-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U++/NVZbc8imw6g/BMhgUps+3LjWG5wwbdUyWnqRdhtwzubwPbDBctv04i9zjQu9 MJ5A0ALRGzQTDNdI1Camtw== 0000931763-98-001925.txt : 19980727 0000931763-98-001925.hdr.sgml : 19980727 ACCESSION NUMBER: 0000931763-98-001925 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980511 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980724 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYTRX CORP CENTRAL INDEX KEY: 0000799698 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 581642740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-15327 FILM NUMBER: 98671345 BUSINESS ADDRESS: STREET 1: 154 TECHNOLOGY PKWY STREET 2: TECHNOLOGY PARK/ATLANTA CITY: NORCROSS STATE: GA ZIP: 30092 BUSINESS PHONE: 4043689500 MAIL ADDRESS: STREET 1: 154 TECHNOLOGY PARKWAY CITY: NORCROSS STATE: GA ZIP: 30092 8-K/A 1 AMENDMENT NO. 2 TO THE 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________________ FORM 8-K/A ___________________________ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 11, 1998 CYTRX CORPORATION (Exact Name of Registrant as Specified in its Charter) DELAWARE 000-15327 58-1642740 (State or Other (Commission File Number) (I.R.S. Employer Jurisdiction of Identification No.) Incorporation) 154 TECHNOLOGY PARKWAY NORCROSS, GEORGIA 30092 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (770) 368-9500 1 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On May 11, 1998, CytRx Corporation (the "Company") and Proceutics, Inc. ("Proceutics"), a subsidiary of the Company, consummated the sale of two buildings owned by them at 150 and 154 Technology Parkway, Norcross, Georgia to ARE - 150/154 Technology Parkway, LLC ("Alexandria"), an affiliate of Alexandria Real Estate Equities, Inc. ("Assignor") for an aggregate of $4.5 million. Proceutics assigned to Alexandria all of Proceutics' rights and obligations under the lease with Oread, Inc. relating to the 150 Technology Parkway building. In addition, the Company entered into a ten year lease with Alexandria for administrative office space at the 154 Technology Parkway building. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) Pro Forma Financial Information The Company has filed herewith as Exhibit 99.2, Pro Forma Condensed Consolidated Financial Statements consisting of (i) a Pro Forma Consolidated Balance Sheet as of March 31, 1998 giving effect to the divestiture of VetLife and the sale of the two buildings and the leaseback by the Company of the building at 154 Technology Parkway, (ii) a Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1997 giving effect to the merger of Zynaxis, Inc. with and into Vaxcel, Inc. and the sale of the two buildings on Technology Parkway and, (iii) a Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 1998 giving effect to the sale of the two buildings and the leaseback by the Company of the building at 154 Technology Parkway. Such Pro Forma Condensed Consolidated Financial Statements are incorporated herein by reference. (c) Exhibits Number Exhibit 2.1* Purchase and Sale Agreement and Joint Escrow Instructions dated as of February 23, 1998, between Proceutics and Assignor 2.2** Purchase and Sale Agreement and Joint Escrow Instructions dated as of February 23, 1998 between the Company and Assignor 99.1*** Lease dated as of May 11, 1998 between the Company and Alexandria 99.2 Pro Forma Condensed Consolidated Financial Statements - ------------ * Incorporated by reference to Exhibit 10.14 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 filed on March 30, 1998. ** Incorporated by reference to Exhibit 10.13 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 filed on March 30, 1998. *** Previously filed -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CYTRX CORPORATION Date: July 24, 1998 By: /s/ Jack J. Luchese -------------------- Jack J. Luchese President and Chief Executive Officer -3- EX-99.2 2 PRO FORMA FINANCIAL INFORMATION EXHIBIT 99.2 PRO FORMA FINANCIAL INFORMATION The accompanying Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998 gives effect to (1) the divestiture of Vetlife, Inc. and (2) the sale of the Proceutics real estate at 150 Technology Parkway and the sale and leaseback of the CytRx real estate at 154 Technology Parkway. The pro forma adjustments assume that these transactions had occurred as of March 31, 1998 in the case of the Pro Forma Condensed Consolidated Balance Sheet. The accompanying Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1997 gives effect to (1) the Merger of Zynaxis, Inc. with and into Vaxcel, Inc. and (2) the sale of the Proceutics real estate at 150 Technology Parkway and the sale and leaseback of the CytRx real estate at 154 Technology Parkway. The accompanying Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 1998 gives effect to the sale of the Proceutics real estate at 150 Technology Parkway and the sale and leaseback of the CytRx real estate at 154 Technology Parkway. The historical statements of operations present the results of operations of VetLife as discontinued operations in accordance with the requirements of Accounting Principles Board ("APB") Opinion No. 30; thus no adjustment to the historical statements of operations is required to give effect to the VetLife disposition. The pro forma adjustments assume that these transactions occurred as of January 1, 1997. These pro forma financial statements have been prepared by management of CytRx and should be read in conjunction with the historical consolidated financial statements of CytRx included in the Company's Current Report on Form 8-K filed with the Commission on May 1, 1998 and as restated for the divestiture of Vetlife, Inc. The historical balances represent the consolidated financial position and results of operations for the Company and have been prepared in accordance with generally accepted accounting principles. The pro forma statements are based on certain assumptions and estimates which are subject to change. The statements do not purport to be indicative of the consolidated financial position or results of operations that might have occurred, nor are they necessarily indicative of future results. 1 CYTRX CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998
Proforma Adjustments Vetlife Divestiture Real Estate Historical Pro Forma Sale Pro Forma Adjusted March 31,1998 Adjustments Ref Adjustments Ref March 31, 1998 ------------- ----------- -------------- -------------- ASSETS Current assets: Cash and cash equivalents $ 5,621,007 $ 3,146,168 (a) $ 4,251,943 (d) $ 12,875,851 (143,267) (b) Short-term investments - 5,359,697 (f) 5,359,697 Accounts receivable 1,481,039 (912,302) (b) 568,737 Other receivable - - Notes receivable - 4,000,000 (a) 4,000,000 Inventories 1,340,008 (979,226) (b) 360,782 Other current assets 243,664 (7,138) (b) 236,526 ------------ ----------- ----------- ------------ Total current assets 8,685,718 10,463,932 4,251,943 23,401,593 Property and equipment, net 3,969,766 (89,661) (b) (836,330) (d) 339,372 (2,704,403) (d) Other assets: Long-term investments (restricted) 5,359,697 (5,359,697) (f) - Notes receivable 400,000 400,000 Acquired developed technology, net 3,394,356 3,394,356 Other assets 801,076 801,076 ------------ ----------- ----------- ------------ Total other assets 9,955,129 (5,359,697) - 4,595,432 ------------ ------------ ----------- ------------ Total assets $ 22,610,613 $ 5,014,574 $ 711,210 $ 28,336,397 ============ =========== =========== ============ Proforma Adjustments Vetlife Divestiture Real Estate Historical Pro Forma Sale Pro Forma Adjusted March 31, 1998 Adjustments Ref Adjustments Ref Balance -------------- ----------- -------------- -------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,063,623 $ (690,264) (b) $ 373,359 Accrued liabilities 951,852 (568,752) (b) 383,100 Unearned revenue - 283,562 (d) 283,562 ------------ ----------- ----------- ------------ Total current liabilities 2,015,475 (1,259,016) 283,562 1,040,021 6% Convertible debentures 1,100,000 1,100,000 Minority interest in Vaxcel, Inc. 555,226 555,226 Commitments Stockholders' equity: - Preferred stock - - Common stock 8,206 8,206 Additional paid-in capital 66,352,311 66,352,311 Treasury stock (2,198,533) (2,198,533) Accumulated deficit (45,222,072) 6,273,590 (c) 427,648 (e) (38,520,834) ------------ ----------- ----------- ------------ Total stockholders' equity 18,939,912 6,273,590 427,648 25,641,150 ------------ ----------- ------------ ------------ Total liabilities and stockholders' equity $ 22,610,613 $ 5,014,574 $ 711,210 $ 28,336,397 ============ =========== =========== ============
(a) To record proceeds from divestiture of Vetlife less transaction costs of $226,410 and the working capital adjustment of $127,422. (b) To remove Vetlife's net assets sold. (c) To record gain on divestiture of Vetlife. (d) To record sale of Proceutics and CytRx real estate assets for $4,500,000, less transactions costs of $248,057. The historical cost of such assets (net of accumulated depreciation) totaled $2,704,403 and $836,330, respectively, resulting in a gain of $427,648 for the sale of the Proceutics real estate and a deferred gain of $283,562 on the sale and leaseback of the CytRx real estate which will be amortized over the life of the related lease. (e) To record gain on sale of Proceutics real estate assets. (f) To reclass investments as a result of the Vetlife divestiture which removed the restriction on investments. 2 CYTRX CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 1997
Cauldron Merger Divestiture Pro Forma Historical Pro Forma Pro Forma Pro Forma Combined (Restated) Adjustments Ref Combined Adjustments Ref (as adjusted) Ref ------------------------------------------------------------------------------------- Revenues: Net sales $ 878,068 $ $ 878,068 $ $ 878,068 Investment income 797,069 22,292 (1) 819,361 819,361 Collaborative, grant and license fee income 337,438 666,890 (1) 1,004,328 (681,130) (3) 323,198 Other 365,712 819,977 (1) 1,185,689 1,185,689 ---------------------------- --------------------------- ------------- 2,378,287 1,509,159 3,887,446 (681,130) 3,206,316 Expenses: Cost of sales 353,764 353,764 353,764 Research and development 4,690,582 720,454 (2) 5,411,036 5,411,036 Acquired incomplete research and development 951,017 951,017 951,017 Selling, general and administrative 3,115,466 137,089 (4) 3,811,839 (813,417) (3) 2,998,422 559,284 (2) Interest 293,048 (49,990) (5) 261,379 261,379 18,321 (2) ---------------------------- --------------------------- ------------- 9,403,877 1,385,158 10,789,035 (813,417) 9,975,618 ---------------------------- --------------------------- ------------- Loss from continuing operations before minority interest (7,025,590) 124,001 (6,901,589) 132,287 (6,769,302) Minority interest (242,487) (50,387) (292,874) (292,874) --------------------------- -------------------------- ------------- Loss from continuing operations $ (6,783,103) $174,388 $ (6,608,715) $132,287 $(6,476,428) =========================== ========================== ============= Basic and diluted loss per common share: Loss from continuing operations $(0.91) $(0.87) Shares used 7,424,372 7,424,372
Real Estate Combined Adjustments Ref Totals ---------------------------------- Revenues: Net sales $ 878,068 Investment income 819,361 Collaborative, grant and license fee income 323,198 Other 1,185,689 -------------------------------- 3,206,316 Expenses: Cost of sales 353,764 Research and development 5,411,036 Acquired incomplete research and development 951,017 Selling, general and administrative (49,628) (6) 3,098,728 149,934 (7) Interest 261,379 ------------- --------------- 100,306 10,075,924 ------------- --------------- Loss from continuing operations before minority interest (100,306) (6,869,608) Minority interest (292,874) ------------- --------------- Loss from continuing operations $(100,306) $ (6,576,734) ============= =============== Basic and diluted loss per common share: Loss from continuing operations $ (0.89) Shares used 7,424,372 (1) To record revenues of Zynaxis up to the merger date (May 21, 1997). (2) To record expenses of Zynaxis up to the merger date (May 21, 1997). (3) To reflect the sale of the Cauldron division as if it had occurred on January 1, 1997. (4) To record amortization of intangible assets acquired using a 15 year amortization period. (5) To eliminate interest expense associated with the CytRx note payable cancelled at the merger date. (6) To eliminate depreciation expense related to real estate assets sold. (7) To record lease expense related to the sale-leaseback of the CytRx real estate, net of $28,356 of amortization of the deferred gain.
Page 3 CYTRX CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1998
March 31, 1998 Real Estate Combined Historical Adjustments Ref Totals ------------------------------------------------------- Revenues: Net sales $ 217,965 $ 217,965 Investment income 143,850 143,850 Collaborative, grant and license fee income 16,483 16,483 Other 62,665 (48,960) (2) 13,705 ------------------------------------------------------- 440,963 (48,960) 392,003 Expenses: Cost of sales 73,184 73,184 Research and development 1,296,070 1,296,070 Selling, general and administrative 756,275 (12,407) (1) 781,352 37,484 (3) Interest 123,040 123,040 -------------------------------- ------------------ 2,248,569 25,077 2,273,646 -------------------------------- ------------------ Loss from continuing operations before minority interest (1,807,606) (74,037) (1,881,643) Minority interest (63,256) (63,256) -------------------------------- ------------------ Loss from continuing operations $(1,744,350) $(74,037) $(1,818,387) -------------------------------- ------------------ Basic and diluted loss per common share: Loss from continuing operations $ (0.23) $ (0.24) Shares used 7,516,319 7,516,319
(1) To eliminate depreciation expense related to real estate assets sold. (2) To eliminate lease income earned from the lease of 150 Technology Parkway to Oread, Inc. (3) To record lease expense related to the sale-leaseback of CytRx real estate, net of $7,089 of amortization of the deferred gain. 4 CYTRX CORPORATION NOTES TO PRO FORMA FINANCIAL STATEMENTS 1. ACCOUNTING FOR ZYNAXIS MERGER AND ALLOCATION OF PURCHASE PRICE The Merger was accounted for as a purchase transaction with Vaxcel as the acquiring company. The total purchase price of $4.4 million was allocated to the fair market values of the assets acquired and the liabilities assumed. In accordance with the provisions of APR Nos. 16 1nd 17, all identifiable assets acquired, including identifiable intangible assets, were assigned a portion of the purchase price on the basis of their fair values. To this and, an independent valuation of Zynaxis' assets (the "Acquired Assets") was performed and used as an aid in determining the fair value of the identifiable assets in allocating the purchase price among the Acquired Assets. A summary of the allocation of the purchase price to the Acquired Assets is as follows: Net tangible assets, less outstanding liabilities...........$ (830,000) Acquired developed technology and other intangibles......... 4,241,000 Acquired incomplete research and development (charged to accumulated deficit).................... 951,000 --------- $4,362,000 ========= The capitalized value of the intangible assets acquired is being amortized on a straight-line basis over a period of 15 years. This period was determined based upon an analysis of competitive technology under development which may render the Zynaxis technology obsolete. Consideration was also given to the fact that Zynaxis' base science will have many alternative uses during that time as many different vaccines may incorporate the technology. Any remaining property and equipment acquired from Zynaxis is being depreciated on straight-line basis over their estimated remaining useful lives. 2. DIVESTITURE OF VETLIFE On April 17, 1998, Cytrx consummated a sale of substantially all of the assets of VetLIfe related to its cattle marketing operations segment to an affiliate of IVY for approximately $7.1 million in cash and a note payable (net of transaction costs), plus contingent payments of up to an additional $5.5 million. The Company will retain the $5.3 million in investments that were pledged to secure a Letter of credit. The Company expects a gain related to this transaction which will be recognized in 1998. 3. SALE OF REAL ESTATE On May 11, 1998, CytRx and Proceutics consummated the sale of the two buildings owned by them at 150 and 154 Technology Parkway, Norcross, Georgia, to ARE - 150/154 Technology Parkway, LLC ("Alexandria"), an affiliate of Alexandria Real Estate Equities, Inc., for an aggregate of $4.5 million less $248,000 in transaction costs. Proceutics' rights and obligations under the lease to Oread were assigned to Alexandria and CytRx entered into a ten year lease with Alexandria regarding the building at 154 Technology Parkway. The Company expects a gain related to the transaction which will be recognized in 1998 for the sale of the Proceutics building and deferred and amortized over the ten year lease for the sale-leaseback of the CytRx building. 5 -----END PRIVACY-ENHANCED MESSAGE-----