Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

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

Company Overview

CEL-SCI Corporation is a late clinical-stage biotechnology company dedicated to research and development directed at improving the treatment of cancer and other diseases by using the immune system, the body's natural defense system. CEL-SCI is currently focused on the development of the following product candidates and technologies with emphasis on Multikine:

	1)	Multikine, an investigational Phase 3 immunotherapy under development for the potential treatment of certain head and neck cancers; and
	2)	L.E.A.P.S. (Ligand Epitope Antigen Presentation System) technology, or LEAPS, with several product candidates under development for the potential treatment of rheumatoid arthritis.

Multikine (Leukocyte Interleukin, Injection) is the full name of this investigational therapy, which, for simplicity, is referred to in this report as Multikine. Multikine is the trademark that the Company has registered for this investigational therapy, and this proprietary name is subject to FDA review under the Company's future anticipated regulatory submission for approval. None of the Company's product candidates have been approved for sale, barter or exchange by the Food and Drug Administration (FDA) or any other regulatory agency for any use to treat disease in humans nor has the safety or efficacy of these products been established for any use. There can be no assurance that obtaining marketing approval from the FDA in the United States and by comparable agencies in most foreign countries will be granted.

MULTIKINE, THE PHASE III CLINICAL TRIAL RESULTS, AND PATH FORWARD

Immunotherapy is a large, high growth market. Immunotherapies use the patient's own immune system to fight disease. These "targeted therapies" are at the forefront of modern cancer research. A Bloomberg report from January 2023 asserted that:

The global cancer immunotherapy market is expected to reach USD $196.45 billion by 2030, registering CAGR of 7.2% during the forecast period, according to a new report by Grand View Research, Inc. The rising adoption of immunotherapy over other therapy options for cancer owing to its targeted action is anticipated to increase the adoption during the forecast period. Moreover, increasing regulatory approvals from authoritarian establishments for novel immunotherapy used for oncology is also expected to further fuel the market growth. (https://www.bloomberg.com/press-releases/2023-01-18/cancer-immunotherapy-market-worth-196-45-billion-by-2030-grand-view-research-inc)

CEL-SCI hopes to participate in this growing market with its lead investigational therapy Multikine® (Leukocyte Interleukin, Injection). Multikine is unique among approved cancer immunotherapies because it is given first, right after diagnosis, before any other treatment including surgery.

Multikine has been tested in approximately 740 patients in Phase 1, 2 and 3 clinical studies conducted in the U.S., Canada, Europe, Israel and Asia. In these studies, it has been administered in multiple doses by various routes and various frequencies to determine its safety and efficacy. The data from these studies allowed CEL-SCI to determine the patient population most responsive to Multikine and most likely to benefit from it. The target population is newly diagnosed advanced primary head and neck cancer patients with no lymph node involvement (determined via PET imaging), and with low PD-L1 tumor expression (determined via biopsy), two features that physicians routinely assess at baseline as part of standard practice.

CEL-SCI completed a bias analysis for the target population in the Phase III study in preparation for submission of data to regulatory agencies including the FDA for a confirmatory registration study. The detailed data on parameters including patient age, sex, race, tumor locations, and staging demonstrate balance between the treatment and control arms. Therefore, no bias was found, which supports confidence in Multikine's efficacy results.

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In the target patient population CEL-SCI believes Multikine significantly extended life. In the Phase III study, CEL-SCI observed a 73% survival rate with Multikine vs. only 45% without Multikine at 5 years after treatment, and a Hazard ratio of 0.35 (95% CIs [0.19, 0.66]).

CEL-SCI applied to the FDA for a 212-patient randomized controlled confirmatory registration study focusing only on those patients in the target population, which accounts for approximately 100,000 patients worldwide per year. In May 2024, CEL-SCI announced that the FDA indicated CEL-SCI may move forward with a confirmatory registration study of Multikine in the target population.

What is Multikine and who is it for? Multikine is a biological medicinal immunotherapy comprised of a mixture of natural cytokines and small biological molecules. Multikine is injected around the tumor and adjacent lymph nodes for three weeks as a first-line treatment before the standard of care (SOC), which is surgery followed by either radiotherapy or chemoradiotherapy. Multikine's rationale for use is to incite a locoregional immune response against the tumor before the local immune system has been compromised by the standard of care and/or disease progression.

The Multikine target population is not yet treated adult patients with resectable locally advanced primary squamous cell carcinoma of the head and neck (SCCHN) in the oral cavity and who have:

	·	No lymph node involvement (via PET imaging)
	·	Low PD-L1 tumor expression (TPS<10) (via biopsy)

PD-L1 is a protein receptor on the tumor surface that helps the tumor repel cells of the immune system. CEL-SCI believes that patients with tumors having low PD-L1 would be more likely to respond to Multikine because their tumors have lower defenses against the patient's immune system. CEL-SCI estimates that patients with tumors having low PD-L1 represent about 70% of locally advanced primary patients with squamous cell carcinoma of the head and neck, or SCCHN (hereafter also referred to as advanced primary head and neck cancer).

Targeting low PD-L1 also differentiates Multikine from other immunotherapies. For example, checkpoint inhibitors like Keytruda and Opdivo appear to best serve patients having high PD-L1, because these drugs work by blocking PD1/PD-L1 receptors interaction; when this interaction (PD1/PD-L1) happens it leads to inactivation/death of the immune cells attacking the tumor. These checkpoint inhibitors appear to act best when tumors express high levels of PD-L1 receptors (usually TPS >20 to TPS >50).

Keytruda was approved by FDA in June 2025 as a perioperative (before and after surgery) treatment for respectable locally advanced head and neck cancer patients whose tumors express PD-L1 at a positive level. In Merck's Phase 3 KEYNOTE-689 trial, Keytruda reduced the risk of recurrence and progression by 30%, compared with standard of care, in patients whose tumors expressed PD-L1 (CPS ≥1). The study did not show an improvement in overall survival. Patients with low to zero levels of PD-L1 did not benefit from Keytruda.

In contrast to the results of the KEYNOTE-689, CEL-SCI's Phase 3 study showed that Multikine treated patients whose tumors expressed low (Tumor Proportion Score [TPS <10]) to zero PD-L1, had their risk of death reduced by 66% (hazard ratio 0.34, 95% CI [0.18, 0.65], p=0.0012) and extended the 5-year overall survival to 73% compared to 45% in the standard of care, log rank p=0.0015. About 70% of the patients in CEL-SCI's Phase 3 study had low to zero levels of PD-L1.

CEL-SCI believes Multikine leads to longer survival with no safety issues. Clinical investigations of Multikine, presented at ESMO (Europe Society for Medical Oncology) in October 2023, have demonstrated in the randomized controlled Phase III trial (RCT) the following in the target population:

	·	risk of death cut in half at five yearsversus the control;
	·	28.6% absolute 5-year overall survival benefit versus control (p=0.0015);
	·	0.349 hazard ratio vs control (95% CIs [0.18, 0.66], Wald p=0.0012);
	·	>35% rate of pre-surgery reductions and/or downstages (p<0.01); and
	·	low PD-L1 tumor expression (vs high PD-L1 where Keytruda and Opdivo work best).

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There were no demonstrable safety signals or toxicities observed in approximately 740 Multikine-treated subjects across multiple clinical trials. Adverse event (AE) and serious adverse event (SAE) incidences were not significantly different among treatment and control groups. There were no Multikine-related deaths, no Multikine-related delays of surgery, no Multikine-related interference with post-surgical treatment, and only two discontinuations. Multikine-related AEs before surgery were local and resolved after surgery. Although the literature reports that some of Multikine's components may be toxic when administered systemically (e.g., TNFα, IFN γ, IL-1β), these toxicities did not emerge with Multikine, even at doses many times higher than those administered in the Phase III trial, primarily due to Multikine's delivery by local injection and dosage.

CEL-SCI published its data as abstracts and posters at the annual conferences for the 2022 American Society of Clinical Oncology (ASCO), 2022 and 2023 European Society for Medical Oncology (ESMO), the 2023 European Head and Neck Society's (EHNS's) annual European Conference on Head and Neck Oncology (ECHNO), the 2023 European Society for Therapeutic Radiology and Oncology (ESTRO), the 2023 American Head and Neck Society (AHNS), 2024 ESMO Congress and in the peer reviewed journal Pathology Oncology Research (POR) 2025.

In March 2025, CEL-SCI published a comprehensive presentation of results from the Phase 3 trial in the peer reviewed journal Pathology and Oncology Research (POR). The article is titled "Neoadjuvant Leukocyte Interleukin Injection Immunotherapy Improves Overall Survival in Low-risk Locally Advanced Head and Neck Squamous Cell Carcinoma -The IT-MATTERS Study" and included new data on quality of life, in addition to improved overall survival (OS) in the Multikine-treated low-risk with a 46.5 months median OS advantage over low-risk control (treated with standard of care only, SOC).

	·	Quality of life improvements included reduction in or cessation of pain in the head and neck area, improvement or complete restoration in ability to eat, drink, and swallow, ability for selfcare including walking and using the toilet, and improved emotional wellbeing.
	·	Complete responders to Multikine treatment reported a 100% (wherein all respondents scored the highest possible improvement from baseline) on 60% (39/65) quality of life measures.
	·	89.4% of partial responders to Multikine reported improved quality of life measures.

These Quality of Life (QoL) improvements were self-reported by study participants and were sustained throughout the 3-years follow-up post SOC administration in which data on quality of life was systematically measured by EORTC validated QoL instruments specifically designed to measure QoL in Head and Neck Cancer patients.

Multikine works by inducing pre-surgical responses. CEL-SCI observed statistically significant pre-surgical responses after Multikine treatment, and therefore CEL-SCI believes in the following:

	➢	Multikine causes pre-surgical responses;
	➢	Pre-surgical responses lead to longer life;
	➢	Therefore, selecting more patients predicted to have a pre-surgical response should lead to much better survival in the target population.

A "pre-surgical response" is a significant change in disease before surgery. CEL-SCI saw two kinds of responses in the Phase III trial. First, there were "reductions" in the size of the tumor-a reduction of 30% or more qualified as a "pre-surgical reduction" or "PSR" for short. Second, there were disease "downstages" (e.g., the disease improved from Stage IV to Stage III) pre-surgery. CEL-SCI calls this a "pre-surgical downstaging" or "PSD" for short. CEL-SCI's 2022 ESMO cancer conference presentation reported on PSR, and CEL-SCI's new 2023 ESMO presentation reported on PSD and POR 2025.

Across the whole Phase III trial, PSRs were seen in 8.5% of Multikine patients compared to none in the control group. PSDs were seen in 22% of Multikine patients as compared to 13% in the control group. Because Multikine was the only therapy given to these patients before surgery, it is CEL-SCI's strong belief that Multikine had to be the cause of the higher rates of PSR and PSD. These data are presented visually below. The taller blue columns show PSR and PSD rates in all 529 Multikine-treated patients in the Phase III trial, and the gray columns show PSR and PSD rates for all 394 control patients.

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It was not enough for CEL-SCI to show that Multikine likely leads to PSRs and PSDs as compared to a control group, CEL-SCI also had to test if PSRs and PSDs lead to improved survival. CEL-SCI's Phase III trial demonstrated that PSR patients were 72% likely to be alive after five years, whereas control patients were only about 49% likely to be alive after five years. Patients with PSD saw similar improvement in CEL-SCI's Phase III trial. Their five-year chance of survival was approximately 68%. Therefore, CEL-SCI believes that the Phase III trial demonstrated that those patients who had PSR or PSD resulting from Multikine lived longer than those who were not treated with Multikine. It is important to note that these results are from the entire Phase III study population, not from a subgroup. The likelihood of living at least five years is shown in the graphic below for patients with PSR (blue), patients with PSD (orange) and control patients who did not receive Multikine (gray).

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Multikine cut the 5-year risk of death in half in the target population. CEL-SCI's results show that Multikine can cut the risk of death in half at five years versus the control group in the target population. Survival increased from 45% in the control group to 73% in the Multikine group at five years. This means the risk of death fell to 27% in the Multikine group from 55% in the control, shown below.

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Another way to see the survival benefit of Multikine in the target population is the Kaplan-Meier curve from our ESMO '23 poster, shown below. On the vertical axis is the probability of survival and the horizontal axis is time in months. The blue Multikine line is far above the green control line, meaning the chance of survival is much higher in the Multikine group at every point in time compared to the control. These results had a low (log rank) p-value of 0.0015, which is very significant as a statistical matter.

CEL-SCI's physician consultants tell CEL-SCI that the early separation of these two survival curves (e.g., at 12 months) adds validation to the potential positive effects of Multikine.

Another measure of survival benefit is called the "hazard ratio," which compares the rate of an event (chances) of dying between two different groups. Here, in the Multikine target population, the hazard ratio was 0.35, which means that deaths occurred in the Multikine group about one-third as frequently as in the control group. It is also important to note that the hazard ratio's 95% confidence interval remained far below 1.0 (which would mean parity between the compared groups). In the case of Multikine, statistically speaking, there is a 95% chance that the hazard ratio would fall between 0.18 and 0.66 if Multikine were tested in the target population in another study. A hazard ratio of 0.66 as the "so called worst case scenario" (the upper limit of the 95% confidence interval - for the hazard ratio - in this case) is still below (better) than the hazard ratio required for most drug approvals.

CEL-SCI completed a bias analysis for the target population in the Phase III study in preparation for submission of data to regulatory agencies including the FDA for a confirmatory registration study. The detailed data on parameters including patient age, sex, race, tumor locations, and staging demonstrate balance between the treatment and control arms. Therefore, no bias was found, which supports confidence in Multikine's efficacy results.

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These positive survival outcomes-increased overall survival, reduced risk of death, widely separated Kaplan-Meier curves with early separation, low hazard ratio, low p-values, low confidence intervals-CEL-SCI believes were driven by high PSR/PSD rates in the target population, as shown in the graphic below:

CEL-SCI relies on all of these data together to support its plan to request accelerated/conditional approval in the new target population without waiting until the completion of another clinical trial. CEL-SCI's regulatory strategy going forward is to seek approval of Multikine following full enrollment of its confirmatory study wherever possible.

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CEL-SCI applied to the FDA for a 212-patient randomized controlled confirmatory registration study focusing only on those patients in the target population, which accounts for approximately 100,000 patients worldwide per year. CEL-SCI is moving forward with a Phase 3 confirmatory registration study of Multikine in the target population.

	·	The confirmatory study will be a randomized controlled trial with two arms: Multikine treatment plus standard of care versus standard of care alone.
	·	If approved as a pre-surgical treatment, CEL-SCI believes Multikine should be added to the standard of care for the target population in this unmet medical need.
	·	CEL-SCI believes that the confirmatory study has a high likelihood of success based on the large survival benefit that has already been observed in the target population from the completed Phase III study. The planned confirmatory study will be much smaller-less than a quarter the size of the prior study- and will focus on the patients who saw the greatest survival benefit when treated with Multikine.

Why Do We Believe Our Confirmatory Study Will Be Successful?

An "unmet need" is a factor for approval considered by all major regulatory bodies worldwide. In the Multikine target population, there is also a great unmet need for improved survival. The current standard of care provides only about a 50/50 chance of surviving five years, whereas Multikine could increase that survival rate to over 70% in the target population based on the Phase III data. Chemotherapy (in addition to radiotherapy following surgery) has improved survival outcome for some head and neck patients, but chemotherapy is only indicated for high-risk patients, who are not likely to fall within the Multikine target population. Currently available immunotherapies are given after surgery or where surgery is not indicated, in contrast to Multikine, which is given before surgery to patients with resectable tumors. Available checkpoint inhibitors work best on tumors with high PD-L1 expression, whereas Multikine works best in tumors with low PD-L1 expression. Therefore, Multikine's target population is underserved, and will continue to be underserved, by current therapies.

The major regulatory bodies with whom we are working, U.S. FDA, Health Canada, European Medicines Agency (EMA) and the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom (UK) all have conditional approval pathways designed for situations where the target population has not been fully tested prospectively and there is strong data supporting clinical benefit for patients. The reason is that regulators understand that in many cases patients should not have to wait for additional data before being offered the chance to benefit from a new drug, especially if the drug has been shown to be safe. Every situation is different and depends on the specific facts.

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IN CONCLUSION

	·	Strong survival data: Multikine-treated patients in the target population had a 73% 5-year survival vs a 45% 5-year survival in the control group who did not receive Multikine in the Phase III study. In addition, no safety signals or toxicities versus standard of care. The Hazard ratio is 0.35 with an upper limit (95% Confidence interval) of 0.66.
	·	Addressing an unmet medical need: Multikine focuses on the 70% of patients (based on our 928 patient Phase III study) not well served by Keytruda or by other immune checkpoint inhibitors, at present.
	·	Multikine's Target Population: The confirmatory registration study will focus on newly diagnosed locally advanced primary head and neck cancer patients with no lymph node involvement (determined via PET scan) and with low PD-L1 tumor expression (determined via biopsy).
	·	FDA pathway: CEL-SCI's goal is to begin the 212-patient confirmatory registration study as soon as the needed capital has been raised, with full enrollment about 15 months later with the potential to seek early approval after full enrollment.

Liquidity and Capital Resources

CEL-SCI has relied primarily upon capital generated from the public and private offerings of its common stock. In addition, CEL-SCI has utilized short-term loans to meet its capital requirements. Capital raised by CEL-SCI has been used to acquire an exclusive worldwide license to use, and later purchase, certain patented and unpatented proprietary technology and know-how relating to the human immunological defense system and for clinical trials. Capital has also been used for patent applications, debt repayment, research and development, administrative costs, and for CEL-SCI's laboratory and manufacturing facilities. CEL-SCI does not anticipate realizing significant revenues until it enters into licensing arrangements regarding its technology and know-how or until it receives regulatory approval to sell its products (which could take a number of years). As a result, CEL-SCI has been dependent primarily upon the proceeds from the sale of its securities to meet all of its liquidity and capital requirements and anticipates having to do so in the future.

The cost of the confirmatory registration study is estimated to be about $30-$35 million. The Company will be required to raise additional capital or find additional long-term financing to continue with its research efforts. The ability to raise capital may be dependent upon market conditions that are outside the control of the Company. 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. Ultimately, the Company must complete the development of its products, obtain the appropriate regulatory approvals and obtain sufficient revenues to support its cost structure. However, there can be no assurance that the Company will be able to raise sufficient capital to support its operations. Due to recurring losses from operations and future liquidity needs, there is substantial doubt about the Company's ability to continue as a going concern.

During the three months ended December 31, 2024, 48,333 pre-funded warrants were exercised. No warrants were exercised during the three months ended December 31, 2025.

During the three months ended December 31, 2025, the Company's cash decreased by approximately $4.7 million. The significant components of this decrease included cash used to fund the Company's regular operations of approximately $4.0 million, approximately $0.5 million in payments on the Company's finance lease obligations, and approximately $0.2 million in stock issuance costs.

During the three months ended December 31, 2024, the Company's cash decreased by approximately $0.1 million. Significant components of this decrease included net proceeds from the December 2024 financing of $4.5 million offset by cash used to fund the Company's regular operations of approximately $4.1 million and approximately $0.5 million in payments on the Company's finance lease obligations.

Primarily as a result of CEL-SCI's losses incurred to date, its expected continued future losses, and limited cash balances, CEL-SCI has included a disclosure in its financial statements expressing substantial doubt about its ability to continue as a going concern.

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Results of Operations and Financial Condition

The Company incurred a net operating loss of approximately $5.4 million for the three months ended December 31, 2025. This net operating loss consists of significant non-cash expenses including approximately $0.5 million in share-based compensation to employees and non-employees, and approximately $1.0 million in depreciation and amortization expense.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including the development of our products, and include:

	·	employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions;
	·	fees paid to consultants for services directly related to our product development and regulatory efforts;
	·	expenses incurred under agreements with Clinical Research Organizations, or CROs, and consultants that conduct and provide supplies for our clinical studies and clinical trials;
	·	costs associated with clinical activities and development activities; and
	·	costs related to compliance with regulatory requirements.

The following table summarizes our research and development expenses for the three months ended December 31, 2025 and 2024:

		Three Months Ended December 31,
(in thousands)		2025				2024
Clinical trial expense		$	41			$	400
Supplies & materials			242				520
Personnel-related expenses			1,543				1,544
Stock-based compensation			257				394
Depreciation and amortization expense			956				986
Other expenses			638				586
Total research and development expenses		$	3,677			$	4,430

During the three months ended December 31, 2025, the research and development expenses decreased by approximately $0.8 million, or 17%, compared to the three months ended December 31, 2024. This decrease is primarily due to a $0.4 million decrease in clinical studies costs as a result of preparing the confirmatory study for enrollment in the prior period, $0.3 million decrease in costs incurred for supplies and materials used and a decrease of $0.1 million of employee stock compensation expense compared to the prior period.

CEL-SCI's research and development efforts involved Multikine and LEAPS. The table below shows the research and development expenses associated with each project during the reporting periods.

		Three Months Ended
		December 31,
		2025				2024
MULTIKINE		$	3,677,230			$	4,409,465
LEAPS			-				20,598
TOTAL		$	3,677,230			$	4,430,063

CEL-SCI's Phase III clinical trial began in December 2010 after the completion and validation of CEL-SCI's dedicated manufacturing facility. The Phase III clinical trial was fully enrolled in September 2016, reached its primary endpoint in April 2020 and achieved database lock in December 2020. The data was unblinded in June 2021, the primary endpoint results were announced in June 2021, additional data was presented at ASCO 2022, ESMO 2022, ECHNO 2023, ESTRO 2023, ESMO 2023, IDDST 2024 and ESMO 2024. Data was then published in a comprehensive article in POR 2025. As part of CEL-SCI's global regulatory approval strategy, CEL-SCI concurrently plans to conduct a Phase 3 confirmatory registration study to support a filing for marketing authorization in the United States and pursue filings for marketing authorization in Canada, United Kingdom and Europe. In August 2025, a Multikine Breakthrough Medicine Designation application was filed with the Saudi Food and Drug Authority (SFDA) in the Kingdom of Saudi Arabia by one of the Kingdom's premier pharmaceutical and healthcare companies.

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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 CEL-SCI's clinical trials and research programs are primarily based upon the amount of capital available to CEL-SCI and the extent to which CEL-SCI has received regulatory approvals for clinical trials. The inability of CEL-SCI to conduct clinical trials or research, whether due to a lack of capital or regulatory approval, will prevent CEL-SCI from completing the studies and research required to obtain regulatory approval for any products which CEL-SCI is developing. Without regulatory approval, CEL-SCI will be unable to sell any of its products. Since all of CEL-SCI's projects are under development, CEL-SCI cannot predict when it will be able to generate any revenue from the sale of any of its products.

General and Administrative Expenses

During the three months ended December 31, 2025, general and administrative expenses decreased by approximately $0.8 million, or 31%, compared to the three months ended December 31, 2024. This decrease is primarily due to a $0.1 million decrease in employee stock compensation, $0.6 million decrease in costs related to public relations, and $0.1 million decrease in accounting and legal fees for various registration statements in the prior period.

Interest Expense, Net

During the three months ended December 31, 2025, net interest expense decreased by approximately $0.1 million, or 47%, compared to the three months ended December 31, 2024. This decrease is primarily due to less interest paid on leases as higher principal balances have been paid over the last period and higher interest and dividend income received in the current period.

Critical Accounting Estimates

CEL-SCI's significant accounting estimates are more fully described in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended September 30, 2025. However, certain accounting estimates are particularly important to the portrayal of CEL-SCI's financial position and results of operations and require the application of significant judgments by management. As a result, the financial statements are subject to an inherent degree of uncertainty. In applying those estimates, 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.

Management believes that the following critical accounting estimates require the most significant judgments and estimates with respect to the preparation of CEL-SCI's financial statements.

Lease Accounting - The measurement of the finance and operating lease right-of-use asset and lease liabilities requires the determination of an estimated lease term and an incremental borrowing rate. The determination of the incremental borrowing rates for new and modified lease contracts is a critical accounting estimate. Significant judgment is required by management to develop inputs and assumptions used to determine the incremental borrowing rate for lease contracts.

Share-based Compensation - Compensation cost for all share-based awards is measured at fair value as of the grant date in accordance with the provisions of ASC 718, Compensation - Stock Compensation ("ASC 718"). The fair value of stock options is calculated using the Black-Scholes option pricing model. The Black-Scholes model requires six input variables: the strike price of an option, the current stock price, the time to expiration, the risk-free rate, the dividend yield and the volatility. The share-based compensation cost is recognized using the straight-line method as expense over the requisite service or vesting period.

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CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option Plans, Stock Compensation Plans, Stock Bonus Plans and an Incentive Stock Bonus Plan. These Plans are collectively referred to as the "Plans". All Plans have been approved by CEL-SCI's stockholders.

CEL-SCI'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. For options issued with service conditions only, CEL-SCI has based its assumption for stock price volatility on the variance of daily closing prices of CEL-SCI's stock. The risk-free interest rate assumption is based on the U.S. Treasury rate at the date of grant with the term equal to the expected life of the option. Forfeitures are accounted for when they occur. The expected term of options represents the period that options granted are expected to be outstanding and has been determined based on an analysis of historical exercise behavior. If any of the assumptions used in the Black-Scholes model change significantly, share-based compensation expense for new awards may differ materially in the future from that recorded in the current period.

Restricted stock granted under the Incentive Stock Bonus Plan and options granted under the Non-Qualified Stock Option Plans are subject to service, performance and market conditions and meet the classification of equity awards. These awards were measured at fair value on the grant dates using a Monte Carlo simulation for issuances where the attainment of performance criteria is uncertain. The total compensation cost will be expensed over the estimated requisite service period.