Liquidity and Capital Resources

The Company has had only limited revenues from operations since its inception in March 1983. The Company has relied upon proceeds realized from the public and private sale of its Common Stock and convertible notes as well as short-term borrowings to meet its funding requirements. Funds raised by the Company have been expended primarily in connection with the acquisition of an exclusive worldwide license to, and later purchase of, certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system, patent applications, the repayment of debt, the continuation of Company sponsored research and development and administrative costs, and the construction of laboratory facilities. Inasmuch as the Company does not anticipate realizing significant revenues until such time as it enters into licensing arrangements regarding its technology and know-how or until such time it receives permission to sell its product (which could take a number of years), the Company has been dependent upon the proceeds from the sale of its securities to meet all of its liquidity and capital resource requirements and will have to continue doing so in the future.

During the six-month periods ended March 31, 2009 and 2008, the Company used cash totaling $57,092 and $10,728,203, respectively. For the six months ended March 31, 2009 and 2008, cash used in operating activities totaled $1,708,634 and $3,251,036. For the six months ended March 31, 2009 and 2008, cash provided by financing activities totaled $1,218,734 and $180,443, respectively. Licensing proceeds of $1,249,982 and receipt of short-term loans of $570,000 provided funds. The repayment of convertible notes ($365,000), financing costs ($36,248) and the repayment of the short-term loan ($200,000) were used in financing activities during the six months ended March 31, 2009. For the six months ended March 31, 2008, cash provided by financing was from the exercise of employee options ($14,403). Repayment of convertible notes of $480,000 used cash in financing activities. Cash provided by investing activities was $432,808 and $7,657,610 was used in investing activities for the six months ended March 31, 2009 and 2008, respectively. For the six months ended March 31, 2009 and 2008, the use of cash in investing activities consisted of purchases of equipment and legal costs incurred in patent applications and, for the six months ended March 31, 2009, the sale of the final $200,000 in ARPs.

The Company has two partners who have agreed to participate in and pay for part of the Phase III clinical trial for Multikine. However in light of the current capital market environment, the Company believes it is prudent not to start the Phase III clinical trial until it has firm commitments in the form of partnerships and/or money raised for a substantial amount of cash to support the Phase III clinical trial. In the meantime, the Company will operate at significantly reduced cash expenditure levels and additional cash may be raised by offering contract manufacturing services to the pharmaceutical industry in its new manufacturing facility. The Company expects that it will need to raise additional capital in fiscal year 2009 in the form of corporate partnerships and/or equity financings to support its operations at its current rate. If the Company does not raise this additional capital during 2009, the Company expects to finance its operations either through its $5 million equity line of credit or additional loans from the Company's President. The Company is currently working

towards a transaction which will finance its Phase III clinical trial of Multikine. The Company believes that it will be able to obtain additional financing since Multikine is a Phase III product designed to treat cancer, an area that pharmaceutical companies are increasingly targeting. It is important to note that the Company's expenditures for fiscal year 2008 included several very large non-recurring expenses that amounted to several million dollars, mostly related to the build out of the manufacturing facility. These expenses will not recur in fiscal year 2009, thereby reducing the Company's expenditures significantly. Beyond those savings the Company has also made other very significant cuts in its expenditures. In addition, the Company has put in place a $5 million Equity Line of Credit (see Note D). With this Equity Line of Credit in place the Company believes it will have the required capital to continue operations through March 2010. However, if necessary the Company can make further reductions in expenditures by a reduction in force or by implementation of a salary reduction program.

The Company has determined that the convertible debt holders of the Series K Notes may require repayment of the entire remaining principal balance at any time after August 4, 2009. This debt can be paid in stock and may not require a cash payment. In addition, in December 2008, CEL-SCI was not in compliance with certain lease requirements (i.e., failure to pay an installment of Base Annual Rent). This resulted in a lease amendment pursuant to which the landlord agreed to defer 3 months (December - February) of rent which will be paid back incrementally from future financings. In return, the Company extended 3,000,000 warrants by one year and repriced these warrants from $1.25 to $0.75 and the landlord was issued an additional 787,000 warrants at $0.75. Both warrants expire on January 26, 2014. The cost of the warrants ($115,721) was accounted for as a debit to deferred rent and a credit to additional paid-in capital. In March 2009, the Company began paying half of the basic monthly rent while it is negotiating for additional capital. As of March 31, 2009, the Company and the landlord were cooperating while the Company is negotiating various financial transactions.

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

It should be noted that substantial funds will be needed for the clinical trial which will be necessary before the Company 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, the Company will be required to raise additional funds through the sale of securities, debt financing or other arrangements in order to continue with its research efforts. However, there can be no assurance that such financing will be available or be available on favorable terms. Ultimately, the Company must complete the development of its products, obtain appropriate regulatory approvals and obtain sufficient revenues to support its cost structure.

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

The Company had invested in ARPs (See Note C). Because of liquidity issues with these ARPs, the Company borrowed $200,000 on a line of credit which was paid off in November of 2008.

Results of Operations and Financial Condition

During the six-month period ended March 31, 2009, research and development expenses increased by $147,433 compared to the six-month period ended March 31, 2008. This increase was due to continuing expenses relating to the preparation for the Phase III clinical trial on Multikine. During the three-month period ended March 31, 2009, research and development expense was relatively unchanged, with a decrease of only $11,827, caused by the layoff of some nonessential personnel in the lab. The Company is preparing for the beginning of the Phase III clinical trial.

During the six-month period ended March 31, 2009, general and administrative expenses decreased by $685,044 compared to the six-month period ended March 31, 2008. This decrease was caused by the Company having extended and repriced options during the six-month period ended March 31, 2008 of $465,008 and the expensing of stock issued to employees in the six-month period ended March 31, 2008 of $378,350 compared to a cost of employee stock issued in prior periods but expensed in the six-month period ended March 31, 2009 of only $81,372, a decrease of $296,978. This decrease from March 31, 2008 to March 31, 2009 was partially offset by higher insurance costs of approximately $16,500. During the three-month period ended March 31, 2009, general and administrative expenses increased slightly, $45,579, primarily because of a writeoff of abandoned patents of approximately $17,000, an increase in insurance of approximately $7,650 and an increase in filing fees of approximately $15,000.

Interest income during the six months ended March 31, 2009 decreased by $196,590 compared to the six-month period ended March 31, 2008. The decrease was due to the decrease in the funds available for investment. Interest income declined by approximately $89,100 during the three months ended March 31, 2009 for the same reason.

The gain on derivative instruments of $656,243 for the six months ended March 31, 2009, and the gain on derivative instruments of $264,554 was the result of the change in fair value of the Series K Notes and Series K Warrants during the period. These gains were caused by fluctuations in the share price of the Company's common stock.

The interest expense of $169,493 for the six months ended March 31, 2009 was composed of four elements: 1) amortization of the Series K discount ($80,551),
2) interest paid and accrued on the Series K debt ($74,650), 3) margin interest ($813) , and 4) interest on the short term loan ($13,479). This is a decline of approximately $96,000 from the six months ended March 31, 2008 because of the lower balance of Series K debt. The corresponding amounts for the three months ended March 31, 2009 are: 1)$36,902, 2) $34,495, 3) $-0- and 4) $13,479.

Research and Development Expenses

During the six-month periods ended March 31, 2009 and 2008, the Company's
research and development efforts involved Multikine and L.E.A.P.S.(TM). The
table below shows the research and development expenses associated with each
project during the six and three-month periods.

                         Six Months Ended           Three  Months Ended
                            March 31,                    March 31,
                         2009         2008          2009             2008
                        ----          ----          ----             ----

   MULTIKINE        $2,158,414     $1,865,345    $  970,188      $  956,397
   L.E.A.P.S            55,048        200,684        55,048          80,666
                    ----------     ----------    ----------      ----------
   TOTAL            $2,213,462     $2,066,029    $1,025,236      $1,037,063
                    ==========     ==========    ==========      ==========

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

As of March 31, 2009, the Company was involved in a number of pre-clinical studies with respect to its L.E.A.P.S. technology. The Company does not know what obstacles it will encounter in future pre-clinical and clinical studies involving its L.E.A.P.S. technology.

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

In August 2007, the Company leased a building near Baltimore, Maryland. The building, which consists of approximately 73,000 square feet, will be remodeled in accordance with the Company specifications so that it can be used by the Company to manufacture Multikine for the Company's Phase III clinical trial and sales of the drug if approved by the FDA. The lease is for a term of twenty years and requires annual base rent payments of $1,575,000 during the first year of the lease. The annual base rent escalates each year at 3%. the Company is also required to pay all real and personal property taxes, insurance premiums, maintenance expenses, repair costs and utilities. The lease allows the Company, at its election, to extend the lease for two ten-year periods or to purchase the building at the end of the 20-year lease. The lease required the Company to pay $3,150,000 towards the remodeling costs, which will be recouped by reductions in the annual base rent of $303,228 in years six through twenty of the lease. In January 2008, the Company signed a second amendment to the lease. In accordance

with the lease, on February 8, 2008, the Company paid an additional $1,295,528 toward the remodeling costs and a further $518,790 to pay for lab equipment. In addition, in April 2008, an additional $288,474 was paid for the completion of the facility. In July 2008, CEL-SCI was required to deposit the equivalent of one year's base rent in accordance with the contract. The $1,575,000 was required to be deposited when the amount of cash CEL-SCI had fell below the amount stipulated in the lease. The Company took possession of the manufacturing facility in October 2008.

Regulatory authorities prefer to see biologics such as Multikine manufactured for commercial sale in the same manufacturing facility for Phase III clinical trials and the sale of the product since this arrangement helps to ensure that the drug lots used to conduct the clinical trials will be consistent with those that may be subsequently sold commercially. Although some biotech companies outsource their manufacturing, this can be risky with biologics because they require intense manufacturing and process control. With biologic products a minor change in manufacturing and process control can result in a major change in the final product. Good and consistent manufacturing and process control is critical and is best assured if the product is manufactured and controlled in the manufacturer's own facility by their own specially trained personnel. Since all of the Company's projects are under development, the Company cannot predict when it will be able to generate any revenue from the sale of any of its products.

Critical Accounting Estimates and Policies

Management's discussion and analysis of the Company's financial condition and results of operations is based on its unaudited condensed consolidated financial statements. The preparation of these financial statements is based on the selection of accounting policies and the application of significant accounting estimates, some of which require management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and notes. The Company believes some of the more critical estimates and policies that affect its financial condition and results of operations are in the areas of revenue recognition, operating leases, asset retirement obligations, stock-based compensation and income taxes. For more information regarding the Company's critical accounting estimates and policies, see Part II, Item 7, MD&A "Critical Accounting Estimates and Policies" of the Company's 2008 10-K. We have discussed the application of these critical accounting policies and estimates with the Audit Committee of the Company's Board of Directors.