<PAGE>

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

                                   FORM 10-K

                 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
          SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended December 31, 2000
                               -----------------
                                      OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                          Commission File No. 0-15327
                                              -------

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

              Delaware                                58-1642740
  ---------------------------------      -----------------------------------
    (State or other jurisdiction         (I.R.S. Employer Identification No.)
  of incorporation or organization)

       154 Technology Parkway
             Suite 200
       Norcross, Georgia 30092                             30092
  ----------------------------------------              ----------
  (Address of principal executive offices)              (Zip Code)


Registrant's telephone number, including area code:   (770) 368-9500
                                                      --------------
                            --------------------

Securities registered pursuant to Section l2(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.001
par value per share

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 and (2) has been subject to such filing requirements for
the past 90 days.

  YES    X         NO__.
        ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the Registrant's common stock held by non-
affiliates on March 19, 2001 was approximately $8.4 million.  On March 19, 2001,
there were 10,137,696 shares of the Registrant's common stock outstanding,
exclusive of treasury shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the CytRx Corporation Proxy Statement for the 2001 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated by reference into Part
III.

                                       1
<PAGE>


                       "SAFE HARBOR" STATEMENT UNDER THE
               PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     From time to time, we make oral and written statements that may constitute
"forward looking statements" (rather than historical facts) as defined in the
Private Securities Litigation Reform Act of 1995 or by the Securities and
Exchange Commission (the "SEC") in its rules, regulations and releases,
including Section 27A of the Securities Act of 1933, as amended (the "Securities
Act").  We desire to take advantage of the "safe harbor" provisions in the
Private Securities Litigation Reform Act of 1995 for forward looking statements
made from time to time, including, but not limited to, the forward looking
statements made in this Annual Report on Form 10-K (the "Annual Report"), as
well as those made in other filings with the SEC.

     Forward looking statements can be identified by our use of forward looking
terminology such as "may", "will", "expect", "anticipate", "estimate",
"believe", "continue", or other similar words.  Such forward looking statements
are based on our management's current plans and expectations and are subject to
risks, uncertainties and changes in plans that could cause actual results to
differ materially from those described in the forward looking statements.  In
the preparation of this Annual Report, where such forward looking statements
appear, we have sought to accompany such statements with meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those described in the forward looking statements, and we
have described many such items under "Risk Factors" set forth in Exhibit 99.1 to
this Annual Report.

     We do not have, and expressly disclaim, any obligation to release publicly
any updates or any changes in our expectations or any changes in events,
conditions or circumstances on which any forward looking statement is based.

                                       2
<PAGE>

                                    PART I

Item 1.  Business

General

     We are a Delaware corporation, incorporated in 1985 and are engaged in the
development and commercialization of pharmaceutical products.  Our current
research and development activities include FLOCOR, an intravenous agent for
treatment of sickle cell disease and other acute vaso-occlusive disorders, and
TranzFect, a delivery technology for DNA-based vaccines. We also have a research
pipeline with opportunities in the areas of muscular dystrophy, cancer, spinal
cord injury, vaccine delivery and gene therapy. See "Product Development".

     Certain financial information concerning the industry segments in which the
Company operates can be found in Note 17 to the Company's Consolidated Financial
Statements.


Recent Developments

Financing Activities
--------------------
     During the first quarter of 2000, we took steps to improve our financial
condition, including (i) agreements with trade creditors whereby an aggregate of
$2.3 million of indebtedness was cancelled in exchange for issuance of
approximately 938,000 shares of CytRx Common Stock, and (ii) a Stock Purchase
Agreement with certain investors (the "Investors") whereby the Investors agreed
to purchase 800,000 shares of the Company's Common Stock for an aggregate
purchase price of $1.8 million and the issuance of warrants to purchase an
additional 330,891 shares at $2.25 per share.  As part of our efforts to
conserve our cash resources we also reduced our staff and reduced our clinical
development program for FLOCOR pending further analysis of results from a Phase
III clinical study completed in December 1999 (see "Product Development").  In
April 2000, we entered into a private equity line of credit agreement (the "ELC
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 ELC 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 relating shares with the Securities
and Exchange Commission.

Sale of Titermax
----------------
     Since 1987, we have manufactured, marketed and distributed Titermax, an
adjuvant used to produce immune responses in research animals.  Effective June
15, 2000, we entered into a Purchase Agreement with Titermax USA, Inc. (an
unaffiliated company) whereby we sold the worldwide rights to market and
distribute Titermax, including all accounts receivable, inventory and other
assets used in the Titermax business.  The gross purchase price was $750,000,
consisting of $100,000 in cash and a $650,000 five-year secured promissory note
bearing interest of 10% annually.

Merck License
-------------
     In November 2000, we entered into an exclusive, worldwide license agreement
(the "License Agreement") with Merck & Co., Inc. ("Merck") whereby we granted
Merck the right to use our TranzFect technology in DNA-based vaccines targeted
to four infectious diseases, one of which is HIV.

     In November 2000, Merck paid us a signature payment of $2 million.  Merck
will also pay us up to $4 million in $1 million increments within 30 days of the
occurrence of each of the following: (i) the commencement by Merck of the first
U.S. Food and Drug Administration (FDA) Phase I Study for the first product
incorporating TransFect designed for the prevention and treatment of HIV; (ii)
the commencement by Merck of the earlier of the first FDA Phase IIb Study or
Phase III Study for such HIV product; (iii) the filing by Merck of the first
U.S. Public Health Service Act Product License Application in one of the
countries mentioned below for such HIV product; and (iv) notification from a
regulatory authority in the United States, Canada, France, Germany, Italy,
Spain, the United Kingdom, or Japan that all approvals for the marketing of such
HIV product, including pricing approvals, has been granted.  Merck will also pay
us an annual fee of $50,000 the first year, $75,000 the second year, and
$100,000 the third year and each additional year thereafter until Merck receives
notification from a regulatory authority as mentioned above.

     For the products incorporating TranzFect targeting the other diseases,
Merck will pay us milestone payments of up to $2,850,000 in the following
increments: (i) $100,000 for the commencement by Merck of the first FDA Phase I
Study; (ii) $250,000 for the commencement by Merck of the earlier of the first
FDA Phase IIb Study or Phase III Study; (iii) $500,000 for the filing by Merck
of the first U.S. Public Health Service Act Product License Application in one
of the countries mentioned below; and (iv) $2 million for notification from a
regulatory authority in the United States, Canada, France, Germany, Italy,
Spain, the United Kingdom, or Japan that all approvals for the marketing of such
product, including pricing approvals, has been granted.

     Merck will also pay to us royalties of between 2% and 4% on a country-by-
country basis, based on net sales. Merck will pay an additional 1% royalty on
net sales if certain conditions are met regarding patent protection and Merck's
competitive position. The royalty payments are subject to certain reductions.

     This agreement remains effective unless terminated according to its terms
by either party or until the expiration of all royalty obligations thereunder.
Merck may terminate this agreement at any time in its sole discretion by giving
90 days written notice.  Upon termination by Merck, the rights and obligations
under the agreement, including any licenses and payment obligations not yet due,
also terminate.  The agreement may also be terminated for cause by either party.

     Restrictions in the license agreement prevent us from disclosing certain of
its terms, including some of the specific disease targets covered.  We have
applied with the SEC for and have received confidential treatment for certain
portions of the agreement, which have been omitted from the exhibit filed with
the SEC.

                                       3
<PAGE>

Ivy Animal Health License
-------------------------
     In February 2001, we entered into a license agreement with Ivy Animal
Health, Inc. ("Ivy") of Overland Park, Kansas, whereby we granted to Ivy a
worldwide exclusive license to our investigational agent, CRL-8761, a non-
antibiotic feed additive that enhances growth performance in monogastric food
animals such as poultry and pigs. As part of the license, we received a nominal
upfront payment, and, dependent upon Ivy's ability to successfully develop a
commercially viable product, will receive a milestone fee upon regulatory
approval in the United States and an eventual royalty equal to 5% of net sales.

Product Development

Therapeutic Copolymer Programs
------------------------------
     General. Our primary focus is on CRL-5861 (purified poloxamer 188), a
     -------
novel, intra-vascular agent with pharmacological properties that can be
characterized as rheologic, cytoprotective and anti-adhesive / anti-thrombotic.
CRL-5861 is an intravenous solution that has the unique property of improving
micro-vascular blood flow. Extensive preclinical and clinical studies suggest
CRL-5861 may be of significant benefit in acute ischemic vascular disorders such
as stroke, heart attack, and vaso-occlusive crisis of sickle cell disease. CRL-
5861 may also provide benefit in cancer when used in combination with radiation
or cytotoxic drugs. Through its effect on increasing blood flow, CRL-5861 is
thought to (a) increase delivery of cytotoxic drugs to ischemic portions of
tumors, and (2) increase oxygen delivery, thus increasing the sensitivity of
tumor cells to drug and radiation therapy.

     The safety profile of CRL-5861 is well established. It has been
investigated in over 17 clinical studies representing administration to
approximately 4,000 patients and healthy volunteers.

     Sickle Cell Disease.  We believe CRL-5861 has significant potential in
     -------------------
treating a variety of vascular-occlusive diseases, however, we have chosen vaso-
occlusive crisis associated with sickle cell anemia as our first development
priority.  For purposes of our sickle cell disease development program, we refer
to CRL-5861 as "FLOCOR".

     Sickle cell disease is a devastating disorder originating from an inherited
abnormality of hemoglobin, the oxygen-carrying molecule in red blood cells.
Under conditions of low blood oxygen, which is generally caused by dehydration
or stress, the sickle cell victim's hemoglobin becomes rigid causing red blood
to become rough, sticky and irregularly shaped, often looking like sickles,
which gives the disease its name.  Estimates place the number of persons
suffering from sickle cell anemia in the U.S. at about 72,000, or roughly one in
400 African-Americans. It is also estimated that complications from sickle cell
disease result in healthcare expenditures of from $1.0 to $1.5 billion annually
in the U.S.

     The most common problem sickle cell patients face is episodic pain (also
referred to as vaso-occlusive crisis, or VOC).  These episodes can last anywhere
from days to weeks, and can vary significantly in their severity.  The deformed
sickle cells cannot easily flow through the smaller blood vessels of the body
and tend to clump together, forming occlusions which impede blood flow.  The
occlusions deprive tissues of vital oxygen that can result in tissue death,
inflammation and intense throbbing pain.  Aside from causing considerable pain
and suffering, these crisis episodes slowly destroy vital organs as they are
deprived of oxygen.  As a result, the life expectancy of sickle cell victims is
about twenty years shorter than those without the disease.  Patients suffering
from sickle cell disease may experience several crisis episodes each year.
Hospitalization is required when pain becomes too much to bear.  There are about
75,000 hospital admissions annually to treat sickle cell patients undergoing
acute vascular-occlusive crisis caused by the disease.  On average, these
patients require

                                       4
<PAGE>

in-patient treatment for four to seven days. Currently there is no disease
modifying treatment for acute crisis of sickle cell disease and treatment is
limited to narcotics, fluids, and bed rest.

     In sickle cell disease, the application of FLOCOR can best be described as
an intravenous blood "lubricant". FLOCOR's unique surface-active properties
decrease blood viscosity and enable the rigid sickled cells to become more
flexible, thus allowing easier passage of blood cells through narrow blood
vessels. We believe FLOCOR can shorten the episodes of vaso-occlusive crises
and, most importantly, preserve organ function.

     On December 21, 1999, we reported results from our Phase III clinical study
of FLOCOR for treatment of acute sickle cell crisis. Although the study did not
demonstrate statistical significance in the primary endpoint, statistically
significant and clinically important benefits associated with FLOCOR were
observed in certain subgroups. In addition, among the entire patient population,
treatment with FLOCOR resulted in a statistically significant increase in the
percent of patients achieving resolution of their crisis. The Phase III study
also demonstrated that FLOCOR is well tolerated. Based on the encouraging
efficacy results and a good safety profile our independent Data and Safety
Monitoring Board (DSMB) and other thought leaders in the area of sickle cell
disease have recommended that we continue with clinical development of FLOCOR in
sickle cell disease. We presented the results of the Phase III trial at the 24th
Annual Meeting of the National Sickle Cell Disease Program in Philadelphia on
April 12, 2000. Based on our recent conversations with the FDA, it is likely
that either two small additional pivotal trials or one large trial will be
required for approval, along with one to two additional safety studies. We
believe there is a reasonable possibility of applying for and obtaining
government funding to support one or more of the remaining trials, which will
minimize, but not eliminate our expenditures. If we are successful in these
discussions, we would anticipate earliest funding approval in the second quarter
of 2002. The additional studies would take approximately two years to complete
patient enrollment, which might begin in the third or fourth quarter of 2002.

     FLOCOR has been granted "Orphan Drug" designation by the FDA for the
treatment of sickle cell crisis. The Orphan Drug Act of 1983, as amended,
provides incentive to drug manufacturers to develop drugs for the treatment of
rare diseases (e.g., diseases that affect less than 200,000 individuals in the
United States, or diseases that affect more than 200,000 individuals in the
United States where the sponsor does not reasonably anticipate that its product
will become profitable). As a result of the designation of FLOCOR as an Orphan
Drug, if we are the first manufacturer to obtain FDA approval to market FLOCOR
for treatment of sickle cell crisis, we will obtain a seven-year period of
marketing exclusivity beginning from the date of FLOCOR's approval. During this
period, the FDA may not approve the same drug for the same use from another
sponsor.

     Cancer - Cancer is the second leading cause of death in the United States,
     ------
costing an astounding $1.7 billion yearly.  Chemotherapy and/or radiation has
highly variable results and improvements to these standard regimens are
drastically needed.  CRL-5861 possesses properties that appear to increase blood
flow to poorly perfused areas of tumors, thus allowing chemotherapeutic agents
to treat such areas more effectively.  By increasing blood flow, the tumors
become more active and sensitive to chemotherapy or radiation.  Preliminary
studies have shown promising results and we have begun further preclinical
studies to evaluate CRL-5861's activity.  Based on the successful outcome of
these studies, we believe we will be able to quickly start a clinical program to
evaluate CRL-5861's effectiveness in cancer patients.

     Muscular Dystrophy - Duchenne muscular dystrophy (DMD) is an inherited
     ------------------
disorder caused by an abnormal gene for a muscle protein known as dystrophin.
Muscles deficient in dystrophin breakdown under normal muscular activity and the
disease results in progressive muscle wasting, paralysis, and death often by age
20.  There is no treatment that is effective in preventing the progressive
muscle destruction of this devastating disorder.  Several years ago, we began
collaborating with researchers at the University of Cincinnati Medical Center to
study CRL-5861 in the treatment of Muscular Dystrophy.  Recently, the
collaboration was awarded a research grant from the Muscular Dystrophy
Association for further studies in animal models.  If these laboratory studies
suggest CRL-5861 can protect dystrophin deficient mice, it should work similarly
in boys with DMD.

     Spinal Cord Injury - Traumatic spinal cord damage is one of the most
     ------------------
devastating injuries imaginable, and unfortunately occurs primarily in young
people, often resulting in complete paralysis.  Researchers believe that a
significant portion of spinal cord damage results from a secondary progression
of damage after the initial injury.  This secondary injury results from membrane
injury to nerve cells, causing them to lose function over time.

     We are currently testing CRL-5861 for its ability to interact with damaged
nerve membranes in such a way as to "seal" the damage and restore membrane
integrity.  If successful, this treatment could limit the progression of
secondary, post-injury damage, thereby maintaining or restoring spinal cord
function.  Based on the successful outcome of these studies, we

                                       5
<PAGE>

believe we can proceed very quickly with the clinical development of this agent
since the program will benefit from the existing safety and manufacturing
capabilities already in place for our FLOCOR program.

Vaccine Enhancement and Gene Therapy
------------------------------------
     DNA Vaccines & Gene Therapy -- Gene therapy and/or gene based vaccines are
     ---------------------------
mediated through the delivery of DNA containing selected genes into cells by a
process known as transfection. We refer to our gene delivery technology as
TranzFect. A common class of materials used to enhance the transfection process
are known as cationic lipids. This type of lipid can associate with and alter
the integrity of a cell membrane, thus increasing the uptake of the complexed
DNA. Unfortunately, cationic lipids are toxic to cells and are readily
metabolized. Thus the effect of these agents in transfection protocols is not
readily reproducible when used in vivo.

     We have identified a series of non-ionic block copolymers known as
poloxamers that share several physico-chemical traits with the cationic lipids
in that they associate with DNA and cell membranes. However, the block
copolymers are significantly less toxic than the cationic lipids and are not
metabolized in vivo. In addition, the poloxamer family of non-ionic block
copolymers have a significant history of being safely used in a wide variety of
oral, injectable, and topical pharmaceutical products. Importantly, a poloxamer
known as CRL-1005 which is among the most active in transfection protocols and
is adjuvant active, has been studied in a Phase I clinical trial. In that trial,
CRL-1005 was well tolerated at doses significantly higher than those anticipated
to be useful in gene therapy or DNA vaccine studies.

     In addition to the ability of poloxamers to enhance transfection, these
compounds have significant immuno-adjuvant activity.  Accordingly, we believe
that an optimal application for this technology may be in the field of DNA
vaccines.  We believe that in this application, the activity of poloxamers will
be two-fold.  First, the poloxamers will act as delivery/transfection agents to
facilitate the intracellular delivery and protection of the DNA from enzymatic
digestion.  Second the poloxamer will act as an immuno-adjuvant.  Since the
poloxamer is not metabolized and has surface active properties, it is likely to
remain on the surface of the transfected cell awaiting expression of the gene.
When the gene product is excreted from the cell, the poloxamer is likely to
associate with the antigen and exert immuno-adjuvant actions.  Numerous
preclinical and clinical studies have demonstrated that conventional vaccines
adjuvanted with poloxamers are well tolerated and result in significantly
enhanced antibody and cellular immune responses.

     Merck License -- In November 2000, we entered into an exclusive, worldwide
     -------------
license agreement (the "License Agreement") with Merck & Co., Inc. ("Merck")
whereby we granted Merck the right to use our TranzFect technology in DNA-based
vaccines targeted to four infectious diseases, one of which is HIV.

     In November 2000, Merck paid us a signature payment of $2 million.  Merck
will also pay us up to $4 million in $1 million increments within 30 days of the
occurrence of each of the following: (i) the commencement by Merck of the first
U.S. Food and Drug Administration (FDA) Phase I Study for the first product
incorporating TransFect designed for the prevention and treatment of HIV; (ii)
the commencement by Merck of the earlier of the first FDA Phase IIb Study or
Phase III Study for such HIV product; (iii) the filing by Merck of the first
U.S. Public Health Service Act Product License Application in one of the
countries mentioned below for such HIV product; and (iv) notification from a
regulatory authority in the United States, Canada, France, Germany, Italy,
Spain, the United Kingdom, or Japan that all approvals for the marketing of such
HIV product, including pricing approvals, has been granted.  Merck will also pay
us an annual fee of $50,000 the first year, $75,000 the second year, and
$100,000 the third year and each additional year thereafter until Merck receives
notification from a regulatory authority as mentioned above.

     For the products incorporating TranzFect targeting the other diseases,
Merck will pay us milestone payments of up to $2,850,000 in the following
increments: (i) $100,000 for the commencement by Merck of the first FDA Phase I
Study; (ii) $250,000 for the commencement by Merck of the earlier of the first
FDA Phase IIb Study or Phase III Study; (iii) $500,000 for the filing by Merck
of the first U.S. Public Health Service Act Product License Application in one
of the countries mentioned below; and (iv) $2 million for notification from a
regulatory authority in the United States, Canada, France, Germany, Italy,
Spain, the United Kingdom, or Japan that all approvals for the marketing of such
product, including pricing approvals, has been granted.

     Merck will also pay to us royalties of between 2% and 4% on a country-by-
country basis, based on net sales. Merck will pay an additional 1% royalty on
net sales if certain conditions are met regarding patent protection and Merck's
competitive position. The royalty payments are subject to certain reductions.

     This agreement remains effective unless terminated according to its terms
by either party or until the expiration of all royalty obligations thereunder.
Merck may terminate this agreement at any time in its sole discretion by giving
90 days written notice.  Upon termination by Merck, the rights and obligations
under the agreement, including any licenses and payment obligations not yet due,
also terminate.  The agreement may also be terminated for cause by either party.

     Restrictions in the license agreement prevent us from disclosing certain of
its terms, including some of the specific disease targets covered.  We have
applied with the SEC for and have received confidential treatment for certain
portions of the agreement, which have been omitted from the exhibit filed with
the SEC.

     Conventional Vaccines - As part of our TranzFect program, we have developed
     ---------------------
a library of compounds, many of which have been shown to enhance the activity of
conventional vaccines. We refer to this program as Optivax. We are currently
providing Optivax compounds to a number of vaccine companies for evaluation and
possible license.

Other Product Development Efforts
---------------------------------
     Food Animal Growth Promotant - The United States Food and Drug
     ----------------------------
Administration has expressed a growing concern about the use of low level
antibiotics in animal feed and the possibility of resultant antibiotic
resistance in human pathogens. Pending regulations at the FDA could suspend
farmers' use of any antibiotics found to promote the spread of resistant

                                       6
<PAGE>

human pathogens. In experimental studies, our compound, CRL-8761, has been shown
to have a consistent effect to improve the rate of weight gain and feed
efficiency in well-controlled studies in poultry and swine. CRL-8761
consistently provides the same growth performance benefits as antibiotics but,
since it has no antibiotic activity, it is free from human health concerns over
the use of antibiotics.

     In February 2001, we entered into a license agreement with Ivy Animal
Health, Inc. ("Ivy") of Overland Park, Kansas, whereby we granted to Ivy a
worldwide exclusive license to CRL-8761. As part of the license, we received a
nominal upfront payment, and will receive a milestone fee upon regulatory
approval in the United States and an eventual royalty equal to 5% of net sales.

     Expenditures for research and development activities related to continuing
operations were $2.0 million, $12.8 million and $7.3 million during the years
ended December 31, 2000, 1999 and 1998, respectively.

Manufacturing

     We require three suppliers of materials or services to manufacture FLOCOR;
(i) a supplier of the raw drug substance, (ii) a supplier of the purified drug
which is refined from the raw drug substance and (iii) a manufacturer who can
formulate and sterile fill the purified drug substance into the finished drug
product. The raw drug substance is currently widely available at commercial
scales from numerous manufacturers. We have not entered into a formal agreement
with any supplier for the raw drug substance because of its wide availability.
In August 1999, we entered into a long-term commercial supply contract with
Organichem, Corp., located in Rennselaer, New York for production of the
purified drug substance. There can be no assurance that our relationship with
such supplier will continue or that we will be able to obtain additional
purified drug substance if our current supply is inadequate. Such inability to
obtain additional purified drug substance in amounts and at prices acceptable to
the Company could have a material adverse effect on our business. To meet the
need for manufacture of our finished drug product, we have entered into a supply
agreement with the Hospital Products Division of Abbott Laboratories. Our
inability to maintain such relationship on terms acceptable to us could have a
material adverse effect on our business.

     If we modify our manufacturing process or change the source or location of
product supply, regulatory authorities will require us to demonstrate that the
material produced from the modified or new process or facility is equivalent to
the material used in our clinical trials. Further, any manufacturing facility
and the quality control and manufacturing procedures used by us for the
commercial supply of a product must comply with applicable Occupational Safety
and Health Administration, Environmental Protection Agency, and FDA standards,
including Good Manufacturing Practice regulations.  See "Government Regulation".

Patents and Proprietary Technology

     We actively seek patent protection for our technologies, processes, uses,
and ongoing improvements and consider our patents and other intellectual
property to be critical to our business.

     We continually evaluate the patentability of new inventions and
improvements developed by our employees and collaborators. Whenever appropriate,
we will endeavor to file United States and international patent applications to
protect these new inventions and improvements. However, there can be no
assurance that any of the current pending patent applications or any new patent
applications that may be filed will ever be issued in the United States or any
other country.

     We also attempt to protect our proprietary products, processes and other
information by relying on trade secrets and non-disclosure agreements with our
employees, consultants and certain other persons who have access to such
products, processes and information.  Under the agreements, all inventions
conceived by employees are our exclusive property.  Nevertheless, there can be
no assurance that these agreements will afford significant protection against
misappropriation or unauthorized disclosure of our trade secrets and
confidential information.

     We believe we have worldwide comprehensive intellectual property covering
the use of poloxamers in a number of therapeutic areas. We have patents claiming
broad areas of the use of these compounds currently pending or issued in Canada,
Japan, South Korea, the EPO and the United States. On November 23, 1999 the U.S.
Patent Office issued patent No. 5,990,241 "Polyoxypropylene/ Polyoxyethylene
Copolymers With Improved Biological Activity" to us. We believe the issue of
this patent provides important exclusivity since it contains composition of
matter claims for purified poloxamers used in our products and technologies,
including purified poloxamer 188, the active ingredient in FLOCOR. This patent
will

                                       7

<PAGE>

expire in 2017. We also own a comprehensive group of patents that broadly claim
the use of poloxamers as vaccine adjuvants that will provide additional coverage
for DNA vaccines.

Competition

     Many companies, including large pharmaceutical, chemical and biotechnology
firms with financial resources, research and development staffs, and facilities
that are substantially greater than ours, are engaged in the research and
development of pharmaceutical products that could compete with products under
development by us. The industry is characterized by rapid technological advances
and competitors may develop their products more rapidly and/or such products may
be more effective than those under development by us or our licensees and
corporate partners.

Government Regulation

     The marketing of pharmaceutical products requires the approval of the FDA
and comparable regulatory authorities in foreign countries. The FDA has
established guidelines and safety standards which apply to the pre-clinical
evaluation, clinical testing, manufacture and marketing of pharmaceutical
products. The process of obtaining FDA approval for a new therapeutic product
(drug) generally takes several years and involves the expenditure of substantial
resources. The steps required before such a product can be produced and marketed
for human use in the United States include preclinical studies in animal models,
the filing of an Investigational New Drug ("IND") application, human clinical
trials and the submission and approval of a New Drug Application ("NDA"). The
NDA involves considerable data collection, verification and analysis, as well as
the preparation of summaries of the manufacturing and testing processes,
preclinical studies, and clinical trials. The FDA must approve the NDA before
the drug may be marketed. There can be no assurance that we will be able to
obtain the required FDA approvals for any of our products.

     The manufacturing facilities and processes for our products, whether
manufactured directly by us or by a third party, will be subject to rigorous
regulation, including the need to comply with Federal Good Manufacturing
Practice regulations. We are also subject to regulation under the Occupational
Safety and Health Act, the Environmental Protection Act, the Nuclear Energy and
Radiation Control Act, the Toxic Substance Control Act and the Resource
Conservation and Recovery Act.

Employees
As of December 31, 2000, we have four full-time employees and one part-time
employee.

Item 2.  Properties
     We currently lease administrative office space at 154 Technology Parkway,
Norcross, Georgia. These facilities are in satisfactory condition and suitable
for our purposes and present operations. We also use contract lab facilities for
research and development purposes.

Item 3.  Legal Proceedings
We are not a party to any material litigation. We are occasionally involved in
other claims arising out of our operations in the normal course of business,
none of which are expected, individually or in the aggregate, to have a material
adverse affect on us.

Item 4.  Submission of Matters to a Vote of Security Holders
None.

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

  Our Common Stock is traded on The Nasdaq Stock Market under the symbol CYTR.
The following table sets forth the high and low sale prices for our Common Stock
for the periods indicated as reported by Nasdaq. Such prices represent prices
between dealers without adjustment for retail mark-ups, mark-downs, or
commissions and may not necessarily represent actual transactions.

                                       8



<PAGE>

                                             High                   Low
                                          ---------             ---------
COMMON STOCK:
     2001
         January 1 to March 23              1 7/32                 3/4
     2000
         Fourth Quarter                     1 9/16                15/32
         Third Quarter                      1 5/8                 13/16
         Second Quarter                     2 7/8                 13/16
         First Quarter                      6 7/16                29/32
     1999
         Fourth Quarter                     3                      3/4
         Third Quarter                      3                   1  7/8
         Second Quarter                     3 1/8               1 27/32
         First Quarter                      3 7/16              1


     On March 23, 2001, the closing price of our Common Stock as reported on The
Nasdaq Stock Market, was $25/32 and there were approximately 1,200 holders of
record of our Company's Common Stock. The number of record holders does not
reflect the number of beneficial owners of our Common Stock for whom shares are
held by brokerage firms and other institutions.  We have not paid any dividends
since our inception and do not contemplate payment of dividends in the
foreseeable future.

Item 6.  Selected Financial Data
<TABLE>
<S>                                               <C>             <C>              <C>               <C>              <C>
                                                       2000             1999             1998              1997             1996
                                                  ---------------------------------------------------------------------------------
Statement of Operations Data:
Revenues:
  Net service revenues                             $   451,031     $    322,536      $   350,789       $   422,039      $   357,517
  License fees                                       2,000,000                -                -                 -                -
  Interest and other income                            876,827        1,068,924        1,762,747         1,381,306        1,558,914
                                                  ---------------------------------------------------------------------------------
Total revenues                                       3,327,858        1,391,460        2,113,536         1,803,345        1,916,431
                                                  =================================================================================

Loss from continuing operations                     (1,147,457)     (15,269,918)      (7,737,296)       (4,618,867)      (2,241,795)
Income (loss) from discontinued operations             799,355          240,627        2,943,937        (1,434,125)      (3,549,984)
Extraordinary item                                           -                -         (325,120)                -                -
                                                  ---------------------------------------------------------------------------------
Net loss                                           $  (348,102)    $(15,029,291)     $(5,118,479)      $(6,052,992)     $(5,791,779)
                                                  =================================================================================

Basic and diluted loss per common share:
  Loss from continuing operations                  $     (0.12)    $      (1.99)     $     (1.01)      $     (0.62)     $     (0.29)
  Income (loss) from discontinued operations              0.08             0.03             0.38             (0.20)           (0.46)
  Extraordinary item                                         -                -            (0.04)                -                -
                                                  ---------------------------------------------------------------------------------
  Net loss                                         $     (0.04)    $      (1.96)     $     (0.67)      $     (0.82)     $     (0.75)
                                                  =================================================================================

Balance Sheet Data:
Total assets                                       $ 6,859,238     $  6,128,063      $16,641,568       $24,905,995      $24,299,322
Long-term debt                                               -          650,000                -                 -                -
Other long-term liabilities                                  -        1,693,638                -                 -                -
Convertible debentures                                       -                -                -         2,000,000                -
Total stockholders' equity                           5,618,814        1,032,688       14,688,548        19,248,395       22,337,734
</TABLE>


Item 7.  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 in
Exhibit 99.1, and should not unduly rely on these forward looking statements.
We undertake no duty to update the information in this discussion if any forward
looking statement later turns our to be inaccurate.

     The following should be read in conjunction with Selected Financial Data
and the audited Consolidated Financial Statements of the Company included in
this report.

Liquidity and Capital Resources
-------------------------------

     At December 31, 2000, we had cash and cash equivalents of $3.8 million and
net assets of $5.6 million, compared to $3.0 million and $1.0 million,
respectively, at December 31, 1999. Working capital totaled $2.6 million at
December 31, 2000, compared to $664,000 at December 31, 1999.

                                       9
<PAGE>

     During the first quarter of 2000, we took steps to improve our financial
condition, including (i) agreements with certain trade creditors whereby they
cancelled indebtedness of $2.3 million in exchange for issuance of approximately
938,000 shares of our common stock, and (ii) a Stock Purchase Agreement with
investors whereby they agreed to purchase 800,000 shares of our common stock for
an aggregate purchase price of $1.8 million and the issuance of warrants. As
part of our efforts to conserve cash resources, we also reduced our staff and
our clinical development program for FLOCOR pending further analysis of results
from a Phase III clinical study completed in December 1999 (see discussion under
"Results of Operations ").  In April 2000, we entered into a private equity line
of credit agreement (the "ELC 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 ELC
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.

     Effective June 15, 2000, we entered into a Purchase Agreement with Titermax
USA, Inc. (an unaffiliated company) whereby we sold the worldwide rights to
market and distribute Titermax, including all accounts receivable, inventory and
other assets used in the Titermax business.  The gross purchase price was
$750,000, consisting of $100,000 in cash and a $650,000 five-year secured
promissory note bearing interest of 10% annually.

     In November 2000, we entered into an exclusive, worldwide license agreement
(the "License Agreement") with Merck & Co., Inc. ("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 has paid us a
signature payment of $2 million, and will pay us milestone and product approval
payments of up to $4 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. For each of the licenses
to 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 each. 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 products. Additionally, if certain
conditions are met regarding patent protection and Merck's competitive position,
Merck may pay a royalty of 1% on net sales of products incorporating TranzFect
for these additional disease targets. Merck will also pay 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 Agreement 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.

     We believe that we will have adequate working capital to allow us to
operate through the first quarter of 2002, but that additional funds will be
needed to significantly advance any of our technologies under development. We
are continuing to seek corporate partnerships for FLOCOR, and are also seeking
government support for additional clinical studies. During 2001, we also plan to
focus attention on obtaining additional licenses for our TranzFect technology.
Some of our additional capital requirements may be provided by the ELC
Agreement, but we also intend to pursue other sources of equity 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 with the current portfolio of technologies under development. Both our
technology licensing efforts and our fund-raising activities 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. Insufficient funding may require us to delay,
reduce or eliminate some or all of our research and development activities,
planned clinical trials and administrative programs.

     At December 31, 2000, we and our subsidiaries had net operating loss
carryforwards for income tax purposes of approximately $54.2 million, which will
expire in 2001 through 2020 if not utilized. We also have research and
development tax credits and orphan drug tax credits available to reduce income
taxes, if any, of approximately $6.7 million which will expire in 2001 through
2015 if not utilized.  Based on an assessment of all available evidence
including, but not limited to, our limited operating history and lack of
profitability, uncertainties of the commercial viability of our technology, the
impact of government regulation and healthcare reform initiatives, and other
risks normally associated with biotechnology companies, we have concluded that
it is more likely than not that these net operating loss carryforwards and
credits will not be realized and, as a result, a 100% deferred tax valuation
allowance has been recorded against these assets.

     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

                                       10
<PAGE>

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 a net loss of $348,000 for the year ended December 31, 2000 as
compared to net losses of $15,029,000 for 1999 and $5,118,000 for 1998.  Loss
from continuing operations before extraordinary items was $1,147,000,
$15,270,000 and $7,737,000 in 2000, 1999 and 1998, respectively.

     We market the services of our small group of human resource professionals
to third parties under the name of Spectrum Recruitment Research as a way of
offsetting our cost of maintaining this function. Net service revenues from
continuing operations related to Spectrum were $451,000 in 2000, $323,000 in
1999 and $351,000 in 1998. Cost of service revenues was $268,000 in 2000,
$240,000 in 1999 and $187,000 in 1998, or 59%, 74% and 53% of net service
revenues, respectively.

     Interest income from continuing operations was $170,000 in 2000 as compared
to $463,000 in 1999 and $1,007,000 in 1998. The variance between years is
attributable to fluctuating cash and investment balances. License fee income of
$2,000,000 in 2000 relates to our license of TranzFect to Merck & Co., Inc. in
November 2000 (see Note 13 to Financial Statements). Grant income was $349,000
in 2000 versus $464,000 in 1999 and $511,000 in 1998; the higher amounts during
1998 and 1999 are primarily due to a $445,000 grant from the U.S. Food and Drug
Administration's Division of Orphan Drug Development to support our Phase III
clinical trial of FLOCOR. Other income was $358,000, $142,000 and $244,000 in
2000, 1999 and 1998, respectively. Other income for 2000 includes $225,000 in
fees paid to us by Merck pursuant to an Evaluation Agreement for our TranzFect
technology and pursuant to a Fee for Service Agreement whereby we provided
certain chemistry services to Merck.

     Research and development expenditures from continuing operations during
2000 were $1,962,000 versus $12,812,000 in 1999 and $7,306,000 in 1998. Research
and development expenditures were higher in 1998 and 1999 primarily due to our
clinical development activities for FLOCOR. In March 1998, we began a Phase III
trial of FLOCOR for treatment of acute sickle cell crisis, which was completed
in December 1999. During 1999, we also continued our Phase I trial of FLOCOR for
treatment of Acute Chest Syndrome in sickle cell patients and initiated two
additional clinical trials of FLOCOR - a Phase III study investigated repeat use
of FLOCOR in patients with acute sickle cell crisis and a Phase I/II study for
treatment of Acute Lung Injury. Subsequent to the completion of the Phase III
trial, we reduced our clinical development activities for FLOCOR pending further
analysis of the Phase III results. Our development activities during 2000
consisted primarily of analysis of the Phase III results and consultation with
our scientific and regulatory advisors and meetings with regulatory authorities
regarding preparation for the next clinical activities for FLOCOR. The Phase III
study did not achieve the high level of statistical significance required by the
FDA for the study as a whole; the results in children, however, were
statistically significant and our planned future studies will focus on the
pediatric sickle cell population. Based on our recent conversations with the
FDA, it is likely that either two small additional pivotal trials or one large
trial will be required for approval, along with one to two additional safety
studies.

     Selling, general and administrative expenses from continuing operations
during 2000 were $2,245,000 as compared to $3,610,000 in 1999 and $2,312,000 in
1998. During 2000 and 1999, we recorded non-cash charges of $365,000 and
$1,043,000, respectively related to issuance of stock warrants to certain
consultants and certain vesting events for management stock options. Excluding
these charges, selling, general and administrative expenses were $1,880,000,
$2,567,000 and $2,312,000 during 2000, 1999 and 1998, respectively. The decrease
from 1999 to 2000 reflects staff reductions and other measures we took during
the first quarter of 2000 to reduce our expenses and conserve cash resources.

     Interest expense of $46,000 during 1998 relates to convertible notes issued
in 1997, which were retired during 1998. The extraordinary loss of $325.000 in
1998 relates to the early extinguishment of the notes that resulted in payment
of premiums of $150,000 and expense of capitalized debt issuance costs of
$175,000 (see Note 16 to Financial Statements).

     Discontinued Operations - Net income from the discontinued operations of
Proceutics, CytRx Animal Health, Vaxcel (net of minority interest) and Titermax
was $799,000, $241,000 and $2,944,000 in 2000, 1999 and 1998. The following
table presents the breakdown of net income (loss) from discontinued operations.

                                       11
<PAGE>


<TABLE>
<S>                                         <C>          <C>            <C>
                                               2000          1999           1998
                                            ----------   -----------    -----------
Titermax:
 Operations                                   $119,000      $281,000    $   231,000
 Gain on sale of business                      680,000             -              -
                                            ----------   -----------    -----------
                                               799,000       281,000        231,000
Proceutics:
 Operations                                          -             -        171,000
 Gain on sale of business                            -             -        782,000
 Gain on sale of real estate                         -             -        434,000
                                            ----------   -----------    -----------
                                                     -             -      1,387,000
CytRx Animal Health:
 Operations                                          -             -       (585,000)
 Gain on sale of business                            -             -      6,230,000
                                            ----------   -----------    -----------
                                                     -             -      5,645,000
Vaxcel:
 Operations                                          -       (44,000)    (1,721,000)
 Minority interest                                   -         4,000        615,000
 Impairment loss                                     -             -     (3,213,000)
                                            ----------   -----------    -----------
                                                     -       (40,000)    (4,319,000)
                                            ----------   -----------    -----------

Net income from discontinued operations       $799,000      $241,000    $ 2,944,000
                                            ==========   ===========    ===========
</TABLE>

     Inflation - Our management believes that inflation had no material impact
on our operations during the three year period ended December 31, 2000.


Item 7A. Qualitative and Quantitative Disclosures About Market Risk

     Our financial instruments that are sensitive to changes in interest rates
are our investments. As of December 31, 2000, we held no investments other than
amounts invested in money market accounts. We are not subject to any other
material market risks.


Item 8.  Financial Statements and Supplementary Data

     Our consolidated financial statements and supplemental schedule and the
notes thereto as of December 31, 2000 and 1999, and for each of the three years
ended December 31, 2000, together with the independent auditors' report thereon,
are set forth on pages F-1 to F-15 of this Annual Report on Form 10-K.


Item 9   Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

None.

                                   PART III

Item 10. Directors and Executive Officers of the Registrant
     Information with respect to this item is incorporated herein by reference
from the Proxy Statement.

Item 11. Executive Compensation
     Information with respect to this item is incorporated herein by reference
from the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management
     Information with respect to this item is incorporated herein by reference
from the Proxy Statement.

Item 13. Certain Relationships and Related Transactions
     Information with respect to this item is incorporated herein by reference
from the Proxy Statement.

                                       12
<PAGE>


                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) Documents filed as part of this 10-K:

(1)  Financial Statements

     The consolidated financial statements of the Company and the related report
     of independent auditors thereon are set forth on pages F-1 to F-15 of this
     Annual Report on Form 10-K. These consolidated financial statements are as
     follows:

        Consolidated Balance Sheets as of December 31, 2000 and 1999

        Consolidated Statements of Operations for the Years Ended December 31,
          2000, 1999 and 1998

        Consolidated Statements of Stockholders' Equity for the Years Ended
          December 31, 2000, 1999 and 1998

        Consolidated Statements of Cash Flows for the Years Ended December 31,
          2000, 1999 and 1998

        Notes to Consolidated Financial Statements

        Report of Independent Auditors

(2)  Financial Statement Schedules

     The following financial statement schedule is set forth on page F-16 of
this Annual Report on Form 10-K.

        Schedule II - Valuation and Qualifying Accounts for the years ended
          December 31, 2000, 1999 and 1998

     All other schedules are omitted because they are not required, not
     applicable, or the information is provided in the financial statements or
     notes thereto.

(3)  Exhibits

     See Exhibit Index on page 14 of this Annual Report on Form 10-K.

(b)  Reports on Form 8-K

     On November 15, 2000, the Registrant filed a Current Report on Form 8-K
     reporting the license of its TranzFect technology to Merck & Co. Inc.

                                       13
<PAGE>

                               CytRx Corporation
                            Form 10-K Exhibit Index

<TABLE>
<CAPTION>
Exhibit
Number
------
<C>    <S>                                                                                    <C>
  3.1   Restated Certificate of Incorporation                                                  (a)
  3.2   Restated By-Laws                                                                       (b)
  4.1   Shareholder Protection Rights Agreement dated April 16, 1997
        between CytRx Corporation and American Stock Transfer & Trust
        Company as Rights Agent                                                                (c)
 10.1   Agreement with Emory University, as amended                                            (d)
 10.2   Agreement with BASF Corporation, as amended                                            (d)
 10.3*  Amended and Restated Employment Agreement between CytRx Corporation
        and Jack J. Luchese                                                                    (i)
 10.4*  Amended and Restated Change of Control Employment Agreement between CytRx
        Corporation and Jack J. Luchese                                                        (i)
 10.7*  1986 Stock Option Plan, as amended and restated                                        (f)
 10.8*  1994 Stock Option Plan, as amended and restated                                        (e)
 10.9*  1995 Stock Option Plan                                                                 (g)
10.10*  1998 Long-Term Incentive Plan                                                          (h)
10.11*  2000 Long-Term Incentive Plan
10.12   Purchase and Sale Agreement dated February 23, 1998 by and between CytRx
        Corporation and Alexandria Real Estate Equities, Inc.                                  (h)
10.13   Common Stock Purchase Agreement dated March 24, 2000 by and between CytRx
        Corporation and the Investors Signatory Thereto                                        (i)
10.14   Private Equity Line of Credit Agreement dated April 26, 2000, between CytRx
        Corporation and Majorlink Holdings Limited                                             (j)
10.15+  License Agreement dated November 1, 2000 by and between CytRx Corporation and
        Merck & Co., Inc.                                                                      (k)
10.16   License Agreement dated February 16, 2001 by and between CytRx Corporation and
        Ivy Animal Health, Inc.
 23.1   Consent of Ernst & Young LLP
 99.1   Safe Harbor Compliance Statement for Forward-looking Statements
</TABLE>

*    Indicates a management contract or compensatory plan or arrangement.
+    Confidential treatment has been granted for certain portions which have
     been blanked out in the copy of the exhibit file with the Securities and
     Exchange Commission. The omitted information has been filed separately with
     the Securities and Exchange Commission.
-------------------

(a) Incorporated by reference to the Registrant's Registration Statement on Form
    S-3 (File No. 333-39607) filed on November 5, 1997.
(b) Incorporated by reference to the Registrant's Registration Statement on Form
    S-8 (File No. 333-37171) filed on July 21, 1997.
(c) Incorporated by reference to the Registrant's Current Report on Form 8-K
    filed on April 21, 1997.
(d) Incorporated by reference to the Registrant's Registration Statement on Form
    S-l (File No. 33-8390) filed on November 5, 1986.
(e) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
    filed on November 13, 1997.
(f) Incorporated by reference to the Registrant's Annual Report on Form 10-K
    filed on March 27, 1996.
(g) Incorporated by reference to the Registrant's Registration Statement on Form
    S-8 (File No. 33-93818) filed on June 22, 1995.
(h) Incorporated by reference to the Registrant's Annual Report on Form 10-K
    filed on March 30, 1998.
(i) Incorporated by reference to the Registrant's Annual Report on Form 10-K
    filed on March 30, 2000.
(j) Incorporated by reference to the Registrant's Registration Statement on Form
    S-1 filed on June 21, 2000.
(k) Incorporated by reference to the Registrant's Current Report on Form 8-K/A
    filed on March 16, 2001.

                                       14
<PAGE>

                                   SIGNATURES
                                   ----------


     Pursuant to the requirements of Section 13 or 15(d) 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


                                           By: /s/ Jack J. Luchese
                                               --------------------------
                                               Jack J. Luchese, President
Date: March 23, 2001                           and Chief Executive Officer
                                               (Principal Executive Officer)


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

Signature                          Title                                       Date
---------                          -----                                       ----
<S>                              <C>                                       <C>
/s/ Alexander L. Cappello        Director                                  March 23, 2001
----------------------------
Alexander L. Cappello


/s/ Raymond C. Carnahan, Jr.     Director                                  March 23, 2001
----------------------------
Raymond C. Carnahan, Jr.


/s/ Lyle A. Hohnke               Director                                  March 23, 2001
----------------------------
Lyle A. Hohnke


/s/ Max Link                     Chairman of the                           March 23, 2001
----------------------------     Board of Directors
Max Link


/s/ Jack J. Luchese              Director                                  March 23, 2001
----------------------------     President and Chief Executive Officer
Jack J. Luchese                  (Principal Executive Officer)


/s/ Herbert H. McDade, Jr.       Director                                  March 23, 2001
----------------------------
Herbert H. McDade, Jr.


/s/ Mark W. Reynolds             Vice President, Finance                   March 23, 2001
----------------------------     (Principal Financial Officer)
Mark W. Reynolds
</TABLE>

                                      15

<PAGE>

                               CYTRX CORPORATION

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                       AND FINANCIAL STATEMENT SCHEDULE


Consolidated Balance Sheets                          F-2

Consolidated Statements of Operations                F-3

Consolidated Statements of Stockholders' Equity      F-4

Consolidated Statements of Cash Flows                F-5

Notes to Consolidated Financial Statements           F-6

Report of Independent Auditors                       F-15

Financial Statement Schedule
  Schedule II - Valuation and Qualifying Accounts    F-16

                                      F-1
<PAGE>

<TABLE>
<CAPTION>
                                                  CYTRX CORPORATION
                                             CONSOLIDATED BALANCE SHEETS

                                                                                      December 31,
                                                                             ----------------------------
<S>
                                                                               2000            1999
                                                                             ------------    ------------
ASSETS                                                                       <C>              <C>
Current assets:
    Cash and cash equivalents                                                $  3,779,376    $  3,031,893
    Accounts receivable, net                                                       54,160         174,292
    Inventories                                                                         -           6,480
    Other current assets                                                           34,171         202,610
                                                                             ------------    ------------
                 Total current assets                                           3,867,707       3,415,275

Property and equipment, net                                                     2,331,977       2,641,810

Other assets:
    Note receivable                                                               598,576               -
    Other assets                                                                   60,978          70,978
                                                                             ------------    ------------
                 Total other assets                                               659,554          70,978
                                                                             ------------    ------------
                 Total assets                                                $  6,859,238    $  6,128,063
                                                                             ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                         $    298,236    $    629,738
    Accrued expenses and other current liabilities                                942,188       2,121,999
                                                                             ------------    ------------
                 Total current liabilities                                      1,240,424       2,751,737

Long-term debt                                                                          -         650,000

Other long-term liabilities                                                             -       1,693,638

Commitments

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, 18,750,000 shares authorized;
       10,734,012 and 8,373,853 shares issued at December 31,
       2000 and 1999, respectively                                                  10,734           8,374
    Additional paid-in capital                                                  72,737,739      67,805,871
    Treasury stock, at cost (633,816 shares held at December 31, 2000
       and 1999)                                                               (2,279,238)     (2,279,238)
    Accumulated deficit                                                       (64,850,421)    (64,502,319)
                                                                             ------------    ------------
                 Total stockholders' equity                                     5,618,814       1,032,688
                                                                             ------------    ------------
                 Total liabilities and stockholders' equity                  $  6,859,238    $  6,128,063
                                                                             ============    ============


                                                      See accompanying notes.
</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>
                                                          CYTRX CORPORATION
                                                CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                            Year Ended December 31,
                                                               --------------------------------------------
<S>  <C>                                                       <C>            <C>             <C>
                                                                   2000            1999             1998
                                                               -----------     ------------     -----------
Revenues:
     Net service revenues                                      $   451,031     $    322,536     $   350,789
     License fees                                                2,000,000                -               -
     Interest income                                               170,433          462,634       1,007,019
     Grant revenue                                                 348,790          464,442         511,375
     Other                                                         357,604          141,848         244,353
                                                               -----------     ------------     -----------
                                                                 3,327,858        1,391,460       2,113,536

Expenses:
     Cost of service revenues                                      267,915          239,840         187,047
     Research and development                                    1,962,171       12,811,925       7,305,835
     Selling, general and administrative                         2,245,229        3,609,613       2,312,062
     Interest                                                            -                -          45,888
                                                               -----------     ------------     -----------
                                                                 4,475,315       16,661,378       9,850,832
                                                               -----------     ------------     -----------
Loss from continuing operations before extraordinary item       (1,147,457)     (15,269,918)     (7,737,296)

Income from discontinued operations                                799,355          236,730       2,329,352
Minority interest in discontinued operations                             -           (3,897)       (614,585)
                                                               -----------     ------------     -----------
Loss before extraordinary item                                    (348,102)     (15,029,291)     (4,793,359)
Extraordinary item:
     Loss on early extinguishment of debt                                -                -        (325,120)
                                                               -----------     ------------     -----------
Net loss                                                       $  (348,102)    $(15,029,291)    $(5,118,479)
                                                               ===========     ============     ===========

Basic and diluted income (loss) per common
 share:
     Continuing operations                                     $     (0.12)    $      (1.99)    $     (1.01)
     Discontinued operations                                          0.08             0.03            0.38
     Extraordinary item                                                  -                -           (0.04)
                                                               -----------     ------------     -----------
     Net loss                                                  $     (0.04)    $      (1.96)    $     (0.67)
                                                               ===========     ============     ===========

Basic and diluted weighted average shares outstanding            9,423,787        7,652,227       7,625,578


                                                      See accompanying notes.
</TABLE>

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
                                                         CYTRX CORPORATION
                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                Common Stock
                                         -------------------------     Additional
                                             Shares                     Paid-in       Accumulated       Treasury
                                             Issued       Amount        Capital         Deficit          Stock          Total
                                         ------------------------------------------------------------------------------------------

<S>  <C>                                   <C>          <C>           <C>             <C>              <C>            <C>
Balance at December 31, 1997                 7,986,441     $ 7,986      $65,793,491    $(44,354,549)    $(2,198,533)   $ 19,248,395
     Issuance of common stock                  250,485         251          630,086               -               -         630,337
     Purchase of treasury stock                      -           -                -               -         (71,705)        (71,705)
     Net loss                                        -           -                -      (5,118,479)              -      (5,118,479)
                                         ------------------------------------------------------------------------------------------
Balance at December 31, 1998                 8,236,926       8,237       66,423,577     (49,473,028)     (2,270,238)     14,688,548
     Issuance of common stock                  136,927         137          339,078               -               -         339,215
     Issuance of stock options/warrants                                   1,043,216                                       1,043,216
     Purchase of treasury stock                      -           -                -               -          (9,000)         (9,000)
     Net loss                                        -           -                -     (15,029,291)              -     (15,029,291)
                                         ------------------------------------------------------------------------------------------
Balance at December 31, 1999                 8,373,853       8,374       67,805,871     (64,502,319)     (2,279,238)      1,032,688
     Issuance of common stock                2,360,159       2,360        4,567,255               -               -       4,569,615
     Issuance of stock options/warrants              -           -          364,613               -               -         364,613
     Net loss                                        -           -                -        (348,102)              -        (348,102)
                                         ------------------------------------------------------------------------------------------
Balance at December 31, 2000                10,734,012     $10,734      $72,737,739    $(64,850,421)    $(2,279,238)   $  5,618,814
                                         ==========================================================================================



                                                      See accompanying notes.
</TABLE>

                                      F-4
<PAGE>

<TABLE>
<CAPTION>
                                                                 CYTRX CORPORATION
                                                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                Year Ended December 31,
                                                                    --------------------------------------------
<S>                                                                 <C>            <C>              <C>
                                                                       2000            1999            1998
                                                                    ------------   -------------   -------------
Cash flows from operating activities:
    Net loss                                                        $  (348,102)   $(15,029,291)    $(5,118,479)
    Adjustments to reconcile net loss to net
       cash used in operating activities:
       Depreciation                                                     317,850          68,377         216,811
       Amortization                                                           -               -         282,732
       Gain on sales of segment operations                             (679,784)       (240,196)     (7,012,305)
       Gain on sale of real estate                                            -               -        (433,786)
       Impairment loss (discontinued operations)                              -               -       3,212,615
       Extraordinary loss on early extinguishment of debt                     -               -         325,120
       Minority interest in net loss of subsidiary                            -          (3,897)       (614,585)
       Stock option and warrant expense                                 364,613       1,043,216               -
       Changes in assets and liabilities:
           Receivables                                                   52,811         (91,043)      1,082,390
           Inventories                                                    3,585           4,455       1,037,197
           Notes receivable                                              51,424         300,000         100,000
           Other assets                                                 198,454         (93,675)         98,545
           Accounts payable                                             124,868         546,019         208,884
           Unearned revenue                                                   -               -         172,380
           Other liabilities                                         (1,435,841)      1,950,233        (495,323)
                                                                    ------------   -------------    ------------
    Total adjustments                                                (1,002,020)      3,483,489      (1,819,325)
                                                                    ------------   -------------    ------------
       Net cash used in operating activities                         (1,350,122)    (11,545,802)     (6,937,804)


Cash flows from investing activities:
    Purchases of held-to-maturity securities                                  -               -      (6,417,066)
    Maturities of held-to-maturity securities                                 -       6,417,066               -
    Decrease in long-term investments                                         -               -       5,326,647
    Net proceeds from sales of segment operations                       100,000         240,196       8,336,985
    Net proceeds from sale of technology                                      -         600,000               -
    Net proceeds from sale of real estate                                     -               -       4,260,747
    Capital (expenditures) retirements, net                             (28,032)     (2,515,157)        (13,317)
                                                                    -----------    ------------     -----------
       Net cash provided by investing activities                         71,968       4,742,105      11,493,996

Cash flows from financing activities:
    Net proceeds from issuance of common stock                        2,225,637         339,215         125,880
    Redemption/retirement of debt                                      (200,000)              -      (1,650,000)
    Purchase of treasury stock                                                -          (9,000)        (71,705)
    Proceeds from issuance of debt, net of issuance costs                     -         650,000               -
                                                                    -----------    ------------     -----------
       Net cash provided by (used in) financing activities            2,025,637         980,215      (1,595,825)

Net increase (decrease) in cash and cash equivalents                    747,483      (5,823,482)      2,960,367
Cash and cash equivalents at beginning of year                        3,031,893       8,855,375       5,895,008
                                                                    -----------    ------------     -----------
Cash and cash equivalents at end of year                            $ 3,779,376    $  3,031,893     $ 8,855,375
                                                                    ===========    ============     ===========

Supplemental disclosure of cash flow information:
    Cash paid during the year for interest                          $         -    $          -     $   45,888
                                                                    ===========    ============     ==========

                                                      See accompanying notes.
</TABLE>

                                      F-5
<PAGE>

                               CYTRX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  Nature of Business

     CytRx Corporation ("CytRx" or "the Company") is a biopharmaceutical company
focused on the development and commercialization of high-value human
therapeutics.  The Company's current research and development include FLOCOR, an
intravenous agent for treatment of sickle cell disease and other acute vaso-
occlusive disorders, and TranzFect, a delivery technology for DNA-based
vaccines.  CytRx also has a research pipeline with opportunities in the areas of
muscular dystrophy, cancer, spinal cord injury, vaccine delivery and gene
therapy.

     The Company's sales from continuing operations relate to Spectrum
Recruitment Research ("Spectrum"), through which the Company markets the
services of its small group of human resources professionals as a way of
offsetting the Company's cost of maintaining this function. Spectrum's services
are marketed primarily within metropolitan Atlanta, Georgia. The Company's
operational focus is on the development and commercialization of pharmaceutical
products; the Spectrum operations were formed as an ancillary activity.

2.  Summary of Significant Accounting Policies

     Basis of Presentation - The consolidated financial statements include the
accounts of CytRx together with those of its majority-owned subsidiaries.  As
more thoroughly discussed in Note 14, the operations of Proceutics, Inc., CytRx
Animal Health, Inc., Vaxcel, Inc., and the Company's TiterMax business segment
are presented as discontinued operations for all periods presented.

     Cash Equivalents - The Company considers all highly liquid debt instruments
with an original maturity of 90 days or less to be cash equivalents.  Cash
equivalents consist primarily of commercial paper and amounts invested in money
market accounts.

     Investments - Management determines the appropriate classification of debt
securities at the time of purchase and reevaluates such designation as of each
balance sheet date.  Debt securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost.  Marketable equity
securities and debt securities not classified as held-to-maturity are classified
as available-for-sale.  Available-for-sale securities are carried at fair value,
with the unrealized gains and losses reported as a separate component of
stockholders' equity.  Realized gains and losses are included in investment
income and are determined on a first-in, first-out basis.  The Company held no
investments at December 31, 2000 or 1999.

     Fair Value of Financial Instruments - The carrying amounts reported in the
balance sheet for cash and cash equivalents, investments, accounts receivable,
notes receivable, accounts payable and long-term debt approximate their fair
values.

     Inventories - Inventories are valued at the lower of cost or market using
the first-in, first-out (FIFO) method.

     Property and Equipment - Property and equipment are stated at cost and
depreciated using the straight-line method based on the estimated useful lives
(generally five years for equipment and furniture) of the related assets.
Leasehold improvements are amortized over the term of the related lease or other
contractual arrangement.

     Patents and Patent Application Costs - Although the Company believes that
its patents and underlying technology have continuing value, the amount of
future benefits to be derived therefrom is uncertain. Patent costs are therefore
expensed rather than capitalized.

     Acquired Developed Technology and Other Intangibles - Acquired developed
technology and other intangible assets are amortized over their estimated useful
lives on a straight-line basis.  Management continuously monitors and evaluates
the realizability of recorded acquired developed technology and other intangible
assets to determine whether their carrying values have been impaired.  In
accordance with Financial Accounting Standards Board ("FASB") Statement No. 121,
Accounting for the Impairment of Long-Lived Assets, the Company records
impairment losses on long-lived assets used in

                                      F-6
<PAGE>

operations when events and circumstances indicate that the assets might be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amount of those assets. Any impairment loss is
measured by comparing the fair value of the asset to its carrying amount. As
more fully discussed in Note 14, during 1998 management evaluated these assets
and recorded a provision for impairment of such assets.

     Accrued Expenses and Other Liabilities - Accrued expenses and other
liabilities at December 31 are summarized below (in thousands).  The headings
correspond to the captions on the accompanying Balance Sheet.
<TABLE>
<CAPTION>
                                                 Accrued Expenses and Other
                                                    Current Liabilities           Other Long-Term Liabilities
                                                ----------------------------      ---------------------------
                                                     2000           1999             2000            1999
                                                    -----         ------           -------           -----
<S>                                             <C>            <C>                <C>             <C>
Clinical research activities                        $ 378         $  631           $     -           $ 966
Scientific and regulatory activities                    -            564                 -             460
Chemical plant construction                             -            146                 -             228
Deferred revenue                                      256            233                 -               -
Employee incentives & severance                         -            233                 -               -
Other miscellaneous                                   308            315                 -              40
                                                    -----         ------           -------           -----
Total                                               $ 942         $2,122           $     -           $1,694
                                                    =====         ======           =======           ======
</TABLE>

     Basic and Diluted Loss per Common Share - Basic and diluted loss per share
are computed based on the weighted average number of common shares outstanding.
Common share equivalents (which may consist of options and warrants) are
excluded from the computation of diluted loss per share since the effect would
be antidilutive.

     Shares Reserved for Future Issuance - As of December 31, 2000, the Company
has reserved approximately 3,616,000 of its authorized but unissued shares of
common stock for future issuance pursuant to its employee stock option plans and
warrants, and 4,643,000 shares pursuant to warrants issued to consultants and
investors.

     Revenue Recognition - Sales are recognized at the time products are shipped
or services rendered. The Company does not require collateral or other
securities for sales made on credit. Revenues from collaborative research
arrangements and grants are generally recorded as the related costs are
incurred. The costs incurred under such arrangements approximated the revenues
reported in the accompanying statements of operations. Non-refundable license
fee revenue is recognized upon receipt when no continuing involvement of the
Company is required and payment of the license fee represents the culmination of
the earnings process. Non-refundable license fees received subject to future
performance by the Company or that are credited against future payments due to
the Company are deferred until services are performed, future payments are
received or termination of the agreement, whichever is earlier.

     Stock-based Compensation - The Company grants stock options and warrants
for a fixed number of shares to key employees and directors with an exercise
price equal to the fair market value of the shares at the date of grant. The
Company accounts for stock option grants and warrants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") and related
Interpretations, and, accordingly, recognizes no compensation expense for the
stock option grants and warrants for which the terms are fixed. For stock option
grants and warrants which vest based on certain corporate performance criteria,
compensation expense is recognized to the extent that the quoted market price
per share exceeds the exercise price on the date such criteria are achieved or
are probable. In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-based Compensation ("Statement 123"),
which provides an alternative to APB 25 in accounting for stock-based
compensation issued to employees. However, the Company has continued to account
for stock-based compensation in accordance with APB 25 (See Note 9). The Company
has also granted stock options and warrants to certain consultants and other
third parties. Stock options and warrants granted to consultants and other third
parties are accounted for in accordance with Emerging Issues Task Force ("EITF")
No. 96-18, Accounting for Equity Instruments That Are Issued for Sales of Goods
and Services to Other Than Employees, and are valued at the fair market value of
the options and warrants granted or the services received, whichever is more
reliably measurable. Expense is recognized in the period in which a performance
commitment exists or the period in which the services are received, whichever is
earlier.

     Concentrations of Credit Risk - Financial instruments that potentially
subject the Company to significant concentrations of credit risk consist
principally of cash and cash equivalents, accounts receivable and note
receivable. The Company maintains cash and cash equivalents in large well-
capitalized financial institutions and the Company's investment policy disallows
investment in any debt securities rated less than "investment-grade" by national
ratings services. The Company

                                      F-7
<PAGE>

generally does not require collateral from its customers. The Company is at risk
to the extent accounts receivable and note receivable amounts become
uncollectible.

     Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

     Segment Information - Effective January 1, 1998, the Company adopted FASB
Statement No. 131, Disclosures about Segments of an Enterprise and Related
Information ("Statement 131").  Statement 131 superceded FASB Statement No. 14,
Financial Reporting for Segments of a Business Enterprise.  Statement 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports.  Statement 131 also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The adoption of Statement 131 did not affect results of operations or financial
position, but did affect the disclosure of segment information (See Note 17).

     Recently Issued Accounting Standards - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133, as amended by SFAS
No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133 and SFAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities, establishes a new
model for accounting for derivatives and hedging activities and supercedes
several existing standards. SFAS 133, as amended by SFAS 137 and SFAS 138, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The Company does not expect that the adoption of SFAS 133 will have a material
impact on its financial statements.

     In December 1999, the SEC staff issued Staff Accounting Bulletin SAB 101,
Revenue Recognition in Financial Statements ("SAB 101").  SAB 101 explains how
the SEC staff applies by analogy the existing rules on revenue recognition to
other transactions not covered by such rules.  In March 2000, the SEC issued SAB
101A that delayed the original effective date of SAB 101 until the second
quarter of 2000 for calendar year companies.  In June 2000, the SEC issued SAB
101B that further delayed the effective date of SAB 101 until no later than the
fourth fiscal quarter of fiscal years beginning after December 15, 1999.  The
adoption of SAB 101 has not had a material impact on the Company's financial
statements.

3.   Property and Equipment

  Property and equipment at December 31 consist of the following (in thousands):

                                                     2000            1999
                                                    ------          ------
Equipment and furnishings                           $2,122          $2,200
Leasehold improvements                                 984             969
                                                    ------          ------
                                                     3,106           3,169
Less accumulated depreciation                         (774)           (527)
                                                    ------          ------
                                                    $2,332          $2,642
                                                    ======          ======

4.   Long Term Debt

     In June 1999, the Company entered into a Purchase Agreement for the design
and construction of manufacturing equipment for commercial production of FLOCOR.
The Purchase Agreement called for, among other things, certain progress payments
to be made, with the final payment of $650,000 due 18 months after installation
of the equipment or 12 months after FDA approval of FLOCOR (the "Note"). The
Note bore interest of 12% annually, payable monthly beginning in the first month
after installation of the equipment. CytRx accepted installed delivery of the
equipment in February 2000; the Note is reflected in the accompanying Balance
Sheet at December 31, 1999 as Long Term Debt. In February 2000, the Note was
cancelled in exchange for a cash payment of $200,000 and the issuance of Common
Stock (see Note 5).

5.   Exchange of Common Stock for Cancellation of Accounts Payable, Accrued
Expenses and Debt

     During the first quarter of 2000, the Company reached agreements with
certain trade creditors whereby an aggregate of $1,894,000 of trade payables was
cancelled in exchange for the issuance of approximately 758,000 shares of
CytRx's Common Stock. Of the trade payables balance, $1,694,000 existed at
December 31, 1999, and was accordingly classified as Long-Term Liabilities on
the accompanying Balance Sheet. The Company also cancelled $650,000 of Long-Term
Debt (see Note 4) in exchange for a cash payment of $200,000 and the issuance of
180,000 shares of CytRx's Common Stock.

6.   Private Placement of Common Stock

                                      F-8
<PAGE>

     Effective March 24, 2000, the Company entered into a Stock Purchase
Agreement with certain investors (the "Investors") whereby the Investors agreed
to purchase 800,000 shares of the Company's Common Stock for an aggregate
purchase price of $1,800,000 and the issuance of warrants to purchase an
additional 330,891 shares at $2.25 per share. After consideration of offering
expenses, net proceeds to the Company were approximately $1,649,000. The
warrants expire March 31, 2003. The Investors were granted registration rights
for the shares issued to them and the shares underlying the warrants. Subject to
certain conditions, the Investors were also required, upon effective
registration of the shares, to either (a) purchase an additional 286,000 shares
at $2.25 per share and simultaneously receive an additional three-year warrant
to purchase 143,000 shares at $2.25 per share, or (b) purchase 429,000 shares at
a price equal to 75% of a trailing average market price of the Company's Common
Stock, as defined in the Stock Purchase Agreement. In July 2000, the Investors
exercised their rights to purchase 429,000 additional shares at a net price of
$.77 per share, resulting in net proceeds of $307,000 to the Company, after
consideration of offering expenses.

7.   Equity Line of Credit

     In April 2000, the Company entered into a Private Equity Line of Credit
Agreement (the "ELC Agreement") with Majorlink Holdings Limited ("Majorlink"),
pursuant to which the Company has the right to put shares of Common Stock to
Majorlink from time to time during the "commitment period" to raise up to
$5,000,000, subject to certain conditions and restrictions.  The "commitment
period" begins on the effective date of a registration statement filed by the
Company to register the resale by Majorlink of the shares of Common Stock that
Majorlink purchases under the ELC Agreement and ends on the earliest of (1) the
date thirty months from such date, (2) the date on which Majorlink shall have
purchased $5,000,000 of Common Stock under the ELC Agreement or (3) the date
either party terminates the ELC Agreement in accordance with its terms.  Each
time the Company desires to raise a specific amount of cash under the ELC
Agreement, the Company will issue to Majorlink a number of shares of Common
Stock determined by dividing the amount of cash desired to be raised by the
Company by 90% of a trailing market average price of the Company's Common Stock,
as defined in the ELC Agreement.  In connection with the ELC Agreement, the
Company issued Majorlink a warrant to purchase up to 150,000 shares of Common
Stock at a per share exercise price of $2.25.  The warrant is exercisable for a
period of three years.

8.   Commitments and Contingencies

     Rental expense from continuing operations under operating leases during
2000, 1999 and 1998 approximated $160,000, $212,000 and $154,000, respectively.
Minimum annual future obligations for operating leases are $165,000, $171,000,
$178,000, $185,000, $193,000 and $485,000 in 2001, 2002, 2003, 2004, 2005 and
2006 and beyond, respectively. Aggregate minimum future subrentals the Company
expects to receive under noncancellable subleases total approximately $110,000
at December 31, 2000.

9.   Stock Options and Warrants

     CytRx has stock option plans pursuant to which certain key employees,
directors and consultants are eligible to receive incentive and/or nonqualified
stock options to purchase shares of CytRx's common stock.  The options granted
under the plans generally become exercisable over a three year period from the
dates of grant and have lives of ten years.  Certain options granted to the
Company's executive officers and others contain alternative or additional
vesting provisions based on the achievement of corporate objectives.
Additionally, the Company has granted warrants to purchase shares of the
Company's common stock to its President and Chief Executive Officer subject to
vesting criteria as set forth in his warrant agreements; such warrants have
lives of ten years from the dates of grant.  Exercise prices of all options and
warrants for employees and directors are set at the fair market values of the
common stock on the dates of grant.  During 2000 and 1999, the vesting criteria
for certain options and warrants held by employees were achieved, resulting in
$115,000 and $689,000 of compensation expense, respectively.  During 2000 and
1999, services were received in exchange for options and warrants issued to
certain consultants, resulting in aggregate non-cash charges of $249,000 and
$355,000, respectively.

                                      F-9
<PAGE>

     A summary of the Company's stock option and warrant activity and related
information for the years ended December 31 is shown below.
<TABLE>
<CAPTION>
                                                       Options and Warrants           Weighted Average Exercise Price
                                              -----------------------------------     -------------------------------
                                                  2000         1999         1998        2000        1999        1998
                                              ----------   ----------   ----------      -----       -----       -----
<S>                                           <C>          <C>          <C>           <C>          <C>         <C>
Outstanding - beginning of year                3,137,852    2,258,308    1,439,297      $1.43       $1.17       $4.87
Granted                                        1,416,803      961,750      902,488       2.04        2.25        2.65
Exercised                                       (106,567)     (12,103)           -       1.28        1.00           -
Forfeited                                       (741,989)     (70,103)     (83,477)      1.86        5.91        4.37
Expired                                          (20,417)           -            -       1.00           -           -
                                              ----------   ----------   ----------
Outstanding - end of year                      3,685,682    3,137,852    2,258,308      $1.57       $1.43       $1.17
                                              ==========   ==========   ==========
Exercisable at end of year                     2,917,674    2,170,107    1,104,620      $1.47       $1.25       $1.33

Weighted  average  fair  value of
   options and  warrants  granted
   during the year:                                $1.98        $1.59        $2.30
</TABLE>

     The following table summarizes additional information concerning options
and warrants outstanding and exercisable at December 31, 2000:

<TABLE>
<CAPTION>
                                         Options Outstanding                         Options Exercisable
  -----------------------------------------------------------------------      -------------------------------
                                           Weighted
                                           Average
                                          Remaining          Weighted              Number          Weighted
       Range of                           Contractual         Average             Of Shares         Average
   Exercise Price    Number of Shares     Life (years)     Exercise Price        Exercisable    Exercise Price
  ---------------  ------------------   --------------    ---------------      -------------    --------------
  <S>              <C>                   <C>               <C>                 <C>              <C>
  $ 1.00 - 1.50        2,261,379              5.3              $1.08              2,034,874          $1.06
    2.13 - 3.438       1,419,303              5.0               2.33                877,800           2.41
    7.75                   5,000              4.2               7.75                  5,000           7.75
                       ---------                                                  ---------
                       3,685,682              5.2               1.57              2,917,674           1.47
                       =========                                                  =========
</TABLE>

     The above tables for 2000 exclude an aggregate of 315,417 stock options
with exercise prices ranging from $1.00 to $1.03 issued pursuant to the CytRx
Corporation 2000 Long-Term Incentive Plan. These stock options are subject to
shareholder approval.

     The Company has elected to follow APB 25 and related Interpretations in
accounting for employee stock options and warrants because, as discussed below,
the alternative fair value accounting provided for under Statement 123 requires
use of option valuation models that were not developed for use in valuing
employee stock options.

     Pro forma information regarding net loss and loss per share is required by
Statement 123, which also requires that the information be determined as if the
Company had accounted for employee stock options granted and warrants issued
subsequent to December 31, 1994 under the fair value method of that Statement.
The fair value for the Company's options and warrants issued to employees was
estimated at the date of grant using a Black-Scholes option pricing model with
the following assumptions:

                                               2000      1999      1998
                                               ----     -----     -----
Weighted average risk free interest rate       6.24%     6.27%     5.64%
Dividend yields                                   0%        0%        0%
Volatility factors of the expected market
   price of the Company's common stock         1.03     1.046     1.026
Weighted average life of the option (years)       8         8         8

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For purposes of pro forma disclosures, the estimated fair value of the
employee options and warrants is amortized to expense over the options' vesting
periods.  The Company's pro forma information is as follows (in thousands,
except per share data):

                                      F-10
<PAGE>

                                                   2000        1999      1998
                                                  ------     --------   -------
Pro forma net loss                                $ (941)    $(16,505)  $(6,521)
Pro forma net loss per share (basic and diluted)  $(0.10)    $  (2.16)  $  (.86)

10.  Shareholder Protection Rights Plan

     Effective April 16, 1997, the Company's Board of Directors declared a
distribution of one Right for each outstanding share of the Company's common
stock to stockholders of record at the close of business on May 15, 1997 and for
each share of common stock issued by the Company thereafter and prior to a Flip-
in Date (as defined below).  Each Right entitles the registered holder to
purchase from the Company one-ten thousandth (1/10,000th) of a share of Series A
Junior Participating Preferred Stock, at an exercise price of $30.  The Rights
are generally not exercisable until 10 business days after an announcement by
the Company that a person or group of affiliated persons (an "Acquiring Person")
has acquired beneficial ownership of 15% or more of the Company's then
outstanding shares of common stock (a "Flip-in Date").

     In the event the Rights become exercisable as a result of the acquisition
of shares, each Right will enable the owner, other than the Acquiring Person, to
purchase at the Right's then current exercise price a number of shares of common
stock with a market value equal to twice the exercise price. In addition, unless
the Acquiring Person owns more than 50% of the outstanding shares of common
stock, the Board of Directors may elect to exchange all outstanding Rights
(other than those owned by such Acquiring Person) at an exchange ratio of one
share of common stock per Right. All Rights that are owned by any person on or
after the date such person becomes an Acquiring Person will be null and void.

     The Rights have been distributed to protect the Company's stockholders from
coercive or abusive takeover tactics and to give the Board of Directors more
negotiating leverage in dealing with prospective acquirors.

11.  Retirement Plan

     The Company maintained a defined contribution retirement plan (the "Plan")
covering employees of the Company until February 2000, at which time the Plan
was terminated.  Total expense for the Plan for the years ended December 31,
2000, 1999 and 1998 was approximately $0, $69,000 and $110,000, respectively, of
which $0, $1,000 and $44,000 related to discontinued operations for the years
ended December 31, 2000, 1999 and 1998, respectively.

12.  Income Taxes

     For income tax purposes, CytRx and its subsidiaries have an aggregate of
approximately $54.2 million of net operating losses available to offset against
future taxable income, subject to certain limitations. Such losses expire in
2001 through 2020 as of December 31, 2000. CytRx also has an aggregate of
approximately $6.7 million of research and development and orphan drug credits
available for offset against future income taxes which expire in 2001 through
2021.

     Deferred income taxes reflect the net effect of temporary differences
between the financial reporting carrying amounts of assets and liabilities and
income tax carrying amounts of assets and liabilities. The components of the
Company's deferred tax assets and liabilities are as follows (in thousands):


                                                    December 31,
                                             --------------------------
                                               2000                1999
                                             -------            --------
Deferred tax assets:
  Net operating loss carryforward            $20,590            $ 20,163
  Tax credit carryforward                      6,652               6,278
  Other                                        2,822                 108
                                             -------            --------
Total deferred tax assets                     30,064              26,549
Deferred tax liabilities:
  Depreciation and other                      (2,882)               (185)
                                             -------            --------
Total deferred tax liabilities                (2,882)               (185)
                                             -------            --------
Net deferred tax assets                       27,182              26,364
Valuation allowance                          (27,182)            (26,364)
                                             -------            --------
                                             $     -            $      -
                                             =======            ========

     Based on assessments of all available evidence as of December 31, 2000 and
1999, management has concluded that the respective deferred income tax assets
should be reduced by valuation allowances equal to the amounts of the deferred
income tax assets.

                                      F-11
<PAGE>

13.  License Agreements

Merck & Co., Inc.
-----------------
     In November 2000, CytRx entered into an exclusive, worldwide license
agreement with Merck and Company, Inc. ("Merck") whereby CytRx granted to Merck
rights to use its TranzFect technology in DNA-based vaccines targeted to four
infectious diseases. In addition an upfront payment of $2 million for the first
disease target, Merck will pay to CytRx milestone and product approval payments
of up to $4 million as they develop the product. The Company has no commitment
for continuing involvement to earn the upfront payment or the future milestone
payments. Thus, the $2 million upfront payment has been recognized as license
fee revenue in the current year. Additionally, if certain conditions are met
regarding patent protection and Merck's competitive position, Merck may pay a
royalty to CytRx of 1% on net sales of products incorporating TranzFect for the
first disease target. For each of the licenses for the three additional disease
targets, Merck will pay to CytRx a series of milestone and product approval
payments totaling up to $2,850,000 each. If and when sales of products
incorporating TranzFect for the three additional disease targets commence, CytRx
will receive royalties of between 2 and 4% of the net sales from such products.
Additionally, if certain conditions are met regarding patent protection and
Merck's competitive position, Merck may pay an additional royalty to CytRx of 1%
on net sales of products incorporating TranzFect for these additional disease
targets, in which case the total royalties may be up to 5%.

Ivy Animal Health, Inc.
-----------------------
     In February 2001, CytRx entered into a license agreement with Ivy Animal
Health, Inc. ("Ivy") of Overland Park, Kansas, whereby CytRx granted to Ivy a
worldwide exclusive license to its investigational agent, CRL-8761, a non-
antibiotic feed additive that enhances growth performance in monogastric food
animals such as poultry and pigs.  As part of the license, CytRx received a
nominal upfront payment, and will receive a milestone fee upon regulatory
approval in the United States and an eventual royalty equal to 5% of net sales.

14.  Discontinued Operations

Titermax
--------
     Since 1987 CytRx has manufactured, marketed and distributed Titermax, an
adjuvant used to produce immune responses in research animals.  Effective June
15, 2000, the Company entered into a Purchase Agreement with Titermax USA, Inc.
(an unaffiliated company) whereby Titermax USA purchased the worldwide rights to
market and distribute Titermax, including all accounts receivable, inventory and
other assets used in the Titermax business.  The gross purchase price was
$750,000, consisting of $100,000 in cash and a $650,000 five-year secured
promissory note bearing interest of 10% annually.  Net income associated with
the Titermax activities included in income (loss) from discontinued operations
was approximately $119,000, $281,000 and $231,000 for 2000, 1999 and 1998,
respectively.  A gain related to the sale of $680,000 was recorded in the second
quarter of 2000 and is also classified as discontinued operations.

Vaxcel, Inc.
------------
     On June 2, 1999, CytRx entered into a Stock Acquisition Agreement with A-Z
Professional Consultants, Inc. ("A-Z") for the sale of CytRx's equity interest
in Vaxcel, Inc..  The sale was consummated on September 9, 1999.  Pursuant to
the agreement, A-Z purchased 9,625,000 shares of common stock of Vaxcel from
CytRx for a cash purchase price of $319,000.  Net losses (net of minority
interest) associated with Vaxcel included in income (loss) from discontinued
operations were approximately $(40,000) and $(4,319,000) for the years ended
December 31, 1999 and 1998, respectively.

     Impairment Loss - In its efforts to raise additional capital during 1998
and 1999, Vaxcel solicited bids for the sublicense or purchase of it's acquired
developed technology, either together with or separately from it's other
technologies. During the fourth quarter of 1998, the results of these efforts
indicated to management that the acquired developed technology might be
impaired. As a result of this indication, Vaxcel performed an evaluation to
determine, in accordance with Statement 121, whether future cash flows
(undiscounted and without interest charges) expected to result from the use and
eventual disposition of the acquired developed technology would be less than its
aggregate carrying amount. As a result of the evaluation, management determined
that the estimated future cash flows expected to be generated by the acquired
developed technology would be less than its carrying amount, and therefore the
asset was impaired as defined by Statement 121. Consequently, the original cost
basis of the acquired developed technology was reduced to reflect the fair
market value at the date the evaluation was made, resulting in a $3,213,000
impairment loss included in discontinued operations for the year ended December
31, 1998.

                                      F-12
<PAGE>

Proceutics, Inc.
----------------
     In February 1998, CytRx's wholly-owned subsidiary, Proceutics, Inc.,
consummated a sale of substantially all of its non-real estate assets to Oread
Laboratories, Inc. ("Oread") for approximately $2.1 million.  Proceutics
retained its real estate assets consisting of a laboratory building that it
leased to Oread.  The laboratory building was subsequently sold in May 1998 (see
Note 15).  Net income associated with Proceutics included in income (loss) from
discontinued operations was approximately $1,387,000 for the year ended December
31, 1998.  A $782,000 gain related to the sale of non-real estate assets is
included in income from discontinued operations for 1998, as well as a $434,000
gain on the sale of Proceutics' real estate assets (see Note 15).

CytRx Animal Health, Inc.
-------------------------
     In April 1998, CytRx's wholly-owned subsidiary, CytRx Animal Health, Inc.,
consummated the sale of substantially all of its assets related to its cattle
marketing operations to VetLife, LLC ("VL LLC") (an unaffiliated company) for a
total purchase price of $7,500,000, subject to certain working capital
adjustments, plus contingent payments based on certain events and future sales
of specified products of VL LLC and its affiliates.  Net income associated with
CytRx Animal Health included in income (loss) from discontinued operations was
approximately $5,645,000 for the year ended December 31, 1998.  A gain related
to the sale of $6,230,000 is included in income from discontinued operations for
1998.

15.  Sale of Real Estate

     In May 1998, CytRx and Proceutics consummated the sale of the two buildings
owned by them at 150 and 154 Technology Parkway, Norcross, Georgia, to
Alexandria Real Estate Equities, Inc. ("Alexandria") for $4.5 million.
Proceutics' rights and obligations under the lease to Oread (See Note 14) were
assigned to Alexandria, and CytRx leased the building at 154 Technology Parkway
from Alexandria.  The lease term extends 10 years and contains escalating rent
payments over the term.  CytRx is also responsible for all operating expenses
for the property.  Proceutics recorded a gain of $434,000 for the sale of its
building.  A gain of $279,000 on the sale/leaseback of the CytRx building was
deferred and is being amortized over the ten-year lease period.

16.  Extraordinary Item

     In October 1997, the Company privately placed with certain investors
$2,000,000 of convertible notes (the "Debentures") with an original maturity of
October, 2001.  In February and March 1998, $500,000 of the Debentures were
converted into 204,104 shares of common stock.  In February and May 1998,
$1,500,000 of the Debentures were redeemed by the Company and total redemption
premiums of $150,000 were paid.  In addition, $175,000 of previously capitalized
debt issue costs were expensed.  The redemption premiums and debt issue costs
($325,000 total) are reflected as an extraordinary item in the statement of
operations for the year ended December 31, 1998 as loss on early extinguishment
of debt.  At December 31, 2000 and 1999 there were no remaining outstanding
Debentures.

17.  Segment Reporting

     The Company has six reportable segments: Recruiting Services (Spectrum),
Product Development (core business of development and commercialization of
pharmaceutical-related products), Research Products (TiterMax), Cattle Marketing
Operations (CytRx Animal Health), Pharmaceutical Services (Proceutics) and
Vaccine Development (Vaxcel).  See Notes 1 and 14 for additional information
concerning these operations.

     The Company adopted FASB Statement No. 131, Disclosures About Segments of
an Enterprise and Related Information, in 1998 which changes the way the Company
reports information about its operating segments. The accounting policies of the
reportable segments are the same as those described in the summary of
significant accounting policies (see Note 2). The Company evaluates performance
of its operating segments based primarily on profit or loss from operations
before income taxes. Summarized financial information concerning the Company's
reportable segments is shown in the following table.

                                      F-13
<PAGE>

<TABLE>
<CAPTION>
                                      Continuing Operations                              Discontinued Operations
                              --------------------------------------------------------------------------------------------------
                                                           Total   |             Cattle     Pharma-                     Total
                              Recruiting    Product     Continuing | Research  Marketing    ceutical     Vaccine     Discontinued
     (in thousands)            Services   Development   Operations | Products  Operations   Services   Development    Operations
     --------------           ----------  ------------  -----------| --------  ----------  ---------   -----------   ------------
<S>                            <C>         <C>           <C>       |  <C>       <C>        <C>          <C>          <C>
2000:                                                              |
-----                                                              |
Sales to external customers      $451       $    -     $    451    |  $170      $    -     $    -       $    -         $  170
Intersegment sales                  -            -            -    |     -           -          -            -              -
Collaborative, grant & other        -        2,706        2,706    |     -           -          -            -              -
 revenue                                                           |
Interest income                     -          170          170    |     -           -          -            -              -
Interest expense                    -            -            -    |     -           -          -            -              -
Depreciation and amortization       -          318          318    |     -           -          -            -              -
Segment profit (loss)             146       (1,293)      (1,147)   |   799           -          -            -            799
Total assets                        -        6,859        6,859    |     -           -          -            -              -
Capital expenditures                -           20           20    |     -           -          -            -              -
                                                                   |
1999:                                                              |
-----                                                              |
Sales to external customers      $323       $    -     $    323    |  $500      $    -     $    -       $    -         $  500
Intersegment sales                  -            -            -    |     -           -          -            -              -
Collaborative, grant & other                                       |
 revenue                            -          606          606    |     -           -          -          134            134
Interest income                     -          463          463    |     -           -          -            7              7
Interest expense                    -            -            -    |     -           -          -            4              4
Depreciation and amortization       -           62           62    |     -           -          -            6              6
Segment profit (loss)              75      (15,345)     (15,270)   |   281           -          -          (40)           241
Total assets                        -        6,128        6,128    |     -           -          -            -              -
Capital expenditures                -        2,515        2,515    |     -           -          -            -              -
                                                                   |
1998:                                                              |
-----                                                              |
Sales to external customers      $351       $    -     $    351    |  $481      $4,383     $  419       $    -         $5,283
Intersegment sales                  -            -            -    |     -           -        131            -            131
Collaborative, grant & other                                       |
 revenue                            -          756          756    |     -           -          -          167            167
Interest income                     -        1,007        1,007    |     -           -         22           13             35
Interest expense                    -           46           46    |     -           -          3            7             10
Depreciation and amortization       -          120          120    |     -           8         78          294            380
Unusual Items:                                                     |
 Gain on sale of business           -            -            -    |     -       6,230        782            -          7,012
 Gain on sale of real estate        -            -            -    |     -           -        434            -            434
 Provision for asset impairment     -            -            -    |     -           -          -        3,213          3,213
 Loss on early debt                                                |
  extinguishment                    -          325          325    |     -           -          -            -              -
Segment profit (loss)             114       (8,176)      (8,062)   |   231       5,645      1,387       (4,319)         2,944
Total assets                        -       15,666       15,666    |     -           -          -          976            976
Capital expenditures                -          112          112    |     -           -         12            4             16
</TABLE>

18. Quarterly Financial Data (unaudited)

Summarized quarterly financial data for 2000 and 1999 is as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                                                 Quarter Ended
                                                    ----------------------------------------------------------------------
<S>                                                 <C>                <C>             <C>                <C>
2000                                                    March 31
--------------------------------------------------   (restated) (1)       June 30        September 30       December 31
                                                    ----------------   -------------   ----------------   ----------------
Net sales                                                    $   100         $    85            $   168            $    98
Gross profit                                                      48              41                 86                  8
Income (loss) from continuing operations                        (940)           (762)              (606)             1,161
Income from discontinued operations                               40             759                  -                  -
Net income (loss)                                               (900)             (3)              (606)             1,161
Basic and diluted income (loss) per common share:
  Continuing operations                                        (0.12)          (0.08)             (0.06)              0.11
  Discontinued operations                                       0.01            0.08                  -                  -
  Net income (loss)                                            (0.11)          (0.00)             (0.06)              0.11

1999
--------------------------------------------------
Net sales                                                         66              99                 75                 83
Gross profit (loss)                                               (3)             61                 24                  1
Income (loss) from continuing operations                      (3,268)         (2,586)            (5,138)            (4,278)
Income (loss) from discontinued operations                        (8)            (79)               252                 76
Net loss                                                      (3,276)         (2,665)            (4,886)            (4,202)
Basic and diluted income (loss) per common share
  Continuing operations                                        (0.43)          (0.34)             (0.67)             (0.55)
  Discontinued operations                                          -           (0.01)              0.03               0.01
  Net loss                                                     (0.43)          (0.35)             (0.64)             (0.54)
</TABLE>

(1) First quarter has been restated to reflect the sale of Titermax as
discontinued operations.

19. Subsequent Event

    Effective January 1, 2001, the Company executed an agreement with Cappello
Capital Corp. ("Cappello") for general corporate finance advisory services.  In
connection with this agreement, the Company issued to Cappello warrants to
purchase up to 1.4 million shares of its common stock with an exercise price of
$1.00 per share.  During the first quarter of 2001, the Company will recognize a
non-cash charge of approximately $445,000 associated with the issuance of these
warrants.

                                      F-14
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
CytRx Corporation

  We have audited the accompanying consolidated balance sheets of CytRx
Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000.  Our audits also included the
financial statement schedule listed in the Index at Item 14(a).  These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

  We conducted our audits in accordance with auditing standards generally
accepted in the United States.  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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
CytRx Corporation at December 31, 2000 and 1999 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.  Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.


                              /s/ ERNST & YOUNG LLP


Atlanta, Georgia
March 8, 2001

                                      F-15
<PAGE>

                               CYTRX CORPORATION

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>




                                                                       Additions
                                                              ----------------------------
                                              Balance at        Charged to      Charged to                      Balance at
                                               Beginning         Costs and         Other                           End
Description                                    of Period         Expenses        Accounts      Deductions       of Period
-----------                                -----------------  ---------------  -------------  -------------  ----------------
<S>                                          <C>                <C>              <C>            <C>            <C>
Reserve Deducted in the Balance Sheet
from the Asset to Which it Applies:

  Allowance for Bad Debts
   Year ended December 31, 2000              $        --        $   11,900          $  --          $  --       $    11,900
   Year ended December 31, 1999                       --                --             --             --                --
   Year ended December 31, 1998                   22,187                --             --         22,187                --

  Allowance for Deferred Tax Assets
   Year ended December 31, 2000              $26,364,000        $  818,000          $  --          $  --       $27,182,000
   Year ended December 31, 1999               20,769,000         5,595,000             --             --        26,364,000
   Year ended December 31, 1998               17,684,000         3,085,000             --             --        20,769,000
</TABLE>

                                      F-16