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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-15327
 CytRx Corporation
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    58-1642740
(I.R.S. Employer
Identification No.)11726 San Vicente Blvd, Suite 650, 
Los Angeles, California
(Address of principal executive offices)
    
    90049
(Zip Code)
 Registrants telephone number, including area code: (310) 826-5648
 
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of exchange on which registeredCommon Stock, $0.001 par value per share 
Series A Junior Participating Preferred Stock Purchase Rights
    
    The NASDAQ Stock Market LLC
 Securities Registered Pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



CYTRX CORPORATION
2007 ANNUAL REPORT ON FORM 10-K
 TABLE OF CONTENTS
 SAFE HARBOR STATEMENT
    
    
    3PART IItem 1. BUSINESS
    
    
    4Item 1A. RISK FACTORS
    
    
    12Item 2. PROPERTIES
    
    
    23Item 3. LEGAL PROCEEDINGS
    
    
    23PART IIItem 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    24Item 6. SELECTED FINANCIAL DATA
    
    
    26Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    27Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    38Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    39Item 9A. CONTROLS AND PROCEDURES
    
    
    39PART IIIItem 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    41Item 11. EXECUTIVE COMPENSATION
    
    
    43Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
    
    
    57Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    58Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    59PART IVItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    60SIGNATURES
    
    
    64EXHIBIT 3.1EXHIBIT 3.2EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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SAFE HARBOR STATEMENT
    3




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PART I
 
 Item 1. BUSINESS
  COMPANY OVERVIEW
      Our Molecular Chaperone Amplification Platform
  4




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in-vitro
  OUR PRODUCT CANDIDATE PIPELINE
  Product
    
    
    
    Stage ofTechnology
    
    candidate
    
    Indication
    
    developmentMolecular 
chaperone 
amplification
    

    Arimoclomol
    
    ALS (Lou Gehrigs disease)
    
    Phase IIbArimoclomol
    
    Stroke recovery
    
    Phase II (2H 2008)Iroxanadine
    
    Diabetic foot ulcers
    
    Phase II (2H 2008)CYT-092
    
    Multiple indications
    
    Preclinical
 OUR CLINICAL DEVELOPMENT PROGRAMS
  Arimoclomol
 Arimoclomol for the treatment of ALS
  
    
    in July 2006, we completed an 84-patient, multi-center, double-blind,
placebo-controlled, multi-dose Phase IIa clinical trial of safety and tolerability of
arimoclomol in volunteers with ALS, which we refer to as the Phase IIa trial;
    
    in May 2007, we completed an open-label extension of the Phase IIa trial in
approximately 70 ALS patients from the trial who were administered the highest
investigational dose (100 mg three times daily) of arimoclomol for an additional six
months;
    
    in June 2007, we completed a multiple ascending-dose clinical trial of safety and
tolerability involving 40 healthy volunteers;
    
    in November 2007, we completed a 28-day safety clinical trial with 400 mg of
arimoclomol three times daily involving 16 healthy volunteers; and
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
    
    in December 2007, we initiated patient screening in a double blind, placebo-controlled
Phase IIb clinical study. In this trial, we expect to enroll 390 ALS patients at 30 to 40
clinical sites in the United States and Canada. The primary purpose of this trial is to
evaluate the safety and efficacy of a 400 mg dose of arimoclomol administered orally three
times daily. The Phase IIb clinical trial was placed on clinical hold by the FDA in
January 2008. Based on written correspondence we received from the FDA, their decision
pertained to a previously completed animal toxicology study in rats and was not related to
data generated from any human studies with arimoclomol.
 Phase IIa clinical trial
 Annals of Neurology
  Phase IIb efficacy trial
  6




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Arimoclomol for the treatment of stroke. the
    Iroxanadine.
 Iroxanadine for the treatment of diabetic ulcers.
   Our Research Programs and Other Technologies
   7




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Our Separation from RXi Pharmaceuticals Corporation
 Nature Reviews Genetics
      Manufacturing
   Patents and Proprietary Technology
  8




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Competition
   ®
  9




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Government Regulation
         10




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Employees
  Available Information
  11




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##### Table of Contents



Item 1A. RISK FACTORS
 We are subject to a number of risks and uncertainties, including the risks and uncertainties
discussed below, as well as any modification, replacement or update to these risks and
uncertainties that are reflected in any subsequent filings we make with the Securities and Exchange
Commission, or SEC. If any of these risks or uncertainties actually occur, our business, results
of operations, financial condition and prospects could be materially and adversely affected. In
that case, the trading price of our common stock could decline. These risks and uncertainties are
not the only ones facing us. Additional risks and uncertainties not presently known to us, or that
we currently perceive as immaterial, also may adversely affect us.
 Risks Associated With Our Business
 We have operated at a loss and will likely continue to operate at a loss for the foreseeable
future.
  Because we have no source of significant recurring revenue, we must depend on financing to
sustain our operations.
  
    
    fund our clinical trials and pursue regulatory approval of our existing and possible
future product candidates;
    
    expand our research and development activities;
    
    finance our general and administrative expenses;
    
    acquire or license technologies;
    
    prepare, file, prosecute, maintain, enforce and defend our patent and other proprietary
rights; and
    
    develop and implement sales, marketing and distribution capabilities to successfully
commercialize any product for which we obtain marketing approval and choose to market
ourselves.
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If we do not achieve our projected development goals in the time frames we announce and
expect, or if our financial projections prove to be materially inaccurate, the commercialization of
our products may be delayed and our stock price may significantly decline.
    If our products are not successfully developed and approved by the FDA, we may be forced to
reduce or curtail our operations.
   
    
    difficulty in securing centers to conduct trials;
    
    difficulty in enrolling patients in conformity with required protocols or projected timelines;
    
    unexpected adverse reactions by patients in trials;
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
    
    difficulty in obtaining clinical supplies of the product;
    
    changes in or our inability to comply with FDA or foreign governmental product testing,
manufacturing or marketing requirements;
    
    regulatory inspections of clinical trials or manufacturing facilities, which may, among
other things, require us or our manufacturers or licensees to undertake corrective action
or suspend or terminate the affected clinical trials if investigators find them not to be
in compliance with applicable regulatory requirements;
    
    inability to generate statistically significant data confirming the safety and efficacy
of the product being tested;
    
    modification of the product during testing; and
    
    reallocation of our limited financial and other resources to other clinical programs.
  Our current and planned clinical trials of our molecular chaperone amplification product
candidates may fail to show that these product candidates are clinically safe and effective.
  The FDA recently placed a clinical hold on our Phase IIb efficacy trial of arimoclomol, which
will delay the trial and could lead to a requirement that we conduct additional toxicology studies
or alter the trial design.
  14




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
    
    required to conduct additional toxicology or human studies prior to or in parallel with
the resumption of our clinical trial, which would result in substantial additional
expenses and possible significant delays in completing the clinical trial;
    
    required to alter the design including reducing the dosage of arimoclomol, of the
clinical trial, which could significantly delay the completion of the trial, increase the
cost of the trial, adversely affect our ability to demonstrate the efficacy of arimoclomol
in the trial or cause us to cancel the trial altogether due to one or more of these
consideration; or
    
    prohibited by the FDA from resuming our current planned clinical trial or initiating
any other clinical trial of arimoclomol for the treatment of ALS or any other indication
due to safety concerns.
  Even if we obtain regulatory approval for arimoclomol or iroxanadine, these product candidates
may not achieve market acceptance or be profitable.
  Any drugs we develop may become subject to unfavorable pricing regulations, third-party
reimbursement practices or healthcare reform initiatives, which could have a material adverse
effect on our business.
   they are incidental to a physicians services,
    
    they are reasonable and necessary for the diagnosis or treatment of
the illness or injury for which they are administered according to
accepted standard of medical practice,
    
    they are not excluded as immunizations, and
    
    they have been approved by the FDA.
 Our current financial resources may be diminished if we elect to provide RXi with additional
future funding.
  15




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We may rely upon third parties in connection with the commercialization of our products.
    We may be unable to protect our intellectual property rights, which could adversely affect our
ability to compete effectively.
     16




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If our product candidates infringe the rights of others, we could be subject to expensive
litigation or be required to obtain licenses from others to develop or market them.
   
    
    we may become involved in time-consuming and expensive litigation, even if the claim is
without merit;
    
    we may become liable for substantial damages for past infringement if a court decides
that our technology infringes a competitors patent;
    
    a court may prohibit us from selling or licensing our product without a license from
the patent holder, which may not be available on commercially acceptable terms, if at all,
or which may require us to pay substantial royalties or grant cross licenses to our
patents; and
    
    we may have to redesign our product candidates or technology so that it does not
infringe patent rights of others, which may not be possible or commercially feasible.
  We have reported several material weaknesses in the effectiveness of our internal controls
over financial reporting, and if we cannot maintain effective internal controls or provide reliable
financial and other information, investors may lose confidence in our SEC reports.
  
    
    We identified a material weakness related to our accounting for an equity transaction
by RXi and our tax withholding in connection with exercises of employee stock options. As
a result, we restated our financial statements for the quarter ended June 30, 2007 and
extended the filing of our quarterly report for the quarter ended September 30, 2007.
    
    We identified a material weakness related to our accounting for transactions at our
former laboratory facility in Worcester, Massachusetts. As a result, we restated our
financial statements for the quarters ended March 31, 2006, June 30, 2006 and September
30, 2006.
    
    We improperly applied generally accepted accounting principles related to our
accounting for deemed dividends incurred in connection with anti-dilution adjustments made
to our outstanding warrants. This misapplication of accounting principles constituted a
material weakness and caused us to twice restate our financial statements for the quarters
ended March 31, 2005, June 30,
2005 and September 30, 2005 and for the year ended December 31, 2005, as well as restate
our financial statements for the quarters ended March 31, 2006, June 30, 2006 and September
30, 2006.
    
    We miscalculated pro forma employee stock option compensation figures disclosed in the
footnotes to our financial statements. As a result, we restated our financial statements
for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 and for the
year ended December 31, 2005.
 17




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We are subject to intense competition, and we may not compete successfully.
   
    
    succeed in developing competitive products sooner than us or our strategic partners or
licensees;
    
    obtain FDA or foreign governmental approvals for their products before we can obtain
approval of any of our products;
    
    obtain patents that block or otherwise inhibit the development and commercialization of
our product candidate candidates;
    
    develop products that are safer or more effective than our products;
    
    devote greater resources than us to marketing or selling products;
    
    introduce or adapt more quickly than us to new technologies and other scientific advances;
    
    introduce products that render our products obsolete;
    
    withstand price competition more successfully than us or our strategic partners or licensees;
    
    negotiate third-party strategic alliances or licensing arrangements more effectively than us; and
    
    take better advantage than us of other opportunities.
  18




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We may be required to pay milestone and other payments relating to the commercialization of
our products.
  We will rely upon third parties for the manufacture of our clinical product supplies.
  We are subject to potential liabilities from clinical testing and future product liability
claims.
  19




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We may be unable to acquire products approved for marketing.
  We use hazardous materials and must comply with environmental, health and safety laws and
regulations, which can be expensive and restrict how we do business.
  Risks Associated With Our Investment in RXi
 The distribution of RXi common stock to our stockholders will be taxable to us.
  Our ownership interest in RXi may be diluted.
  We may be required to dispose of some of our remaining RXi shares, and may not be able to do
so on attractive terms.
  20




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RXi retains discretion over its use of the funds that we have provided to it.
  We do not and will not control RXi, and the officers, directors and other RXi stockholders may
have interests that are different from ours.
  Products developed by RXi could eventually compete with our products for ALS, type 2 diabetes,
obesity and other disease indications.
  Risks Associated with Our Common Stock
 Our anti-takeover provisions may make it more difficult to change our management, or may
discourage others from acquiring us, and thereby adversely affect stockholder value.
    21




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Our outstanding options and warrants and the availability for resale of our shares issued in
our private financings may adversely affect the trading price of our common stock.
   We may issue preferred stock in the future, and the terms of the preferred stock may reduce
the value of our common stock.
  We may experience volatility in our stock price, which may adversely affect the trading price
of our common stock.
  
    
    announcements of regulatory developments or technological innovations by us or our
competitors;
    
    changes in our relationship with our licensors and other strategic partners;
    
    changes in our ownership of or other relationships with RXi;
    
    our quarterly operating results;
    
    litigation involving or affecting us;
    
    shortfalls in our actual financial results compared to our guidance or the forecasts of
stock market analysts;
    
    developments in patent or other technology ownership rights;
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
    
    acquisitions or strategic alliances by us or our competitors;
    
    public concern regarding the safety of our products; and
    
    government regulation of drug pricing.
  We do not intend to pay cash dividends on our common stock in the foreseeable future.
  
 Item 2. PROPERTIES
   
 Item 3. LEGAL PROCEEDINGS
  23




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PART II
 
 Item 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
  High
    
    LowFiscal Year 2007:Fourth Quarter
    
    $
    4.70
    
    
    $
    2.60Third Quarter
    
    $
    4.09
    
    
    $
    3.00Second Quarter
    
    $
    5.36
    
    
    $
    2.97First Quarter
    
    $
    5.49
    
    
    $
    1.74Fiscal Year 2006:Fourth Quarter
    
    $
    2.04
    
    
    $
    1.21Third Quarter
    
    $
    1.94
    
    
    $
    0.87Second Quarter
    
    $
    2.30
    
    
    $
    1.06First Quarter
    
    $
    1.92
    
    
    $
    1.01
 Holders
  Dividends
  24




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Comparison of Cumulative Total Returns
  Comparison of Cumulative Total Returns
 
 December 31,2003
    
    2004
    
    2005
    
    2006
    
    2007CytRx Corporation
    
    
    744
    
    
    
    560
    
    
    
    412
    
    
    
    764
    
    
    
    1,136NASDAQ Stock Market Index
    
    
    151
    
    
    
    165
    
    
    
    168
    
    
    
    186
    
    
    
    211NASDAQ Pharmaceutical Index
    
    
    147
    
    
    
    156
    
    
    
    172
    
    
    
    168
    
    
    
    177
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Equity Compensation Plans
  ®Number of SecuritiesRemaining Available(a)
    
    
    
    
    
    
    for Issuance UnderNumber of Securities
    
    
    (b)
    
    
    Equityto be Issued Upon
    
    
    Weighted-Average
    
    
    CompensationExercise of
    
    
    Exercise Price of
    
    
    Plans (ExcludingOutstanding Options,
    
    
    Outstanding Options,
    
    
    Securities ReflectedPlan Category
    
    Warrants and Rights
    
    
    Warrants and Rights
    
    
    in Column (a))Equity compensation plans
approved by our security
holders:1994 Stock Option Plan
    
    
    9,167
    
    
    $
    1.00
    
    
    
    1998 Long-Term Incentive Plan
    
    
    100,041
    
    
    
    1.02
    
    
    
    29,5172000 Long-Term Incentive Plan
    
    
    5,999,300
    
    
    
    2.31
    
    
    
    2,192,000Equity compensation plans not
approved by our security
holders:Outstanding warrants(1)
    
    
    13,031,515
    
    
    
    1.87
    
    
    
    Total
    
    
    19,140,023
    
    
    $
    2.00
    
    
    
    2,221,517
 
 (1)
    
    The warrants shown were issued in discreet transactions from time to time as compensation for
services rendered by consultants, advisors or other third parties, and do not include warrants
sold in private placement transactions. The material terms of such warrants were determined
based upon arms-length negotiations with the service providers. The warrant exercise prices
approximated the market price of our common stock at or about the date of grant, and the
warrant terms range from five to ten years from the grant date. The warrants contain customary
anti-dilution adjustments in the event of a stock split, reverse stock split, reclassification
or combination of our outstanding common stock and similar events and certain of the warrants
contain anti-dilution adjustments triggered by other corporate events, such as dividends and
sales of equity below market price. 
 Item 6. SELECTED FINANCIAL DATA
 General
  2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Statement of Operations Data:RevenuesService revenue
    
    $
    7,242,000
    
    
    $
    1,859,000
    
    
    $
    83,000
    
    
    $
    
    
    
    $
    Licensing revenue
    
    
    101,000
    
    
    
    101,000
    
    
    
    101,000
    
    
    
    428,000
    
    
    
    94,000Grant revenue
    
    
    116,000
    
    
    
    106,000
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    7,459,000
    
    
    $
    2,066,000
    
    
    $
    184,000
    
    
    $
    428,000
    
    
    $
    94,000Deemed dividend for anti-dilution
adjustments made to outstanding common
stock warrants
    
    
    
    
    
    
    (488,000
    )
    
    
    (1,076,000
    )
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    (21,890,000
    )
    
    $
    (17,240,000
    )
    
    $
    (16,169,000
    )
    
    $
    (16,392,000
    )
    
    $
    (17,845,000
    )Basic and diluted loss per share
applicable to common stock
    
    $
    (0.26
    )
    
    $
    (0.25
    )
    
    $
    (0.28
    )
    
    $
    (0.48
    )
    
    $
    (0.65
    )Balance Sheet Data:
 26




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2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Cash, cash equivalents and short-term
investments
    
    $
    60,450,000
    
    
    $
    30,381,000
    
    
    $
    8,299,000
    
    
    $
    1,988,000
    
    
    $
    11,644,000Total assets
    
    $
    64,146,000
    
    
    $
    31,636,000
    
    
    $
    9,939,000
    
    
    $
    5,049,000
    
    
    $
    12,324,000Total stockholders equity
    
    $
    40,224,000
    
    
    $
    5,150,000
    
    
    $
    7,208,000
    
    
    $
    1,595,000
    
    
    $
    10,193,000
 Factors Affecting Comparability
   Share Based
Payment
    
 Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  27




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Overview
 CytRx Corporation
    Our Separation from RXi Pharmaceuticals Corporation
 Nature Reviews Genetics
    Research and Development
  28




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
    
    our ability to advance product candidates into pre-clinical and clinical trials;
    
    the scope, rate and progress of our pre-clinical trials and other research and development activities;
    
    the scope, rate of progress and cost of any clinical trials we commence;
    
    the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
    
    future clinical trial results;
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish;
    
    the cost and timing of regulatory approvals;
    
    the cost and timing of establishing sales, marketing and distribution capabilities;
    
    the cost of establishing clinical and commercial supplies of our product candidates and
any products that we may develop; and
    
    the effect of competing technological and market developments.
  Critical Accounting Policies and Estimates
  29




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Revenue Recognition
  Revenue Recognition
  Research and
Development Arrangements
  Research and Development Expenses
  Clinical Trial Expenses
  30




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Stock-based Compensation
 Share-Based Payment Accounting
for Equity Instruments that are Issued to other than Employees for Acquiring, or in Conjunction
with Selling Goods or Services Accounting Recognition for Certain Transactions
involving Equity Instruments Granted to Other Than Employees
 Accounting for Stock Issued to
Employees
   Impairment of Long-Lived Assets
  Earnings Per Share
  31




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Quarterly Financial Data
  Quarters EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)2007Total revenues
    
    $
    1,563
    
    
    $
    2,371
    
    
    $
    2,046
    
    
    $
    1,479Net loss
    
    
    (4,546
    )
    
    
    (6,285
    )
    
    
    (4,597
    )
    
    
    (6,462
    )Deemed dividend for anti-dilution adjustments made to
outstanding common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    (4,546
    )
    
    $
    (6,285
    )
    
    $
    (4,597
    )
    
    $
    (6,462
    )Basic and diluted loss per share applicable to common stock
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.05
    )
    
    $
    (0.07
    )2006Total revenues
    
    $
    61
    
    
    $
    
    
    
    $
    776
    
    
    $
    1,229Net loss
    
    
    (4,166
    )
    
    
    (5,465
    )
    
    
    (2,972
    )
    
    
    (4,148
    )Deemed dividend for anti-dilution adjustments made to
outstanding common stock warrants
    
    
    (488
    )
    
    
    
    
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    (4,654
    )
    
    $
    (5,465
    )
    
    $
    (2,972
    )
    
    $
    (4,148
    )Basic and diluted loss per share applicable to common stock
    
    $
    (0.07
    )
    
    $
    (0.08
    )
    
    $
    (0.04
    )
    
    $
    (0.06
    )
   Fourth Quarter Adjustment
  Liquidity and Capital Resources
 General
   32




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Discussion of Operating, Investing and Financing Activities
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Off-Balance Sheet Arrangements
  Contractual Obligations
     Non-Cancelable
    
    
    CancelableOperating
    
    
    Employment
    
    
    
    
    
    
    Research and
    
    
    LicenseLeases
    
    
    Agreements
    
    
    Subtotal
    
    
    Development
    
    
    Agreements
    
    
    Subtotal(In thousands)(1)
    
    
    (2)
    
    
    
    
    
    
    (3)
    
    
    (4)
    
    
    
    
    
    
    Total2008
    
    $
    446
    
    
    $
    900
    
    
    $
    1,346
    
    
    $
    4,035
    
    
    $
    
    
    
    $
    4,035
    
    
    $
    5,3812009
    
    
    236
    
    
    
    650
    
    
    
    886
    
    
    
    3,279
    
    
    
    
    
    
    
    3,279
    
    
    
    4,1652010
    
    
    145
    
    
    
    
    
    
    
    145
    
    
    
    3,045
    
    
    
    
    
    
    
    3,045
    
    
    
    3,1902011
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    2,188
    
    
    
    
    
    
    
    2,188
    
    
    
    2,1992012 and thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    681
    
    
    
    
    
    
    
    681
    
    
    
    681Total
    
    $
    838
    
    
    $
    1,550
    
    
    $
    2,388
    
    
    $
    13,228
    
    
    $
    
    
    
    $
    13,228
    
    
    $
    15,616
  Non-Cancelable
    
    
    CancelableOperating
    
    
    Employment
    
    
    
    
    
    
    Research and
    
    
    LicenseLeases
    
    
    Agreements
    
    
    Subtotal
    
    
    Development
    
    
    Agreements
    
    
    Subtotal(In thousands)(1)
    
    
    (2)
    
    
    
    
    
    
    (3)
    
    
    (4)
    
    
    
    
    
    
    Total2008
    
    $
    180
    
    
    $
    942
    
    
    $
    1,122
    
    
    $
    
    
    
    $
    716
    
    
    $
    716
    
    
    $
    1,8382009
    
    
    105
    
    
    
    448
    
    
    
    553
    
    
    
    
    
    
    
    666
    
    
    
    666
    
    
    
    1,2192010
    
    
    
    
    
    
    290
    
    
    
    290
    
    
    
    
    
    
    
    616
    
    
    
    616
    
    
    
    9062011
    
    
    
    
    
    
    105
    
    
    
    105
    
    
    
    
    
    
    
    816
    
    
    
    816
    
    
    
    9212012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,126
    
    
    
    1,126
    
    
    
    1,1262013 and thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,325
    
    
    
    10,325
    
    
    
    10,325Total
    
    $
    285
    
    
    $
    1,785
    
    
    $
    2,070
    
    
    $
    
    
    
    $
    14,265
    
    
    $
    14,265
    
    
    $
    16,335
 
 (1)
    
    Operating leases are primarily facility lease related obligations, as well as equipment and
software lease obligations with third party vendors. 34




---



##### Table of Contents



(2)
    
    Employment agreement obligations include management contracts, as well as scientific advisory
board member compensation agreements. Certain agreements, which have been revised from time to
time, provide for minimum salary levels, adjusted annually at the discretion of our
Compensation Committee, as well as for minimum bonuses.(3)
    
    Research and development obligations relate primarily to clinical trials. Most of these
purchase obligations are cancelable.(4)
    
    License agreements generally relate to RXis obligations with UMMS associated with RNAi and,
for future periods, represent minimum annual royalty payment obligations. Not included in the
table are milestone payment amounts that may be required under RXis license agreements, due
to their contingent nature. RXi has determined that a hypothetical product candidate attaining
all possible product milestones would have aggregate potential milestone payments of $36
million. This hypothetical product analysis was undertaken since RXi has not yet named a lead
product candidate. RXi determined what would be a like product candidate based on its current
research and ran an analysis of the milestone payments due under its current licenses for this
hypothetical product. As a part of this analysis, due to the fact that certain of its licenses
are for technologies that are mutually exclusive, if any two licenses are mutually exclusive
and only one would be applicable to any single product, RXi selected the milestone payments
that would result in higher fees to include in its analysis. Net Operating Loss Carryforwards
  Results of Operations
   35




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##### Table of Contents



Research and Development
 Years Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Research and development expense
    
    $
    14,454
    
    
    $
    8,858
    
    
    $
    8,867Non-cash research and development expense
    
    
    3,778
    
    
    
    674
    
    
    
    220Employee stock option expense
    
    
    592
    
    
    
    249
    
    
    
    $
    18,824
    
    
    $
    9,781
    
    
    $
    9,087
     General and administrative expenses
 Years Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)General and administrative expenses
    
    $
    12,666
    
    
    $
    8,622
    
    
    $
    6,057Stock, stock option and warrant expenses to non-employees and consultants
    
    
    2
    
    
    
    60
    
    
    
    367Employee stock option expense
    
    
    2,154
    
    
    
    975
    
    
    
    $
    14,822
    
    
    $
    9,657
    
    
    $
    6,424
  36




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##### Table of Contents



Depreciation and amortization
  Other Income
  Interest income
  Minority interest in losses of subsidiary
   Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes
 37




---



##### Table of Contents



Fair Value Measurements Accounting for Leases
 Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
 Accounting for
Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and
Development Activities
 Noncontrolling Interests in Consolidated
Financial Statements Business Combinations
  Off-Balance Sheet Arrangements
  
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  38




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##### Table of Contents



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 Item 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
    Managements Report on Internal Control Over Financial Reporting
   Internal Control-Integrated
Framework
  39




---



##### Table of Contents



40




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##### Table of Contents



PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Class ofName
    
    Age
    
    Director(1)
    
    PositionMax Link, Ph.D.
    
    
    67
    
    
    III
    
    Director, Chairman of the Board(2)(3)Steven A. Kriegsman
    
    
    66
    
    
    II
    
    Director, Chief Executive Officer, PresidentMarvin R. Selter
    
    
    80
    
    
    II
    
    Director, Vice Chairman of the Board(2)(3)(4)Louis Ignarro, Ph.D.
    
    
    66
    
    
    I
    
    DirectorJoseph Rubinfeld, Ph.D.
    
    
    75
    
    
    I
    
    Director(2)(4)Richard L. Wennekamp
    
    
    65
    
    
    II
    
    Director(2)(3)(4)Mitchell K. Fogelman
    
    
    56
    
    
    
    
    Chief Financial Officer, TreasurerJack R. Barber, Ph.D.
    
    
    52
    
    
    
    
    Chief Scientific OfficerShi Chung Ng, Ph.D.
    
    
    53
    
    
    
    
    Senior Vice President 
Research and DevelopmentBenjamin S. Levin
    
    
    32
    
    
    
    
    General Counsel, Vice President
 Legal Affairs and Corporate SecretaryJohn Y. Caloz
    
    
    56
    
    
    
    
    Chief Accounting Officer
 
 (1)
    
    Our Class II directors serve until the 2008 annual meeting of stockholders, our Class III
director serves until the 2009 annual meeting of stockholders and our Class I directors serve
until the 2010 annual meeting of stockholders.(2)
    
    Members of our Audit Committee. Mr. Selter is the Chairman of the Committee.(3)
    
    Members of our Nominating and Corporate Governance Committee. Mr. Wennekamp is Chairman of
the Committee.(4)
    
    Members of our Compensation Committee. Dr. Rubinfeld is Chairman of the committee. Max Link, Ph.D
 Steven A. Kriegsman
 Marvin R. Selter
 41




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##### Table of Contents



Louis Ignarro, Ph.D.
 Joseph Rubinfeld, Ph.D.
 Richard L. Wennekamp
 Mitchell K. Fogelman
 Jack R. Barber, Ph.D.
 Shi Chung Ng, Ph.D.
 42




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##### Table of Contents



Benjamin S. Levin
 John Y. Caloz
 Audit Committee
  Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  
 Item 11. EXECUTIVE COMPENSATION
 Compensation Discussion and Analysis
 Overview of Executive Compensation Program
   43




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##### Table of Contents



Compensation Philosophy and Objectives
     Role of Executive Officers in Compensation Decisions
   Setting Executive Compensation
  2007 Executive Compensation Components
  
    
    base salary;
 44




---



##### Table of Contents




    
    annual bonuses; and
    
    equity incentive compensation.
 Base Salary
   
    
    the negotiated terms of each executive employment agreement;
    
    internal review of the executives compensation, both individually and relative to
other named executive officers; and
    
    individual performance of the executive.
  Annual and Special Bonuses
   Equity Incentive Compensation
  45




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##### Table of Contents



Retirement Plans, Perquisites and Other Personal Benefits
    Ownership Guidelines
   
    
    links the creation of stockholder value with executive compensation;
    
    provides increased equity ownership by executives;
    
    functions as a retention tool, because of the vesting features included in all options
granted by the Compensation Committee; and
    
    maintains competitive levels of total compensation.
  46




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##### Table of Contents



Tax and Accounting Implications
 Deductibility of Executive Compensation
  Accounting for Share-Based Compensation
 Share-Based Payment
 Compensation Committee Interlocks and Insider Participation in Compensation Decisions
  Compensation Committee Report
  Joseph Rubinfeld, Ph.D., Chairman
    
    Marvin R. Selter
    
    Richard L. Wennekamp
 47




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##### Table of Contents



Summary Compensation Table
  Summary Compensation Table
 OptionBonus
    
    Awards
    
    All Other
    
    TotalName and Position
    
    Year
    
    Salary ($)
    
    ($) (1)
    
    ($) (2)
    
    Compensation ($)
    
    ($)Steven A.
Kriegsman 
President and Chief Executive Officer
    
    
    2007
    
    
    
    524,767
    
    
    
    
    
    
    
    295,534
    
    
    
    
    
    
    
    820,3012006
    
    
    
    417,175
    
    
    
    800,000
    
    
    
    340,426
    
    
    
    
    
    
    
    1,557,601Mitchell K.
Fogelman 
Chief Financial Officer and Treasurer (3)
    
    
    2007
    
    
    
    76,763
    
    
    
    
    
    
    
    35,665
    
    
    
    
    
    
    
    112,428Matthew
Natalizio 
Chief Financial Officer and Treasurer (3)
    
    
    2007
    
    
    
    175,573
    
    
    
    
    
    
    
    
    
    
    
    5,224
    (5)
    
    
    180,7972006
    
    
    
    204,115
    
    
    
    83,000
    
    
    
    78,472
    
    
    
    
    
    
    
    365,587Jack R.
Barber, Ph.D. 
Chief Scientific Officer
    
    
    2007
    
    
    
    327,074
    
    
    
    
    
    
    
    168,876
    
    
    
    
    
    
    
    495,9502006
    
    
    
    261,750
    
    
    
    218,750
    
    
    
    90,544
    
    
    
    
    
    
    
    571,044Benjamin S. Levin
General Counsel, Vice President  Legal
Affairs and Secretary
    
    
    2007
    
    
    
    250,000
    
    
    
    
    
    
    
    84,438
    
    
    
    
    
    
    
    334,4382006
    
    
    
    208,170
    
    
    
    219,750
    
    
    
    120,550
    
    
    
    
    
    
    
    548,470Tod Woolf,
Ph.D. 
President and Chief Executive Officer of
RXi Pharmaceuticals Corporation (4)
    
    
    2007
    
    
    
    216,347
    
    
    
    87,500
    
    
    
    236,433
    (6)
    
    
    33,302
    (7)
    
    
    573,5822006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,830
    (7)
    
    
    115,830
 
 (1)
    
    Bonuses to the named executive officers reported above relating to 2006 were paid in both
June 2006, in connection with the contractual year end for those officers, and also in April
2007, following our decision to determine and award bonuses in connection with each fiscal
year end. For purposes of this table, the entire amount of the bonus
paid as attributed to 2006 has been presented as a 2006 amount. We plan to determine and award annual bonuses for 2007 at our next regularly
scheduled Compensation Committee meeting, and we will report any bonuses so awarded when made
in a Current Report on Form 8-K. The bonus for Dr. Woolf was paid by RXi on January 10, 2008.(2)
    
    The values shown in this column represent the dollar amount recognized for financial
statement reporting purposes with respect to the 2006 and 2007 fiscal years for the fair value
of stock options granted in 2006 and 2007 and prior fiscal years in accordance with SFAS
123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. The amount recognized for these awards was
calculated using the Black Scholes option-pricing model, and reflect grants from our 2000
Long-Term Incentive Plan, which is described in Note 12 of the Notes to Consolidated Financial
Statements.(3)
    
    Mr. Natalizio served as our Chief Financial Officer and Treasurer through September 7, 2007,
and Mr. Fogelman has served in that capacity since September 11, 2007.(4)
    
    As of March 11, 2008, we no longer owned a majority of the outstanding common stock of RXi,
and thus Mr. Woolf is no longer considered an executive officer of CytRx. Amounts reported
above with respect to Dr. Woolf were paid by RXi unless otherwise noted.(5)
    
    Represents premiums paid for medical, dental and vision insurance for Mr. Natalizio
following his resignation in September 2007.(6)
    
    Represents the fair value of RXi employee stock options issued to Dr. Woolf.(7)
    
    Consists of $33,000 and $115,830 in consulting fees paid by CytRx Corporation in 2007 and
2006, respectively, and $302 of life insurance premiums paid by RXi in 2007. 48




---



##### Table of Contents



2007 Grants of Plan-Based Awards
  2007 Grants of Plan-Based Awards
 All Other
    
    
    
    
    
    Grant DateOption Awards
    
    Exercise Price of
    
    Fair Value of(# of CytRx
    
    Option Awards
    
    Option AwardsName
    
    Grant Date
    
    Shares)
    
    ($/Sh)
    
    ($)Steven A. Kriegsman
    
    
    4/18/2007
    
    
    
    350,000
    
    
    $
    4.51
    
    
    $
    1,328,600President and Chief Executive OfficerMitchell K. Fogelman
    
    
    9/11/2007
    
    
    
    150,000
    
    
    $
    3.40
    
    
    $
    426,600Chief Financial Officer and TreasurerMatthew Natalizio
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial Officer and TreasurerJack R. Barber, Ph.D.
    
    
    4/18/2007
    
    
    
    200,000
    
    
    $
    4.51
    
    
    $
    759,200Chief Scientific OfficerBenjamin S. Levin
    
    
    4/18/2007
    
    
    
    100,000
    
    
    $
    4.51
    
    
    $
    379,600General Counsel, Vice President  Legal Affairs and SecretaryTod Woolf, Ph.D. (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    President and Chief Executive Officer of RXi Pharmaceuticals
Corporation
 
 (1)
    
    No stock options were awarded by CytRx to Dr. Woolf in 2007. On May 23, 2007, RXi granted to
Dr. Woolf ten-year options to purchase 316,994 shares of RXis common stock under the RXi
Pharmaceutical Corporation 2007 Incentive Plan at an exercise price of $5.00 per share. 2000 Long-Term Incentive Plan
   
    
    options to purchase shares of common stock, which may be incentive stock options or
non-qualified stock options;
    
    stock appreciation rights;
    
    restricted stock;
    
    performance units;
    
    dividend equivalents; and
    
    other stock-based awards.
  49




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##### Table of Contents



Administration
  
    
    designate participants;
    
    determine the types of awards to grant to each participant and the number, terms and
conditions of any award;
    
    establish, adopt or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan; and
    
    make all other decisions and determinations that may be required under, or as the
Compensation Committee deems necessary or advisable to administer, the Plan.
 Awards
  Stock Options
 Stock Appreciation Rights
 Restricted Stock
 Performance Units
 Dividend Equivalents
 Other Stock-Based Awards
 50




---



##### Table of Contents



Performance Goals.
 
    
    the achievement by CytRx or a parent or subsidiary of a specific financial target;
    
    CytRxs stock price;
    
    the achievement by an individual or a business unit of CytRx or a subsidiary of a
specific financial target;
    
    the achievement of specific goals with respect to (i) product development milestones,
(ii) corporate financings, (iii) merger and acquisition activities, (iv) licensing
transactions, (v) development of strategic partnerships or alliances, or (vi) acquisition
or development of new technologies; and
    
    any combination of the goals set forth above.
  Limitations on Transfer; Beneficiaries
 Acceleration Upon Certain Events
 Termination and Amendment
  51




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##### Table of Contents



Holdings of Previously Awarded Equity
  2007 Outstanding Equity Awards at Fiscal Year-End
 Option AwardsNumber ofSecuritiesUnderlyingUnexercised
    
    OptionOptions
    
    Exercise
    
    Option(#)
    
    Price
    
    ExpirationName
    
    Exercisable
    
    Unexercisable
    
    ($)
    
    DateSteven A. Kriegsman
    
    
    77,854
    
    
    
    (1
    )
    
    
    272,146
    
    
    
    4.51
    
    
    
    4/18/17President and Chief Executive Officer
    
    
    100,028
    
    
    
    (1
    )
    
    
    99,972
    
    
    
    1.38
    
    
    
    6/16/16258,307
    
    
    
    (1
    )
    
    
    41,693
    
    
    
    .79
    
    
    
    5/17/15250,000
    
    
    
    (2
    )
    
    
    
    
    
    
    2.47
    
    
    
    6/19/13750,000
    
    
    
    (2
    )
    
    
    
    
    
    
    2.47
    
    
    
    6/20/13Mitchell K. Fogelman
    
    
    12,539
    
    
    
    (1
    )
    
    
    137,461
    
    
    
    3.40
    
    
    
    9/11/17Chief Financial Officer and TreasurerMatthew Natalizio
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial Officer and TreasurerJack R. Barber, Ph.D.
    
    
    44,488
    
    
    
    (1
    )
    
    
    155,512
    
    
    
    4.51
    
    
    
    4/18/17Chief Scientific Officer
    
    
    50,014
    
    
    
    (1
    )
    
    
    49,986
    
    
    
    1.38
    
    
    
    6/16/16129,154
    
    
    
    (1
    )
    
    
    20,846
    
    
    
    .79
    
    
    
    5/17/15100,000
    
    
    
    (2
    )
    
    
    
    
    
    
    1.13
    
    
    
    7/06/14Benjamin S. Levin
    
    
    22,244
    
    
    
    (1
    )
    
    
    77,756
    
    
    
    4.51
    
    
    
    4/18/17General Counsel, Vice President  Legal
    
    
    45,013
    
    
    
    (1
    )
    
    
    44,987
    
    
    
    1.38
    
    
    
    6/16/16Affairs and Secretary
    
    
    141,652
    
    
    
    (1
    )
    
    
    8,348
    
    
    
    .79
    
    
    
    5/17/15160,000
    
    
    
    (2
    )
    
    
    
    
    
    
    1.39
    
    
    
    7/15/14Tod Woolf, Ph.D. (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    President and Chief Executive Officer
of RXi Pharmaceuticals Corporation
 
 (1)
    
    These options vest in 36 equal monthly installments, subject to the option holders remaining
in our continuous employ through such dates.(2)
    
    These options vest in three annual installments, subject to the option holders remaining in
our continuous employ through such dates.(3)
    
    Dr. Woolf has not been issued any equity by CytRx. On May 23, 2007, RXi granted to Dr. Woolf
ten-year options to purchase 316,994 shares of RXis common stock under the RXi Pharmaceutical
Corporation 2007 Incentive Plan at an exercise price of $5.00 per share. As of December 31,
2007, 61,709 of those stock options were exercisable, and the remaining 255,285 options were
not exercisable. Option Exercises and Stock Vested
  2007 Exercises of Plan-Based Awards
 Number ofShares Acquired
    
    Value RealizedName
    
    on Exercise
    
    On Exercise ($)(1)Steven A. Kriegsman
    
    
    
    
    
    $
    President and Chief Executive Officer
 52




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##### Table of Contents



Number ofShares Acquired
    
    Value RealizedName
    
    on Exercise
    
    On Exercise ($)(1)Mitchell K. Fogelman
    
    
    
    
    
    $
    Chief Financial Officer and TreasurerMatthew Natalizio
    
    
    237,496
    
    
    $
    582,437Chief Financial Officer and TreasurerJack R. Barber, Ph.D.
    
    
    
    
    
    $
    Chief Scientific OfficerBenjamin S. Levin
    
    
    
    
    
    $
    General Counsel, Vice President  Legal Affairs and SecretaryTod Woolf, Ph.D.
    
    
    
    
    
    $
    President and Chief Executive Officer of RXi Pharmaceuticals Corporation
 
 (1)
    
    Represents the difference between the exercise price and the fair market value of the common
stock on the date of exercise. Employment Agreements and Potential Payment upon Termination or Change in Control
 Employment Agreement with Steven A. Kriegsman
       53




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##### Table of Contents



Potential Payment upon Termination or Change in Control for Steven A. Kriegsman
  Employment Agreement with Mitchell K. Fogelman
 th
  Employment Agreement with Jack R. Barber, Ph.D.
   Employment Agreement with Benjamin S. Levin
   Employment Agreement with Tod Woolf, Ph.D.
  54




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##### Table of Contents



Quantification of Termination Payments and Benefits
  Termination Payments and Benefits
 Termination w/o Cause orfor Good ReasonBefore Change in
    
    After Change in
    
    
    
    
    
    Disability
    
    Change inName
    
    Benefit
    
    Control ($)
    
    Control ($)
    
    Death ($)
    
    $
    
    Control ($)Steven A. Kriegsman
    
    Severance Payment
    
    
    1,000,000
    
    
    
    1,000,000
    
    
    
    1,000,000
    
    
    
    1,000,000
    
    
    
    President and Chief Executive
    
    Stock Options (1)
    
    
    231,430
    
    
    
    
    
    
    
    231,430
    
    
    
    231,430
    
    
    
    231,430Officer
    
    Health Insurance (2)
    
    
    45,704
    
    
    
    45,704
    
    
    
    45,704
    
    
    
    45,704
    
    
    
    Life Insurance
    
    
    11,350
    
    
    
    11,350
    
    
    
    
    
    
    
    11,350
    
    
    
    Bonus
    
    
    300,000
    
    
    
    300,000
    
    
    
    300,000
    
    
    
    300,000
    
    
    
    Tax Gross Up (3)
    
    
    
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    Mitchell K. Fogelman
    
    Severance Payment
    
    
    125,000
    
    
    
    125,000
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial Officer and Treasurer
    
    Stock Options (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jack R. Barber, Ph.D.
    
    Severance Payment
    
    
    68,750
    
    
    
    68,750
    
    
    
    
    
    
    
    
    
    
    
    Chief Scientific Officer
    
    Stock Options (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,714Benjamin S. Levin
    
    Severance Payment
    
    
    125,000
    
    
    
    125,000
    
    
    
    
    
    
    
    
    
    
    
    General Counsel, Vice President  Legal Affairs and Secretary
    
    Stock Options (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,793Tod Woolf, Ph.D.(4)
    
    Severance Payment
    
    
    250,000
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    President and Chief Executive
    
    Stock Options (1)
    
    
    449,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    978,098Officer of RXi
    
    Benefits
    
    
    14,500
    
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents the aggregate value of stock options that vest and become exercisable immediately
upon each of the triggering events listed as if such events took place on December 31, 2007,
determined by the aggregate difference between the stock price as of December 31, 2007 and the
exercise prices of the underlying options.(2)
    
    Represents the cost as of December 31, 2007 for the family health benefits provided to Mr.
Kriegsman for a period of two years.(3)
    
    Mr. Kriegsmans employment agreement provides that if a change in control (as defined in our
2000 Long-Term Incentive Plan) occurs during the term of the employment agreement, and if,
during the term and within two years after the date on which the change in control occurs, Mr.
Kriegsmans employment is terminated by us without cause or by him for good reason (each as
defined in his employment agreement), then, to the extent that any payment or distribution of
any type by us to or for the benefit of Mr. Kriegsman resulting from the termination of his
employment is or will be subject to the excise tax imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended, we will pay Mr. Kriegsman, prior to the time the excise tax
is payable with respect to any such payment (through withholding or otherwise), an additional
amount that, after the imposition of all income, employment, excise and other taxes, penalties
and interest thereon, is equal to the sum of (i) the excise tax on such payments plus (ii) any
penalty and interest assessments associated with such excise tax. Based on Mr. Kriegsmans
past compensation and the estimated payment that would result from a termination of his
employment following a change in control, we have estimated that a gross-up payment would not
be required.(4)
    
    As of March 11, 2008, we no longer owned a majority of the outstanding common stock of RXi
Pharmaceuticals Corporation, and thus Mr. Woolf is no longer considered an executive officer
of CytRx. Amounts reported above with respect to Dr. Woolf would be payable by RXi. Stock
option amounts for Dr. Woolf relate to options to purchase RXi common stock granted pursuant
to the RXi Pharmaceutical Corporation 2007 Incentive Plan. 55




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##### Table of Contents



Compensation of Directors
  Director Compensation Table
 Fees Earned or
    
    OptionPaid in Cash
    
    Awards
    
    TotalName (1)
    
    ($) (2)
    
    ($) (3)
    
    ($)Max Link, Ph.D.
    
    
    108,173
    
    
    
    70,000
    
    
    
    178,173ChairmanMarvin R. Selter
    
    
    169,834
    
    
    
    70,000
    
    
    
    239,834Vice ChairmanLouis Ignarro, Ph.D.
    
    
    26,750
    
    
    
    70,000
    
    
    
    96,750DirectorJoseph Rubinfeld, Ph.D.
    
    
    80,066
    
    
    
    70,000
    
    
    
    150,066DirectorRichard Wennekamp
    
    
    76,990
    
    
    
    70,000
    
    
    
    146,990Director
 
 (1)
    
    Steven A. Kriegsman does not receive additional compensation for his role as a Director. For
information relating to Mr. Kriegsmans compensation as President and Chief Executive Officer,
see the Summary Compensation Table above.(2)
    
    The amounts in this column represent cash payments made to Non-Employee Directors for
attendance at meetings during the year.(3)
    
    In July 2007, we granted stock options to purchase 25,000 shares of our common stock at an
exercise price equal to the current market value of our common stock to each non-employee
director, which had a grant date fair value of $2.80 calculated in accordance with SFAS
123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. The amount recognized for these awards was
calculated using the Black Scholes option-pricing model, and reflect grants from our 2000
Long-Term Incentive Plan, which is described in Note 12 of the Notes to Consolidated Financial
Statements.   56




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##### Table of Contents



Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  Shares ofCommon StockName of Beneficial Owner
    
    Number
    
    PercentLouis Ignarro, Ph.D.(1)
    
    
    538,916
    
    
    
    *Steven A. Kriegsman(2)
    
    
    5,575,274
    
    
    
    6.0
    %Max Link(3)
    
    
    159,519
    
    
    
    *Joseph Rubinfeld(4)
    
    
    97,000
    
    
    
    *Marvin R. Selter(5)
    
    
    442,451
    
    
    
    *Richard L. Wennekamp(6)
    
    
    90,000
    
    
    
    *Mitchell K. Fogelman(7)
    
    
    33,336
    
    
    
    *Jack R. Barber(8)
    
    
    404,161
    
    
    
    *Shi Chung Ng (9)
    
    
    50,004
    
    
    
    *Benjamin S. Levin(10)
    
    
    403,614
    
    
    
    *All executive officers and directors as a group (ten persons)(11)
    
    
    7,794,275
    
    
    
    8.3
    %
 
 (1)
    
    Includes 447,000 shares subject to options or warrants.(2)
    
    Includes 1,554,174 shares subject to options or warrants. Mr. Kriegsmans address is c/o
CytRx Corporation, 11726 San Vicente Boulevard, Suite 650, Los Angeles, CA 90049.(3)
    
    Includes 104,543 shares subject to options or warrants.(4)
    
    Includes 97,000 shares subject to options or warrants.(5)
    
    The shares shown are owned, of record, by the Selter Family Trust or Selter IRA Rollover.
Includes 85,000 shares subject to options or warrants owned by Mr. Selter.(6)
    
    Includes 85,000 shares subject to options or warrants.(7)
    
    Includes 33,336 shares subject to options or warrants.(8)
    
    Includes 404,161 shares subject to options or warrants.(9)
    
    Includes 50,004 shares subject to options or warrants.(10)
    
    Includes 403,614 shares subject to options or warrants.(11)
    
    Includes 3,263,832 shares subject to options or warrants. 57




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##### Table of Contents



Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Director Independence
  Transactions with Related Persons
 General
    
    
    that all related person transactions, all material terms of the transactions, and all
the material facts as to the related persons direct or indirect interest in, or
relationship to, the related person transaction must be communicated to the Audit
Committee; and
    
    that all related person transactions, and any material amendment or modification to any
related person transaction, be reviewed and approved or ratified by the Audit Committee, as
required by NASDAQ Marketplace Rules.
  
    
    information provided by members of our board of directors in connection with the
required annual evaluation of director independence;
    
    pertinent responses to the Directors and Officers Questionnaires submitted
periodically by our officers and directors and provided to the Audit Committee by our
management;
    
    background information on nominees for director provided by the Nominating and Corporate
Governance Committee of our board of directors; and
    
    any other relevant information provided by any of our directors or officers.
   58




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##### Table of Contents



Exemption Clause
  Applicable Definitions
  
    
    related person has the meaning given to such term in Item 404(a) of Securities and
Exchange Commission Regulation S-K (Item 404(a)); and
    
    related person transaction means any transaction for which disclosure is required
under the terms of Item 404(a) involving the Company and any related persons.
 
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit Fees
  Audit Related Fees
  Tax Fees
  All Other Fees
  Pre-Approval Policies and Procedures
  59




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1) Financial Statements
        (2) Financial Statement Schedules
      60




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CytRx Corporation
Form 10-K Exhibit Index
 ExhibitNumber
    
    Description
    
    Footnote3.1
    
    Amended and Restated Certificate of Incorporation, as amended3.2
    
    Restated By-Laws, as amended4.1
    
    Shareholder Protection Rights Agreement dated April 16, 1997 between CytRx Corporation and
American Stock Transfer &Trust Company as Rights Agent
    
    (a)4.2
    
    Amendment No. 1 to Shareholder Protection Rights Agreement
    
    (e)4.3
    
    Amendment No. 2 to Shareholder Protection Rights Agreement
    
    (s)4.4
    
    Form of Common Stock Purchase Warrant between CytRx Corporation and each of the investors in the
May 29, 2003 private placement
    
    (i)4.5
    
    Form of Common Stock Purchase Warrant between CytRx Corporation and each of the investors in the
September 16, 2003 private placement
    
    (j)4.6
    
    Warrant issued on May 10, 2004 to MBN Consulting, LLC
    
    (k)4.7
    
    Form of Common Stock Purchase Warrant between CytRx Corporation and each of the investors in the
October 4, 2004 private placement
    
    (l)4.8
    
    Form of Common Stock Purchase Warrant between CytRx Corporation and each of the investors in the
January 2005 private placement
    
    (m)4.9
    
    Form of Common Stock Purchase Warrant between CytRx Corporation and each of the investors in the
March 2006 private placement
    
    (p)10.1*
    
    1994 Stock Option Plan, as amended and restated
    
    (b)10.2*
    
    1995 Stock Option Plan
    
    (r)10.3*
    
    1998 Long-Term Incentive Plan
    
    (d)10.4*
    
    2000 Long-Term Incentive Plan
    
    (e)10.5*
    
    Amendment No. 1 to 2000 Long-Term Incentive Plan
    
    (g)10.6*
    
    Amendment No. 2 to 2000 Long-Term Incentive Plan
    
    (g)10.7*
    
    Amendment No. 3 to 2000 Long-Term Incentive Plan
    
    (j)10.8*
    
    Amendment No. 4 to 2000 Long-Term Incentive Plan
    
    (j)10.9
    
    License Agreement dated December 7, 2001 by and between CytRx Corporation and Vical Incorporated
    
    (f)10.10
    
    Agreement between CytRx Corporation and Dr. Robert Hunter regarding SynthRx, Inc dated October
20, 2003
    
    (j)10.11
    
    Office Lease between The Kriegsman Group and Douglas Emmett, dated April 13, 2000
    
    (j)10.12
    
    Assignment to CytRx Corporation effective July 1, 2003 of Office Lease between The Kriegsman
Group and Douglas Emmett, dated April 13, 2000
    
    (j)10.13
    
    Asset Sale and Purchase Agreement dated October 4, 2004, by and among CytRx Corporation, Biorex
Research & Development, RT and BRX Research and Development Company Ltd
    
    (l)10.14*
    
    Amended and Restated Employment Agreement dated May 17, 2005 between CytRx Corporation and
Steven A. Kriegsman
    
    (n)10.15
    
    First Amendment to Office Lease dated October 14, 2005, by and between CytRx Corporation and
Douglas Emmett 1993, LLC
    
    (o)10.16*
    
    Second Amended and Restated Employment Agreement dated June 16, 2006 between CytRx Corporation
and Dr. Jack Barber
    
    (q)10.17*
    
    Second Amended and Restated Employment Agreement dated June 16, 2006 between CytRx Corporation
and Benjamin S. Levin
    
    (q)
 61




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Footnote10.18
    
    Royalty Agreement dated August 28, 2006 between CytRx Corporation and Kenneth Council, as
Trustee of the ALS Charitable Remainder Trust
    
    (r)10.19
    
    Contribution Agreement, dated as of January 8, 2007, between CytRx Corporation and RXi
Pharmaceuticals Corporation
    
    (t)10.20
    
    Reimbursement Agreement, dated January 8, 2007, between CytRx Corporation and RXi
Pharmaceuticals Corporation
    
    (t)10.21
    
    Voting agreement, dated as of January 10, 2007, between CytRx Corporation and the University of
Massachusetts
    
    (t)10.22
    
    Master Agreement for Clinical Trials Management Services, dated February 5, 2007, between CytRx
Corporation and Pharmaceutical Research Associates
    
    (t)10.23
    
    Stockholders agreement, dated February 23, 2007, among CytRx Corporation, RXi Pharmaceuticals
Corporation, Craig C. Mello, Ph.D., Tariq Rana, Ph.D., Gregory J. Hannon, Ph.D., and Michael P.
Czech, Ph.D
    
    (t)10.24
    
    Form of Purchase Agreement, dated as of April 17, 2007, by and between CytRx Corporation and
each of the selling stockholders named therein
    
    (u)10.25
    
    Contribution Agreement, dated as of April 30, 2007, between CytRx Corporation and RXi
Pharmaceuticals Corporation
    
    (t)10.26*
    
    Employment Agreement dated April 30, 2007, between CytRx Corporation and Shi Chung Ng
    
    (v)10.27*
    
    Lease dated July 20, 2007, between CytRx Corporation and BMR-3030 Bunker Hill Street LLC
    
    (v)10.28*
    
    Employment Agreement dated September 11, 2007, between CytRx Corporation and Mitchell K. Fogelman
    
    (w)10.29*
    
    Employment Letter dated October 26, 2007, between CytRx Corporation and John Y. Caloz
    
    (w)21.1
    
    Subsidiaries23.1
    
    Consent of BDO Seidman, LLP31.1
    
    Certification of Chief Executive Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Indicates a management contract or compensatory plan or arrangement.
    
    Confidential treatment has been requested or granted for certain portions which have been
blanked out in the copy of the exhibit filed 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 Current Report on Form 8-K filed on April 17,
1997(b)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q filed on November
13, 1997(c)
    
    Incorporated by reference to the Registrants Registration Statement on Form S-8 (File No.
33-93818) filed on June 22, 1995(d)
    
    Incorporated by reference to the Registrants Proxy Statement filed on April 30, 1998 62




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##### Table of Contents



(e)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K filed on March 27,
2001(f)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K filed on December
21, 2001(g)
    
    Incorporated by reference to the Registrants Proxy Statement filed June 10, 2002(h)
    
    Incorporated by reference to the Registrants 10-Q filed on May 15, 2003(i)
    
    Incorporated by reference to the Registrants 8-K filed on May 30, 2003(j)
    
    Incorporated by reference to the Registrants 10-K filed on May 14, 2004(k)
    
    Incorporated by reference to the Registrants 10-Q filed on August 16, 2004(l)
    
    Incorporated by reference to the Registrants 8-K filed on October 5, 2004(m)
    
    Incorporated by reference to the Registrants 8-K filed on January 21, 2005(n)
    
    Incorporated by reference to the Registrants 10-Q filed on August 15, 2005(o)
    
    Incorporated by reference to the Registrants 8-K filed on October 20, 2005(p)
    
    Incorporated by reference to the Registrants 8-K filed on March 3, 2006(q)
    
    Incorporated by reference to the Registrants 10-Q filed on August 3, 2006(r)
    
    Incorporated by reference to the Registrants 10-Q filed on November 13, 2006(s)
    
    Incorporated by reference to the Registrants 10-K filed on April 2, 2007(t)
    
    Incorporated by reference to the Registrants 10-Q filed on May 10, 2007(u)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K filed on April 18,
2007(v)
    
    Incorporated by reference to the Registrants 10-Q filed on August 9, 2007(w)
    
    Incorporated by reference to the Registrants 10-Q filed on November 14, 2007 63




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##### Table of Contents



SIGNATURES
  Date: April 1, 2008
    CYTRX CORPORATIONBy:
    /s/ STEVEN A. KRIEGSMANSteven A. KriegsmanPresident and Chief Executive Officer 64




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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
 CytRx CorporationConsolidated Balance Sheets
    
    F-2Consolidated Statements of Operations
    
    F-3Consolidated Statements of Stockholders Equity
    
    F-4Consolidated Statements of Cash Flows
    
    F-5Notes to Consolidated Financial Statements
    
    F-6Reports of Independent Registered Public Accounting Firm
    
    F-22Financial Statement Schedule Schedule II  Valuation and Qualifying Accounts
    
    F-25
 F-1




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##### Table of Contents



CYTRX CORPORATION
CONSOLIDATED BALANCE SHEETS
 December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    50,498,261
    
    
    $
    30,381,393Short-term investments, at amortized cost
    
    
    9,951,548
    
    
    
    Accounts receivable
    
    
    101,217
    
    
    
    105,930Prepaid expenses and other current assets
    
    
    930,596
    
    
    
    233,323Total current assets
    
    
    61,481,622
    
    
    
    30,720,646Equipment and furnishings, net
    
    
    1,573,290
    
    
    
    252,719Molecular library, net
    
    
    193,946
    
    
    
    283,460Goodwill
    
    
    183,780
    
    
    
    183,780Other assets
    
    
    713,398
    
    
    
    195,835Total assets
    
    $
    64,146,036
    
    
    $
    31,636,440LIABILITIES
AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,946,215
    
    
    $
    955,156Accrued expenses and other current liabilities
    
    
    3,700,866
    
    
    
    2,722,478Deferred revenue, current portion
    
    
    8,399,167
    
    
    
    6,733,350Total current liabilities
    
    
    14,046,248
    
    
    
    10,410,984Deferred revenue, non-current portion
    
    
    7,167,381
    
    
    
    16,075,117Total liabilities
    
    
    21,213,629
    
    
    
    26,486,101Minority interest
    
    
    2,708,368
    
    
    
    Commitment and contingenciesStockholders equity:Preferred Stock, $.01 par value, 5,000,000 shares authorized, including 5,000 shares of
Series A Junior Participating Preferred Stock; no shares issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value, 150,000,000 shares authorized; 90,397,867 and 70,788,586
shares issued and outstanding at December 31, 2007 and 2006, respectively
    
    
    90,398
    
    
    
    70,789Additional paid-in capital
    
    
    203,905,691
    
    
    
    146,961,657Treasury stock, at cost (633,816 shares held, at December 31, 2007 and 2006, respectively)
    
    
    (2,279,238
    )
    
    
    (2,279,238
    )Accumulated deficit
    
    
    (161,492,812
    )
    
    
    (139,602,869
    )Total stockholders equity
    
    
    40,224,039
    
    
    
    5,150,339Total liabilities and stockholders equity
    
    $
    64,146,036
    
    
    $
    31,636,440
  F-2




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##### Table of Contents



CYTRX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Revenue:Service revenue
    
    $
    7,241,920
    
    
    $
    1,858,772
    
    
    $
    82,860Licensing revenue
    
    
    101,000
    
    
    
    101,000
    
    
    
    101,500Grant revenue
    
    
    116,118
    
    
    
    105,930
    
    
    
    7,459,038
    
    
    
    2,065,702
    
    
    
    184,360Expenses:Research and development (includes an aggregate
of 462,112 shares of RXi common stock valued at
$2,310,560 issued in exchange for licensing
rights in the second quarter of 2007)
    
    
    18,823,802
    
    
    
    9,781,007
    
    
    
    9,087,270General and administrative
    
    
    14,822,142
    
    
    
    9,657,257
    
    
    
    6,424,106Depreciation and amortization
    
    
    272,229
    
    
    
    227,704
    
    
    
    217,09533,918,173
    
    
    
    19,665,968
    
    
    
    15,728,471Loss before other income
    
    
    (26,459,135
    )
    
    
    (17,600,266
    )
    
    
    (15,544,111
    )Other income:Interest and dividend income
    
    
    2,663,542
    
    
    
    996,647
    
    
    
    206,195Gain on lease termination
    
    
    
    
    
    
    
    
    
    
    163,604Other income (expense), net
    
    
    1,496,979
    
    
    
    (3,205
    )
    
    
    (22,298,614
    )
    
    
    (16,606,824
    )
    
    
    (15,174,312
    )Minority interest in losses of subsidiary
    
    
    448,671
    
    
    
    
    
    
    
    81,452Net loss before provision for income taxes
    
    
    (21,849,943
    )
    
    
    (16,606,824
    )
    
    
    (15,092,860
    )Provision for income taxes
    
    
    (40,000
    )
    
    
    (145,000
    )
    
    
    Net loss
    
    
    (21,889,943
    )
    
    
    (16,751,824
    )
    
    
    (15,092,860
    )Deemed dividend for anti-dilution adjustments made
to outstanding common stock warrants
    
    
    
    
    
    
    (488,429
    )
    
    
    (1,075,568
    )Net loss applicable to common stockholders
    
    $
    (21,889,943
    )
    
    $
    (17,240,253
    )
    
    $
    (16,168,428
    )Basic and diluted loss per share
    
    $
    (0.26
    )
    
    $
    (0.25
    )
    
    $
    (0.28
    )Basic and diluted weighted average shares outstanding
    
    
    84,006,728
    
    
    
    68,105,626
    
    
    
    56,852,402
  F-3




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##### Table of Contents



CYTRX CORPORATION
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 AdditionalCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    TreasuryShares Issued
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    TotalBalance at December 31, 2004
    
    
    40,189,688
    
    
    $
    40,190
    
    
    $
    110,028,327
    
    
    $
    (106,194,187
    )
    
    $
    (2,279,238
    )
    
    $
    1,595,092Common stock and warrants issued
in connection with private
placements
    
    
    18,084,494
    
    
    
    18,084
    
    
    
    19,572,362
    
    
    
    
    
    
    
    
    
    
    
    19,590,446Issuance of stock options/warrants:For services and licenses
    
    
    
    
    
    
    
    
    
    
    586,471
    
    
    
    
    
    
    
    
    
    
    
    586,471For minority interest
    
    
    
    
    
    
    
    
    
    
    273,000
    
    
    
    
    
    
    
    
    
    
    
    273,000Options and warrants exercised
    
    
    1,009,778
    
    
    
    1,010
    
    
    
    255,203
    
    
    
    
    
    
    
    
    
    
    
    256,213Deemed dividend
    
    
    
    
    
    
    
    
    
    
    1,075,569
    
    
    
    (1,075,569
    )
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,092,860
    )
    
    
    
    
    
    
    (15,092,860
    )Balance at December 31, 2005
    
    
    59,283,960
    
    
    
    59,284
    
    
    
    131,790,932
    
    
    
    (122,362,616
    )
    
    
    (2,279,238
    )
    
    
    7,208,362Common stock and warrants issued
in connection with private
placements
    
    
    10,650,795
    
    
    
    10,651
    
    
    
    12,393,709
    
    
    
    
    
    
    
    
    
    
    
    12,404,360Issuance of stock options/warrants
for services and licenses
    
    
    149,928
    
    
    
    150
    
    
    
    1,930,098
    
    
    
    
    
    
    
    
    
    
    
    1,930,248Options and warrants exercised
    
    
    703,903
    
    
    
    704
    
    
    
    358,489
    
    
    
    
    
    
    
    
    
    
    
    359,193Deemed dividend
    
    
    
    
    
    
    
    
    
    
    488,429
    
    
    
    (488,429
    )
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,751,824
    )
    
    
    
    
    
    
    (16,751,824
    )Balance at December 31, 2006
    
    
    70,788,586
    
    
    
    70,789
    
    
    
    146,961,657
    
    
    
    (139,602,869
    )
    
    
    (2,279,238
    )
    
    
    5,150,339Common stock and warrants issued
in connection with private
placements
    
    
    8,615,000
    
    
    
    8,615
    
    
    
    34,239,442
    
    
    
    
    
    
    
    
    
    
    
    34,248,057Issuance of stock options/warrants
for services and licenses
    
    
    
    
    
    
    
    
    
    
    2,402,035
    
    
    
    
    
    
    
    
    
    
    
    2,402,035Options and warrants exercised
    
    
    10,994,281
    
    
    
    10,994
    
    
    
    18,778,180
    
    
    
    
    
    
    
    
    
    
    
    18,789,174Issuance of stock options by subsidiary
    
    
    
    
    
    
    
    
    
    
    1,524,377
    
    
    
    
    
    
    
    
    
    
    
    1,524,377Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,889,943
    )
    
    
    
    
    
    
    (21,889,943
    )Balance at December 31, 2007
    
    
    90,397,867
    
    
    $
    90,398
    
    
    $
    203,905,691
    
    
    $
    (161,492,812
    )
    
    $
    (2,279,238
    )
    
    $
    40,224,039
  F-4




---



##### Table of Contents



CYTRX CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (21,889,943
    )
    
    $
    (16,751,824
    )
    
    $
    (15,092,860
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    272,229
    
    
    
    227,704
    
    
    
    217,095Non-cash earned on short-term investments
    
    
    (172,055
    )
    
    
    
    
    
    
    Loss on retirement of equipment
    
    
    
    
    
    
    2,864
    
    
    
    Minority interest in losses of subsidiary
    
    
    (448,671
    )
    
    
    
    
    
    
    (81,452
    )Gain on lease termination
    
    
    
    
    
    
    
    
    
    
    (163,604
    )Stock option and warrant expense
    
    
    3,511,541
    
    
    
    1,284,032
    
    
    
    366,753Common stock issued for services
    
    
    3,089,639
    
    
    
    262,500
    
    
    
    Non-cash stock compensation related to research and development
    
    
    
    
    
    
    411,530
    
    
    
    219,718Changes in assets and liabilities:Accounts receivable
    
    
    4,713
    
    
    
    66,930
    
    
    
    (172,860
    )Prepaid expenses and other current assets
    
    
    (1,214,836
    )
    
    
    100,295
    
    
    
    596,935Accounts payable
    
    
    757,086
    
    
    
    139,530
    
    
    
    (845,477
    )Deferred revenue
    
    
    (7,241,919
    )
    
    
    22,533,467
    
    
    
    Accrued expenses and other current liabilities
    
    
    978,388
    
    
    
    1,082,557
    
    
    
    456,637Total adjustments
    
    
    (463,885
    )
    
    
    26,111,409
    
    
    
    593,745Net cash provided by (used in) operating activities
    
    
    (22,353,828
    )
    
    
    9,359,585
    
    
    
    (14,499,115
    )Cash flows from investing activities:Purchases of short-term investments
    
    
    (9,779,493
    )
    
    
    
    
    
    
    Redemption of short-term investments
    
    
    
    
    
    
    
    
    
    
    1,011,814Purchases of equipment and furnishings
    
    
    (1,269,313
    )
    
    
    (41,133
    )
    
    
    (47,563
    )Net cash provided by (used in) investing activities
    
    
    (11,048,806
    )
    
    
    (41,133
    )
    
    
    964,251Cash flows from financing activities:Net proceeds from exercise of stock options and warrants
    
    
    18,789,173
    
    
    
    359,191
    
    
    
    256,213Net proceeds from issuances of common stock
    
    
    34,248,058
    
    
    
    12,404,360
    
    
    
    19,590,446Capital contributions from minority interest
    
    
    482,271
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    53,519,502
    
    
    
    12,763,551
    
    
    
    19,846,659Net increase in cash and cash equivalents
    
    
    20,116,868
    
    
    
    22,082,003
    
    
    
    6,311,795Cash and cash equivalents at beginning of year
    
    
    30,381,393
    
    
    
    8,299,390
    
    
    
    1,987,595Cash and cash equivalents at end of year
    
    $
    50,498,261
    
    
    $
    30,381,393
    
    
    $
    8,299,390Supplemental disclosure of cash flow information:Cash
received during the years for interest received
    
    $
    2,491,487
    
    
    $
    996,647
    
    
    $
    206,195Cash paid
during the years for income taxes
    
    $
    183,461
    
    
    $
    
    
    
    $
    Supplemental disclosures of non-cash investing activities:Fair market value of options and warrants provided for goods and services
    
    $
    
    
    
    $
    705,794
    
    
    $
    586,471Fair market value of common stock exchanged for minority interest in
subsidiary
    
    $
    
    
    
    $
    
    
    
    $
    273,000Acquisition
of property and equipment through accrued liabilities
    
    $
    233,974
    
    
    $
    
    
    
    $
    
 Non-cash financing activities:
    F-5




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##### Table of Contents



CYTRX CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Nature of Business
   2. Summary of Significant Accounting Policies
 Basis of Presentation and Principles of Consolidation
 Revenue Recognition
   F-6




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##### Table of Contents



Research and Development Arrangements
  Other Income
 Cash Equivalents
 Fair Value of Financial Instruments
 Short-term Investments Investments in Debt Securities
 Equipment and Furnishings
 Molecular Library
 Impairment of Long-Lived Assets
 F-7




---



##### Table of Contents



Patents and Patent Application Costs
 Basic and Diluted Loss per Common Share
 Shares Reserved for Future Issuance
 Stock-based Compensation
   Year EndedDecember 31, 2005Net loss applicable to common stockholders
    
    $
    (16,168
    )Total stock-based employee compensation expense
determined under fair-value based method for
all awards
    
    
    (1,388
    )Pro forma net loss
    
    $
    (17,556
    )Loss per share, as reported (basic and diluted)
    
    $
    (0.28
    )Loss per share, pro forma (basic and diluted)
    
    $
    (0.31
    )
  F-8




---



##### Table of Contents



Research and Development Expenses
 Income Taxes
 Concentrations of Credit Risk
 Use of Estimates
 Reclassifications
 Other comprehensive income/(loss)
 3. Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes
 F-9




---



##### Table of Contents



Fair Value Measurements Accounting for Leases
 Fair Value Option for Financial Assets and
Financial Liabilities
 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
 Accounting for
Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and
Development Activities
 Noncontrolling Interests in Consolidated
Financial Statements Business Combinations
  4. Accounts Receivable
  F-10




---



##### Table of Contents



5. Other Assets
  6. Equipment, Furnishings and Molecular Library, net
  2007
    
    
    2006Equipment and furnishings
    
    $
    1,965
    
    
    $
    502Less  accumulated depreciation
    
    
    (392
    )
    
    
    (249
    )Property and equipment, net
    
    
    1,573
    
    
    
    253Molecular library
    
    $
    447
    
    
    $
    447Less  accumulated amortization
    
    
    (253
    )
    
    
    (164
    )Molecular library, net
    
    $
    194
    
    
    $
    283
   7. Accrued Expenses and Other Current Liabilities
  2007
    
    
    2006Professional fees
    
    $
    907
    
    
    $
    900Research and development costs
    
    
    873
    
    
    
    1,013Wages, bonuses and employee benefits
    
    
    1,255
    
    
    
    404Income taxes
    
    
    30
    
    
    
    145Other
    
    
    636
    
    
    
    260Total
    
    $
    3,701
    
    
    $
    2,722
 8. Termination of the Atlanta Facility Lease
  9. Commitments and Contingencies
   F-11




---



##### Table of Contents



Non-Cancelable
    
    
    CancelableOperating
    
    
    Employment
    
    
    
    
    
    
    Research and
    
    
    LicenseLeases
    
    
    Agreements
    
    
    Subtotal
    
    
    Development
    
    
    Agreements
    
    
    Subtotal(In thousands)(1)
    
    
    (2)
    
    
    
    
    
    
    (3)
    
    
    (4)
    
    
    
    
    
    
    Total2008
    
    $
    446
    
    
    $
    900
    
    
    $
    1,346
    
    
    $
    4,035
    
    
    $
    
    
    
    $
    4,035
    
    
    $
    5,3812009
    
    
    236
    
    
    
    650
    
    
    
    886
    
    
    
    3,279
    
    
    
    
    
    
    
    3,279
    
    
    
    4,1652010
    
    
    145
    
    
    
    
    
    
    
    145
    
    
    
    3,045
    
    
    
    
    
    
    
    3,045
    
    
    
    3,1902011
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    2,188
    
    
    
    
    
    
    
    2,188
    
    
    
    2,1992012 and thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    681
    
    
    
    
    
    
    
    681
    
    
    
    681Total
    
    $
    838
    
    
    $
    1,550
    
    
    $
    2,388
    
    
    $
    13,228
    
    
    $
    
    
    
    $
    13,228
    
    
    $
    15,616
  Non-Cancelable
    
    
    CancelableOperating
    
    
    Employment
    
    
    
    
    
    
    Research and
    
    
    LicenseLeases
    
    
    Agreements
    
    
    Subtotal
    
    
    Development
    
    
    Agreements
    
    
    Subtotal(In thousands)(1)
    
    
    (2)
    
    
    
    
    
    
    (3)
    
    
    (4)
    
    
    
    
    
    
    Total2008
    
    $
    180
    
    
    $
    942
    
    
    $
    1,122
    
    
    $
    
    
    
    $
    716
    
    
    $
    716
    
    
    $
    1,8382009
    
    
    105
    
    
    
    448
    
    
    
    553
    
    
    
    
    
    
    
    666
    
    
    
    666
    
    
    
    1,2192010
    
    
    
    
    
    
    290
    
    
    
    290
    
    
    
    
    
    
    
    616
    
    
    
    616
    
    
    
    9062011
    
    
    
    
    
    
    105
    
    
    
    105
    
    
    
    
    
    
    
    816
    
    
    
    816
    
    
    
    9212012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,126
    
    
    
    1,126
    
    
    
    1,1262013 and thereafter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,325
    
    
    
    10,325
    
    
    
    10,325Total
    
    $
    285
    
    
    $
    1,785
    
    
    $
    2,070
    
    
    $
    
    
    
    $
    14,265
    
    
    $
    14,265
    
    
    $
    16,335
 
 (1)
    
    Operating leases are primarily facility lease related obligations, as well as equipment and
software lease obligations with third party vendors.(2)
    
    Employment agreement obligations include management contracts, as well as scientific advisory
board member compensation agreements. Certain agreements, which have been revised from time to
time, provide for minimum salary levels, adjusted annually at the discretion of the Companys
Compensation Committee, as well as for minimum bonuses that are payable.(3)
    
    Research and development obligations relate primarily to clinical trials. Most of these
purchase obligations are cancelable.(4)
    
    License agreements generally relate to RXis obligations with UMMS associated with RNAi and,
for future periods, represent minimum annual royalty payment obligations. Not included in the
table are milestone payment amounts that may be required under RXis license agreements, due
to their contingent nature. RXi has determined that a hypothetical product candidate attaining
all possible product milestones would have aggregate potential milestone payments of $36
million. This hypothetical product analysis was undertaken since RXi has not yet named a lead
product candidate. RXi determined what would be a like product candidate based on its current
research and ran an analysis of the milestone payments due under its current licenses for this
hypothetical product. As a part of this analysis, due to the fact that certain of its licenses
are for technologies that are mutually exclusive, if any two licenses are mutually exclusive
and only one would be applicable to any single product, RXi selected the milestone payments
that would result in higher fees to include in its analysis.  F-12




---



##### Table of Contents



10. Private Placements of Common Stock
   Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, ,
Application of 98-5 to Certain Convertible Instruments,
  Accounting for Derivative Financial
Instruments Indexed To, and Potentially Settled In a Companys Own Stock, , Accounting for
Registration Payment Arrangements Accounting for
Contingencies
  F-13




---



##### Table of Contents



11. Investment in CytRx Laboratories
  12. Stock Options and Warrants
 CytRx Options
    2007
    
    2006
    
    2005Weighted average risk free interest rate
    
    
    4.41
    %
    
    
    4.91
    %
    
    
    4.10
    %Dividend yields
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Weighted average volatility
    
    
    108
    %
    
    
    112
    %
    
    
    109
    %Expected lives (years)
    
    
    6
    
    
    
    6
    
    
    
    8
  F-14




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##### Table of Contents



Weighted AverageStock Options
    
    
    Exercise Price2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005Outstanding  beginning of year
    
    
    4,500,208
    
    
    
    4,097,542
    
    
    
    3,026,042
    
    
    $
    1.66
    
    
    $
    1.70
    
    
    $
    2.02Granted
    
    
    1,685,500
    
    
    
    783,500
    
    
    
    1,124,500
    
    
    
    4.02
    
    
    
    1.36
    
    
    
    .83Exercised
    
    
    (1,030,933
    )
    
    
    (82,500
    )
    
    
    (15,000
    )
    
    
    1.76
    
    
    
    .97
    
    
    
    1.00Forfeited
    
    
    (222,503
    )
    
    
    (296,667
    )
    
    
    (38,000
    )
    
    
    1.24
    
    
    
    1.59
    
    
    
    1.52Expired
    
    
    
    
    
    
    (1,667
    )
    
    
    
    
    
    
    
    
    
    
    1.00
    
    
    
    Outstanding  end of year
    
    
    4,932,273
    
    
    
    4,500,208
    
    
    
    4,097,542
    
    
    
    2.46
    
    
    
    1.66
    
    
    
    1.70Exercisable at end of year
    
    
    3,210,320
    
    
    
    3,316,994
    
    
    
    2,360,989
    
    
    $
    1.93
    
    
    $
    1.84
    
    
    $
    1.98Weighted average fair value of
stock options granted during
the year:
    
    $
    3.34
    
    
    $
    1.16
    
    
    $
    .72
  Weighted AverageGrant Date FairStock Options
    
    
    Value per Share2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005Nonvested at January 1,
    
    
    1,183,214
    
    
    
    1,736,553
    
    
    
    1,574,162
    
    
    $
    .99
    
    
    $
    1.16
    
    
    $
    1.77Granted
    
    
    1,685,500
    
    
    
    783,500
    
    
    
    1,124,500
    
    
    
    3.34
    
    
    
    1.16
    
    
    
    0.72Vested
    
    
    (924,259
    )
    
    
    (1,040,172
    )
    
    
    (924,109
    )
    
    
    1.67
    
    
    
    1.29
    
    
    
    1.65Pre-vested forfeitures
    
    
    (222,503
    )
    
    
    (296,667
    )
    
    
    (38,000
    )
    
    
    1.06
    
    
    
    1.39
    
    
    
    1.34Nonvested at December 31,
    
    
    1,721,952
    
    
    
    1,183,214
    
    
    
    1,736,553
    
    
    $
    2.92
    
    
    $
    .99
    
    
    $
    1.16
  Weighted AverageRemaining
    
    
    
    
    
    Number ofRange of
    
    
    
    
    
    Contractual Life
    
    Weighted Average
    
    Options
    
    Weighted Average
    
    Weighted AverageExercise Prices
    
    Number of Options
    
    (years)
    
    Exercise Price
    
    Exercisable
    
    Contractual Life
    
    Exercise Price$0.25  1.00
    
    
    814,774
    
    
    
    6.76
    
    
    $
    0.81
    
    
    
    699,440
    
    
    
    6.76
    
    
    $
    0.81$1.01  2.00
    
    
    1,269,500
    
    
    
    7.16
    
    
    
    1.48
    
    
    
    1,041,222
    
    
    
    7.16
    
    
    
    1.49$2.01  3.00
    
    
    1,162,499
    
    
    
    5.51
    
    
    
    2.45
    
    
    
    1,162,499
    
    
    
    5.51
    
    
    
    2.45$3.01  4.00
    
    
    700,500
    
    
    
    9.74
    
    
    
    3.45
    
    
    
    137,539
    
    
    
    9.74
    
    
    
    3.34$4.01  4.65
    
    
    985,000
    
    
    
    9.35
    
    
    
    4.42
    
    
    
    169,621
    
    
    
    9.35
    
    
    
    4.454,932,273
    
    
    
    7.51
    
    
    $
    2.46
    
    
    
    3,210,321
    
    
    
    7.51
    
    
    $
    1.93
  Accounting for Equity Instruments that are Issued
to other than Employees for Acquiring, or in Conjunction with Selling Goods or Services Accounting Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees, as amended
  F-15




---



##### Table of Contents



2007
    
    2006Weighted average risk free interest rate
    
    
    
    
    
    
    4.31
    %Dividend yields
    
    
    
    
    
    
    0
    %Weighted average volatility
    
    
    
    
    
    
    108
    %Expected lives (years)
    
    
    
    
    
    
    6
  Weighted Average Grant DateStock Options
    
    
    Fair Value per Share2007
    
    
    2006
    
    
    2007
    
    
    2006Nonvested at January 1,
    
    
    916,663
    
    
    
    1,030,831
    
    
    $
    1.44
    
    
    $
    1.53Granted
    
    
    
    
    
    
    250,000
    
    
    
    
    
    
    
    .95Vested
    
    
    (104,163
    )
    
    
    (364,168
    )
    
    
    1.63
    
    
    
    1.35Pre-vested forfeitures
    
    
    (562,500
    )
    
    
    
    
    
    
    1.63
    
    
    
    Nonvested at December 31,
    
    
    250,000
    
    
    
    916,663
    
    
    $
    1.00
    
    
    $
    1.44
 CytRx Warrants
  Weighted AverageWarrants
    
    
    Exercise Price2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005Outstanding  beginning of year
    
    
    23,360,165
    
    
    
    18,508,949
    
    
    
    9,735,416
    
    
    $
    1.83
    
    
    $
    1.94
    
    
    $
    1.64Granted
    
    
    
    
    
    
    6,112,870
    
    
    
    10,267,887
    
    
    
    
    
    
    
    1.54
    
    
    
    1.96Exercised
    
    
    (10,233,650
    )
    
    
    (1,261,654
    )
    
    
    (1,294,354
    )
    
    
    1.77
    
    
    
    1.16
    
    
    
    0.55Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    (95,000
    )
    
    
    
    
    
    
    (200,000
    )
    
    
    2.25
    
    
    
    
    
    
    
    1.00Outstanding  end of year
    
    
    13,031,515
    
    
    
    23,360,165
    
    
    
    18,508,949
    
    
    
    1.87
    
    
    
    1.83
    
    
    
    1.94Exercisable at end of year
    
    
    13,031,515
    
    
    
    23,360,165
    
    
    
    18,508,949
    
    
    $
    1.87
    
    
    $
    1.83
    
    
    $
    1.94Weighted average fair value of
warrants granted during the
year:
    
    $
    
    
    
    $
    1.54
    
    
    $
    2.00
  Warrants OutstandingWeightedAverage
    
    
    
    
    
    WarrantsRemaining
    
    Weighted
    
    Number of
    
    ExercisableNumber of
    
    Contractual Life
    
    Average
    
    Shares
    
    Weighted AverageRange of Exercise Prices
    
    Shares
    
    (years)
    
    Exercise Price
    
    Exercisable
    
    Exercise Price$0.20  1.26
    
    
    482,001
    
    
    
    1.68
    
    
    $
    .20
    
    
    
    482,001
    
    
    $
    .20$1.54  1.84
    
    
    4,183,844
    
    
    
    5.35
    
    
    
    1.59
    
    
    
    4,183,844
    
    
    
    1.59$1.85  2.36
    
    
    7,056,917
    
    
    
    4.98
    
    
    
    2.00
    
    
    
    7,056,917
    
    
    
    2.00$2.37  2.67
    
    
    1,308,753
    
    
    
    5.04
    
    
    
    2.67
    
    
    
    1,308,753
    
    
    
    2.6713,031,515
    
    
    
    4.98
    
    
    $
    1.87
    
    
    
    13,031,515
    
    
    $
    1.87
 F-16




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##### Table of Contents



RXi Options
   2007Weighted average risk free interest rate
    
    
    4.50
    %Weighted average volatility
    
    
    108.7
    %Expected lives (years)
    
    
    6Expected dividend yield
    
    
    0
    %
   Weighted AverageStock Options
    
    Exercise Price2007
    
    2007Outstanding  beginning of year
    
    
    
    
    
    $
    Granted
    
    
    1,139,375
    
    
    
    5.00Exercised
    
    
    (66,044
    )
    
    
    5.00Forfeited
    
    
    (92,465
    )
    
    
    5.00Outstanding  end of year
    
    
    980,866
    
    
    
    5.00Exercisable at end of year
    
    
    274,129
    
    
    $
    5.00
  Weighted AverageGrant Date FairStock Options
    
    
    Value per Share2007
    
    
    2007Nonvested at January 1,
    
    
    
    
    
    $
    Granted
    
    
    1,139,375
    
    
    
    3.51Vested
    
    
    (274,129
    )
    
    
    3.45Pre-vested forfeitures
    
    
    (92,465
    )
    
    
    3.57Nonvested at December 31,
    
    
    772,781
    
    
    $
    3.51
 F-17




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##### Table of Contents



Weighted AverageRemaining
    
    
    
    Number ofRange of
    
    
    
    Contractual Life
    
    Weighted Average
    
    Options
    
    Weighted Average
    
    Weighted AverageExercise Prices
    
    Number of Options
    
    (years)
    
    Exercise Price
    
    Exercisable
    
    Contractual Life
    
    Exercise Price$5.00
    
    980,866
    
    9.46
    
    $5.00
    
    274,129
    
    9.46
    
    $5.00
    2007Weighted average risk free interest rate
    
    
    4.39
    %Dividend yields
    
    
    0
    %Weighted average volatility
    
    
    109.4
    %Expected lives (years)
    
    
    6
   Weighted AverageStock Options
    
    Exercise Price2007
    
    2007Outstanding  beginning of year
    
    
    
    
    
    $
    Granted
    
    
    357,318
    
    
    
    5.00Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding  end of year
    
    
    357,318
    
    
    
    5.00Exercisable at end of year
    
    
    221,883
    
    
    $
    5.00
 F-18




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##### Table of Contents



13. Stockholder Protection Rights Plan
    14. Income Taxes
   December 31,2007
    
    
    2006Deferred tax assets:Net operating loss carryforwards
    
    $
    39,919
    
    
    $
    30,892Tax credit carryforwards
    
    
    3,114
    
    
    
    2,391Equipment, furnishings and other
    
    
    4,124
    
    
    
    1,547Deferred revenue
    
    
    6,200
    
    
    
    9,085Total deferred tax assets
    
    
    53,357
    
    
    
    43,915Deferred tax liabilities
    
    
    (111
    )
    
    
    (85
    )Net deferred tax assets
    
    
    53,246
    
    
    
    43,830Valuation allowance
    
    
    (53,246
    )
    
    
    (43,830
    )$
    
    
    
    $
    
  F-19




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##### Table of Contents



Years ended December 31,2007
    
    
    2006
    
    
    2005Federal benefit at statutory rate
    
    $
    (7,781
    )
    
    $
    (5,646
    )
    
    $
    (5,128
    )State income taxes, net of Federal taxes
    
    
    (908
    )
    
    
    (968
    )
    
    
    (603
    )Permanent differences
    
    
    65
    
    
    
    143
    
    
    
    736Provision related to change in valuation allowance
    
    
    9,416
    
    
    
    34
    
    
    
    5,308Net change in research and development tax credits
    
    
    (1,125
    )
    
    
    5,059
    
    
    
    Change in state tax rates
    
    
    
    
    
    
    2,160
    
    
    
    Other, net
    
    
    373
    
    
    
    (637
    )
    
    
    (313
    )$
    40
    
    
    $
    145
    
    
    $
    
 15. Quarterly Financial Data (unaudited)
  Quarters EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)2007Total revenues
    
    $
    1,563
    
    
    $
    2,371
    
    
    $
    2,046
    
    
    $
    1,479Net loss
    
    
    (4,546
    )
    
    
    (6,285
    )
    
    
    (4,597
    )
    
    
    (6,462
    )Deemed dividend for anti-dilution adjustments made to
outstanding common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    (4,546
    )
    
    $
    (6,285
    )
    
    $
    (4,597
    )
    
    $
    (6,462
    )Basic and diluted loss per share applicable to common stock
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.05
    )
    
    $
    (0.07
    )2006Total revenues
    
    $
    61
    
    
    $
    
    
    
    $
    776
    
    
    $
    1,229Net loss
    
    
    (4,166
    )
    
    
    (5,465
    )
    
    
    (2,972
    )
    
    
    (4,148
    )Deemed dividend for anti-dilution adjustments made to
outstanding common stock warrants
    
    
    (488
    )
    
    
    
    
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    (4,654
    )
    
    $
    (5,465
    )
    
    $
    (2,972
    )
    
    $
    (4,148
    )Basic and diluted loss per share applicable to common stock
    
    $
    (0.07
    )
    
    $
    (0.08
    )
    
    $
    (0.04
    )
    
    $
    (0.06
    )
    Fourth Quarter Adjustment
  16. Subsequent Events
 F-20




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F-21




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Share-based Payment
 Internal Control  Integrated Framework
  
 F-22




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework
      F-23




---



##### Table of Contents



F-24




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##### Table of Contents



CYTRX CORPORATION
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2007, 2006 and 2005
 AdditionsBalance at
    
    Charged to
    
    Charged toBeginning of
    
    Costs and
    
    Other
    
    
    
    
    
    Balance atDescription
    
    Year
    
    Expenses
    
    Accounts
    
    Deductions
    
    End of YearReserve Deducted in the Balance
Sheet from the Asset to Which it
Applies:Allowance for Deferred Tax AssetsYear ended December 31, 2007
    
    $
    43,830,000
    
    
    $
    
    
    
    $
    9,416,000
    
    
    $
    
    
    
    $
    53,246,000Year ended December 31, 2006
    
    
    43,796,000
    
    
    
    
    
    
    
    34,000
    
    
    
    
    
    
    
    43,830,000Year ended December 31, 2005
    
    
    38,488,000
    
    
    
    
    
    
    
    5,308,000
    
    
    
    
    
    
    
    43,796,000
 F-25