<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
Commission file number 0-15327
-------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
CYTRX CORPORATION 401(K) PROFIT-SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
CYTRX CORPORATION
154 Technology Parkway
Norcross, Georgia 30092
<PAGE> 2
CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors 2
Statements of Net Assets Available for Plan Benefits
as of December 31, 1997 and 1996 3
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 1997, 1996 and 1995 4
Notes to Financial Statements 6
Signatures 10
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes 11
Schedule of Reportable Transactions 12
Exhibit Index 13
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
The Trustees of the CytRx Corporation
401(k) Profit-Sharing Plan
We have audited the accompanying statements of net assets available for plan
benefits of the CytRx Corporation 401(k) Profit-Sharing Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of changes in net assets
available for plan benefits for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
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 financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental Schedule of
Assets Held for Investment Purposes as of December 31, 1997 and Schedule of
Reportable Transactions for the year ended December 31, 1997 are presented for
purposes of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, and are not a required part of the basic financial statements. The
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the 1997 financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic 1997 financial
statements taken as a whole.
ERNST & YOUNG LLP
Atlanta, Georgia
June 23, 1998
2
<PAGE> 4
CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
Retirement Corporate Basic CytRx
Preservation Bond Capital Value Growth Corporation
Trust Fund Fund Fund Fund Common Stock Total
------------ --------- -------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1997
ASSETS
Investments at Market Value $ 51,718 $ 40,722 $390,382 $576,685 $401,244 $ 378,086 $1,838,837
Cash & Cash Equivalents 17,014 - - - - - 17,014
Receivables:
Employer contributions - - - - - 24,114 24,114
Employee contributions - 625 2,051 4,235 3,853 379 11,143
Employee loans 20,392 - - - - - 20,392
------------ --------- -------- -------- -------- ------------ ----------
20,392 625 2,051 4,235 3,853 24,493 55,649
------------ --------- -------- -------- -------- ------------ ----------
Total Assets 89,124 41,347 392,433 580,920 405,097 402,579 1,911,500
------------ --------- -------- -------- -------- ------------ ----------
LIABILITIES
Due to CytRx Corporation 17,037 - - - - - 17,037
------------ --------- -------- -------- -------- ------------ ----------
Net Assets Available for Plan Benefits $ 72,087 $ 41,347 $392,433 $580,920 $405,097 $ 402,579 $1,894,463
============ ========= ======== ======== ======== ============ ==========
DECEMBER 31, 1996
ASSETS
Investments at Market Value $ 85,995 $ 18,710 $287,784 $343,640 $224,164 $ 304,463 $1,264,756
Cash & Cash Equivalents 203 - - - - - 203
Receivables:
Employer contributions - - - - - 30,450 30,450
Employee contributions 492 1,267 3,319 5,935 6,999 1,668 19,680
Employee loans 17,480 - - - - - 17,480
Other 13 - - - - - 13
------------ --------- -------- -------- -------- ------------ ----------
17,985 1,267 3,319 5,935 6,999 32,118 67,623
------------ --------- -------- -------- -------- ------------ ----------
Total Assets 104,183 19,977 291,103 349,575 231,163 336,581 1,332,582
------------ --------- -------- -------- -------- ------------ ----------
LIABILITIES - - - - - - -
------------ --------- -------- -------- -------- ------------ ----------
Net Assets Available for Plan Benefits $ 104,183 $ 19,977 $291,103 $349,575 $231,163 $ 336,581 $1,332,582
============ ========= ======== ======== ======== ============ ==========
</TABLE>
See accompanying notes.
3
<PAGE> 5
CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
Retirement Federal Corporate Basic CytRx
Preservation Securities Bond Capital Value Growth Corporation
Trust Trust Fund Fund Fund Fund Common Stock Total
------------ ---------- --------- -------- -------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for plan benefits
January 1, 1995 $ 5,565 $ 19,592 $ - $141,601 $140,439 $ - $ 135,620 $ 442,817
Employee contributions 44,038 14,935 6,866 67,176 59,881 52,916 61,077 306,889
Employer contributions - - - - - - 138,672 138,672
Investment income 1,545 814 109 22,449 9,296 4,857 2,962 42,032
Net appreciation (depreciation) in
market value of investments - 2,561 16 30,398 44,233 (3,863) (101,031) (27,686)
Interfund transfers 43,049 (37,902) (48) (23,018) 13,156 13,400 (8,637) -
Forfeitures - - - - - - (425) (425)
Distributions/Withdrawals - - - (758) (1,071) - (136) (1,965)
------------ ---------- --------- -------- -------- ------- ------------ ----------
Net assets available for plan benefits
December 31, 1995 $ 94,197 $ - $ 6,943 $237,848 $265,934 $67,310 $ 228,102 $ 900,334
Employee contributions 35,910 - 17,206 47,933 69,821 114,542 32,379 317,791
Employer contributions - - - - - - 143,067 143,067
Investment income 5,741 - 1,182 25,716 20,221 16,138 - 68,998
Net appreciation (depreciation) in
market value of investments - - 405 4,438 25,803 24,348 (87,606) (32,612)
Interfund transfers (25,525) - (3,307 ) (11,518) (12,405) 23,522 29,233 -
Distributions/Withdrawals (6,140) - (2,452 ) (13,314) (19,799)(14,697) (8,594) (64,996)
------------ ---------- --------- ------- ------- ------- ------------ ----------
Net assets available for plan benefits
December 31, 1996 $ 104,183 $ - $ 19,977 $291,103 $349,575 $231,163 $ 336,581 $1,332,582
</TABLE>
See accompanying notes.
4
<PAGE> 6
CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
Retirement Federal Corporate Basic CytRx
Preservation Securities Bond Capital Value Growth Corporation
Trust Trust Fund Fund Fund Fund Common Stock Total
------------ ---------- --------- ------- ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for plan benefits
December 31, 1996 $ 104,183 $ - $ 19,977 $291,103 $349,575 $231,163 $ 336,581 $1,332,582
Employee contributions 17,380 - 20,543 48,479 103,025 141,104 46,826 377,357
Employer contributions - - - - - - 163,134 163,134
Investment income 3,791 - 2,812 28,036 37,433 29,966 - 102,038
Net appreciation (depreciation) in
market value of investments 1,724 - (228) 29,875 71,315 (2,491) (100,026) 169
Interfund transfers (15,690) - (821) 4,459 30,747 6,658 (25,353) -
Distributions/Withdrawals (39,301) - (936) (9,519) (11,175) (1,303) (18,583) (80,817)
------------ ---------- --------- ------- ------- ------- ------------ ----------
Net assets available for plan benefits
December 31, 1997 $ 72,087 $ - $ 41,347 $392,433 $580,920 $405,097 $ 402,579 $1,894,463
============ ========== ========= ======== ======== ======== ============ ==========
</TABLE>
See accompanying notes.
5
<PAGE> 7
CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan
General
The CytRx Corporation 401(k) Profit-Sharing Plan (the "Plan") is a
contributory defined contribution plan that covers substantially all
employees of CytRx Corporation and its wholly-owned subsidiaries
(Proceutics, Inc., Vaxcel, Inc. and VetLife, Inc., collectively referred
to herein as "the Company"). The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). Participants
should refer to the Summary Plan Description for the Plan for a more
complete description of the Plan's provisions.
Contributions
Eligible employees may elect to contribute up to 15% of their total
compensation on a pre-tax basis, subject to statutory restrictions. In
1997 the maximum salary deferral allowed by the Internal Revenue Service
was $9,500. Participants may also elect to contribute additional amounts
on an after-tax basis, subject to statutory restrictions.
Company matching contributions are made equal to 50% of the participants'
pre-tax contribution. The Company matching contribution is made in the
form of CytRx Corporation common stock. The number of shares of stock
contributed to the Plan is determined at the end of each calendar quarter
by dividing the total value of the authorized Company matching
contribution by the average stock price during the quarter.
Vesting
Participants are immediately vested in their contributions and earnings
thereon. Company contributions are vested in accordance with the
following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
0 0%
1 33 1/3%
2 66 2/3%
3 100%
</TABLE>
Distributions
Withdrawals and distributions from the Plan are calculated at the market
value of the pro rata shares of the fund to which Participants are
entitled. Participants may receive distributions of their vested balances
upon termination of employment, disability or attainment of age 59 1/2.
Withdrawals are also permitted for financial hardship.
6
<PAGE> 8
Forfeitures
Forfeitures of unvested account balances by terminating Participants are
used to reduce future Company matching contributions.
Investment Programs
All amounts contributed to the Plan have been deposited with Merrill
Lynch Pierce Fenner & Smith, Inc., the Custodian of the Plan. At December
31, 1997 the Plan provided the following funds in which participants have
elected to invest their Plan assets:
Merrill Lynch Retirement Preservation Trust -- This fund seeks current
income, preservation of capital and liquidity available from investing in
a diversified portfolio of short-term money market instruments as well as
annuity contracts issued by banks and insurance companies. At December
31, 1997 there were 27 Plan participants with balances in this fund.
Merrill Lynch Corporate Bond Fund -- High Income Portfolio - This fund
seeks as high a level of current income as is consistent with prudent
investment management by investing principally in corporate securities
which are rated in the lower categories of the established rating
services. At December 31, 1997 there were 29 Plan participants with
balances in this fund.
Merrill Lynch Capital Fund --This fund seeks to achieve the highest total
investment return consistent with prudent risk through a fully managed
investment policy which permits management of the fund to vary investment
in equity, debt, convertible and money market securities based on its
evaluation of changes in economic and market trends. At December 31, 1997
there were 51 Plan participants with balances in this fund.
Merrill Lynch Basic Value Fund -- This fund seeks capital appreciation
and, secondarily, income by investing in securities, primarily equities,
that management of the fund believes to be undervalued, especially those
selling at a discount from book value or at historically low
price/earnings ratios. At December 31, 1997 there were 71 Plan
participants with balances in this fund.
Merrill Lynch Growth Fund -- This fund seeks long-term capital
appreciation by investing in a diversified portfolio of equity
securities with principal emphasis on issues believed to be
undervalued. At December 31, 1997 there were 64 Plan participants with
balances in this fund.
CytRx Corporation Common Stock Fund -- Invests solely in common stock of
CytRx Corporation. At December 31, 1997 there were 85 Plan participants
with balances in this fund.
Federal Securities Trust -- This fund seeks a high current return through
investments in U.S. Government and Government Agency securities. The Plan
discontinued use of this fund during 1995.
7
<PAGE> 9
During 1998, five additional investment programs have been added to the
plan.
Amendment or Termination
The Company intends to continue the Plan indefinitely but reserves the
right to terminate it at any time or amend it in any manner it deems
advisable. No amendment or termination may reduce any participant's
vested interest accrued to the date of such amendment or termination.
2. Summary of Significant Accounting Policies
Method of Accounting
The financial statements of the Plan have been prepared using the accrual
basis of accounting. Participant contributions are recorded as
receivables when the related payroll deductions are made for Plan
participants. Contributions receivable represent reconciling items
between the accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, and the
financial information contained in the Plan's Form 5500 filed with the
Internal Revenue Service, which is prepared using the cash basis of
accounting.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Investments
Investments are stated at market value based on quoted market prices on
national exchanges.
3. Administrative Expenses
All custodial, record-keeping and trust administration fees and expenses
incurred for the benefit of the Plan are paid by the Company.
4. Income Tax Status
The Plan has received a favorable determination letter from the Internal
Revenue Service indicating that it is qualified under Section 401 of the
Internal Revenue Code and that the related trust is tax-exempt under
Section 501 of the Internal Revenue Code. Accordingly, the trust's net
investment income is exempt from income taxes. The Company is not aware
of any actions or series of events that have occurred that might
adversely affect the Plan's qualified status.
8
<PAGE> 10
5. Subsequent Events
Subsequent to December 31, 1997 the Company divested of Proceutics, Inc.
("Proceutics") and VetLife, Inc. (VetLife"). Such divestitures resulted
in a partial termination of the Plan. Accordingly, all plan participants
previously employed by Proceutics and VetLife vested in their participant
accounts which totaled approximately $645,000 at December 31, 1997.
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed by the undersigned
hereunto duly authorized.
June 23, 1997 CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
/s/ Mark W. Reynolds
---------------------------
Mark W. Reynolds
Chief Financial Officer
CytRx Corporation
10
<PAGE> 12
CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Market
Name of Issuer and Title of Issue Shares Cost Value
- --------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Merrill Lynch Retirement Preservation Trust 51,718 $ 51,718 $ 51,718
Merrill Lynch Corporate Bond Fund 5,027 40,253 40,722
Merrill Lynch Capital Fund 11,553 351,996 390,382
Merrill Lynch Basic Value Fund 15,765 472,354 576,685
Merrill Lynch Growth Fund 15,187 377,869 401,244
CytRx Corporation Common Stock 128,732 611,288 378,086
----------- -----------
Total Assets Held for Investment $ 1,905,478 $ 1,838,837
=========== ===========
</TABLE>
11
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CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Current
Value of
Assets on
Cost of Transaction Net
Identity of Party Involved Description of Assets Purchases Sales Assets Date Gain (Loss)
- ------------------------------ --------------------------------- ----------- -------- ---------- ----------- -----------
Category (iii) - Series of transactions in excess of 5% of plan assets
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CytRx Corp. Common Stock $ 98,869 $ 98,869 $ 98,869
$ 92,949 $ 116,220 $ 92,949 $ (23,271)
Merrill Lynch Pierce Fenner Merrill Lynch Capital Fund
& Smith, Inc. $ 105,417 $ 105,417 $ 105,417
$ 34,584 $ 32,187 $ 34,584 $ 2,397
Merrill Lynch Pierce Fenner Merrill Lynch Basic Value Fund
& Smith, Inc. $ 181,126 $ 181,126 $ 181,126
$ 19,933 $ 16,117 $ 19,933 $ 3,816
Merrill Lynch Pierce Fenner Merrill Lynch Growth Fund
& Smith, Inc. $ 206,960 $ 206,960 $ 206,960
$ 40,658 $ 36,329 $ 40,658 $ 4,329
Merrill Lynch Pierce Fenner Merrill Lynch CMA Money Fund
& Smith, Inc. $ 423,847 $ 423,847 $ 423,847
$ 407,045 $ 407,045 $ 407,045 $ -
</TABLE>
Note: Commissions and fees related to purchases and sales of investments are
included in the cost of investments or the proceeds from the sale and are not
separately identified by the trustee.
There were no category (i), (ii) or (iv) reportable transactions during the year
ended December 31, 1997.
12
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CYTRX CORPORATION
401(K) PROFIT-SHARING PLAN
FORM 11-K EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Page
- -------------- ----------- ----
<S> <C> <C>
23.1 Consent of Ernst & Young LLP 14
</TABLE>
13
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 No. 33-48706 and 333-31717 pertaining to the CytRx Corporation 401(k)
Profit-Sharing Plan of our report dated June 23, 1998, with respect to the
financial statements and supplemental schedules of the CytRx Corporation 401(k)
Profit-Sharing Plan included in this Annual Report (Form 11-K) for the year
ended December 31, 1997.
Atlanta, Georgia ERNST & YOUNG LLP
June 24, 1998
14
