-----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, UlhhTGpGvy+EilYo6CSkD+Y0cN9MiPKPsijT1Wq30625oeCTHHpltMOSZlSg0jiW 4Og7RmxKcXdXzTL8JByCDg== 0000950144-99-008307.txt : 19990630 0000950144-99-008307.hdr.sgml : 19990630 ACCESSION NUMBER: 0000950144-99-008307 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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: 11-K SEC ACT: SEC FILE NUMBER: 000-15327 FILM NUMBER: 99655061 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 11-K 1 CYTRX CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ________ to ________ Commission file number 0-15327 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: CYTRX CORPORATION 401(K) PROFIT-SHARING PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: CYTRX CORPORATION 154 Technology Parkway Norcross, Georgia 30092 2 CytRx Corporation 401(k) Profit Sharing Plan Audited Financial Statements and Supplemental Schedules Year ended December 31, 1998 and as of December 31, 1997 CONTENTS Report of Independent Auditors...........................................................................1 Audited Financial Statements Statements of Net Assets Available for Benefits..........................................................3 Statement of Changes in Net Assets Available for Benefits, with Fund Information.................................................................................4 Notes to Financial Statements............................................................................5 Signatures..............................................................................................11 Supplemental Schedules Line 27(a) - Schedule of Assets Held for Investment Purposes............................................12 Line 27(d) - Schedule of Reportable Transactions........................................................13 Exhibit Index...........................................................................................14 Consent.................................................................................................15
3 Report of Independent Auditors The Trustees of the CytRx Corporation 401(k) Profit-Sharing Plan We have audited the accompanying statements of net assets available for benefits of the CytRx Corporation 401(k) Profit-Sharing Plan as of December 31, 1998 and 1997, and the related statement of changes in net assets available for benefits for the year ended December 31, 1998. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in its net assets available for benefits for the year ended December 31, 1998, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The Fund Information in the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. Atlanta, Georgia June 23, 1999 4 CytRx Corporation 401(k) Profit Sharing Plan Statements of Net Assets Available for Benefits
DECEMBER 31 1998 1997 ---------- ---------- ASSETS Investments, at fair value: Merrill Lynch Retirement Preservation Trust $ 46,059 $ 51,718 Merrill Lynch Basic Value Fund 473,846 576,685 Merrill Lynch Corporate Bond Fund 17,275 40,722 Merrill Lynch Capital Fund 322,765 390,382 Merrill Lynch Growth Fund 195,532 401,244 Merrill Lynch Global Allocation Fund 964 -- Merrill Lynch S&P 500 Index Fund 24,987 -- Massachusetts Financial Services Emerging Growth Fund 2,905 -- Massachusetts Financial Services Research Fund 7,245 -- Oppenheimer Quest Fund 1,009 -- CytRx Corporation Common Stock 151,413 378,086 Merrill Lynch CMA Money Fund 3,303 17,014 Participant loans 19,695 20,392 ---------- ---------- Total investments 1,266,998 1,876,243 Contributions receivable: Employer 7,615 24,114 Participants 5,777 11,143 ---------- ---------- Total assets 1,280,390 1,911,500 LIABILITIES Due to CytRx Corporation -- 17,037 ---------- ---------- Net assets available for benefits $1,280,390 $1,894,463 ========== ==========
See accompanying notes. 2 5 CytRx Corporation 401(k) Profit Sharing Plan Statement of Net Assets Available for Benefits, with Fund Information Year ended December 31, 1998
PARTICIPANT DIRECTED -------------------------------------------------------------------------------------------------------- RETIREMENT BASIC CORPORATE GLOBAL S&P 500 PRESERVATION VALUE BOND CAPITAL GROWTH ALLOCATION INDEX TRUST FUND FUND FUND FUND FUND FUND ------------------------------------------------------------------------------------------------------ Additions to net assets attributed to: Participant contributions $ 37,557 $ 52,754 $ 13,746 $ 21,438 $ 53,917 $ 1,000 $ 1,957 Employer contributions -- -- -- -- -- -- -- Investment income 3,295 38,060 3,036 17,912 1,865 95 1,143 Net appreciation (depreciation) in fair value of investments -- 23,408 (3,043) 3,238 (71,914) (131) 2,137 Deductions from net assets attributed to: Distribution to participants (19,828) (247,543) (36,872) (105,610) (157,545) -- -- ------------------------------------------------------------------------------------------------------ Interfund transfers (26,546) 27,432 (832) (5,476) (34,849) -- 19,848 ------------------------------------------------------------------------------------------------------ Net increase (decrease) (5,522) (105,889) (23,965) (68,498) (208,526) 964 25,085 Net assets available for benefits: Beginning of year 72,087 580,920 41,347 392,433 405,097 -- -- ------------------------------------------------------------------------------------------------------ End of year $ 66,565 $ 475,031 $ 17,382 $ 323,935 $ 196,571 $ 964 $25,085 ====================================================================================================== PARTICIPANT DIRECTED ------------------------------------------------------------------------- CYTRX EMERGING OPPENHEIMER CORPORATION GROWTH RESEARCH QUEST COMMON FUND FUND FUND STOCK TOTAL ------------------------------------------------------------------------- Additions to net assets attributed to: Participant contributions $ 2,943 $ 7,059 $ 1,000 $ 14,603 $ 207,974 Employer contributions -- -- -- 96,190 96,190 Investment income 26 239 42 -- 65,713 Net appreciation (depreciation) in fair value of investments 275 552 (33) (284,975) (330,486) Deductions from net assets attributed to: Distribution to participants -- (890) -- (85,176) (653,464) ------------------------------------------------------------------------- Interfund transfers (265) 1,419 -- 19,269 -- ------------------------------------------------------------------------- Net increase (decrease) 2,979 8,379 1,009 (240,089) (614,073) Net assets available for benefits: Beginning of year -- -- -- 402,579 1,894,463 ------------------------------------------------------------------------- End of year $ 2,979 $ 8,379 $ 1,009 $ 162,490 $ 1,280,390 =========================================================================
3 6 CytRx Corporation 401(k) Profit-Sharing Plan Notes to Financial Statements December 31, 1998 1. DESCRIPTION OF PLAN GENERAL The CytRx Corporation 401(k) Profit-Sharing Plan (the "Plan") is a defined contribution plan that covers substantially all employees of CytRx Corporation and its wholly-owned subsidiaries (Proceutics, Inc., Vaxcel, Inc. and VetLife, Inc., collectively referred to herein as "the Company"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions. CONTRIBUTIONS Eligible employees may elect to contribute up to 15% of their total compensation on a pre-tax basis. Participants may also elect to contribute additional amounts on an after-tax basis, subject to statutory restrictions. Company matching contributions are made equal to 50% of the participants' pre-tax contribution. The Company matching contribution is made in the form of CytRx Corporation common stock. The number of shares of stock contributed to the Plan is determined at the end of each calendar quarter by dividing the total value of the authorized Company matching contribution by the average stock price during the quarter. VESTING Participants are immediately vested in their contributions and earnings thereon. Participants are fully vested in Company contribution after three years of service. 4 7 CytRx Corporation 401(k) Profit-Sharing Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF PLAN (CONTINUED) VESTING (CONTINUED) During 1998 the Company divested certain business operations of Proceutics, Inc. ("Proceutics") and CytRx Animal Health, Inc. ("CytRx Animal Health") (formerly VetLife, Inc.) Such divestitures resulted in a partial termination of the Plan. Accordingly, all plan participants previously employed by Proceutics and VetLife fully vested in their participant accounts which totaled approximately $645,000 at December 31, 1997. DISTRIBUTIONS Upon the attainment of age 59 1/2, death, disability or termination of employment a participant and his or her beneficiary, generally may elect to receive distributions of their vested account balance. Withdrawals are also permitted for financial hardship. FORFEITURES Forfeitures of nonvested account balances by terminating participants are used to reduce future Company matching contributions. PARTICIPANT LOANS Participants may borrow the lesser of $50,000 or 50% of the vested amount of their account balances. Such loans bear interest at a rate determined by the Plan Administrator. The loan is collateralized by the remainder of the participant's account, and must be repaid within 5 years through equal payments made at least quarterly. The term of the loan may be for a term in excess of 5 years, if the loan is used to acquire a principal residence of the Participant. Participant distributions from the Plan are reduced by any outstanding loan balance at the time of distribution. 5 8 CytRx Corporation 401(k) Profit-Sharing Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF PLAN (CONTINUED) AMENDMENT OR TERMINATION The Company intends to continue the Plan indefinitely but reserves the right to terminate it at any time or amend it in any manner it deems advisable. No amendment or termination may reduce any participant's vested interest accrued to the date for such amendment or termination. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES METHOD OF ACCOUNTING The financial statements of the Plan have been prepared using the accrual basis of accounting. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. INVESTMENTS Investments are stated at fair value based on quoted market prices on national exchanges. Participant loans are valued at cost, which approximates fair value. 6 9 CytRx Corporation 401(k) Profit-Sharing Plan Notes to Financial Statements (continued) 3. ADMINISTRATIVE EXPENSES All custodial, record-keeping and trust administration fees and expenses incurred for the benefit of the Plan are paid by the Company. 4. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated August 17, 1995, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code, (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
YEAR ENDED DECEMBER 31 1998 1997 ---- ---- Net assets available for benefits per the financial statements $1,280,390 $1,894,463 Contributions receivable (13,392) (35,257) Other (3,276) 145 ---------- ---------- Net assets available for benefits per the Form 5500 $1,263,722 $1,859,351 ========== ==========
7 10 CytRx Corporation 401(k) Profit-Sharing Plan Notes to Financial Statements (continued) 5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (CONTINUED) The following is a reconciliation of net decrease per the financial statements to the Form 5500:
YEAR ENDED DECEMBER 31, 1998 ------------ Net decrease in net assets available for benefits per the financial statements $ 614,073 Add: Contributions receivable at December 31, 1998 13,392 Less: Contributions receivable at December 31, 1997 (35,257) Other 3,421 --------- Net decrease in net assets available for benefits per the Form 5500 $ 595,629 =========
6. YEAR 2000 ISSUE (UNAUDITED) The Company has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Company is taking a two phase approach. The first phase addresses internal systems that must be modified or replaced to function properly. Both internal and external resources are being utilized to replace or modify existing software applications, and test the software and equipment for the year 2000 modifications. The Company anticipates substantially completing this phase of the project by late 1999. Costs associated with modifying software and equipment are not estimated to be significant and will be paid by the Company. 8 11 CytRx Corporation 401(k) Profit-Sharing Plan Notes to Financial Statements (continued) 6. YEAR 2000 ISSUE (UNAUDITED) (CONTINUED) For the second phase of the project, Plan management established formal communications with its third party providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated that they have become or will become year 2000 compliant during 1999. If modification of data processing systems of either the Plan, the Company, or its service providers are not completed timely, the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 9 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed by the undersigned hereunto duly authorized. June 29, 1999 CYTRX CORPORATION 401(K) PROFIT-SHARING PLAN /s/ Mark W. Reynolds ------------------------------------ Mark W. Reynolds Chief Financial Officer CytRx Corporation 10 13 Cytrx Corporation 401(k) Profit-Sharing Plan EIN: 58-1642740 Plan No.: 001 Line 27(a) - Schedule of Assets Held for Investment Purposes December 31, 1998
IDENTITY OF ISSUE, BORROWER, LESSOR OR CURRENT SIMILAR PARTY DESCRIPTION OF INVESTMENT COST VALUE - -------------------------------------------------------------------------------------------------------- * Merrill Lynch, Pierce Fenner 46,059 shares Retirement Preservation & Smith Trust $ 46,059 $ 46,059 * Merrill Lynch, Pierce Fenner 12,653 shares Basic Value Fund & Smith 399,809 473,846 * Merrill Lynch, Pierce Fenner 2,482 shares Corporate Bond Fund & Smith 20,858 17,275 * Merrill Lynch, Pierce Fenner 9,572 shares Capital Fund & Smith 296,142 322,765 * Merrill Lynch, Pierce Fenner 9,850 shares Growth Fund & Smith 42,844 195,532 * Merrill Lynch, Pierce Fenner 78 shares Global Allocation Fund & Smith 1,095 964 * Merrill Lynch, Pierce Fenner 1,635 shares S&P 500 Index Fund & Smith 22,850 24,987 Massachusetts Financial 67 shares Emerging Growth Fund Services 2,602 2,905 Massachusetts Financial Services 296 shares Research Fund 6,689 7,245 Oppenheimer 48 shares Quest Fund 1,042 1,009 *CytRx Corporation 156,418 shares Common Stock 577,107 151,413 * Merrill Lynch, Pierce Fenner 3,303 shares CMA Money Fund & Smith 3,303 3,303 Participant loans Interest rates ranging from 8%to 8.5%, due no later than June, 2002 - 19,695 ---------- ---------- $1,617,097 $1,266,998 ========== ==========
* Indicates a party-in-interest to the Plan. 11 14 Cytrx Corporation 401(k) Profit-Sharing Plan EIN: 58-1642740 Plan No.: 001 Line 27(d) - Schedule of Reportable Transactions Year ended December 31, 1998
CURRENT VALUE OF ASSETS ON PURCHASE SELLING COST OF TRANSACTION NET GAIN IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS) - ------------------------------------------------------------------------------------------------------------------------------------ CATEGORY (III) - SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS. CytRx Corporation Common Stock $161,001 $ -- $161,001 $161,001 $ -- -- 102,699 214,071 102,699 (111,372) Merrill Lynch Pierce Fenner & Smith Capital Fund 44,248 -- 44,248 44,248 -- -- 115,103 100,100 115,103 15,003 Merrill Lynch Pierce Fenner & Smith Basic Value Fund 123,731 -- 123,731 123,731 -- -- 249,978 196,276 249,978 53,702 Merrill Lynch Pierce Fenner & Smith Growth Fund 61,224 -- 61,224 61,224 -- -- 195,023 196,243 195,023 (1,220) Merrill Lynch Pierce Fenner & Smith CMA Money Fund 826,375 -- 826,375 826,375 -- -- 840,086 840,086 840,086 -- Merrill Lynch Pierce Fenner & Smith Retirement Preservation Trust 45,733 -- 45,733 45,733 -- -- 51,390 51,390 51,390 --
Note: Commissions and fees related to purchases and sales of investments are included in the cost of investments or the proceeds from the sale and are not separately identified by the trustee. There was no lease rental. THERE WERE NO CATEGORY (I), (II) OR (IV) REPORTABLE TRANSACTIONS DURING THE YEAR ENDED DECEMBER 31, 1998. 12 15 CYTRX CORPORATION 401(K) PROFIT-SHARING PLAN FORM 11-K EXHIBIT INDEX
Exhibit Number Description Page - -------------- ----------- ---- 23.1 Consent of Ernst & Young LLP 14
13 EX-23.1 2 CONSENT OF ERNST & YOUNG LLP 1 Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-48706 and 333-31717) pertaining to the CytRx Corporation 401(k) Profit-Sharing Plan of our report dated June 23, 1999 with respect to the financial statements and supplemental schedules of the CytRx Corporation 401(k) Profit-Sharing Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP Atlanta, Georgia June 23, 1999 14 -----END PRIVACY-ENHANCED MESSAGE-----