<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 8-K/A
___________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
MAY 11, 1998
CYTRX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-15327 58-1642740
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation)
154 TECHNOLOGY PARKWAY
NORCROSS, GEORGIA 30092
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (770) 368-9500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 11, 1998, CytRx Corporation (the "Company") and Proceutics, Inc.
("Proceutics"), a subsidiary of the Company, consummated the sale of two
buildings owned by them at 150 and 154 Technology Parkway, Norcross, Georgia to
ARE - 150/154 Technology Parkway, LLC ("Alexandria"), an affiliate of Alexandria
Real Estate Equities, Inc. ("Assignor") for an aggregate of $4.5 million.
Proceutics assigned to Alexandria all of Proceutics' rights and obligations
under the lease with Oread, Inc. relating to the 150 Technology Parkway
building. In addition, the Company entered into a ten year lease with
Alexandria for administrative office space at the 154 Technology Parkway
building.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
The Company has filed herewith as Exhibit 99.2, Pro Forma Condensed
Consolidated Financial Statements consisting of (i) a Pro Forma Consolidated
Balance Sheet as of March 31, 1998 giving effect to the divestiture of VetLife
and the sale of the two buildings and the leaseback by the Company of the
building at 154 Technology Parkway, (ii) a Pro Forma Condensed Consolidated
Statement of Operations for the year ended December 31, 1997 giving effect to
the merger of Zynaxis, Inc. with and into Vaxcel, Inc. and the sale of the two
buildings on Technology Parkway and, (iii) a Pro Forma Condensed Consolidated
Statement of Operations for the three months ended March 31, 1998 giving effect
to the sale of the two buildings and the leaseback by the Company of the
building at 154 Technology Parkway. Such Pro Forma Condensed Consolidated
Financial Statements are incorporated herein by reference.
(c) Exhibits
Number Exhibit
2.1* Purchase and Sale Agreement and Joint Escrow Instructions dated as of
February 23, 1998, between Proceutics and Assignor
2.2** Purchase and Sale Agreement and Joint Escrow Instructions dated as of
February 23, 1998 between the Company and Assignor
99.1*** Lease dated as of May 11, 1998 between the Company and Alexandria
99.2 Pro Forma Condensed Consolidated Financial Statements
- ------------
* Incorporated by reference to Exhibit 10.14 of the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1997 filed on March 30, 1998.
** Incorporated by reference to Exhibit 10.13 of the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1997 filed on March 30, 1998.
*** Previously filed
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CYTRX CORPORATION
Date: June 19, 1998 By: /s/ Jack J. Luchese
--------------------
Jack J. Luchese
President and Chief Executive Officer
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EXHIBIT 99.2
PRO FORMA FINANCIAL INFORMATION
The accompanying Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1998 gives effect to (1) the divestiture of Vetlife, Inc. and (2) the sale of
the Proceutics real estate at 150 Technology Parkway and the sale and leaseback
of the CytRx real estate at 154 Technology Parkway. The pro forma adjustments
assume that these transactions had occurred as of March 31, 1998 in the case of
the Pro Forma Condensed Consolidated Balance Sheet.
The accompanying Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1997 gives effect to (1) the Merger of Zynaxis, Inc.
with and into Vaxcel, Inc. and (2) the sale of the Proceutics real estate at 150
Technology Parkway and the sale and leaseback of the CytRx real estate at 154
Technology Parkway. The accompanying Pro Forma Condensed Consolidated Statement
of Operations for the three months ended March 31, 1998 gives effect to the sale
of the Proceutics real estate at 150 Technology Parkway and the sale and
leaseback of the CytRx real estate at 154 Technology Parkway. The historical
statements of operations present the results of operations of VetLife as
discontinued operations in accordance with the requirements of Accounting
Principles Board ("APB") Opinion No. 30; thus no adjustment to the historical
statements of operations is required to give effect to the VetLife disposition.
The pro forma adjustments assume that these transactions occurred as of
January 1, 1997.
These pro forma financial statements have been prepared by management of CytRx
and should be read in conjunction with the historical consolidated financial
statements of CytRx included in the Company's Current Report on Form 8-K filed
with the Commission on May 1, 1998 and as restated for the divestiture of
Vetlife, Inc. The historical balances represent the consolidated financial
position and results of operations for the Company and have been prepared in
accordance with generally accepted accounting principles. The pro forma
statements are based on certain assumptions and estimates which are subject to
change. The statements do not purport to be indicative of the consolidated
financial position or results of operations that might have occurred, nor are
they necessarily indicative of future results.
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CYTRX CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Proforma Adjustments
Vetlife
Divestiture Real Estate
Historical Pro Forma Sale Pro Forma Adjusted
March 31,1998 Adjustments Ref Adjustments Ref March 31, 1998
------------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,621,007 $ 3,146,168 (a) $ 4,251,943 (d) $ 12,875,851
(143,267) (b)
Short-term investments - 5,359,697 (g) 5,359,697
Accounts receivable 1,481,039 (912,302) (b) 568,737
Other receivable - -
Notes receivable - 4,000,000 (a) 4,000,000
Inventories 1,340,008 (979,226) (b) 360,782
Other current assets 243,664 (7,138) (b) 236,526
------------ ----------- ----------- ------------
Total current assets 8,685,718 10,463,932 4,251,943 23,401,593
Property and equipment, net 3,969,766 (89,661) (b) (836,330) (d) 1,466,372
(2,704,403) (d)
1,127,000 (e)
Other assets:
Long-term investments (restricted) 5,359,697 (5,359,697) (g) -
Notes receivable 400,000 400,000
Acquired developed technology, net 3,394,356 3,394,356
Other assets 801,076 801,076
------------ ----------- ----------- ------------
Total other assets 9,955,129 (5,359,697) 4,595,432
Total assets $ 22,610,613 $ 5,014,574 $ 1,838,210 $ 29,463,397
============ =========== =========== ============
Proforma Adjustments
Vetlife
Divestiture Real Estate
Historical Pro Forma Sale Pro Forma Adjusted
March 31, 1998 Adjustments Ref Adjustments Ref Balance
-------------- ----------- -------------- --------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,063,623 $ (690,264) (b) $ 373,359
Accrued liabilities 951,852 (568,752) (b) 383,100
Unearned revenue - 283,562 (d) 283,562
------------ ----------- ----------- ------------
Total current liabilities 2,015,475 (1,259,016) 283,562 1,040,021
6% Convertible debentures 1,100,000 1,100,000
Minority interest in Vaxcel, Inc. 555,226 555,226
Commitments
Capital lease obligation _ 1,127,000 (e) 1,127,000
Stockholders' equity: -
Preferred stock - -
Common stock 8,206 8,206
Additional paid-in capital 66,352,311 66,352,311
Treasury stock (2,198,533) (2,198,533)
Accumulated deficit (45,222,072) 6,273,590 (c) 427,648 (f) (38,520,834)
------------ ----------- ----------- ------------
Total stockholders' equity 18,939,912 6,273,590 427,648 25,641,150
Total liabilities and stockholders' equity $ 22,610,613 $ 5,014,574 $ 1,838,210 $ 29,463,397
============ =========== =========== ============
</TABLE>
(a) To record proceeds from divestiture of Vetlife less transaction costs of
$226,410 and the working capital adjustment of $127,422.
(b) To remove Vetlife's net assets sold.
(c) To record gain on divestiture of Vetlife.
(d) To record sale of Proceutics and CytRx real estate assets for $4,500,000,
less transactions costs of $248,057. The historical cost of such assets
(net of accumulated depreciation) totaled $2,704,403 and $836,330,
respectively, resulting in a gain of $427,648 for the sale of the
Proceutics real estate and a deferred gain of $283,562 on the sale and
leaseback of the CytRx real estate which will be amortized over the life of
the related lease.
(e) To record capital lease assets and related obligation for CytRx real
estate.
(f) To record gain on sale of Proceutics real estate assets.
(g) To reclass investments as a result of the Vetlife divestiture which removed
the restriction on investments.
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CYTRX CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Cauldron
Merger Divestiture Pro Forma
Historical Pro Forma Pro Forma Pro Forma Combined
(Restated) Adjustments Ref Combined Adjustments Ref (as adjusted) Ref
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales $ 878,068 $ $ 878,068 $ $ 878,068
Investment income 797,069 22,292 (1) 819,361 819,361
Collaborative, grant and license fee
income 337,438 666,890 (1) 1,004,328 (681,130) (3) 323,198
Other 365,712 819,977 (1) 1,185,689 1,185,689
---------------------------- --------------------------- -------------
2,378,287 1,509,159 3,887,446 (681,130) 3,206,316
Expenses:
Cost of sales 353,764 353,764 353,764
Research and development 4,690,582 720,454 (2) 5,411,036 5,411,036
Acquired incomplete research and
development 951,017 951,017 951,017
Selling, general and administrative 3,115,466 137,089 (4) 3,811,839 (813,417) (3) 2,998,422
559,284 (2)
Interest 293,048 (49,990) (5) 261,379 261,379
18,321 (2)
---------------------------- --------------------------- -------------
9,403,877 1,385,158 10,789,035 (813,417) 9,975,618
---------------------------- --------------------------- -------------
Loss from continuing operations before
minority interest (7,025,590) 124,001 (6,901,589) 132,287 (6,769,302)
Minority interest (242,487) (50,387) (292,874) (292,874)
--------------------------- -------------------------- -------------
Loss from continuing operations $ (6,783,103) $174,388 $ (6,608,715) $132,287 $(6,476,428)
=========================== ========================== =============
Basic and diluted loss per common share:
Loss from continuing operations $(0.91) $(0.87)
Shares used 7,424,372 7,424,372
</TABLE>
<TABLE>
Real Estate Combined
Adjustments Ref Totals
----------------------------------
<S> <C> <C> <C>
Revenues:
Net sales $ 878,068
Investment income 819,361
Collaborative, grant and license fee
income 323,198
Other 411,600 (7) 1,597,289
--------------------------------
411,600 3,617,916
Expenses:
Cost of sales 353,764
Research and development 94,080 (8) 5,505,116
Acquired incomplete research and
development 951,017
Selling, general and administrative 63,072 (6) 3,061,494
Interest 261,379
------------- ---------------
157,152 10,132,770
------------- ---------------
Loss from continuing operations before
minority interest (254,448) (6,514,854)
Minority interest (6,113)(8) (298,987)
------------- ---------------
Loss from continuing operations $(260,561) $ (6,215,867)
============= ===============
Basic and diluted loss per common share:
Loss from continuing operations $ (0.84)
Shares used 7,424,372
(1) To record revenues of Zynaxis up to the merger date (May 21, 1997).
(2) To record expenses of Zynaxis up to the merger date (May 21, 1997).
(3) To reflect the sale of the Cauldron division as if it had occurred on January 1, 1997.
(4) To record amortization of intangible assets acquired using a 15 year amortization period.
(5) To eliminate interest expense associated with the CytRx note payable cancelled at the merger date.
(6) To eliminate depreciation expense related to real estate assets sold and record depreciation expense on the building
recorded under capital lease obligation.
(7) To record lease income earned from the lease of 150 Technology Parkway to Oread, Inc.
(8) To record sublease expense and minority interest related to laboratories subleased to CytRx and Vaxcel to Oread, Inc.
</TABLE>
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CYTRX CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
March 31,
1998 Real Estate Combined
Historical Adjustments Ref Totals
-------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 217,965 $ 217,965
Investment income 143,850 143,850
Collaborative, grant and license fee
income 16,483 16,483
Other 62,665 102,900 (2) 165,565
-------------------------------------------------------
440,963 102,900 543,863
Expenses:
Cost of sales 73,184 73,184
Research and development 1,296,070 23,520 (3) 1,319,590
Selling, general and administrative 756,275 15,768 (1) 772,043
Interest 123,040 123,040
-------------------------------- ------------------
2,248,569 39,288 2,287,857
-------------------------------- ------------------
Loss from continuing operations before
minority interest (1,807,606) (63,612) (1,743,994)
Minority interest (63,256) (1,528) (3) (64,784)
-------------------------------- ------------------
Loss from continuing operations $(1,744,350) $(65,140) $(1,679,210)
-------------------------------- ------------------
Basic and diluted loss per common share:
Loss from continuing operations $ (0.23) $ (0.22)
Shares used 7,516,319 7,516,319
</TABLE>
(1) To eliminate depreciation expense related to real estate assets sold and
record depreciation expense on the building recorded under capital lease
obligation.
(2) To record lease income earned from the lease of 150 Technology Parkway to
Oread, Inc.
(3) To record sublease expense and minority interest related to laboratories
subleased to CytRx and Vaxcel by Oread, Inc.
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CYTRX CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
1. ACCOUNTING FOR ZYNAXIS MERGER AND ALLOCATION OF PURCHASE PRICE
The Merger was accounted for as a purchase transaction with Vaxcel as
the acquiring company. The total purchase price of $4.4 million was allocated to
the fair market values of the assets acquired and the liabilities assumed.
In accordance with the provisions of APR Nos. 16 1nd 17, all
identifiable assets acquired, including identifiable intangible assets, were
assigned a portion of the purchase price on the basis of their fair values. To
this and, an independent valuation of Zynaxis' assets (the "Acquired Assets")
was performed and used as an aid in determining the fair value of the
identifiable assets in allocating the purchase price among the Acquired Assets.
A summary of the allocation of the purchase price to the Acquired Assets
is as follows:
Net tangible assets, less outstanding liabilities...........$ (830,000)
Acquired developed technology and other intangibles......... 4,241,000
Acquired incomplete research and development
(charged to accumulated deficit).................... 951,000
---------
$4,362,000
=========
The capitalized value of the intangible assets acquired is being
amortized on a straight-line basis over a period of 15 years. This period was
determined based upon an analysis of competitive technology under development
which may render the Zynaxis technology obsolete. Consideration was also given
to the fact that Zynaxis' base science will have many alternative uses during
that time as many different vaccines may incorporate the technology. Any
remaining property and equipment acquired from Zynaxis is being depreciated on
straight-line basis over their estimated remaining useful lives.
2. DIVESTITURE OF VETLIFE
On April 17, 1998, Cytrx consummated a sale of substantially all of the
assets of VetLIfe related to its cattle marketing operations segment to an
affiliate of IVY for approximately $7.1 million in cash and a note payable (net
of transaction costs), plus contingent payments of up to an additional $5.5
million. The Company will retain the $5.3 million in investments that were
pledged to secure a Letter of credit. The Company expects a gain related to this
transaction which will be recognized in 1998.
3. SALE OF REAL ESTATE
On May 11, 1998, CytRx and Proceutics consummated the sale of the two
buildings owned by them at 150 and 154 Technology Parkway, Norcross, Georgia, to
ARE - 150/154 Technology Parkway, LLC ("Alexandria"), an affiliate of Alexandria
Real Estate Equities, Inc., for an aggregate of $4.5 million less $248,000 in
transaction costs. Proceutics' rights and obligations under the lease to Oread
were assigned to Alexandria and CytRx entered into a ten year lease with
Alexandria regarding the building at 154 Technology Parkway. The Company expects
a gain related to the transaction which will be recognized in 1998.
5