10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2002
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

Commission file number 0-15327

CYTRX CORPORATION
(Exact name of Registrant as specified in its charter)

Delaware	58-1642740
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
11726 San Vicente Blvd. Los Angeles, CA	90049
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:   (310) 826-5648

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Number of shares of CytRx Corporation Common Stock, $.001 par value, issued and outstanding as of November 14, 2002:  21,510,111.

CYTRX CORPORATION

Form 10-Q

Table of Contents

			Page
PART I.		FINANCIAL INFORMATION
	Item 1	Financial Statements:
		Condensed Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001	3
		Condensed Consolidated Statements of Operations (unaudited) for the Three Month and Nine Month Periods Ended September 30, 2002 and 2001	4
		Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Month Periods Ended September 30, 2002 and 2001	5
		Notes to Condensed Consolidated Financial Statements	6
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	22
	Item 4	Controls and Procedures	22
PART II.		OTHER INFORMATION
	Item 2	Changes in Securities and Use of Proceeds	22
	Item 4	Submission of Matters to a Vote of Securities Holders	22
	Item 6	Exhibits and Reports on Form 8-K	23
SIGNATURES			24

2

Part I – FINANCIAL INFORMATION

Item 1.  Financial Statements

CYTRX CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS

			September 30, 2002			December 31, 2001
			(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	2,125,885		$	5,272,914
	Accounts receivable, net			20,572			28,000
	Current portion of note receivable			131,966			122,467
	Other current assets			168,144			23,238
		Total current assets		2,446,567			5,446,619
Property and equipment, net				1,110,798			1,745,728
Other assets:
	Note receivable			265,053			365,249
	Acquired developed technology (Note 2)			7,061,200			—
	Other assets			262,398			53,000
		Total other assets		7,588,651			418,249
		Total assets	$	11,146,016		$	7,610,596
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	80,700		$	178,777
	Accrued liabilities and deferred income			519,520			849,068
		Total current liabilities		600,220			1,027,845
Commitments and Contingencies
Stockholders’ equity:
	Preferred Stock, $.01 par value, 1,000 shares authorized, including 1,000 shares of Series A Junior Participating Preferred Stock; no shares issued and outstanding			—			—
	Common stock, $.001 par value, 50,000,000 shares authorized; 22,143,927 and 11,459,012 shares issued at September 30, 2002 and December 31, 2001, respectively			22,144			11,459
	Additional paid-in capital			82,173,839			74,632,292
	Treasury stock, at cost (633,816 shares held at September 30, 2002 and December 31, 2001)			(2,279,238	)		(2,279,238	)
	Accumulated deficit			(69,370,949	)		(65,781,762	)
		Total stockholders’ equity		10,545,796			6,582,751
		Total liabilities and stockholders’ equity	$	11,146,016		$	7,610,596

See accompanying notes.

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CYTRX CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

			Three Months Ended September 30,						Nine Months Ended September 30,
			2002			2001			2002			2001
Revenues:
	Service revenues		$	—		$	28,140		$	22,453		$	64,219
	License fees			1,000			—			1,001,000			—
	Interest income			21,167			31,598			82,837			136,304
	Grant income			—			46,584			46,144			141,876
	Other			17,168			57,818			103,129			158,335
		Total revenues		39,335			164,140			1,255,563			500,734
Expenses:
	Cost of service revenues			—			20,761			11,287			39,972
	Research and development			67,318			384,084			743,126			1,320,809
	Severance payments to officers			1,394,447			—			1,394,447			—
	Merger related costs			112,000			—			112,000			—
	Selling, general and administrative			456,888			614,938			1,721,181			2,079,226
	Depreciation and amortization			359,459			146,562			736,759			439,687
		Total expenses		2,390,112			1,166,345			4,716,402			3,879,694
	Loss before other expenses			(2,350,777	)		(1,002,205	)		(3,460,839	)		(3,378,960	)
	Equity losses from Blizzard Genomics			(128,348	)		—			(128,348	)
Net loss			$	(2,479,125	)	$	(1,002,205	)	$	(3,589,187	)	$	(3,378,960	)
Basic and diluted (loss) per common share			$	(0.13	)	$	(0.10	)	$	(0.25	)	$	(0.33	)
Basic and diluted weighted average shares outstanding				19,611,449			10,272,343			14,148,668			10,202,806

See accompanying notes.

4

CYTRX CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

								Nine Month Period Ended September 30,
								2002			2001
Cash flows from operating activities:
		Net loss						$	(3,589,187	)	$	(3,378,960	)
		Adjustments to reconcile net loss to net cash used by operating activities:
						Equity losses from Blizzard Genomics			128,348			—
						Depreciation and amortization			734,361			439,687
						Stock option and warrant expense			229,550			1,183,891
					Net change in assets and liabilities				(683,804	)		(550,353	)
							Total adjustments		408,455			1,073,225
				Net cash used by operating activities					(3,180,732	)		(2,305,735	)
Cash flows from investing activities:
	Capital retirements, net								31,347			—
				Net cash provided by investing activities					31,347			—
Cash flows from financing activities:
	Net proceeds from issuance of common stock								628,496			403,468
	Net cash paid for acquisition of Global Genomics Capital								(626,140	)		—
			Net cash provided by financing activities						2,356			403,468
Net decrease in cash and cash equivalents									(3,147,029	)		(1,902,267	)
Cash and cash equivalents at beginning of period									5,272,914			3,779,376
Cash and cash equivalents at end of period								$	2,125,885		$	1,877,109

See accompanying notes.

5

CYTRX CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2002
(Unaudited)

1.       Description of Company and Basis of Presentation

          CytRx Corporation (“CytRx” or “the Company”) is a biopharmaceutical company focused on the commercialization of high-value human therapeutics. The Company’s research and development activities have included CRL-5861 (FLOCOR), an intravenous agent for treatment of acute vaso-occlusive disorders, and TranzFect, a delivery technology for DNA-based vaccines. CytRx has licensed TranzFect to Merck & Co., Inc. for use in Merck’s efforts to develop DNA-based vaccines for HIV and three other infectious diseases. All other uses of TranzFect for enhancement of viral or non-viral delivery of polynucleotides (such as DNA and RNA) were recently licensed to Vical, Incorporated. CytRx also has a technology portfolio with potential opportunities in the areas of muscular dystrophy, cancer, spinal cord injury, vaccine delivery, gene therapy and food animal feed additives.

          On July 19, 2002, CytRx consummated a merger with Global Genomics Capital, Inc., which became a wholly-owned subsidiary of the Company and was renamed GGC Pharmaceuticals, Inc. (“GGC”) (see Note 2.) GGC is a genomics holding company that currently has a 40% ownership interest in Blizzard Genomics, Inc. in Minneapolis, Minnesota and a 5% ownership interest in Psynomics, Inc., a central nervous system genomics company in San Diego, California. Blizzard Genomics, Inc. is developing instrumentation, software, and consumable supplies (including patent-pending “T-Chip” and “Contact” technologies) for the genomics industry. GGC expects that DNA chips may significantly impact a broad range of biomedical and agricultural businesses. These include drug development, diagnostic testing, forensics, environmental testing and plant biotechnology. Psynomics, Inc. is a genomics company developing technology for the diagnosis and treatment of neuropsychiatric diseases and has rights to access a significant database of patient data and corresponding tissue samples. The Company records its portion of the losses in Blizzard Genomics on the equity method.

          The accompanying condensed consolidated financial statements at September 30, 2002 and for the three month and nine month periods ended September 30, 2002 and 2001 include the accounts of CytRx together with its subsidiary and are unaudited, but include all adjustments, consisting of normal recurring entries, which the Company’s management believes to be necessary for a fair presentation of the periods presented.  Actual results could differ from these estimates.  All significant intercompany transactions have been eliminated.  Interim results are not necessarily indicative of results for a full year.  The financial statements should be read in conjunction with the Company’s audited financial statements in its Form 10-K for the year ended December 31, 2001.

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2.       Merger with Global Genomics Capital, Inc.

          On February 11, 2002, CytRx entered into an agreement whereby the Company agreed to acquire GGC, a privately-held genomics holding company, through a merger of GGC Merger, Inc., a wholly-owned subsidiary of CytRx, into GGC. The terms of the merger provided for CytRx to acquire all outstanding shares, and rights to acquire shares, of GGC in return for the issuance or reservation for issuance of a maximum of approximately 9,963,000 shares of CytRx Common Stock, subject to adjustment.

          The transaction was closed on July 19, 2002, after approval by the shareholders of each company and satisfaction of other customary closing conditions. Pursuant to the merger agreement, each outstanding share of common stock of GGC was converted into .765967 shares of the Company's Common Stock. The merger resulted in the issuance of 8,948,204 shares of CytRx Common Stock and options and warrants to purchase 1,014,677 shares of CytRx Common Stock to the former security holders of GGC, with 498,144 of the CytRx shares being held in escrow and subject to cancellation in whole or in part to satisfy any indemnification claims made by the Company under the merger agreement. CytRx issued an additional 548,330 shares of its Common Stock for investment banking and legal fees as part of the merger.

          The merger was accounted for as a purchase by CytRx of a group of assets of GGC in a transaction other than a business combination. Because the current activities of GGC are focused on the development of a business rather than the operation of a business and planned principal operations of GGC have not yet commenced, GGC is considered a development-stage company. The purchase price was determined in accordance with Statement of Financial Accounting Standards No. 141 – Business Combinations (“FAS 141”) and Statement of Financial Accounting Standards No. 142 – Goodwill and Other Intangible Assets (“FAS 142”).  The total purchase price of $7,481,239 including the transaction costs of approximately $971,869 has been allocated based on the relative fair market values of the assets acquired and the liabilities assumed.

          The preliminary purchase price allocation, which is subject to adjustment when transaction costs have been finalized, is as follows:

Current assets	$	32,229
Other long-term assets		1,043,888
Investment in Blizzard Genomics technologies-Acquired development technology		6,277,338
In process R&D (recognized as expense)		67,318
Less: Liabilities assumed		(56,283	)
Total purchase price	$	7,481,239

        The in process research and development was recorded as a charge for acquired incomplete research and development in the accompanying statement of operations and relates primarily to GGC's investment in Psynomics, Inc. The acquired developed technology primarily represents the Company's investment in Blizzard Genomics. The acquired technology is being amortized over a period of ten years.

          The following table presents unaudited pro forma operating results for the nine months ended September 30, 2002 and 2001, as if the acquisition of GGC had occurred on January 1 of each period.

	2002			2001
Revenues	$	1,255,563		$	500,734
Net loss		(3,943,510	)		(4,434,175	)
Net loss per share		(0.19	)		(0.23	)

3.       Severance Payments to Officers

          The terms of CytRx’s merger with GGC (see Note 2) contemplated that GGC’s management team would replace that of CytRx’s subsequent to the closing of the merger. On July 16, 2002, CytRx terminated the employment of all of its then current officers, resulting in total obligations for severance, stay bonuses, accrued vacation and other contractual payments of $1,394,000. Prior to the merger closing date, CytRx advanced part of these amounts to three of

7

its officers, such that the total remaining obligation at the closing date was $1,147,000. Additionally, four officers agreed to accept an aggregate total of $177,000 of such amount in the form of CytRx Common Stock in lieu of cash, resulting in the issuance of 248,799 shares. Thus, the net cash payout subsequent to the merger in satisfaction of these obligations was $1,002,000, before taxes. The severance payments and fair value of the shares issued were recognized as expense during the third quarter of 2002.

4. Other Assets

     Included in other assets is a directors and officers liability policy that provides coverage for the former management and board of directors of the Company for a period of six years. The cost of the policy was $275,000. A portion of the cost has been reclassified to other current assets.

8

5.       Segment Reporting

(in thousands)		Product Development			Recruiting Services *		Total
Three Months Ended September 30, 2002
Sales to external customers		$	—		$	—	$	—
Intersegment sales			—			—		—
License fee income			1			—		1
Interest income			21			—		21
Grant & other income			17			—		17
Interest expense			—			—		—
Depreciation and amortization			362			—		362
Stock option and warrant expense			118			—		118
Segment profit (loss)			(2,480	)		—		(2,480	)
Total assets			10,927			—		10,927
Capital expenditures			—			—		—
Three Months Ended September 30, 2001
Sales to external customers			—			28		28
Intersegment sales			—			—		—
License fee income			—			—		—
Interest income			32			—		32
Grant & other income			104			—		104
Interest expense			—			—		—
Depreciation and amortization			147			—		147
Stock option and warrant expense			392			—		392
Segment profit (loss)			(1,002	)		—		(1,002	)
Total assets			4,427			—		4,427
Capital expenditures			—			—		—
Nine Months Ended September 30, 2002
Sales to external customers		$	—		$	22	$	22
Intersegment sales			—			—		—
License fee income			1,001			—		1,001
Interest income			83			—		83
Grant & other income			149			—		149
Interest expense			—			—		—
Depreciation and amortization			737			—		737
Stock option and warrant expense			260			—		260
Segment profit (loss)			(3,595	)		5		(3,590	)
Total assets			10,927			—		10,927
Capital expenditures			—			—		—
*	The activities of the Spectrum Recruitment Research segment were terminated effective February 1, 2002.

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5.       Segment Reporting (continued)

(in thousands)		Product Development		Recruiting Services *	Total
Nine Months Ended September 30, 2001
Sales to external customers		—		64	64
Intersegment sales		—		—	—
License fee income		—		—	—
Interest income		136		—	136
Grant & other income		300		—	300
Interest expense		—		—	—
Depreciation and amortization		440		—	440
Stock option and warrant expense		1,184		—	1,184
Segment profit (loss)		(3,381	)	2	(3,379	)
Total assets		4,427		—	4,427
Capital expenditures		—		—	—
*	The activities of the Spectrum Recruitment Research segment were terminated effective February 1, 2002.

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Item 2.  Management’s Discussion and Analysis of Financial Condition And Results of Operations

          This discussion includes “forward looking” statements that reflect our current views with respect to future events and financial performance. Investors should be aware that actual results may differ materially from our expressed expectations because of risks and uncertainties inherent in future events, particularly those risks identified under “Risk Factors” set forth below, and should not unduly rely on these forward looking statements. We undertake no duty to update the information in this discussion.

Liquidity and Capital Resources

          At September 30, 2002, we had cash and cash equivalents of $2.1 million and net assets of $10.5 million, compared to $5.3 million and $6.6 million, respectively, at December 31, 2001. Working capital totaled $1.8 million at September 30, 2002, compared to $4.4 million at December 31, 2001.

          On December 7, 2001, we entered into a license agreement with Vical Incorporated granting Vical exclusive, worldwide rights to use or sublicense our TranzFect poloxamer technology to enhance viral or non-viral delivery of polynucleotides (such as DNA and RNA) in all preventive and therapeutic human and animal health applications, except for (1) four infectious disease vaccine targets previously licensed by CytRx to Merck & Co., Inc., and (2) DNA vaccines or therapeutics based on prostate-specific membrane antigen (PSMA). In addition, the Vical license permits Vical to use TranzFect poloxamer technology to enhance the delivery of proteins in prime-boost vaccine applications that involve the use of polynucleotides. Under the Vical license, we received an up-front payment of $3,750,000 and have the potential to receive milestone and royalty payments in the future based on criteria described in the agreement. Restrictions in the Vical license prevent us from disclosing certain of its terms, including some of the specific terms of the potential milestone and royalty payments. Vical will also pay us an annual maintenance payment of between $50,000 and $100,000 until the first product approval. Maintenance payments are creditable against future royalties. Vical may terminate the license at any time upon 90 days written notice. All amounts paid to us are non-refundable upon termination and require no additional effort on our part.

          In November 2000, we entered into an exclusive, worldwide license agreement with Merck whereby we granted to Merck the right to use our TranzFect technology in DNA-based vaccines targeted to four infectious diseases, one of which is HIV. For the license to the TranzFect technology to treat the first disease target, Merck paid us a signature payment of $2 million. In addition, in February 2002, Merck paid us a $1 million milestone fee related to the commencement by Merck of the first U.S. Food and Drug Administration Phase I Study for the first product incorporating TranzFect designed for the prevention and treatment of HIV. Merck may pay us additional milestone and product approval payments in the future of up to $3 million as they develop the product. Additionally, if certain conditions are met regarding patent protection and Merck’s competitive position, Merck may pay a royalty to us of 1% on net sales of products incorporating TranzFect for the first disease target. If Merck chooses to pursue development of the TranzFect technology to treat the three additional disease targets, Merck will make a series of milestone and product approval payments to us totaling up to $2,850,000 for each target. If and when sales of products incorporating TranzFect for the three additional disease targets commence, we will receive royalties of between 2 and 4% of the net sales from such

11

products. Additionally, if certain conditions are met regarding patent protection and Merck’s competitive position, Merck may pay us an additional royalty of 1% on net sales of products incorporating TranzFect for these additional disease targets. Merck will also pay us an annual fee of between $50,000 and $100,000 until the first product approval for one of the three additional disease targets. Merck may terminate the license at any time upon 90 days written notice. All amounts paid to us are non-refundable upon termination and require no additional effort on our part.

          In April 2000, we entered into a private equity line of credit agreement whereby we have the right to put shares of our common stock to an investor from time to time to raise up to $5,000,000, subject to the conditions and restrictions included in the agreement. Our ability to raise significant funds through this mechanism is subject to a number of risks and uncertainties, including stock market conditions and our ability to obtain and maintain an effective registration of the related shares with the Securities and Exchange Commission. To date, we have not exercised our right to sell shares under this agreement (which expires in early 2003), and there can be no assurances that we would be able to raise significant funds through this mechanism should we seek to do so.

          Since October 2001 we have sought government support for additional clinical studies of CRL-5861 (FLOCOR) in sickle cell disease. Based on the encouraging results we observed in children in the previous Phase III clinical study of CRL-5861, we collaborated with a consortium of pediatric hematology centers led by Johns Hopkins University School of Medicine to design a follow-up Phase III trial to further investigate CRL-5861 in children with sickle cell crisis. In October 2001, Johns Hopkins University School of Medicine, in cooperation with the Maryland Medical Research Institute, submitted grant applications to the National Heart, Lung and Blood Institute (“NHLBI”) of the National Institutes of Health for financial support of the trial. On June 3, 2002, CytRx was informed the grant to fund a portion of the anticipated costs of the Phase III trial to further investigate FLOCOR was not approved. We now intend to focus our efforts on outlicensing this compound for any or all indications. The costs of the Phase III sickle cell trial and the development and clinical testing costs for other indications for FLOCOR are expected to be substantial. There can be no assurance that we will be able to identify parties that are willing and able to enter into such licensing arrangements on terms that are satisfactory to us. Any potential licensee for the sickle cell indication may consider a possible resubmission of the grant application for consideration by the NHLBI during its next grant review cycle. There is, however, no guarantee that such a submission will occur. Further, even if the grant application is resubmitted, there can be no assurance that the NHLBI will award any grant, or that, if awarded, our licensees would have adequate funding to complete the required testing and development. In the event that we are unsuccessful in licensing the compound, we may be required to reduce the carrying value of some of our assets.

          CytRx terminated the employment of all of its then current officers on July 16, 2002, resulting in total obligations for severance, stay bonuses, accrued vacation and other contractual payments of $1,394,000. Prior to the merger closing date, CytRx advanced part of these amounts to three of its officers, such that the total remaining obligation at the closing date was $1,147,000. Additionally, four officers agreed to accept an aggregate total of $177,000 of such

12

amount in the form of CytRx Common Stock in lieu of cash, resulting in the issuance of 248,799 shares. Thus, the net cash payout in satisfaction of these obligations was $1,002,000, before taxes.

          We continue to make lease payments of $16,800 per month on our former offices in Atlanta. We are seeking to sublease this facility which would cover a portion of the costs.

          Subsequent to our merger with GGC, we have modified our corporate business strategy such that we do not intend to pursue additional research and development efforts for any of our existing technologies. We intend now to focus our efforts on obtaining strategic alliances, license partners or other collaborative arrangements with larger pharmaceutical companies for FLOCOR and additional license partners for TranzFect. Our spending for each of these technologies now will primarily relate to maintaining patents and other agreements as required under our existing license agreements and to support our additional licensing efforts. We may also pursue product acquisition opportunities. Given this change in business strategy, we believe that we will have adequate working capital to allow us to operate through at least late 2003, although we may require additional working capital before this in order to fund any product acquisitions that we consummate. Any additional capital requirements may be provided by the equity line of credit agreement, by potential milestone payments pursuant to the Merck and Vical licenses or by potential payments from future strategic alliance partners or licensees of FLOCOR or our other existing technologies, but we may also pursue other sources of capital. The results of our technology licensing efforts and/or the actual proceeds of any fund-raising activities will determine our ongoing ability to operate as a going concern. These efforts are subject to market conditions and our ability to identify parties that are willing and able to enter into such arrangements on terms that are satisfactory to us. There is no assurance that such funding will be available to finance our operations on acceptable terms, if at all.

          The above statements regarding our plans and expectations for future financing are forward-looking statements that are subject to a number of risks and uncertainties. Our ability to obtain future financings through joint ventures, product licensing arrangements, equity financings or otherwise is subject to market conditions and our ability to identify parties that are willing and able to enter into such arrangements on terms that are satisfactory to us. There can be no assurance that we will be able to obtain future financing from these sources. Additionally, depending upon the outcome of our fund raising efforts, the accompanying financial information may not necessarily be indicative of future operating results or future financial condition.

Results of Operations

          We recorded net losses of $2,479,000 and $3,589,000 for the three month and nine month periods ended September 30, 2002 as compared to $1,002,000 and $3,379,000 for the same periods in 2001.

          From 1996 to February 2002, we marketed the services of a small group of human resource professionals to third parties under the name of Spectrum Recruitment Research (“Spectrum”) as a way of offsetting our cost of maintaining this function. Service revenues related to Spectrum were $0 and $22,000 during the three month and nine month periods ended

13

September 30, 2002, as compared to $28,000 and $64,000 during the three month and nine month periods ended September 30, 2001. Cost of service revenues were $0 and $11,000 during the three month and nine month periods ended September 30, 2002, as compared to $21,000 and $40,000 during the three month and nine month periods ended September 30, 2001. In February 2002 CytRx terminated the operations of Spectrum and transferred the rights to use the Spectrum tradenames to Albert, Isaac & Alexander, Inc., a consulting firm comprised of former CytRx (Spectrum) employees.

          License fee income was $1,000 and $1,001,000 during the three months and nine months ended September 30, 2002. There was no license fee income recorded during the three or nine month periods ended September 30, 2001. License fees for 2002 consist of a milestone fee received from Merck during the first quarter related to the commencement by Merck of a Phase I human clinical trial incorporating our TranzFect technology.

          Interest income was $21,000 and $83,000 during the three month and nine month periods ended September 30, 2002, as compared to $32,000 and $136,000 for the same periods in 2001. The variance between years generally corresponds to fluctuating cash and investment balances. Grant income was $0 and $46,000 during the three month and nine month periods ended September 30, 2002, as compared to $47,000 and $142,000 for the same periods in 2001. Costs related to grant income are included in research and development expense and generally approximate the amount of revenue recognized. The decrease in grant income results at least in part from the the modification in corporate business strategy subsequent to our merger. Other income was $17,000 and $103,000 during the three month and nine month periods ended September 30, 2002 as compared to $58,000 and $158,000 for the same periods in 2001. Other income primarily consists of sublease revenues.

         Research and development expenditures were $67,000 and $743,000 during the three month and nine month periods ended September 30, 2002, as compared to $384,000 and $1,321,000 for the same periods in 2001. Research and development expenditures for all periods primarily relate to our development activities for CRL-5861 (FLOCOR). The reduction in research and development expense during 2002 is attributable in part to the modification of our corporate business strategy, made after our merger with GGC, such that we do not presently intend to pursue additional research and development efforts for any of our existing technologies other than through partnering or out-licensing from outside parties (see discussion under "Liquidity and Capital Resources").

         In connection with our merger with GGC, we terminated the services of all of our then current officers on July 16, 2002, resulting in total expenses recognized for severance, stay bonuses, accrued vacation and other contractual payments of approximately $1,394,000.

         Selling, general and administrative expenditures were $457,000 and $1,721,000 during the three and nine month periods ended September 30, 2002, as compared to $615,000 and $2,079,000 for the same periods in 2001. Included in selling, general and administrative expeses were $27,000 for the three month and nine month periods ended September 30, 2002 that we paid to Kriegsman Capital Group, which is an affiliate of our Chief Executive Officer and largest shareholder, for our office headquarters space and certain administrative services provided to us by Kriegsman Capital Group. The amount of this payment is based on an allocation of rental expense and other expenses between Kriegsman Capital Group and us and may vary in future periods depending upon our usage of these facilities and services. During each of the periods, certain vesting criteria of employee and consultant options and warrants were achieved, resulting in aggregate non-cash charges of $118,000 and $260,000, during the three and nine month periods ended September 30, 2002 and $392,000 and $1,184,000 during the same periods in 2001. Additionally, during the first quarter of 2002, as a result of our agreement to merge with GGC (See "Liquidity and Capital Resources"), we paid Jack Luchese, our then President and Chief Executive Officer, a "success bonus" of approximately $435,000 pursuant to his employment agreement. In order to conserve the Company's cash resources, at the Company's request Mr. Luchese agreed to accept $325,000 of the amount in CytRx stock rather than cash. The number of shares issued to Mr. Luchese were calculated based upon a price per share equal to 85% of the volume-weighted average price per share for the 20 trading days preceding Mr. Luchese's commitment to accept shares in lieu of cash. The total expense we recorded was approximately $428,000.

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          The Company records its portion of the loss in Blizzard on the equity method. The losses were $128,000 during the three and nine month periods ended September 30, 2002.

Risk Factors

We Have Operated at a Loss and Will Likely Continue to Operate at a Loss For the Foreseeable Future

          We have incurred significant losses over the past five calendar years and for the first six months of 2002, primarily as the result of our expenditures for research and development on our products and for general and administrative expenses and our lack of significant revenues. We are likely to continue to incur operating losses until such time, if ever, as we generate significant recurring revenues. Unless we are able to acquire products from third parties that are already being marketed and that can be profitably marketed by us, it will take an extended period of time for us to generate recurring revenues. We anticipate that it will take at least several years before the development of any of our licensed or other products is completed, FDA marketing approvals are obtained and commercial sales of any of these products can begin.

We Have No Source of Significant Recurring Revenues, Which May Make Us Dependent on Financing to Sustain Our Operations.

          Although we generated $3,751,000 in revenues from milestone payments from our licensees during 2001 and $1,001,000 (on an unaudited basis) from these sources during the nine months ended September 30, 2002, we do not have any significant sources of recurring operating revenues. We will not have significant recurring operating revenues until at least one of the following occurs:

          • one or more of our currently licensed products is commercialized by our licensees that generates royalty income for us

          • we are able to enter into license or other arrangements with third parties who are then able to complete the development and commercialize one or more of our other products that are currently under development

          • we are able to acquire products from third parties that are already being marketed

          We are likely to incur negative cash from operations until such time, if ever, as we can generate significant recurring revenues. Should we be unable to generate these recurring revenues by late 2003, it is likely that we will become dependent on obtaining financing from third parties to maintain our operations. We have no commitments from third parties to provide us with any

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debt or equity financing, except for an equity line of credit that is only available to us under certain conditions that we may be unable or unwilling to satisfy and that expires in early 2003. Accordingly, financing may be unavailable to us or only available on terms that substantially dilute our existing shareholders. A lack of needed financing could force us to reduce the scope of or terminate our operations.

We Are Changing Our Business Strategy, Which Will Require Us to Find and Rely Upon Third Parties for the Development of Our Products and to Provide Us With Products

          We are modifying our prior business strategy of internally developing FLOCOR and our other products not yet licensed to third parties. We will now seek to enter into strategic alliances, license agreements or other collaborative arrangements with larger pharmaceutical companies that will provide for those companies to be responsible for the development and marketing of our products. There can be no assurance that our products will have sufficient potential commercial value to enable us to secure these arrangements with suitable companies on attractive terms or at all. If we enter into these arrangements, we will be dependent upon the timeliness and effectiveness of the development and marketing efforts of our contractual partners. If these companies do not allocate sufficient personnel and resources to these efforts or encounter difficulties in complying with applicable FDA requirements, the timing of receipt or amount of revenues from these arrangements may be materially and adversely affected. By entering into these arrangements rather than completing the development and then marketing these products on our own, we may suffer a reduction in the ultimate overall profitability for us of these products.

          We will also seek to acquire products from third parties that already are being marketed. We have not yet identified any of these products. It may be difficult for us to acquire these types of products with our limited financial resources and we may incur substantial shareholder dilution if we acquire these products with our securities. We do not have any prior experience in acquiring or marketing products and may need to find third parties to market these products for us.

Our Limited Financial Resources May Adversely Impact Our Ability to Execute Certain Strategic Initiatives

          On September 30, 2002 we had (on an unaudited basis) approximately $2.1 million in cash and cash equivalents and approximately $1.8 million in working capital. Our recently modified product development strategy calls for seeking strategic alliances, licensing agreements or other collaborative arrangements with larger pharmaceutical companies to complete the development of FLOCOR and our other products, and we will not continue any further FLOCOR development work on our own in the meantime. We also will seek to acquire products from third parties that already are being marketed. Although we believe this strategy will enhance our ability to achieve profitability, our lack of substantial available funds may make it difficult for us to acquire new products or to adopt other strategic initiatives in the future, such as acquiring or developing a marketing organization for our products or resuming internal development work on our products.

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Our Recent Acquisition of GGC May Place Additional Financial and Operational Burdens on Us.

          In July 2002, we acquired GGC through a merger. GGC is a development stage company that, to date, has not generated any operating revenue, does not expect to generate any revenues in the foreseeable future and has operated at a loss since its organization in May 2000. We have moved our headquarters in connection with the merger to Los Angeles, California while we continue to incur a substantial lease expense for our prior headquarters in Norcross, Georgia. We may be unable to substantially mitigate the future rental expense for our prior headquarters by terminating the lease for or subleasing this space.

          Although a majority of the members of our board of directors were directors prior to the merger, all of our operating officers resigned as a part of the merger. This change in personnel may place additional administrative burdens on our management in conducting our operations.

If Our Products Are Not Successfully Developed and Approved by the FDA, We May Be Forced to Reduce or Terminate Our Operations

          Each of our products is in the development stage and must be approved by the FDA or similar foreign governmental agencies before they can be marketed. The process for obtaining FDA approval is both time-consuming and costly, with no certainty of a successful outcome. This process typically includes the conduct of extensive pre-clinical and clinical testing, which may take longer or cost more than we or our licensees currently anticipate due to numerous factors such as:

          • difficulty in securing centers to conduct trials

          • difficulty in enrolling patients in conformity with required protocols or projected timelines

          • unexpected adverse reactions by patients in trials

          • difficulty in obtaining clinical supplies of the product

          • changes in the FDA’s requirements for our testing during the course of that testing

          • inability to generate statistically significant data confirming the efficacy of the product being tested

          In December 1999, we reported results from our Phase III clinical trial of FLOCOR for treatment of sickle cell disease patients experiencing an acute vaso-occlusive crisis (a blockage of blood flow caused by deformed or “sickled” red blood cells). Overall, the study did not achieve the statistical target for its primary objective, which was to decrease the length of vaso-occlusive crisis for the study population as a whole. To generate sufficient data to seek FDA approval for FLOCOR will require additional clinical studies, which will entail substantial time and expense. We do not intend to conduct or fund these tests ourself but will seek a strategic alliance partner or licensee for this purpose. The failure of our prior Phase III trial to generate sufficient data could make it more difficult for us to secure a strategic alliance partner or licensee for this product.

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If Blizzard Genomics Fails to Successfully Commercialize Its Products, the Value of Our Assets Will Be Adversely Impacted

          Blizzard Genomics, Inc., which is GGC’s principal portfolio company, has not yet commercialized any of its products. Although Blizzard Genomics plans to introduce its first product, the I-Scan Imager™, a low cost DNA chip reader, in the first half of 2003 and its second product, its T-Chip™ technology, in the second half of 2003, it may experience delays in completing the development of or commercially launching these products. We do not intend to provide any of the additional financing that Blizzard Genomics will require to complete the development and commercial launch of these products, and Blizzard Genomics may be unable to obtain such financing from other third parties at all or only on terms that could be highly dilutive to our ownership interest in that company. These products are likely to face intense market competition from existing products or technologies and products or technologies that are developed in the future. Blizzard Genomics is the licensee of several U.S. patents, and is seeking additional patent protection for its products and technologies. There can be no assurance, however, that the company will be able to secure sufficient patent coverage for its products and technologies. The failure of Blizzard Genomics to successfully commercialize its products would require us to write down or write off on our balance sheet the substantial carrying value of GGC’s investment in that company as part of our assets, which would have a materially adverse effect on our stockholders’ equity.

We Are Dependent Upon a Limited Operational Management Team and Need to Recruit a Chief Financial Officer and Perhaps Other Personnel to Effectively Operate

          Our current management team is limited to Steven A. Kriegsman, our Chief Executive Officer and interim Chief Financial Officer, and Kathy Hernandez, our Secretary. We are, therefore, very dependent on the availability and quality of the efforts of Mr. Kriegsman in managing our company. We will need to recruit a permanent Chief Financial Officer and may need to recruit other personnel in order to effectively operate the company and carry out our business plan. As provided by the terms of our merger with Global Genomics, we will seek to hire a full-time Chief Executive Officer to replace Mr. Kriegsman, whose employment agreement expires in July 2003. There can be no assurance that Mr. Kriegsman will be willing to continue to serve as our Chief Executive Officer if we have not found his replacement before expiration of his current employment agreement.

We Are Subject to Intense Competition That Could Materially Impact Our Operating Results

          We and our strategic partners or licensees may be unable to compete successfully against our current or future competitors. The pharmaceutical, biopharmaceutical and biotechnology industry is characterized by intense competition and rapid and significant technological advancements. Many companies, research institutions and universities are working in a number of areas similar to our primary fields of interest to develop new products. There also is intense competition among companies seeking to acquire products that already are being marketed. Many of the companies with which we compete have or are likely to have substantially greater research and product development capabilities and financial, technical, scientific, manufacturing, marketing, distribution and other resources than at least some of our present or future strategic partners or licensees.

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As a result, these competitors may:

          • Succeed in developing competitive products earlier than we or our strategic partners or licensees do

          • Obtain approvals for such products from the FDA or other regulatory agencies more rapidly than we or our strategic partners or licensees do

          • Obtain patents that block or otherwise inhibit the development and commercialization of our product candidates

          • Develop treatments or cures that are safer or more effective than those we propose for our products

          • Devote greater resources to marketing or selling their products

          • Introduce or adapt more quickly to new technologies or scientific advances

          • Introduce products that make the continued development of our product candidates uneconomical

          • Withstand price competition more successfully than our strategic partners or licensees can

          • More effectively negotiate third-party strategic alliances or licensing arrangements

          • Take advantage of product acquisition or other opportunities more readily than we can

We Depend on a Limited Number of Suppliers for an Adequate Supply of Materials, Which May Negatively Affect Our Ability to Manufacture Our Products

          We require three suppliers of materials or services to manufacture FLOCOR. These consist of a supplier of poloxamer 188, which is the raw material used to manufacture FLOCOR (the raw drug substance), a manufacturer who can refine the raw drug substance to our specifications (the purified drug substance), and a manufacturer who can mix the purified drug substance with other inactive ingredients in a sterile environment to produce the final dosage form of FLOCOR. Our inability to maintain relationships with those suppliers or the inability of any licensee of FLOCOR to maintain these relationships or provide other suitable manufacturing relationships could result in lengthy delays in the FDA and other regulatory agencies approval processes, causing us or our licensee to incur substantial unanticipated costs and delays or an inability to produce, market and distribute our product. Organichem, Corp., which is to provide us with commercial supplies of FLOCOR purified drug substance, has advised us that it does not intend to renew our agreement when it expires in December 2003. If Organichem were to renew a previous assertion by it that we were in breach of this agreement and terminate it prior to December 2003, we could be required to accelerate the write-off of certain of our depreciable

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assets associated with this contract (which were valued at approximately $1,100,000 as of September 30, 2002).

We May Incur Substantial Costs from Future Clinical Testing or Product Liability Claims

          If any of our products are alleged to be defective, they may expose us to claims for personal injury by patients in clinical trials of our products or by patients using our commercially marketed products. Even if the commercialization of one or more of our products is approved by the FDA, users may claim that such products caused unintended adverse effects. We currently carry product liability insurance covering the use of our products in human clinical trials and anticipate that any licensee or other third party who develops or markets any of our products will carry liability insurance covering the clinical testing or marketing of those products. However, if someone asserts a claim against us and the amount of such claim exceeds our policy limits or is not covered by our policy, such successful claim may exceed our financial resources and cause us to discontinue operations. Even if claims asserted against us are unsuccessful, they may divert management’s attention from our operations and we may have to incur substantial costs to defend such claims.

Our Common Stock May Be Delisted From Nasdaq, Which Could Adversely Affect the Trading Market For and Value of Our Common Stock.

          Our ability to continue to have our common stock listed on the Nasdaq SmallCap Market depends on our satisfying applicable Nasdaq listing criteria. We have been unable to maintain compliance with Nasdaq’s $1 minimum closing bid requirement and failed to come back into compliance with this requirement by Nasdaq’s deadline of August 13, 2002. However, we did receive a 180-day grace period until February 13, 2003, due to compliance with the Nasdaq’s core listing requirements (including shareholders equity of at least $5,000,000). If our common stock is delisted from the Nasdaq Small Cap Market, an active trading market for our common stock may cease to exist and the delisting could materially and adversely impact the market value of our common stock.

Our Anti-Takeover Provisions May Discourage Others From Acquiring Us and Adversely Affect Shareholder Value

          We have a shareholder rights plan and provisions in our bylaws that may discourage or prevent a person or group from acquiring us without our board of directors’ approval. The intent of the shareholder rights plan and our bylaw provisions is to protect our shareholders’ interests by encouraging anyone seeking control of our company to negotiate with our board of directors.

          We have a classified board of directors, which requires that at least two stockholder meetings, instead of one, will be required to effect a change in the majority control of our board of directors. This provision applies to every election of directors, not just an election occurring after a change in control. The classification of our board increases the amount of time it takes to change majority control of our board of directors and may cause our potential purchasers to lose interest in the potential purchase of us, regardless of whether our purchase would be beneficial to us and our stockholders.

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          Our bylaws provide that directors may only be removed for cause by the affirmative vote of the holders of at least a majority of the outstanding shares of our capital stock then entitled to vote at an election of directors. This provision prevents stockholders from removing any incumbent director without cause.

          Our bylaws also provide that a stockholder must give us at least 120 days notice of a proposal or director nomination that such stockholder desires to present at any annual meeting or special meeting of stockholders. Such provision prevents a stockholder from making a proposal or director nomination at a stockholder meeting without us having advance notice of that proposal or director nomination. This could make a change in control more difficult by providing our directors with more time to prepare an opposition to a proposed change in control.

Our Outstanding Options and Warrants and the Registration of Our Shares Issued in the Global Genomics Merger May Adversely Affect the Trading Price of Our Common Stock

          As of November 14, 2002, there were 6,731,656 shares of our common stock reserved for issuance upon the exercise of outstanding stock options and warrants at exercise prices ranging from $0.01 to $7.75 per share. Our outstanding options and warrants could adversely affect our ability to obtain future financing or engage in certain mergers or other transactions, since the holders of options and warrants can be expected to exercise them at a time when we may be able to obtain additional capital through a new offering of securities on terms more favorable to us than the terms of outstanding options and warrants. For the life of the options and warrants, the holders have the opportunity to profit from a rise in the market price of our common stock without assuming the risk of ownership. To the extent the trading price of our common stock at the time of exercise of any such options or warrants exceeds the exercise price, such exercise will also have a dilutive effect to our stockholders.

          We recently filed a registration statement covering the 8,948,204 shares of our common stock issued and the 1,014,677 shares of our common stock issuable upon exercise of options and warrants assumed by us in connection with the GGC merger as well as the resale of 548,330 other shares that we have issued and warrants to purchase 1,522,492 shares that are otherwise outstanding. The availability for public resale of these shares could adversely affect the trading price of our common stock. 

We May Experience Volatility in Our Stock Price, Which May Adversely Affect the Trading Price of Our Common Stock

          The market price of our common stock has experienced significant volatility in the past and may continue to experience significant volatility from time to time. Our stock price has ranged from $0.26 to $6.44 over the past five years. Factors such as the following may affect such volatility:

          • our quarterly operating results

          • announcements of regulatory developments or technological innovations by us or our competitors

          • government regulation of drug pricing

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          • developments in patent or other technology ownership rights

          • public concern regarding the safety of our products

          Other factors which may affect our stock price are general changes in the economy, financial markets or the pharmaceutical or biotechnology industries.

Item 3. – Quantitative and Qualitative Disclosures About Market Risk

          Our financial instruments that are sensitive to changes in interest rates are our investments. As of September 30, 2002, we held no investments other than amounts invested in money market accounts. We are not subject to any other material market risks.

Item 4. – Controls and Procedures

          Evaluation of Disclosure Controls and Procedures: Our Chief Executive Officer and interim Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) on November 11, 2002, has concluded that the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to us, including our consolidated subsidiary, would be made known to him by others within those entities, particularly during the period in which this Form 10-Q was being prepared.

          Changes in Internal Controls: Our management changed on July 16, 2002 in connection with the merger with GGC. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the November 11, 2002 date of their evaluation.

PART II – OTHER INFORMATION

Item 2. – Changes in Securities and Use of Proceeds

         In July 2002, we issued a warrant to Corporate Consulting International Group to purchase 250,000 shares of our common stock at $.58 per share at any time prior to July 20, 2004. The warrants were issued as partial consideration for certain financial public relations services provided to us by Corporate Consulting International Group. The warrants were issued in reliance upon an exemption from registration under the Securities Act of 1933 provided by Regulation D.

         In July 2002, we issued a total of 448,330 shares of our common stock to five affiliates, executives and employees of Cappello Capital Corp. in consideration of investment banking services provided to us by Cappello Capital Corp. in connection with the GGC merger. In July 2002, we also issued 100,000 shares of our common stock to Wasserman, Comden, Casselman & Pearson LLP in cancellation of all amounts owed by GGC to that law firm for legal services rendered by that law firm to GGC through the time of the merger. The shares were issued to the affiliates, executives and employees of Cappello Capital Corp. and to Wasserman, Comden, Casselman & Pearson LLP in reliance upon an exemption from registration under the Securities Act of 1933 provided by Regulation D.

         In September 2002, we sold 50,000 shares of our common stock for $500 to Madison & Wall Worldwide, Inc. upon their exercise of a warrant previously issued to them in consideration of certain financial public relations services that they provided to us. The shares were issued in reliance upon an exemption from registration under the Securities Act of 1933 provided by Regulation D.

Item 4. – Submission of Matters to a Vote of Security Holders

          At our annual meeting of stockholders held on July 16, 2002, Raymond C. Carnahan, Jr. and Herbert H. McDade, Jr. were re-elected to our Board of Directors as Class II directors.  There were 9,489,152 shares voted for and 523,874 shares withheld for each of Mr. Carnahan and Mr. McDade.  Jack Luchese resigned as a director on July 16, 2002, and Max Link and Alexander L. Cappello continue to serve as Class III directors.  Following the annual stockholders meeting, our Board of Directors appointed Steven A. Kriegsman as a Class II director and Dr. Louis Ignarro.

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and Dr. Joseph Rubinfeld as Class I directors.  The terms of the Class I, II and III directors expire at the annual stockholders meetings for fiscal years 2004, 2005 and 2003, respectively.

          The stockholders also voted at our annual meeting of stockholders to approve issuance of our shares of common stock in connection with the GGC merger, with 4,795,439 shares voted for, 449,452 shares voted against and 54,795 shares abstaining.

          A proposal voted on by our stockholders at our annual meeting to amend our certificate of incorporation to change our name to Global Therapeutics, Inc. if the GGC merger was completed was not approved, with 4,934,242 shares voted for, 311,449 shares voted against and 53,995 shares abstaining.

          The stockholders voted at our annual meeting of stockholders to approve certain amendments to our 2000 Long-Term Incentive Plan, including an increase in the number of shares of common stock available under the Plan from 1,000,000 to 3,000,000, with 4,053,860 shares voted in favor, 4,053,860 shares voted against and 104,870 shares abstaining.

          At our annual meeting of stockholders, the stockholders also ratified the selection of Ernst & Young LLP as our independent auditors for the fiscal year ending December 31, 2002, with 9,874,717 shares voted in favor, 86,214 shares voted against and 52,095 shares abstaining.

Item 6. – Exhibits and Reports on Form 8-K

(a)     Exhibits:

          The exhibits listed in the accompanying Index to Exhibits are filed as part of this Quarterly Report on Form 10-Q.

(b)     Reports on Form 8-K: 

          On August 1, 2002 we filed a Form 8-K disclosing the completion of our acquisition of Global Genomics Capital, Inc.

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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 thereunto duly authorized.

			CYTRX CORPORATION
			(Registrant)
Date:	November  14 , 2002	By:	/s/ Steven A. Kriegsman
			Steven A. Kriegsman
			Chief Executive Officer and Interim Chief Financial Officer

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CERTIFICATION

I, Steven A. Kriegsman, certify that: 

1.	I have reviewed this quarterly report on Form 10-Q of CytRx Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:
		a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;
		b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
		c)	presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date:
5.	I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
		a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
		b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.	I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: November 14, 2002

 /s/  STEVEN A. KRIEGSMAN

Steven A. Kriegsman
Chief Executive Officer and President

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INDEX TO EXHIBITS

Exhibit Number	Description
4.1	Warrant issued on July 20, 2002 to Corporate Consulting International Group pursuant to Consulting/Engagement Letter dated July 20, 2002.
10.1	Amended and Restated Employment Agreement dated as of May 2002 between CytRx Corporation and Steven A. Kriegsman.
10.2	Extension of Financial advisory agreement between CytRx Corporation and Cappello Capital Corp. dated January 1, 2002.
10.3	Agreement between Kriegsman Capital Group and CytRx Corporation dated February 11, 2002 regarding office space rental.
10.4	Marketing Agreement with Madison & Wall Worldwide, Inc. dated August 14, 2002.
10.5	Non-exclusive financial advisory agreement between CytRx and Sands Brothers & Co., Ltd. dated September 12, 2002.

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EX-4.1

EXHIBIT 4.1

          THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR APPLICABLE STATE LAW, AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAW, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND STATE LAW IS AVAILABLE.

THIS WARRANT IS NONTRANSFERABLE, EXCEPT AS SET FORTH HEREIN

Void after 5:00 p.m. California Time, on July 19, 2004.

Warrant to Purchase 250,000 Shares of Common Stock

WARRANT TO PURCHASE COMMON STOCK

of

CYTRX CORPORATION

          This is to Certify that, FOR VALUE RECEIVED, Corporate Consulting International Group or registered assigns (“Holder”), is entitled to purchase, subject to the provisions of this Warrant, from CytRx Corporation, a Delaware corporation (“Company”), at any time on or after July 20, 2002, and not later than 5:00 p.m., California Time, on July 19, 2004, 250,000 shares of common stock, $0.01 par value, of Company (“Common Stock”) at a purchase price per share of U.S. $0.58.  The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth.  The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as “Warrant Stock” and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the “Exercise Price.”

          This Warrant is issued to Holder in connection with the Consulting/Engagement Letter between Holder and the Company dated as of July 20, 2002. 

          1.          Exercise of Warrant.

          (a)         This Warrant may be exercised in whole or in part at any time or from time to time on or after July 20, 2002, and not later than 5:00 p.m., California Time, on July 19, 2004, or if July 19, 2004, is a day on which banking institutions are authorized by law to close, then on the next succeeding day, which shall not be such a day, by presentation and surrender hereof to Company or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto, duly endorsed and accompanied by payment in full of the Exercise Price for the number of shares specified in such form, together with all federal and state taxes applicable upon such exercise.

          (b)         Upon receipt by the Company of this Warrant at the office or agency of the Company, in proper form for exercise, together with payment in full of the Exercise Price for the number of shares indicated in the Purchase Form, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder.

          (c)         Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance or delivery upon exercise of this Warrant.

          2.           Fractional Shares.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  With respect to any fraction of a share called for upon any exercise hereof, Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current “Fair Market Value” of a share of Common Stock, determined as follows:

                       a.           If the Common Stock is listed on a national securities exchange or the Nasdaq National Market, the current Fair Market Value shall be the last reported (as reported by Bloomberg’s Financial Service) sale price of the Common Stock on such exchange or the Nasdaq National Market on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or the Nasdaq National Market; or

                       b.          If the Common Stock is not so listed, the current Fair Market Value shall be the mean of the last reported bid and asked prices reported by the National Association of Securities Dealers Quotation System (or, if not so quoted on NASDAQ, by the National Quotation Bureau, Inc.) on the last business day prior to the date of the exercise of this Warrant; or

                       c.          If the Common Stock is not so listed and bid and asked prices are not so reported, the current Fair Market Value shall be an amount, not less than book value, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company, such determination to be final and binding on the Holder.

          3.          Exchange Assignment or Loss of Warrant.  This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder.  This Warrant may not be sold, transferred, assigned or hypothecated, except that it may be transferred by operation of law as a result of the death of Holder or his lawful successors.  Any such assignment shall be made by surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax; whereupon the

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Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled.  This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof.  The term “Warrant” as used herein includes any Warrants issued in substitution for or replacement of this Warrant, or into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfied indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date.  Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone.

          4.          Rights of the Holder.  The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against Company except to the extent set forth herein.

          5.          Anti-Dilution Provisions.

                       a.          Adjustment of Exercise Price.  Anything in this Section 5 to the contrary notwithstanding, in case the Company shall at any time issue Common Stock or Convertible Securities by way of dividend or other distribution on any stock of the Company or subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall be proportionately decreased in the case of such issuance (on the day following the date fixed for determining shareholders entitled to receive such dividend or other distribution) or decreased in the cases of such subdivision or increased in the case of such combination (on the date that such subdivision or combination shall become effective).

                       b.          No Adjustment for Small Amounts.  Anything in this Section 5 to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment in the Exercise Price unless and until the net effect of one or more adjustments, determined as above provided, shall have required a change of the Exercise Price by at least one cent, but when the cumulative net effect of more than one adjustment so determined shall be to change the actual Exercise Price by at least one cent, such change in the Exercise Price shall thereupon be given effect.

                       c.          Number of Shares Adjusted.  Upon any adjustment of the Exercise Price pursuant to Section 5(a), the Holder of this Warrant shall thereafter (until another such adjustment) be entitled to purchase, at the new Exercise Price, the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares of Common Stock initially issuable upon exercise of this Warrant by the original Exercise Price and dividing the product so obtained by the new Exercise Price.

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          6.          Officer’s Certificate.  Whenever the Exercise Price shall be adjusted as required by the provisions of Section 5 hereof, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office, and with its stock transfer agent, if any, an officer’s certificate showing the adjusted Exercise Price determined as herein provided and setting forth in reasonable detail the facts requiring such adjustment.  Each such officer’s certificate shall be made available at all reasonable times for inspection by the Holder and the Company shall, forthwith after each such adjustment, deliver a copy of such certificate to the Holder. Such certificate shall be conclusive as to the correctness of such adjustment.

          7.          Notices to Warrant Holder.  So long as this Warrant shall be outstanding and unexercised (i) if Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if Company shall offer to the holders of Common Stock for subscription or purchase by them any shares of stock of any class or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be delivered to the Holder, at least ten days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any, is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.

          8.          Reclassification, Reorganization or Merger.  In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of an issuance of Common Stock by way of dividend or other distribution or of a subdivision or combination), or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, the Company shall cause effective provision to be made so that the holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance.  Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant.  The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances.  In the event that in any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in

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part, for or of a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of subsection (f)(i) hereof with the amount of the consideration received upon the issue thereof being determined by the Board of Directors of the Company, such determination to be final and binding on the Holder.

          9.          Spin-Offs.  In the event the Company spins-off a subsidiary by distributing to the shareholders of the Company as a dividend or otherwise the stock of the subsidiary, the Company shall reserve for the life of the Warrant shares of the subsidiary to be delivered to the Holder of this Warrant upon exercise to the same extent as if such Holder were an owner of record of the Warrant Stock on the record date for payment of the shares of the subsidiary.

          10.         Notices.  Any notices or certificates by the Company to Holder shall be deemed delivered if in writing and delivered personally or sent by either certified mail or overnight mail (e.g., Federal Express or similar carrier) to Holder at the address for Holder registered on the Company’s books, and by Holder to Company by notice in writing to the Company addressed to it at 11726 San Vicente Blvd., Suite 650, Los Angeles, CA 90049, to the attention of Steven A. Kriegsman, or such other address of which the Company shall give notice.  The Company may change its address by written notice to the Holder registered as the owner on the Company’s books and Holder may change its address by written notice to the Company.

          11.         Transfer Restrictions.  This Warrant may not be assigned, transferred, sold or otherwise disposed of, except by intestate succession or by will.

          12.         The Company may cause the following legend to be set forth on each certificate representing Warrant Stock or any other security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such certificate that such legend is unnecessary:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT MADE UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND APPLICABLE STATE LAW, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAW.

          13.          Applicable Law.  This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of California.

Dated: July 20, 2002

By:	/s/ STEVEN A. KRIEGSMAN
	Steven A. Kriegsman

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PURCHASE FORM

Date ___________, 200_

          o          The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _____ shares of Common Stock and hereby makes payment of $___________ in payment of the actual exercise price thereof.

INSTRUCTIONS FOR REGISTRATION OF STOCK

	NAME:________________________________________________
		(Please type or print in block letters)
	NAME: ________________________________________________
	ADDRESS: _____________________________________________
	SIGNATURE: ___________________________________________
ASSIGNMENT FORM
	FOR VALUE RECEIVED, _________________________________
hereby sells, assigns and transfers unto:
	NAME: ________________________________________________
		(Please type or print in block letters)
	ADDRESS: _____________________________________________

the right to purchase Common Stock represented by this Warrant to the extent of_____ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ______________________________________, attorney, to transfer the same on the books of the Company with fill power of substitution in the premises.

Date:_______________, 200__

By:

Name:

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EX-10.1

EXHIBIT 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”) is made and entered into this              day of May, 2002, and is effective as of the Effective Time (as defined in Section 4 hereof), by and between CytRx Corporation, a Delaware corporation (“Employer”) and Steven A. Kriegsman, an individual and resident of the State of California (“Employee”), and this Agreement hereby replaces and supersedes the Employment Agreement dated as of February 11, 2002 between Employer and Employee.

A.    In connection with that certain Agreement and Plan of Merger dated as of February 11, 2002, as amended by that certain First Amendment to Agreement and Plan of Merger dated as of the date hereof (the “Merger Agreement”) among Employer, Global Genomics Capital, Inc. (“GGC”) and GGC Merger Corporation, Employee has agreed to enter into this Agreement and serve as Chief Executive Officer of Employer in accordance with the terms hereof.

B.    Employer believes that Employee will be an integral part of its management and is and will become more knowledgeable of, and be responsible for developing, its business.

C.    Employee possesses extensive knowledge regarding Employer’s business, including confidential and proprietary information concerning marketing plans and strategy, business plans, projections, and the formulae and models pertaining thereto, customer needs and peculiarities, finances, operations, billing methods, customer lists and trade secrets (the “Trade Secrets”).

D.    Employer desires that, effective as of the Effective Time, Employee be employed as Chief Executive Officer of Employer.

NOW, THEREFORE, upon the above premises, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows.

1.    Employment.    Effective as of the Effective Time, Employer hereby hires Employee as Employer’s Chief Executive Officer, and Employee hereby accepts such employment and position with Employer, on the terms and conditions set forth herein. Employer understands that his duties as Chief Executive Officer may change from time to time over the Term hereof in the discretion of Employer’s Board of Directors.

2.    Duties.    Employee shall perform all duties assigned to him by the Employer’s Board of Directors in a professional business-like manner and to the best of his ability . Such duties include, without limitation, the overseeing and implementation of the business plan adopted by the Board of Directors (as may be revised from time to time by the Board of Directors). Employee will truthfully and accurately maintain all records, preserve all such records, and make such reports as Employer may require. Employee will fully and truthfully account for all money and property of Employer of which he may be given custody, and

Employee will pay over and deliver to Employer all such money and property as he may be directed.

3.    Time and Efforts.    Employee shall devote such time, efforts, attention, and energies to Employer’s Business as are reasonably necessary to implement the business plan and discharge his duties hereunder.

4.    Term.    Employee’s employment hereunder shall commence at the Effective Time and shall continue until the first anniversary thereof, unless sooner terminated in accordance with Section 6 (the “Initial Term”). Upon expiration of the Initial Term, Employee’s employment hereunder shall automatically renew for one additional one year period (the “Additional Term”), unless either Employee or Employer provides written notice to the other at least thirty (30) days prior to the expiration of the Initial Term that such party does not intend to renew this Agreement for the Additional Term. For purposes of this Agreement, (i) “Effective Time” shall have the meaning ascribed to such term in the Merger Agreement and (ii) “Term” shall mean the Initial Term, and if this Agreement is renewed for the Additional Term, the Additional Term.

5.    Compensation.    As the total consideration for Employee’s services rendered hereunder, Employer shall pay Employee the following compensation:

5.1.    Salary.    Employer shall pay Employee an annual salary of Two Hundred Forty Thousand Dollars ($240,000) per year (“Salary”), in equal installments, twice monthly, on those days when Employer normally pays its employees. If the Employee’s employment is renewed for the Additional Term, this Salary shall be reviewed by Employer’s Board of Directors or Compensation Committee and may be subject to an upward adjustment or no adjustment in their sole discretion.

5.2.    Bonus Compensation.    Employee shall be eligible to receive a bonus based upon goals and objectives set by Employer’s Board of Directors or Compensation Committee.

5.3    Stock Options.    Employee will be eligible to receive grants of options to purchase Employer’s Common Stock. The terms of those options, including the vesting schedule, will be determined by the Board of Directors (or Compensation Committee) in its sole discretion and set forth in the agreements evidencing the options.

5.4    Expense Reimbursement.    Employer shall reimburse Employee for reasonable and necessary business and entertainment expenses incurred by Employee in connection with the performance of Employee’s duties. In the event that any federal, state or local government taxing agency or authority determines to disallow any such expenses which are reimbursed to Employee, Employee agrees upon Employer’s request, to repay Employer any such disallowed expenses.

5.5    Vacation.    Employee shall be entitled to three (3) weeks vacation time each year without loss of compensation. Employee may be absent from his employment only at

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such times as Employer shall determine from time to time. Employee’s vacation shall be governed by Employer’s usual policies applicable to all employees.

5.6    Insurance Benefits.    Employee shall be eligible to participate in all insurance and other benefits made available by Employer to all of its employees under its group plans. In addition to the extent Employee is insurable and the annual premium does not exceed Five Thousand Dollars ($5,000), Employer will purchase a life insurance policy on Employee’s life with a death benefit of not less than One Million Dollars ($1,000,000). Employee shall have the right to name the beneficiary of the life insurance policy. Employer’s liability under this section 5.6 shall be limited to payment of the policy premium. In the event Employer does not obtain the insurance for any reason, other than the non-payment of a required premium (as long as such premium is not more than $5,000 per year), Employer shall have no liability to Employee under this section 5.6.

5.7    Tax Withholding.    Employer shall have the right to deduct from the compensation due to Employee hereunder any and all sums required for social security and withholding taxes and for any other federal, state, or local tax or charge which may be in effect or hereafter enacted or required as a charge on the compensation of Employee.

6.    Expiration and Termination.    This Agreement will expire at the conclusion of its Term and may be terminated earlier in the following events or in accordance with Section 17:

6.1    Termination for Cause.    Upon notice to Employee, Employer may terminate this Agreement effective immediately for material breach by Employee of the terms hereof or for Cause as defined in this section 6.1. “Cause” shall mean only: (1) Employee’s failure or inability to comply with a lawful instruction of the Board of Directors; or (2) Employee’s act or acts of personal dishonesty that are intended to result in personal enrichment of Employee at the expense of the Employer; or (3) Employee’s conviction of any felony or any crime involving an act of moral turpitude. In such event, Employee shall not be entitled to any severance, or any proration of any bonus calculated under section 5.2 on account of any part year.

6.2    Termination by Employer Without Cause.    Employer may terminate this Agreement without cause any time upon thirty (30) days’ written notice. If Employer terminates Employee without cause at any time during the Initial Term, Employee will be entitled to his Salary for the remainder of the Initial Term and for a period of six months after the expiration of the Initial Term. If Employer terminates Employee without cause at any time after the expiration of the Initial Term, Employee will be entitled to his Salary through the effective date of his termination and for a period of six months thereafter.

6.3    Termination by Employee Without Cause.    Employee may terminate this Agreement without cause upon thirty (30) days’ written notice to Employer. In such event, at Employer’s request, Employee shall continue to render his services up to the effective date of his termination. In the event of a termination under this section 6.3, Employee shall be entitled to

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his Salary through the effective date of his termination.

6.4    Termination upon Replacement CEO.    Employee and Employer acknowledge and agree that after the Effective Time, both will search for a full-time Chief Executive Officer to replace Employee. Upon the finding of such a replacement, Employee shall resign his employment hereunder, which shall be deemed to be a termination without Cause by Employer hereunder.

7.    First Offer.    Employee acknowledges and agrees that a material inducement to Employer to enter into the Merger Agreement and this Agreement and to consummate the transactions contemplated by the Merger Agreement is the Employee’s expertise in, knowledge of and ability to identify acquisition candidates within, the biotech, pharmaceutical and health care industries. Accordingly, Employee agrees that Employee will provide the Board of Directors with the first opportunity to conduct or take action with respect to any acquisition opportunity or any other potential transaction identified by Employee within the biotech, pharmaceutical or health care industries and that is within the scope of the business plan adopted by the Board of Directors to Employer’s Board of Directors. Employee’s obligations under this Section 7 shall commence at the Effective Time and shall continue until for the longer of (i) the first annual anniversary of the Effective Time or (ii) the period during which Employee is entitled to payments under Sections 6.1, 6.2, 6.3 or 6.4.

8.    Confidentiality.    During the Term of this Agreement and for a period of five years thereafter, Employee shall hold and keep secret and confidential all Trade Secrets and other confidential or proprietary information of Employer and shall use such information only in the course of performing Employee’s duties hereunder; provided, however, that with respect to “trade secrets” (as defined under applicable law), Employee shall hold and keep secret and confidential such “trade secrets” for so long as they remain “trade secrets” under applicable law. Employee shall maintain in trust all such Trade Secret or other confidential or proprietary information, as Employer’s property, including, but not limited to, all documents concerning Employer’s business, including Employee’s work papers, telephone directories, customer information and notes, and any and all copies thereof in Employee’s possession or under Employee’s control. Upon expiration or earlier termination of Employee’s employment with Employer, for any reason, or upon request by Employer, Employee shall deliver to Employer all such documents belonging to Employer, including any and all copies in Employee’s possession or under Employee’s control.

9.    Equitable Remedies; Injunctive Relief.    Employee hereby acknowledges and agrees that monetary damages are inadequate to fully compensate Employer for the damages that would result from a breach or threatened breach of Sections 7 or 8 of this Agreement and, accordingly, that Employer shall be entitled to equitable remedies, including, without limitation, specific performance, temporary restraining orders, and preliminary injunctions and permanent injunctions, to enforce such Sections without the necessity of proving actual damages in connection therewith. This provision shall not, however, diminish Employer’s right to claim and recover damages or enforce any other of its legal or equitable rights or defenses.

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10. Severable Provisions. The provisions of this Agreement are severable and if any one or more provisions is determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provisions to the extent enforceable, shall nevertheless be binding and enforceable.

11. Binding Agreement. This Agreement shall inure to the benefit of and shall be binding upon Employer, its successors and assigns and Employee and his heirs and representatives. Neither party may assign this Agreement without the prior written consent of the other party.

12. Entire Agreement. This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth otherwise herein. This Agreement supersedes any and all prior agreements, written or oral, between Employee and Employer relating to the subject matter hereof. Any such prior agreements are hereby terminated and of no further effect and Employee, by the execution hereof, agrees that any compensation provided for under any such prior agreements is specifically superseded and replaced by the provision of this Agreement. No modification of this Agreement shall be valid unless made in writing and signed by the parties hereto and unless such writing is made by an executive officer of Employer (other than Employee). The parties hereto agree that in no event shall an oral modification of this Agreement be enforceable or valid.

13. Governing Law. This Agreement is and shall be governed and construed in accordance with the laws of the State of California without giving effect to California’s choice of law rules.

14. Notice. All notices and other communications under this Agreement shall be in writing and mailed, telecopied or delivered by hand or by a nationally recognized courier service guaranteeing overnight delivery to a party at the following address (or to such other address as such party may have specified by notice given to the other party pursuant to this provision):

If to Employer:

CytRx Corporation

154 Technology Parkway

Norcross, Georgia 30092

Facsimile: (770) 448-3357

Attention: President

With a copy to:

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Facsimile:

If to Employee:

Steve Kriegsman

15. Attorneys’ Fees. In the event that any party shall bring any lawsuit, arbitration or proceeding in connection with the performance, breach or interpretation hereof, then the prevailing party in such action shall be entitled to recover from the losing party in such action, all reasonable costs and expenses, including reasonable attorneys’ fees, court costs, costs of investigation and other costs reasonably related to such proceeding.

16. Arbitration. The parties agree if any controversy or claim shall arise out of this Agreement or the breach hereof (other than claims (1) for equitable relief, including specific performance, injunctive relief or temporary restraining orders or (2) enforcing this Section 16 or an arbitration award granted in accordance herewith), and either party shall request that the matter be settled by arbitration the matter shall be settled exclusively by final and binding arbitration before JAMS (or its successor pursuant to the United States Arbitration Act, 9 U.S.C. Section 1 et seq.) in accordance with the provisions of JAMS’ Streamlined Arbitration Rules and Procedures in effect at such time, by a single arbitrator, if the parties shall agree upon one, or by one arbitrator appointee by each party and a third arbitrator appointed by the other arbitrators. In case of any failure of a party to make an appointment referred to above within two (2) weeks after written notice of controversy, such appointment shall be made by JAMS. All arbitration proceedings shall be held in the City of Los Angeles, and each party agrees to comply in all respects with any award made in such proceeding and to the entry of a judgment in any jurisdiction upon any award rendered in such proceeding. All costs and expenses of arbitration (including costs of preparation therefor and reasonable attorneys’ fees incurred in connection therewith) of the party prevailing in such arbitration shall be borne by the losing party to such arbitration, unless otherwise directed by the arbitrators.

17. Death or Disability. In the event of Employee’s death during his employment with Employer, Employer’s obligations under this Agreement shall automatically terminate; provided, however, that within fifteen (15) days thereafter Employer shall pay to the Employee’s heirs or personal representatives Employee’s accrued but unpaid Salary, bonus and vacation, and his remaining unvested Options shall vest. In the event of Employee’s total disability (defined as the complete inability to perform his duties hereunder) for any period of at least three (3) consecutive months, Employer shall have the right, which may be exercised at its sole discretion, to terminate Employee. Employer shall have no obligation to Employee (or his heirs or personal representatives) upon Employee’s termination under this Section 17, other than for unpaid Salary accrued prior to the effective date of his termination.

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18. Survival. In the event this Agreement expires after its term or is terminated, the provisions of sections 5.7 and 7 through 18 shall survive.

19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

IN WITNESS WHEREOF, this Agreement is executed as of the day and year first above written.

“EMPLOYER”

CYTRX CORPORATION

a Delaware corporation

/s/    H. MCDADE, JR.

By:                                                                                                  

    Name:      H. McDade, Jr.

    Title:         Chairman of Compensation Committee

“EMPLOYEE”

/s/    STEVEN A. KRIEGSMAN        

Steven A. Kriegsman

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EX-10.2

CAPPELLO CAPITAL CORP.
Investment Bankers

EXHIBIT 10.2

Confidential

January 1, 2002

Mr. Jack J. Luchese
President and Chief Executive Officer
CytRx Corporation
154 Technology Parkway
Technology Park
Atlanta, Georgia 30092

Dear Mr. Luchese,

This letter shall confirm the extension of the Engagement Agreement (the “Agreement”) dated as of December 12, 2000 (the “Agreement”), by and between Cappello Capital Corp. (“Advisor”) and CytRx Corporation (“Company”).  The amendments are as follows:

1.)          The Term of the Agreement, as defined therein, shall run from the date of receipt by Advisor of the Company’s signed acceptance of this letter until twelve months thereafter, and may be further extended by mutual consent of the parties (“Term”).

2.)          The Company agrees to pay the Advisor a monthly retainer of $10,000 per month for a period of six (6) months, payable on the first day of each month, commencing as of January 1, 2002, and ending as of June 30, 2002.

All other terms and provisions of the Agreement shall otherwise remain unchanged.

If this meets with your approval, please indicate your acceptance of the above by signing where indicated below and returning this letter by facsimile and mail to the undersigned.  Thank you for the opportunity to be of service.

Sincerely,

/s/ GERARD K. CAPPELLO

Gerard K. Cappello
President and CEO
Cappello Capital Corp.

1299 Ocean Avenue , Suite 306, Santa Monica, California 90401
Telephone 310.393.663 2 Fax 310.393.4838

NASD - SIPC

CytRx Corporation -- Cappello Capital Corp.	Confidential
Engagement Extension – January 1, 2002 – Page 2

AGREED AND ACCEPTED:

The foregoing accurately sets forth our understanding and agreement with respect to the matters set forth herein.

CYTRX CORPORATION
By:	/s/ JACK J. LUCHESE
Title:	President & CEO
Date:	February 11, 2002

EX-10.3

EXHIBIT 10.3

[CYTRX CORPORATION LETTERHEAD]

February 11, 2002

Kriegsman Capital Group, LLC
11726 San Vicente Boulevard, Suite 650
Los Angeles, CA 90049
Attention: Steven A. Kriegsman

          Re:          Office Space

Dear Steve:

This letter reflects the agreement between Kriegsman Capital Group, LLC (“KCG”) and CytRx Corporation (“CytRx”) with respect to the payment of rent for office space and other related expenses in connection with your employment as CytRx’s Chief Executive Officer after the closing of the acquisition of Global Genomics Capital, Inc. (“GGC”) by CytRx via a merger of GGC Merger Corporation (“Merger Sub”) with and into GGC pursuant to that certain Agreement and Plan of Merger of even date herewith (the “Merger Agreement”) among CytRx, GGC and Merger Sub. 

Effective as of the Effective Time (as defined in the Merger Agreement), CytRx shall pay KCG a reasonable monthly amount for office space and other expenses related to your employment with CytRx.  The amount of such rent and other expenses shall be determined in good faith from time to time by the CytRx board of directors.  In no event shall CytRx be liable for any such rent or other expenses if the Effective Time does not occur.

This letter agreement shall be governed by and construed in accordance with the laws of the State of California.  This letter agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed one and the same document.  This letter agreement may not be amended without the prior written consent of each of the parties hereto.  This letter agreement may not be sold, assigned or transferred by any party hereto without the consent of the other parties hereto.  Either party may terminate this letter agreement at any time upon thirty days prior written notice without any further liability among the parties hereto, other than rent and other expenses accrued through the effective time of such termination.  This letter agreement shall terminate automatically and without any further action by the parties hereto upon the termination of your employment with CytRx and CytRx shall have no further liability to KCG hereunder other than rent and other expenses accrued through the date of such termination.

If this letter reflects your understanding of the agreement between the parties with respect to the subject matter hereof, please sign and date this letter below and return a copy to us for our records.

Sincerely,
CYTRX CORPORATION
By:	/s/ JACK LUCHESE
Name:	Jack Luchese
Title:	President & CEO

Acknowledged and agreed as of the date hereof:

Kriegsman Capital Group, LLC

By:	/s/ STEVEN A. KRIEGSMAN
Name:	Steven A. Kriegsman
Title:	Chairman

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EX-10.4

Exhibit 10.4

MARKETING AGREEMENT

          THIS AGREEMENT (the “Agreement”) made and entered into this 14th day of August, 2002, by and between MADISON & WALL WORLDWIDE, INC., located at 195 Wekiva Springs Road, Suite 200, Longwood, Florida 32779 (hereinafter referred to as “M&W”) and CYTRX CORPORATION, located at 11726 San Vicente Blvd., Suite 650, Los Angeles 90049 (hereinafter referred to as the “Company”).

WITNESSETH:
In consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows:

1.	EMPLOYMENT
Company hereby hires and employs M&W as an independent contractor; and M&W does hereby accept its position as an independent contractor to the Company upon the terms and conditions hereinafter set forth.
2.	TERM
The term of this Agreement shall be for six (6) months from the date first written above, except that the Company may terminate this Agreement effective at the end of 90 days by giving M&W written notice of such termination on or before November 15, 2002 (an “Early Termination”).
3.	DUTIES AND OBLIGATIONS OF M&W
M&W shall have the following duties and obligations under this Agreement.
	3.1	M&W will provide exposure to retail stockbrokers, market makers, institutions, fund managers, analysts, private funding sources and other industry professionals by delivering approved information on the Company.  M&W will at its own expense contract with and compensate other investor relations firms as M&W deems necessary to complete its obligations under this Agreement.
	3.2	M&W will use its best efforts to motivate the individuals described in Section 3.1 above to take an active participation with the Company by building retail positions in the Company’s common stock, initiating analyst coverage, increasing institutional holdings, and introducing financing sources.
	3.3	M&W will introduce the Company to sources of equity funding, including sources that may provide investment banking services, participate in private placements, purchase blocks of Company stock, exercise certain options, and/or otherwise assist the Company with its capital raising efforts.
	3.4	M&W will be available during market hours to field all incoming telephone calls from shareholders, potential investors, brokers, and other interested parties.  M&W will keep a log of all such calls and will disseminate information, approved by the Company, to these parties.
	3.5	M&W will disseminate approved information about the Company via e-mail, fax broadcasting, direct mail, and other methods to its proprietary databases as well as to other private determined by M&W and the Company

195 Wekiva Springs Road, Suite 200, Longwood, Florida 32779 * 407-682-2001 * Fax-407-682-2544
www.insidewallstreet.com

		3.6			M&W will assist the Company in preparing and releasing news announcements.  The Company shall be solely responsible for paying all fees associated with the actual release(s) through BusinessWire, P.R. Newswire, or any other comparable news dissemination source.
		3.7			M&W will arrange due diligence meetings and road shows that may involve the corporate officers of the Company or be conducted by M&W themselves with an approved script from the Company.
		3.8			ALL OF THE M&W PREPARED DOCUMENTATION CONCERNING THE COMPANY, SHALL BE PREPARED FROM MATERIALS SUPPLIED BY THE COMPANY AND SHALL BE APPROVED BY THE COMPANY IN WRITING  PRIOR TO DISSEMINATION BY M&W.
4.		M&W’S COMPENSATION
Upon the execution of this Agreement, Company hereby covenants and agrees to pay M&W for services performed as follows:
		4.1		M&W shall be issued a certificate for 200,000 restricted shares of the Company’s common stock with the execution of this Agreement.
		4.2		M&W shall also be issued a certificate for 150,000 restricted shares of the Company’s common stock with the execution of this Agreement.  M&W will be entitled to delivery of the certificate evidencing these shares 90 days from the date this Agreement.
		4.3		M&W shall also be entitled to receive cash compensation, payable quarterly in the amount of $30,000 with the first payment due upon execution of this Agreement.
		4.4		The Company agrees to issue M&W customary piggyback registration rights for the common shares described in Sections 4.1 and 4.2 above, whereby these shares will be registered for resale by M&W on the first applicable Registration Statement filed by the Company with the U.S. Securities & Exchange Commission (“SEC”), following execution of this Agreement.
		4.5		Notwithstanding any other provision of this Section 4 to the contrary, in the event of an Early Termination, the 150,000 shares described in Section 4.2 shall be cancelled and M&W shall not be entitled to any cash compensation except for the $30,000 payment made upon execution of this Agreement.
5.		M&W’S EXPENSES AND COSTS
M&W shall be responsible for paying all its own costs and expenses, including those of its directors, officers, employees and agents, in carrying out its duties and obligations pursuant to the provisions of this Agreement
6.		COMPANY’S DUTIES AND OBLIGATIONS
Company shall have the following duties and obligations under this Agreement:
	6.1		Cooperate fully and timely with M&W so as to enable M&W to perform its obligations under this Agreement and will immediately give written notice to M&W of any change in Company’s

INITIAL Company ____       INITIAL M&W____      

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				financial condition or in the nature of its business or operations which had or might have an adverse material effect on its operations, assets, properties or prospects of its business.
	6.2			Give full disclosure of all material facts concerning the Company to M&W and update such information on a timely basis.
7.			NONDISCLOSURE
Except as may be required by law (including the requirement to file this Agreement with the SEC), Company, its officers, directors, employees, agents and affiliates shall not disclose the contents and provisions of this Agreement to any individual or entity without M&W’s expressed written consent, subject to disclosing same further to Company counsel, accountants and other persons performing investment banking, financial, or related functions for Company, M&W shall not disclose to any third party any confidential information concerning the Company that is provided to it by the Company.
8.			COMPANY’S REPRESENTATIONS AND WARRANTIES
The execution and delivery by the Company of this Agreement have been duly and validly authorized by all requisite action by the Company. No license, consent or approval of any person is required for the Company’s execution and delivery of this Agreement.
9.			LIMITATION OF M&W LIABILITY
If M&W fails to perform its services hereunder, its entire liability to the Company shall not exceed the lessor of (a) the amount of cash and/or stock compensation M&W has received from the Company under Section 4 of this Agreement or (b) the actual damage to the Company as a result of such non-performance, except that such limitation on liability will not apply in the case of M&W’s gross negligence or willful misconduct.  M&W will not be liable for any indirect, special or consequential damages nor for any claim against the Company by any person or entity arising from or related to this Agreement, unless such damages result from the use by M&W of information not authorized by the Company in writing.
10.			NOTICES
Any notice or other communication required or permitted to be given hereunder shall be in writing, and shall be deemed to have been duly given when delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the parties hereto at their addresses indicated hereunder.  Either party may change his or its address for the purpose of this paragraph by written notice similarly given.
11.			MISCELLANEOUS
		11.1			This Agreement shall be governed by and construed in accordance with the internal laws of the State of California.  Venue shall be located in Los Angeles, California.
		11.2			This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their heirs, personal representatives, successors and assigns.
		11.3			If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not contained herein.

INITIAL Company ____       INITIAL M&W____      

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This Agreement may be executed in counterparts and by fax transmission, each counterpart being deemed an original.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.

CONFIRMED AND AGREED ON THIS 15^th DAY OF August 2002.

MADISON & WALL WORLDWIDE, INC.
By:	/s/ LOREN BROWN	/s/ BRANDY HUNT
	M&W Representative	Witness
CONFIRMED AND AGREED ON THIS  19th DAY OF August  2002.
CYTRX CORPORATION
	/s/ STEVEN A. KRIEGSMAN	/s/ KATHRYN R. HERNANDEZ
	Duly Authorized	Witness

INITIAL Company ____       INITIAL M&W____      

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EX-10.5

EXHIBIT  10.5

SANDS BROTHERS & CO., LTD.
INVESTMENT BANKERS
MEMBER NYSE
90 PARK AVENUE, NEW YORK, N.Y. 10016
(212) 697-5200  Toll Free (800) 866-6116  Fax (212) 697-8035

                                                 September 12, 2002

CytRx Corporation
11726 San Vicente Boulevard
Suite 650
Los Angeles, CA 90049

Attn:	Mr. Steven A. Kriegsman,
	President and Chief Executive Officer

Dear Mr. Kriegsman:

          This is to confirm our understanding that Sands Brothers & Co., Ltd. (“Sands Brothers”) has been engaged as a non-exclusive financial advisor to CytRx Corporation., its successors, subsidiaries and affiliates (collectively, the “Company”), with respect to financial advisory, corporate finance and mergers and acquisition matters for a one year period commencing the date hereof (the “Term”) on the terms set forth below.

A.   Financial Advisory Services

          During the Term, Sands Brothers shall provide the Company with such regular and customary financial advisory services as are reasonably requested by the Company, provided that Sands Brothers shall not be required to undertake duties not reasonably within the scope of the financial advisory services in which it is generally engaged.  It is understood and acknowledged by the parties that the value of Sands Brothers’ advice is not measurable in a quantitative manner and Sands Brothers shall be obligated to render advice, upon the request of the Company, in good faith, as shall be determined by Sands Brothers.  Sands Brothers’ duties may include, but will not necessarily be limited to:

(i)	advice regarding the formation of corporate goals and their implementation;
(ii)	advice regarding the financial structure of the Company or its divisions or any programs and projects undertaken by any of the foregoing;
(iii)	advice regarding financing needs and matters; and
(iv)	advice regarding corporate organization, personnel and selection of needed specialty skills.

Mr. Steven A. Kriegsman
September 12, 2002
Page 2

          The Company acknowledges that Sands Brothers and its affiliates are in the business of providing financial advisory services (of all types contemplated by this agreement) to others.  Nothing herein contained shall be construed to limit or restrict Sands Brothers or its affiliates in conducting such business with respect to others or in rendering such advice to others.

          The Company will furnish, or cause to be furnished, to Sands Brothers all information reasonab1y requested by Sands Brothers for purposes of rendering services hereunder (all such information being the “Information”).  In addition, the Company agrees to make available to Sands Brothers upon request from time to time, the officers, directors, accountants, counsel and other advisors to the Company.  The Company recognizes and confirms that Sands Brothers (i) will use and rely on the Information and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same, (ii) does not assume responsibility for the accuracy or completeness of the Information and such other information and (iii) will not make an appraisal of any of the assets or liabilities of the Company.  The Company hereby warrants that all information furnished to Sands Brothers in connection with this Agreement will be accurate and complete in all material respects at the time provided, and that if such information, in whole or in part, becomes materially inaccurate, misleading or incomplete during the Term, the Company shall promptly advise Sands Brothers in writing and correct any such inaccuracy or omission.

          The Company agrees that any information or advice rendered by Sands Brothers or its representatives in connection with this engagement is for the confidential use of the Company’s Board of Directors only in its evaluation of the matters for which Sands Brothers has been engaged and, except as otherwise required by law, the Company will not and will not permit any third party to disclose or otherwise refer to such advice or information in any manner without Sands Brothers’s prior written consent.  The name of Sands Brothers will not be quoted or referred to orally or in writing by the Company without Sands Brothers’ prior written consent, which will not be unreasonably withheld.

          In consideration of such financial advisory services, the Company agrees to pay Sands Brothers a non-refundable and non-accountable retainer of $20,000, which shall be payable upon the execution of this agreement.  In addition, as and for additional consideration and as a material inducement for Sands Brothers to enter into this agreement, the Company agrees to issue to Sands Brothers or its designee(s), upon execution and delivery of this Agreement, warrants (the “Warrants”) to purchase 100,000 shares of common stock of the Company at an exercise price of $1.00 per share.  The Warrants will be exercisable for a five-year period commencing on the date of issuance and shall contain such terms and conditions as are satisfactory in form and substance to Sands Brothers, the Company and their respective counsel, including, without limitation, piggy-back registration rights, corporate anti-dilution for stock splits and other similar transactions and cashless exercise provisions.  The foregoing compensation shall be in addition to any other compensation and reimbursement of expenses described herein.

Mr. Steven A. Kriegsman
September 12, 2002
Page 3

B.    Acquisition Transaction

          For purposes of this agreement, the term “Acquisition Transaction” means (i) any merger, consolidation, reorganization or other business combination pursuant to which the businesses of a third party are combined with that of the Company, (ii) the acquisition, directly or indirectly, by the Company of all or a substantial portion of the assets or common equity of a third party by way of negotiated purchase or otherwise or (iii) the acquisition, directly or indirectly, by a third party of all or a substantial portion of the assets or common equity of the Company by way of negotiated purchase or otherwise.

          In connection with a proposed Acquisition Transaction, Sands Brothers’ advisory services will include the following:  (i) assistance in the evaluation of a third party from a financial point of view, (ii) assistance and advice with respect to the form and structure of the Acquisition Transaction and the financing thereof, (iii) conducting discussions and negotiations regarding an Acquisition Transaction and (iv) providing other related advice and assistance as the Company may reasonably request in connection with an Acquisition Transaction.

          For purpose of this agreement, “Consideration” means the aggregate value, whether in cash, securities, assumption (or purchase subject to) of debt or liabilities (including, without limitation, indebtedness for borrowed money, pension liabilities and guarantees) or other property, obligations or services, paid or payable directly or indirectly (in escrow or otherwise) or otherwise assumed in connection with an Acquisition Transaction.  The value of such Consideration shall be determined as follows:

(a)	the value of securities, liabilities, obligations, property and services shall be the fair market value as we shall mutually agree upon at the date of the closing of the Acquisition Transaction; and
(b)	the value of indebtedness, including indebtedness assumed, shall be the face amount.

          If the Consideration payable in an Acquisition Transaction includes contingent payments to be calculated by reference to uncertain future occurrences, such as future financial or business performance, then any fees of Sands Brothers relating to such Consideration shall be payable at the time of consideration.

          In connection with our services, you agree that if, during the Term or within one year thereafter, an Acquisition Transaction is consummated with a third party directly or indirectly introduced to the Company by Sands Brothers (“Sands Third Party”), or the Company enters into definitive agreement with a Sands Third Party which at any time thereafter results in an Acquisition Transaction, you will pay Sands Brothers a transaction fee equal to 5% of the first $1 million of Consideration, 4% of the next $1 million of Consideration, 3% of the next $1 million of Consideration, 2% of the next $1 million of Consideration and 1% of any additional Consideration.  There is no obligation to close any acquisition.

Mr. Steven A. Kriegsman
September 12, 2002
Page 4

C.    Corporate Finance

          For purposes of this agreement, the term “Financing Transaction” means a private placement, public offering, syndication or other sale of equity or debt securities of the Company or other on-balance or off-balance sheet corporate finance transaction of the Company.  There is no obligation to close any acquisition.

          In connection with our services, you agree that if, during the Term or within one year thereafter, a Financing Transaction is consummated with a Sands Third Party, or the Company enters into a definitive agreement during the Term with a Sands Third Party which at any time thereafter results in a Financing Transaction, you will pay Sands Brothers a transaction fee equal to 8% in cash and 10% in the form of warrant coverage or such other compensation as may mutually be agreed to by the parties.  The Warrants shall be exercisable for a five-year period at a price consistent with the terms provided to investors in the Financing Transaction and shall contain such other terms and conditions as are satisfactory in form and substance to Sands Brothers, the Company and their respective counsel.

D.    Termination.

          This agreement may not be terminated by either party for the first 180 days.  However, after the initial 180 day period either party cancel the agreement with thirty (30) days prior written notice to the other party.  In addition, the indemnification, contribution, reimbursement and “tail” obligations of the Company (which tail obligations are set forth under Section B. and C. above) shall survive such termination and all previously paid fees to Sands Brothers shall be retained by Sands Brothers on a non-accountable basis.

E.    General

          In addition to all other charges payable to Sands Brothers as per the terms hereof, the Company agrees to reimburse Sands Brothers, upon requests made from time to time, for all of its reasonable out-of-pocket expenses incurred in connection with its activities under this agreement.  The cap on such expenses shall be $500 per month.

          The Company agrees to indemnify Sands Bros. and related persons in accordance with the indemnification letter annexed hereto as Schedule A, the provisions of which are incorporated herein in their entirety, and shall survive the termination or expiration of this Agreement.

          This Agreement, including Schedule A, constitutes the entire understanding of the parties with respect to the subject matter hereof and may not be altered or amended except in a writing signed by both parties.  The Company expressly acknowledges that the execution of this Agreement does not constitute a commitment by Sands Brothers to consummate any transaction contemplated hereunder, including without limitation, the consummation of any Financing Transaction.  Nothing contained in this agreement shall be construed to place Sands Brothers and the Company in the relationship of partners or joint venturers.  Neither Sands Brothers nor the

Mr. Steven A. Kriegsman
September 12, 2002
Page 5

Company shall represent itself as the agent or legal representative of the other for any purpose whatsoever nor shall either have the power to obligate or bind the other in any manner whatsoever.  The Company’s engagement of Sands Brothers is not intended to confer rights upon any person not a party hereto (including shareholders, directors, officers, employees or creditors of the Company) as against Sands Brothers or its affiliates, or their respective directors, officers, employees or agents, successors or assigns.  Sands Brothers, in performing its services hereunder, shall at all times be an independent contractor.  No promises or representations have been made except as expressly set forth in this agreement and the parties have not relied on any promises or representations except as expressly set forth in this agreement.  Nothing contained herein should be construed as creating any fiduciary duties between the parties.

          This Agreement shall be deemed to have been made and delivered in New York City and shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York without regard to principles of conflicts of law thereof.  All controversies which may arise between the parties concerning this Agreement shall be exclusively determined by arbitration by, and in accordance with, the then existing Code of Arbitration of the National Association of Securities Dealers (“NASD”).  Hearings with regard to such dispute shall be held exclusively at the offices of the NASD in the City of New York and judgment upon any award rendered pursuant thereto may be entered in any court of competent jurisdiction.  Any award rendered pursuant to the terms and conditions set forth herein shall be final and binding.  The parties are waiving their right to seek remedies in court, including the right to a jury trial.  The Company waives, and the Company agrees not to assert in any such proceeding, in each case, to the fullest extent permitted by applicable law that:  (a) the Company is not personally subject to the jurisdiction of such arbitration; (b) the Company is immune from any legal process (whether through service or notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) with respect to it or its property (c) any proceeding is brought in an inconvenient forum; (d) the venue of any such proceeding is improper; or (e) this agreement may not be enforced in or by any such arbitration.

          The parties acknowledge and agree that with respect to phrases contained herein such as “as a results of our efforts,” “introduced to the Company by Sands Brothers” or similar language, such phrases are intended to include any person or entity, directly or indirectly introduced to the Company by the undersigned.  Thus, to the extent that the Company consummates a particular transaction with any person or entity, whose introduction to the Company can be traced back, directly or indirectly, to a person or entity who was originally introduced to the Company by Sands Brothers, Sands Brothers is entitled to the compensation described herein.

          Neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated hereby will, directly or indirectly, with or without the giving of notice or lapse of time, or both:  (i) violate any provisions of the Certificate of Incorporation or By-laws of the Company; or (ii) violate, or be in conflict with, or constitute a default under, any agreement, lease, mortgage, debt or obligation of the Company or require the payment, any pre-payment or other penalty with respect thereto.  The Company has all requisite power and authority to enter into and perform its obligations under this Agreement.  This

Mr. Steven A. Kriegsman
September 12, 2002
Page 6

Agreement has been duly executed and delivered and constitutes valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms.

          The rights and obligations of the Company under this Agreement may not be assigned by the Company without the prior written consent of Sands Brothers any other purported assignment shall be null and void.  If any provision of this Agreement is determined to be invalid or unenforceable in any respect, then such determination will not affect such provision in any other respect or any other provision of this Agreement, which will remain in full force and effect.

Mr. Steven A. Kriegsman
September 12, 2002
Page 7

          If the foregoing correctly sets forth the terms of our agreement, kindly so indicate by signing and returning the enclosed copy of this letter, along with a check made payable to Sands Brothers in the amount of Twenty Thousand Dollars ($20,000).

		SANDS BROTHERS & CO., LTD.
		By:	/s/ ANDREW H. SCOTT
		Name:	Andrew H. Scott
		Title:	Director Investment Banking
ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN
CYTRX CORPORATION
By:	/s/ STEVEN A. KRIEGSMAN
Name:	Steven A. Kriegsman,
Title:	President and Chief Executive Officer

Mr. Steven A. Kriegsman
September 12, 2002
Page 8

SCHEDULE A

INDEMNIFICATION

          Recognizing that matters of the type contemplated in this engagement sometimes result in litigation and that Sands Brothers’s role is advisory, the Company agrees to indemnify and hold harmless Sands Brothers, its affiliates and their respective officers, directors, employees, agents and controlling persons (collectively, the “Indemnified Parties”), from and against any losses, claims, damages and liabilities, joint or several, related to or arising in any manner out of any transaction, financing, proposal or any other matter (collectively, the “Matters”) contemplated by the engagement of Sands Brothers hereunder, and will promptly reimburse the Indemnified Parties for all expenses (including fees and expenses of legal counsel) as incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim related to or arising in any manner out of any Matter contemplated by the engagement of Sands Brothers hereunder, or any action or proceeding arising therefrom (collectively, “Proceedings”), whether or not such Indemnified Party is a formal party to any such Proceeding.  Notwithstanding the foregoing, the Company shall not be liable in respect of any losses, claims, damages, liabilities or expenses that a court of competent jurisdiction shall have determined by final judgment resulted solely from the gross negligence or willful misconduct of an Indemnified Party.  The Company further agrees that it will not, without the prior written consent of Sands Brothers, settle, compromise or consent to the entry of any judgment in any pending or threatened Proceeding in respect of which indemnification may be sought hereunder (whether or not Sands Brothers or any Indemnified Party is an actual or potential party to such Proceeding), unless such settlement, compromise or consent includes an unconditional release of Sands Brothers and each other Indemnified Party hereunder from all ability arising out of such Proceeding.

          The Company agrees that if any indemnification or reimbursement sought pursuant to this letter were for any reason not to be available to any Indemnified Party or insufficient to hold it harmless as and to the extent contemplated by this letter, then the Company shall contribute to the amount paid or payable by such Indemnified Party in respect of losses, claims, damages and liabilities in such proportion as is appropriate to reflect the relative benefits to the Company and its stockholders on the one hand, and Sands Brothers on the other, in connection with the Matters to which such indemnification or reimbursement relates or, if such allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of such parties to the Company and/or its stockholders and to Sands Brothers with respect to Sands Brothers’s engagement shall be deemed to be in the same proportion as (i) the total value paid or received or to be paid or received by the Company and/or its stockholders pursuant to the Matters (whether or not consummated) for which Sands Brothers is engaged to render financial advisory services bears to (ii) the fees paid to Sands Brothers in connection with such engagement.  In no event shall the Indemnified Parties contribute or otherwise be liable for an amount in excess of the aggregate amount of fees actually received by Sands Brothers pursuant to such engagement (excluding amounts received by Sands Brothers as reimbursement of expenses).

Mr. Steven A. Kriegsman
September 12, 2002
Page 9

          The Company further agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with Sands Brothers’s engagement hereunder except for losses, claims, damages, liabilities or expenses that a court of competent jurisdiction shall have determined by final judgment resulted solely from the gross negligence or willful misconduct of such Indemnified Party.  The indemnity, reimbursement and contribution obligations of the Company shall be in addition to any liability which the Company may otherwise have and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company or an Indemnified Party.

          The indemnity, reimbursement, contribution provisions set forth herein shall remain operative and in full force and effect regardless of (i) any withdrawal, termination or consummation of or failure to initiate or consummate any Matter referred to herein, (ii) any investigation made by or on behalf of any party hereto or any person controlling (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended) any party hereto, (iii) any termination or the completion or expiration of this letter or Sands Brothers’s engagement and (iv) whether or not Sands Brothers shall, or shall not be called upon to render any formal or informal advice in the course of such engagement.