 shares of the Company's common stock and
all of the discount had been amortized to interest expense. All deferred
financing costs had also been amortized to interest expense as of November
30, 2002.

In July and September 2002, the Company sold convertible debt, plus Series G
warrants, to a group of private investors for $1,300,000 less transaction
costs of $177,370, of which $161,879 was included in deferred financing costs
in the accompanying balance sheet as of September 30, 2002. The notes bore
interest at 7% per year and were due and payable September 9, 2004. Interest
was payable quarterly beginning October 1, 2002. The notes were secured by
substantially all of the Company's assets and contained certain restrictions,
including limitations on such items as indebtedness, sales of common stock
and payment of dividends. At the holder's option the notes were convertible
into shares of the Company'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 the Company's common stock on the American

Stock Exchange during the 15 trading days immediately prior to the conversion
date. The Conversion Price could not be less than $0.18. However, if the
Company's common stock traded for less than $0.24 per share for a period of
20 consecutive trading days, the $0.18 minimum price would no longer have
been applicable. The Conversion Price would have declined from 76% to 60% if
(i) on any trading day after September 9, 2002 the closing daily price of the
Company's common stock multiplied by the total number of shares of common
stock traded on that day is less than $29,977, (ii) the Company defaulted in
the performance of any material covenant, condition or agreement with the
holders of the notes or, (iii) the Company's common stock was delisted from
the American Stock Exchange.

If the Company sold 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 would have been lowered to the price at which the
shares were sold or the lowest price at which the securities were
convertible, as the case may be. If the Company had sold any additional
shares of common stock, or any securities convertible into common stock at a
price below the market price of the Company's common stock, the Conversion
Price would have been lowered by a percentage equal to the price at which the
shares were sold or the lowest price at which the securities were
convertible, as the case may be, divided by the then prevailing market price
of the Company's common stock.

So long as the notes remained outstanding, the note holders had a first right
of refusal to participate in any subsequent financings involving the Company.
If the Company had entered into any subsequent financing on terms more
favorable than the terms governing the notes and warrants, then the note
holders could have exchanged notes and warrants for the securities sold in
the subsequent financing. A portion of the proceeds was initially offset by a
discount of $690,706, which represents the relative fair value of the Series
G warrants of $83,340 and a beneficial conversion discount of $677,140. As of
September 30, 2002, $50,000 of the notes had been converted into 277,778
shares of common stock. In addition, $27,496 of the discount on the debt had
been amortized to interest expense. During the year ended September 30, 2003,
the balance of the notes were converted into an additional 8,076,420 shares
of common stock. In addition, interest totaling $21,472 was converted into
109,428 shares of common stock during the year ended September 30, 2003. All
of the remaining discount and deferred financing costs were amortized to
interest expense during the year ended September 30, 2003.

In January and July 2003, the Company sold convertible debt, plus Series H
warrants to purchase up to 1,100,000 shares of common stock, to a group of
private investors for $1,350,000 less transaction costs of approximately
$220,419, of which $16,243 is included in deferred financing costs in the
accompanying balance sheet as of September 30, 2003. The first funds,
totaling $600,000, were received in January 2003 and the balance of $750,000
was received on July 2, 2003. The notes bear interest at 7% per year. The
first notes will be due and payable January 7, 2005 and the second notes will
be due and payable July 7, 2005. Interest is payable quarterly. The notes are
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. At the holders' option the notes are
convertible into shares of the Company'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 defaults to 60% of the average
of the three lowest daily trading prices of the Company's common stock on the
American Stock Exchange during the 15 trading days immediately prior to the
conversion date in the event of default. On May 8, 2003, the Company signed
an amendment to the agreement that prevented the conversion price from
defaulting to 60%. In the agreement, the conversion price declines to 70% of
the average of the three lowest daily trading prices of the Company's common
stock if the price of the stock climbs over $0.50. If the Company 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. On May 30, 2003, the
price of the Company's stock rose above $0.50. In accordance with the
agreement, the discount percentage changed from 76% to 70%. This change
increased the discount on the debt that the Company recorded for the Series H
convertible debt by $67,669 and is included in the $1,054,647 total discount.

During the year ended September 30, 2003, $1,250,000 of the notes had been
converted into 3,003,929 shares of common stock. Additionally, $1,023,731 of
the total discount of $1,054,647 had been amortized to interest expense.
Interest of $26,230 was converted into 80,010 shares of common stock during
the year ended September 30, 2003. As of October 2, 2003, all of the Series H
notes had been converted into a total of 3,183,358 shares of common stock and
total interest of $32,914 had been converted into 83,227 shares of common
stock.

13. 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 expired December 22, 2001. 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 were 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
allowed 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 was restricted from entering
into any other equity line of credit arrangement and the agreement expired in
June 2003. As discussed in Note 6, the Company issued 200,800 warrants to the
issuer pursuant to this agreement. During the year ended September 30, 2002,
the Company sold 2,553,174 shares of its common stock pursuant to this
agreement for net proceeds of $1,366,797. During the year ended September 30,
2003, the Company sold 2,877,786 shares of its common stock pursuant to this
agreement for net proceeds of $725,000.

During fiscal year 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%. During the year ended September 30,
2002, the Company incurred $202,987 in dividends. Dividends paid in common
stock totaled $133,103, interest expense on unpaid dividends was $9,404 and
accrued dividends and interest payable was $78,436 at September 30, 2002. For
the year ended September 30, 2003, the Company incurred $32,101 in
dividends,. During the year ended September 30, 2003, $99,624 in accrued
dividends and interest were converted into 97,389 shares of common stock.
There were no dividends and interest payable on the Preferred stock at
September 30, 2003.

All outstanding shares of the Company's Series E Preferred Stock, 39 shares,
were automatically converted on August 17, 2003, (the Automatic Conversion
Date) into 47,531 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.

In addition, the Company issued 23,758 common stock purchase warrants which
was one warrant for each share of the Series E Preferred stock outstanding as
of August 17, 2003 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. Since the terms of
these warrants were contingent, no accounting has been given to such warrants
in the accompanying consolidated financial statements as of September 30,
2002. As of September 30, 2003, the warrants were valued using Black Scholes
methodology as discussed in Note 6 and the resulting costs of $10,912 were
recorded as a deemed dividend as a debit and an offsetting credit to
additional paid-in capital as the Company is in a deficit position. See Note
6 for further discussion of the warrants issued at the time the Preferred
stock converted to common stock.

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 Years
Expected dividend yield -0-

Pursuant to the exchange, the holders received a beneficial conversion
discount in the amount of $5,365,381, which was accreted to additional
paid-in capital over a two-year period. During the years ended September 30,
2003, September 30, 2002 and September 30, 2001, $76,720, $1,444,757 and
$317,419, respectively, of the beneficial conversion discount was accreted.
During the year ended September 30, 2002, 4,671 shares of the Series E
Preferred Stock were converted into 4,282,150 shares of common stock. During
the year ended September 30, 2003, 1,192 shares of the Series E Preferred
stock were converted into 1,018,439 shares of common stock. As of September
30, 2003, there are no shares of Series E Preferred stock remaining.

In October 2001, the Company issued 150,000 shares of common stock in a
private offering for proceeds of $150,000. 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 May 2003, the Company sold 1,100,000 shares of common stock and an
additional 1,100,000 warrants to purchase common stock in conjunction with a
marketing agreement as discussed in Note 6. The Company received proceeds of
$500,000 for the stock and warrants. The warrants are exercisable at a price
of $0.47 per The warrants initially expired May 30, 2006. In accordance with
the terms of the agreement, the expiration was extended to May 30, 2008

In September 2003, the Company signed a common stock purchase agreement that
allowed the Company at its discretion to draw up to $10 million of common
stock in increments of a minimum of $100,000 and a maximum amount that can be
drawn down at any one time that will be determined at the time of the
drawdown request, using a formula contained in the agreement. The Company is
restricted from entering into any other equity line of credit arrangement
until the earlier of the expiration of the agreement or two years from the
date of registration. As discussed in Note 6, the Company issued 395,726
warrants to the issuer at a price of $0.83 and the warrants expire September
16, 2008 pursuant to the agreement. There were no drawdowns on this line of
credit as of September 30, 2003 as the registration statement for the shares
is not yet effective. Expenses of $40,600 were recorded to additional paid-in
capital as a cost of equity related - transaction during the year ended
September 30, 2003.

14. MARKETING AGREEMENT

On May 30, 2003, the Company and Eastern Biotech signed an agreement to
develop both Multikine and CEL-1000, and their derivatives and improvements,
in three Eastern European countries: Greece, Serbia and Croatia. Eastern
Biotech also has the exclusive right to sales in these three countries. As
part of the agreement, Eastern Biotech gained the right to receive a 1%
royalty on the future net sales of these two products and their derivatives
and improvements worldwide. Eastern Biotech also purchased 1,100,000 shares
of common stock and warrants, which allow the holder to purchase up to
1,100,000 shares of the Company's common stock at a price equal to $0.47. The
Company received proceeds of $500,000 for these shares and warrants. Because
the Company did not register these shares prior to September 30, 2003, the
royalty percentage increased to 2%. If Eastern Biotech does not meet certain
clinical development milestones within one year, it will lose the right to
sell both products in these three countries.

15. NET LOSS PER COMMON SHARE

Basic earnings per share (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 4,906,527, 11,118,168 and
6,876,972 potentially dilutive securities outstanding at September 30, 2003,
2002 and 2001, respectively, that were not included in the computation of
diluted loss per share because to do so would have been antidilutive 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.

2003 2002 2001

Net loss per common share (basic and $(0.13) $(0.35) $(0.51)
======= ======= =======

16. SEGMENT REPORTING

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

17. SUBSEQUENT EVENT

On December 1, 2003, CEL-SCI sold 2,994,964 shares of its common stock, to a
group of private institutional investors for approximately $2,550,000, or
$0.85 per share. As part of this transaction, the investors in the private
offering received Series J warrants which allow the investors to purchase
899,988 shares of CEL-SCI's common stock at a price of $1.32 per share at any
time prior to December 1, 2006.

******

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.................................................
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 $ 463
Blue Sky Fees and Expenses 100
Printing and Engraving Expenses 2,000
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 10,000
Miscellaneous Expenses 2,437
---------

TOTAL $35,000
=======

All expenses other than the SEC filing fees are estimated.

Item 14. Indemnification of Officers and Directors.

Section 7-109-102 of the Colorado Revised Statutes and CEL-SCI's Bylaws
provides 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.

In May 2003, the Company entered into an agreement with Eastern Biotech
which provided Eastern Biotech with the following (i) the exclusive right to
distribute MULTIKINE and CEL-1000 in Greece, Serbia and Croatia, (ii) a royalty
equal to 1% of the Company's net sales of MULTIKINE and CEL-1000 prior to May
30, 2033, (iii) 1,100,000 shares of the Company's common stock and, (iv)
warrants which allow Eastern Biotech to purchase an additional 1,100,000 shares
of the Company's common stock at a price of $0.47 per share at any time prior to
May 30, 2006.

In July 2003, the Company issued 120,608 shares of its common stock to
certain employees and directors in lieu of salary and fees.

In August 2003, the Company issued 47,831 shares of its common stock in
payment of approximately $26,000 in accrued and unpaid dividends which were owed
to a holder of the Company's Series E preferred stock.

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

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

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

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

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

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

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

5. Opinion of Counsel (1)
---------------------------------------

10(d) Employment Agreement with Incorporated by reference to Exhibit
Maximilian de Clara 10(d) to CEL-SCI's Registration
Statement on Form S-1 (Commission File
#333-102639).

10(e) Employment Agreement with Incorporated by reference to Exhibit
Geert Kersten 10(e) of CEL-SCI's Registration
Statement on Form S-3 (Commission File
#106879).

10(q) Common Stock Purchase Agreement (1)
with Rubicon Group Ltd. ------------------------------------

10(r) Stock Purchase Warrant issued to (1)
Rubicon Group Ltd. -----------------------------------

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

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

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

10(v)Note and Warrant Purchase Agreement Incorporated by reference to Exhibit
(together with Schedule required by 10(v) to CEL-SCI's Registration
Instruction 2 to Item 601 Regulation Statement on Form S-3 (Commission
S-K) pertaining to notes sold in File Number 333- 76396)
December 2001 and January 2002

10(vi) Note and Warrant Purchase Incorporated by reference to Exhibit
Agreement (together with Schedule (vi)to CEL-SCI's Registration
required by Instruction 2 to Item statement on Form S-3 (Commission File
601 Regulation S-K) pertaining to No. 333-97171)
Series G notes and warrants

10(vii) Note and Warrant Purchase Incorporated by reference to Exhibit
Agreement (together with 10 to CEL-SCI's report on Form 8-K
Schedule required by Instruction dated January 14, 2003
2 to Item 601 Regulation S-K)
pertaining to Series H notes
and warrants

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

10(y)Common Stock and Warrant Purchase Incorporated by reference to Exhibit
Agreement (together with Schedule 10 to CEL-SCI's report on Form 8-K
required by Instruction 2 to Item dated December 1, 2003.
601 Regulation S-K).

23(a) Consent of Hart & Trinen (1)
-----------------------------------

(b) Consent of Deloitte & Touche, LLP
----------------------------------

(1) Filed with original registration statement.

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

The undersigned Registrant hereby undertakes:

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

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

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

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

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

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

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, Commonwealth of Virginia, on the 8th day of
December 2003.

CEL-SCI CORPORATION

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

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

Signature Title Date

/s/ Maximilian de Clara Director and Principal December 8, 2003
------------------------
Maximilian de Clara Executive Officer

/s/ Geert R. Kersten Director, Principal December 8, 2003
------------------------ Financial Officer
Geert R. Kersten and Chief Executive Officer

/s/ Alexander G. Esterhazy Director December 8, 2003
---------------------------
Alexander G. Esterhazy

/s/ C. Richard Kinsolving Director December 8, 2003
--------------------------
C. Richard Kinsolving, Ph.D.

/s/ Peter R. Young Director December 10, 2003
------------------------
Peter R. Young, Ph.D.

CEL-SCI CORPORATION
REGISTRATION STATEMENT ON
FORM S-1

EXHIBITS