<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 FORM 10-K/A
                               Amendment No. 1

(Mark One)
[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].

       For the fiscal year ended December 31, 1996
                                 -----------------

                                       OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                          Commission File No. 0-15327

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

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

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

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

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

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

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.           YES  X        NO
                                                -----        -----

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

On March 13 1997, the aggregate market value of the Registrant's common stock
held by non-affiliates was approximately $28,626,000.

On March 13 1997, there were 7,444,471 shares of the Registrant's common stock
outstanding, exclusive of treasury shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the CytRx Corporation 1996 Annual Report to Stockholders are
incorporated by reference into Parts II, III and IV.  

<PAGE>   2
                                     PART I


ITEM 1. BUSINESS

OVERVIEW

     CytRx Corporation was founded in 1985 and is engaged in the development
and commercialization of pharmaceutical-related products and services including
human therapeutics focused on high-value critical-care therapies.

     In addition to its development work in human therapeutics, CytRx has
created three wholly owned subsidiaries to broaden the development of its
technologies without losing focus on its core critical-care strategy.  Vaxcel,
Inc. is developing its Optivax(R) delivery system to enhance the effectiveness
of vaccines. Vetlife, Inc. is developing products to enhance food animal
growth.  Vetlife also recently created its new Cattle Business Unit to market
and distribute cattle growth promotant products to beef producers.  Proceutics,
Inc. provides preclinical development services to the pharmaceutical industry.
Reference herein to "the Company" includes CytRx and its wholly owned
subsidiaries.

     Certain financial information concerning the industry segments in which
the Company operates can be found in Note 11 to the Company's Consolidated
Financial Statements.

     On December 6, 1996, CytRx, Vaxcel and Vaxcel Merger Subsidiary, Inc., a
Georgia corporation and wholly owned subsidiary of Vaxcel formed for the
purpose of the transaction ("Vaxcel Merger Sub"), entered into a definitive
Agreement and Plan of Merger and Contribution (the "Agreement and Plan of
Merger and Contribution") with Zynaxis, Inc., a Pennsylvania corporation and
publicly held biotechnology company engaged in the development of certain
vaccine technologies ("Zynaxis").

     The Agreement and Plan of Merger and Contribution provides for (i) the
issuance of shares of common stock of Vaxcel to the existing shareholders of
Zynaxis in exchange for the contribution to Vaxcel by such shareholders of all
of the outstanding shares of capital stock of Zynaxis by means of a merger of
Vaxcel Merger Sub and with and into Zynaxis (the "Merger") and (ii) the
issuance to CytRx of shares of common stock of Vaxcel and a warrant to purchase
shares of common stock of Vaxcel in exchange for CytRx's contribution to Vaxcel
of a secured loan being extended by Zynaxis by CytRx plus cash in the amount of
$4,000,000 minus the balance of the secured loan at the time of contribution,
subject to certain adjustments.

     Subject to the approval of the shareholders of Zynaxis, and subject to the
satisfaction of other terms and conditions of the Agreement and Plan of Merger
and Contribution, at the effective time of the Merger (i) Vaxcel Merger Sub
will be merged with and into Zynaxis and (ii) the outstanding shares of capital
stock of Zynaxis will be converted into the right to receive shares of common
stock of Vaxcel and Zynaxis will continue to conduct its business as a wholly
owned subsidiary of Vaxcel.

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<PAGE>   3

This Form 10-K contains certain Statements of a foward-looking nature relating
to future events or the future financial performance of the Company. Holders of
the Company's capital stock are cautioned that such Statements are only
predictions and that actual events or results may differ materially.

PRODUCT DEVELOPMENT

     Consolidated expenditures for research and development activities were
$3.1 million, $7.1 million, and $6.8 million during the years ended December
31, 1996, 1995, and 1994, respectively.

CytRx

     CytRx's human therapeutics product development efforts are focused on
critical-care products providing target opportunities for high-value
breakthrough products to address unmet medical needs.  CytRx's current product
development focus is RheothRx(pf), which the Company believes has the potential
to alleviate the pain and suffering associated with sickle cell crisis.

     In June 1989, the FDA informed CytRx of its decision to grant RheothRx
"Orphan Drug" designation for the treatment of sickle cell crisis.  The Orphan
Drug Act of 1983, as amended, provides incentive to drug manufacturers to
develop drugs for the treatment of rare diseases (e.g. diseases that affect
less than 200,000 individuals in the United States, or diseases that affect
more than 200,000 individuals in the United States where the sponsor does not
reasonably anticipate that its product will become profitable).  As a result of
the designation of RheothRx as an Orphan Drug, if the Company is the first
manufacturer to obtain FDA approval to market RheothRx for treatment of sickle
cell crisis, the Company will obtain a seven-year period of marketing
exclusivity beginning from the date of its approval.  During this period, the
FDA cannot approve the same drug for the same use from another sponsor. In
March 1990, RheothRx also received Orphan Drug designation for the treatment of
severe burns.

     In 1995, results from a 2,900 patient RheothRx trial indicated
unacceptable side effects at doses that provided therapeutic benefit to heart
attack victims.  As a result, CytRx's licensee, Glaxo Wellcome PLC, returned
the rights to RheothRx to the Company.  CytRx believes that RheothRx still
offers opportunity in treating sickle cell disease.  In June 1996, CytRx was
awarded a composition of matter patent on RheothRx(pf), a new purified form of
RheothRx.

     RheothRx(pf) is an intravenous solution that has the unique property of
improving blood flow. The Company believes that RheothRx(pf) has significant
potential in treating a variety of vascular-occlusive diseases where blood
flow is restricted. CytRx has chosen the painful vascular-occlusive crisis
associated with sickle cell anemia as its first development priority. 
Currently there is no effective treatment to alleviate the pain and suffering
sickle cell anemia patients in crisis must endure. 

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<PAGE>   4

     Sickle cell anemia primarily affects African-Americans.  It is an
inherited abnormality of hemoglobin, the oxygen-carrying molecule in red blood
cells.  Under conditions of low blood oxygen, which is generally caused by
dehydration or stress, the sickle cell victim's hemoglobin becomes rigid.  This
causes red blood cells to lose their normal flexibility.  The cells become
rough, sticky and irregularly shaped, often looking like sickles, which gives
the disease its name.

     These deformed cells cannot easily flow through the smaller blood vessels
of the body and tend to clump together, forming occlusions which impede blood
flow.  The occlusions deprive tissues of vital oxygen which can result in
tissue death, inflammation and intense throbbing pain.  Patients suffering from
sickle cell disease may experience several crisis episodes each year.
Hospitalization is required when pain becomes too much to bear.  As there is
currently no effective treatment to alleviate the crisis, patients only receive
injectable morphine, fluids and rest.  Aside from causing considerable pain and
suffering, these crisis episodes slowly destroy vital organs as they are
deprived of oxygen.  As a result, the life expectancy of sickle cell victims is
about twenty years shorter than those without the disease.

     Estimates place the number of persons suffering from sickle cell anemia in
the U.S. at about 60,000.  There are about 100,000 hospital admissions
annually to treat sickle cell patients undergoing acute vascular-occlusive
crisis caused by the disease.  On average, these patients require in-patient
treatment for 7.2 days, resulting in significant healthcare costs.  A recent
study indicated that each year an average sickle cell patient consumes about
$25,000 in hospital goods and services while seeking treatment for his or her
pain.

     RheothRx's unique surface-active properties decrease blood viscosity and
enable the rigid sickled cells to become more flexible, thus allowing easier
passage of blood cells through narrow blood vessels.

     A Phase II human clinical trial conducted by Burroughs Wellcome Co. has
indicated trends towards reducing the duration of sickle cell crisis and
associated hospital stay when RheothRx is used.  Also, the trial indicated that
RheothRx significantly reduced use of medication required to alleviate the
severe pain.  CytRx will conduct small safety and dose ranging studies with the
new purified material before proceeding to a larger Phase II/III trial toward
the end of 1997, assuming the initial studies do not encounter any unforeseen
problems.                                                        

     The Company believes that RheothRx has the potential to be an effective
treatment for other vascular-occlusive diseases as well.  Once the sickle cell
program is underway, CytRx currently plans to explore the opportunities in
significant diseases such as Acute Respiratory Distress Syndrome (ARDS) and
stroke.  However, CytRx's current strategy is to focus its efforts and
resources on gaining approval for the acute crisis of sickle cell anemia.

     CytRx is also developing Protox (TM) as a treatment for tuberculosis as 
well as for use in combination with certain antibiotic and anti-viral compounds
to enhance their uptake and resulting effectiveness.  Protox is currently in
preclinical development.


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<PAGE>   5
Vaxcel

     VAXCEL is currently engaged in the development and commercialization of
Optivax(R), the tradename for a family of proprietary nonionic block copolymers
which may augment or modulate the immune response to vaccines when administered
injectably.  Vaxcel believes Optivax may improve the effectiveness and/or
convenience of existing vaccines and may contribute to the development of new
vaccines.  Vaxcel and its institutional/corporate collaborators have conducted
preclinical studies in which Optivax appears to act both as a delivery system
and as a vaccine adjuvant.  In addition, a Phase I human clinical trial was
initiated by Vaxcel in early 1996 and completed in February 1997 which
indicated both safety and adjuvant activity of Optivax in humans.

     Vaxcel's business strategy is to license Optivax on a vaccine-by-vaccine
basis to pharmaceutical and biotechnology companies engaged in vaccine research
and development.  Under such arrangements, these companies would combine
Optivax with their vaccines and assume responsibility for product development,
regulatory approval and marketing at their expense.  In return, Vaxcel would
receive license fees, milestone payments, and royalties on sales.  At present,
Vaxcel has entered into option agreements for the development of Optivax with
Medeva PLC and Connaught Laboratories, Inc. and a license agreement with Corixa
Corporation.

     On December 6, 1996, CytRx, Vaxcel and Vaxcel Merger Subsidiary, Inc., a
Georgia corporation and wholly owned subsidiary of Vaxcel formed for the
purpose of the transaction ("Vaxcel Merger Sub"), entered into a definitive
Agreement and Plan of Merger and Contribution (the "Agreement and Plan of
Merger and Contribution") with Zynaxis, Inc., a Pennsylvania corporation and
publicly held biotechnology company engaged in the development of certain
vaccine technologies ("Zynaxis").                            

     The Agreement and Plan of Merger and Contribution provides for (i) the
issuance of shares of common stock of Vaxcel to the existing shareholders of
Zynaxis in exchange for the contribution to Vaxcel by such shareholders of all
of the outstanding shares of capital stock of Zynaxis by means of a merger of
Vaxcel Merger Sub and with and into Zynaxis (the "Merger") and (ii) the
issuance to CytRx of shares of common stock of Vaxcel and a warrant to purchase
shares of common stock of Vaxcel in exchange for CytRx's contribution to Vaxcel
of a secured loan being extended by Zynaxis by CytRx plus cash in the amount of
$4,000,000 minus the balance of the secured loan at the time of contribution,
subject to certain adjustments.

     Subject to the approval of the shareholders of Zynaxis, and subject to the
satisfaction of other terms and conditions of the Agreement and Plan of Merger
and Contribution, at the effective time of the Merger (i) Vaxcel Merger Sub will
be merged with and into Zynaxis and (ii) the outstanding shares of capital stock
of Zynaxis will be converted into the right to receive shares of common stock of
Vaxcel and Zynaxis will continue to conduct its business as a wholly owned
subsidiary of Vaxcel.  After closing, assuming that no holder of Zynaxis stock
exercises its appraisal or objection rights and assuming no exercise of any
options or warrants to purchase Vaxcel 


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<PAGE>   6
Common Stock, it is anticipated that CytRx will own approximately 87.5% of the
outstanding common shares of Vaxcel, with the remaining 12.5% held by the
former shareholders of Zynaxis.  The merger will be treated as a purchase by
Vaxcel and is expected to constitute a tax-free reorganization for Zynaxis
shareholders.  The merger is subject to approval by the Zynaxis shareholders at
a meeting expected to be held during the second quarter of 1997 and is also
subject to the satisfaction of other terms and conditions of the Agreement and
Plan of Merger and Contribution.

     In connection with the execution of the Agreement and Plan of Merger and
Contribution: (i) CytRx and Zynaxis entered into a secured loan agreement
pursuant to which CytRx agreed to loan up to $2,000,000 to Zynaxis on a secured
basis; (ii) CytRx and Zynaxis entered into a letter agreement that provides for
CytRx to serve as Zynaxis' agent and assist Zynaxis in conducting the sale or
transfer of substantially all of Zynaxis' assets prior to the Merger, subject
to the approval of Zynaxis' shareholders; (iii) CytRx, Vaxcel, Zynaxis and the
holders of all the outstanding shares of Zynaxis preferred stock, who also hold
certain warrants to purchase Zynaxis common stock, entered into an agreement,
conditioned upon consummation of the Merger, making certain agreements with
respect to their rights, and converting their Zynaxis warrants, upon
consummation of the Merger, into warrants for the purchase of Vaxcel common
stock; (iv) CytRx, Vaxcel and Zynaxis entered into an agreement with holders of
convertible notes issued by Zynaxis pursuant to which such noteholders agreed
that, conditioned upon consummation of the Merger, that their notes would be
converted into the right to receive shares of Vaxcel common stock; (v) CytRx
and certain Zynaxis shareholders entered into shareholder voting agreements
pursuant to which each of such shareholders granted CytRx an irrevocable proxy
to vote shares of Zynaxis common stock held by such shareholder in favor of the
Agreement and Plan of Merger and the transactions contemplated thereby; and
(vi) Vaxcel and Zynaxis entered into a technology development agreement
concerning the development by Vaxcel of certain technologies owned by or
licensed to Zynaxis.

     As a result of the Merger, Vaxcel will acquire the PLG microencapsulation
and mucoadhesive vaccine technologies of Zynaxis.  These technologies appear to
be complementary to Vaxcel's current technology, as Optivax is primarily
focused on enhancing the effectiveness of injectable vaccines, while the
Zynaxis technologies are primarily targeted toward development of vaccines for
oral and mucosal delivery.  CytRx and Vaxcel believe the Zynaxis oral delivery
technologies may have commercial application for many marketed vaccines
currently administered by parenteral injection, as well as certain new vaccines
under development.  In addition, the Zynaxis technologies can be administered
alone or in combination with other vaccine carriers, delivery systems, and
adjuvants.  Similar to Optivax, Vaxcel's business strategy for the Zynaxis
technologies will be to license these technologies to companies engaged in
vaccine research and development.  In September 1995, ALK A/S, a Danish
company, executed a development and licensing agreement with Zynaxis which
granted ALK exclusive, worldwide rights to evaluate and develop the Zynaxis
technologies for oral delivery of bioactive substances for the treatment of
allergy.  ALK is a world leader in the preparation and standardization of
allergen extracts for allergy immunotherapy.  ALK is currently conducting a
Phase II human clinical trial.


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<PAGE>   7

Vetlife

     Vetlife is engaged in the development, licensing and marketing of
technologies to improve the value of food animal products to the cattle,
poultry, swine and dairy industries.  Vetlife's products under development are
targeted at improving food animal production or reducing cost without
compromising safety or quality.  Projects include a non-antibiotic growth
promoter for poultry and swine, adjuvants to enhance animal vaccines and
antibiotic potentiators to overcome antibiotic resistance or reduce required
doses.

     Regulations imposed by the United States government and other countries
require a demonstration of the safety and efficacy of new animal drugs in the
target animal as well as human food safety prior to marketing.  See "Government
Regulation."  There can be no assurance that any particular development program
of the Company will lead to the development of a marketable product, that any
such product will be approved by the appropriate regulatory agencies or that
any approved product will be profitable.


VETLIFE CATTLE BUSINESS UNIT

     Vetlife's Cattle Business Unit is focused on the customer.  Its objective
is to assist each customer in optimizing the quality of beef being raised while
at the same time lowering production costs.  To accomplish this, Vetlife has
built a team of dedicated and highly experienced professionals.  These
individuals are dedicated to providing superior sales support, nutrition
management and quality control to Vetlife's customers.

     In January 1996 Vetlife signed an agreement with IVY Laboratories, Inc. to
market and distribute IVY's line of FDA-approved cattle growth products and
devices in North America.  The newly created Vetlife Cattle Marketing Group
began marketing IVY's products in January 1997.  In September 1996, Vetlife
signed an agreement with Elanco Animal Health, a division of Eli Lilly and
Company, whereby Vetlife became the exclusive U.S. supplier of Elanco's
Compudose cattle growth promotant products, effective October 1, 1996.

     Though the Vetlife-IVY agreement was signed in January 1996, Vetlife's
Cattle Business Unit could not begin marketing and distribution activities
until 1997 due to previous IVY contract commitments.  Thus 1996 became a year
of preparation: recruiting and training the Vetlife Cattle Business Unit team,
discussions with future customers and the development of strategies and
detailed plans to meet the needs of customers and prospects alike.

     Vetlife's activities attracted the interest of Eli Lilly's Elanco animal
health division.  This resulted in Vetlife becoming Elanco's exclusive U.S.
distributor of its Compudose(R) cattle growth promotant product.  Marketing
activities which began in October served as an excellent testing period prior
to the January 1997 launch of Vetlife's Component(R) line of growth promotant
products.


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<PAGE>   8
PRECLINICAL DEVELOPMENT SERVICES - PROCEUTICS

     PROCEUTICS was formed in 1995 and commenced formal operations in January
1996.  Proceutics is targeting a growing need within biopharmaceutcal companies
by providing high-value, high-quality pharmaceutical development services to
supplement pre-IND activities.  Proceutics provides a wide range of client
services including analytical method development and analysis, quality control
testing, pharmaceutics, stability program management, regulatory compliance and
consultation, manufacturing, packaging and labeling of clinical supplies, and
bioanalytical method development and analysis.

     Proceutics' customer base targets three distinct drug development
segments.  First are large pharmaceutical companies that simply have more
compounds under development than available people or facilities.  The second
customer target is small biotechnology and drug development startup companies
that do not have the money and time to construct validated facilities to carry
out their testing requirements.  The third group is generic drug distributors
that need to do testing in support of generic drug development.

     Proceutics has found established pharmaceutical companies to be a good
customer base since they have so much work to do, need reliable outsourcing
alternatives and, when satisfied with the work, they keep sending new business.
Proceutics' business philosophy is quality service at a fair price that is
delivered on time.  This is meeting with success as Proceutics continues to add
new clients, and, more importantly, the company is now generating repeat
business from satisfied clients.


OTHER PRODUCTS AND SERVICES

     CytRx manufactures, markets and distributes TiterMax(R), an adjuvant used 
to produce cell mediated and humoral responses in research animals.  The keys
to the potency of TiterMax lie in its immunostimulatory activity and the
formation of stable water-in-oil emulsions.  TiterMax aids in the antigen's
effective presentation to the immune system without the toxic effects of other
research adjuvants.

     CytRx also has a small group of human resource professionals who, in
addition to their services to the Company, provide recruiting services to third
parties under the name of Spectrum Recruitment Research.


MANUFACTURING

     The Company maintains a portion of its Norcross, Georgia headquarters as a
pilot manufacturing facility in order to produce the bulk clinical supply
ingredients for its product 


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<PAGE>   9

development programs.  See "Product Development." Production of the final
dosage form of materials for use in clinical trials will be performed by third
party manufacturers.  The Company's pilot facility is intended for manufacture
of investigational supplies of certain of the Company's products under
development and is generally not large enough to produce quantities of product

adequate for commercial purposes.  The process used in the pilot facility
also may require modification to achieve commercial scale.  If the Company
modifies its manufacturing process or changes the source or location of product
supply, regulatory authorities will require the Company to demonstrate that the
material produced from the modified or new process or facility is equivalent to
the material used in the Company's clinical trials.  Further, any manufacturing
facility and the quality control and manufacturing procedures used by the
Company for the commercial supply of a product must comply with applicable
OSHA, EPA, and FDA standards, including Good Manufacturing Practice
regulations.

     Cattle growth products marketed and distributed by Vetlife are
manufactured under contract by IVY Laboratories, Inc. and the Elanco Animal
Health division of Eli Lilly and Company.


PATENTS AND PROPRIETARY TECHNOLOGY

     CytRx considers the protection of its discoveries and inventions important
to its business.  The Company seeks patent protection for its technology when
deemed appropriate and has filed patent applications in the United States and
selected foreign countries covering several general product areas, including
technology licensed from Emory University (see below) and others.

     There can be no assurance that patent applications which have been or will
in the future be filed by the Company will result in the issuance of any
patents, or, if issued, that such patents will provide sufficient protection or
be of commercial benefit to CytRx and its licensees.

     Pursuant to an agreement with Emory University ("Emory") whereby certain
basic research was performed by the Company utilizing the research facilities
and support staff at Emory, Emory will be assigned the rights to all patents
acquired as a result of discovery activities conducted at Emory on behalf of
CytRx.  Emory has granted CytRx exclusive worldwide licenses to these patents.
Emory is entitled to receive royalty payments on sales made by CytRx of
products covered by the licensed patents, and on payments received by CytRx as
a result of sales of such products made by a third party.  In the event that
patents are not issued with respect to a particular class of products, the
Company's license with respect to that class of products will terminate.


COMPETITION

     Many companies, including large pharmaceutical, chemical and biotechnology
firms with financial resources, research and development staffs, and facilities
that are substantially greater than those of the Company, are engaged in the
research and development of pharmaceutical 


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<PAGE>   10

products that could compete with the products under development by the Company. 
The industry is characterized by rapid technological advances and competitors
may develop their products more rapidly and/or such products may be more
effective than those under development by the Company or its licensees and
corporate partners.  The Company competes in this research and development
environment by attempting to develop its products and technologies in an
innovative and timely fashion that would provide the Company with an advantage
in the licensing and/or marketing of its products and technologies.


GOVERNMENT REGULATION

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

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


ENVIRONMENTAL PROTECTION

     The Company's pharmaceutical development center is exempt from the CFR
(40-Part 370) hazardous chemical reporting.  The facility is classified as a
small quantity generator of hazardous waste, which includes radio-isotopes,
biological and chemical hazards.  Such waste is removed by a qualified waste
hauler.  The Company has established a Corporate Safety Committee to oversee
its Health and Safety Policy which defines procedures for identification of
risks posed to employees from hazardous material and training of employees in
the proper handling and disposal of such materials.

     During 1993 and 1994 the Company incurred approximately $2.6 million to
expand and renovate its pharmaceutical development facility.  These
expenditures included amounts related 


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<PAGE>   11

to the installation of a single pass air handling system with HEPA filters for
the exhaust air from Biosafety Level III and radiological hoods.  Also included
were the installation of backflow prevention devices and acid dilution basins
to neutralize waste water leaving the facility.  During 1996 compliance with
federal, state and local regulations pertaining to environmental standards did
not have a material effect upon the capital expenditures or earnings of the
Company.


EMPLOYEES

     As of December 31, 1996, the Company had 72 full-time and 5 part-time
employees.


ITEM 2. PROPERTIES

     The Company's executive offices and operational facilities, consisting of
an aggregate of approximately 30,700 square feet, are located on property owned
by the Company at 150 and 154 Technology Parkway, Norcross, Georgia.  These
facilities include approximately 20,000 square feet of laboratories, pilot
manufacturing, and associated space.

     The Company also leases approximately 3,500 square feet of office and
warehouse space in Winterset, Iowa and 600 square feet of office space in
Overland Park, Kansas in support of Vetlife's Cattle Business Unit activities.

     The above-mentioned facilities are in satisfactory condition and suitable
for the particular purposes for which they were acquired or constructed and are
adequate for present operations.


ITEM 3. LEGAL PROCEEDINGS

     On September 27,1996, American Home Products Corporation ("AHP"), through
its Fort Dodge Animal Health Division, filed a complaint (the "Complaint") in
the District Court of Johnson County, Kansas alleging claims against CytRx
Corporation, Vetlife, Inc., and certain of Vetlife's employees ("the
"Employees").

     The Employees are former employees of AHP who executed confidentiality
agreements with AHP.  The Complaint alleges breach of contract and
misappropriation of trade secrets by the Employees and tortious interference by
CytRx and Vetlife.  The Complaint seeks an unspecified amount of damages from
the Employees and seeks damages in excess of $50,000 from CytRx and Vetlife. 
The Complaint also seeks a restraining order enjoining the Employees from
working for Vetlife in any capacity that concerns or relates to cattle growth
implant products.

     The case is now in discovery.  At this stage, evaluation of the outcome
and potential loss is not possible.


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<PAGE>   12

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS

     The Company's Common Stock is traded on The Nasdaq Stock Market under the
symbol CYTR.  The following table sets forth the high and low sale prices for
the Common Stock for the periods indicated as reported by Nasdaq.  Such prices
represent prices between dealers without adjustment for retail mark-ups,
mark-downs, or commissions and may not necessarily represent actual
transactions.  Such prices have been adjusted to reflect the one-for-four
reverse stock split effected February 6, 1996.


<TABLE>
<CAPTION>
                                              High     Low
                                             -------  ------
COMMON STOCK:                               
<S>                                          <C>      <C>
 1997                                       
   January 1 to March 13                     4 15/16  3 5/16
 1996                                       
   Fourth Quarter                            4 9/16   3 5/16
   Third Quarter                             4 13/16  3 5/8
   Second Quarter                            6 1/8    3 7/8
   First Quarter                             6        3 3/8
 1995                                       
   Fourth quarter                            12 5/8   3 1/2
   Third quarter                             13 1/2   6 1/2
   Second quarter                            10 3/4   5 3/4
   First quarter                             10 3/8   5 1/4
</TABLE>


     On March 13, 1997, the closing price of the Common Stock as reported on
The Nasdaq Stock Market, was $3 7/8 and there were approximately 1500 holders
of record of the Company's Common Stock.  The number of record holders does not
reflect the number of beneficial owners of the Company's Common Stock for whom
shares are held by Cede & Co., certain brokerage firms and other institutions.
The Company has not paid any dividends since its inception and does not
contemplate payment of dividends in the foreseeable future.


ITEM 6. SELECTED FINANCIAL DATA

     Information with respect to this item is incorporated herein by reference
from the Company's 1996 Annual Report to Stockholders.  The applicable portion
of the 1996 Annual Report to Stockholders is included in Exhibit 13.1 to this
report.


                                       11

<PAGE>   13

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
        RESULTS OF OPERATIONS


     Information with respect to this item is incorporated herein by reference
from the Company's 1996 Annual Report to Stockholders.  The applicable portion
of the 1996 Annual Report to Stockholders is included in Exhibit 13.1 to this
report.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Part IV, Item 14 for an index of the statements, notes and schedules.
Information with respect to this item is incorporated herein by reference from
the Company's 1996 Annual Report to Stockholders.  The applicable portion of
the 1996 Annual Report to Stockholders is included in Exhibit 13.1 to this
report.

ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
        FINANCIAL DISCLOSURE


None.

                                   PART III


                                   RIDER 1

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS OF THE REGISTRANT

        The following table lists the names and ages of all directors of the
registrant and all persons  nominated or chosen to become directors, all
positions and offices with the registrant held by each such  person, the
business experience during the past five years of each such person, and any
other directorships  held by such person in companies that are subject to the
reporting requirements of the Securities  Exchange Act of 1934 or in any
company registered as an investment company under the Investment  Company Act
of 1940.  Each of the following directors has served continuously as a director
since the year  in which he was first elected a director, and the term of each
of the following directors ends with the 1997  Annual Meeting of Stockholders
of the registrant.  None of the following persons serves as a director or is 
nominated to be elected a director pursuant to any arrangement or understanding
between him and any  other person(s).


                                       12

<PAGE>   14
<TABLE>
<CAPTION>
Name and Year                              Positions with the Company, Business Experience                       
First Elected Director        Age          During at Least the Past Five Years, and Other Directorships          
----------------------        ---          ------------------------------------------------------------          
<S>                           <C>          <C>
Jack L. Bowman                64           Prior to his retirement at the end of 1993, Mr. Bowman was            
  (1994)                                   Company Group Chairman at Johnson & Johnson Company, a                
                                           position he held from 1987.  From 1991 to 1993, Mr. Bowman was        
                                           responsible for Johnson & Johnson Company's diagnostic, blood         
                                           glucose monitoring, and certain over-the-counter pharmaceutical       
                                           businesses. Prior to that assignment at Johnson & Johnson, he was     
                                           responsible for a major portion of Johnson & Johnson's global         
                                           pharmaceutical businesses.  From 1983 to 1987, he was Executive       
                                           Vice President of American Cyanamid Company where he was              
                                           responsible for the pharmaceutical, medical device and over-the-      
                                           counter and toiletry businesses. Mr. Bowman has also served as        
                                           President, Lederle Laboratories Division and Executive Vice           
                                           President, CIBA-GEIGY Pharmaceutical Division.  Mr. Bowman            
                                           serves as a director of NeoRx Corporation, Pharmagenics, Inc.,        
                                           Cell Therapeutics, Inc. and Coating Technologies International.       
                                           He also is a director of Proceutics, Inc., Vaxcel, Inc. and Vetlife,  
                                           Inc., wholly-owned subsidiaries of CytRx Corporation, and is a        
                                           former member of the Johns Hopkins University Board of Trustees.      
                                                                                                                 
Raymond C. Carnahan, Jr.      71           Mr. Carnahan has over 39 years of experience in cost controls and     
  (1991)                                   operational systems in a variety of industries.  Prior to his         
                                           retirement in 1991, Mr. Carnahan served as Manager,                   
                                           International Cost Analysis planning for Johnson & Johnson            
                                           International from 1974 to 1991.  Mr. Carnahan is an arbitrator for   
                                           the American Arbitration Association and has provided consulting      
                                           services to Waterford-Wedgewood Corporation in England and to         
                                           Torf Pharmaceutical Corporation in Portland.  Mr. Carnahan also       
                                           serves as the Treasurer for the Morristown Memorial Hospital          
                                           Chaplaincy Service in Morristown, New Jersey, and is a director of    
                                           Proceutics, Inc., Vaxcel, Inc. and Vetlife, Inc., wholly-owned        
                                           subsidiaries of CytRx Corporation.                                    

Max Link                      56           Dr. Link joined the Board of Directors in November 1996.  From         
  (1996)                                   May 1993 to June 1994, Dr. Link served as the Chief Executive          
                                           Officer of Corange U.S. Holdings, Inc. (the holding company for        
                                           Boehringer Mannheim Therapeutics, Boehringer Mannheim                  
                                           Diagnostics and DePuy International).  From 1992 to 1993, Dr.          
                                           Link was Chairman of Sandoz Pharma.  From 1990 to 1992, Dr.            
                                           Link was the Chief Executive Officer of Sandoz and from 1987 to        
                                           1989, he was head of the Pharmaceutical Division and a member of       
                                           the Executive Board of Sandoz, Ltd., Basel.  Prior to 1987, Dr.        
                                           Link served in various capacities with the United States operations    
                                           of Sandoz, including President and Chief Operating Officer.  Dr.       
                                           Link also serves on the Boards of Directors of Protein Design          
                                           Laboratories, Alexion Pharmaceuticals, Human Genome Sciences           
                                           and Procept.                                                           
</TABLE>
                                                                       

                                      13
<PAGE>   15

                                                              

<TABLE>
<S>                           <C>          <C>
Jack J. Luchese               48           Mr. Luchese was named President and Chief Executive Officer of      
  (1989)                                   the Company in March, 1989 and became Chairman of the Board         
                                           in June, 1995.  Prior to joining the Company, Mr. Luchese served    
                                           as Vice President and General Manager of the Armour                 
                                           Pharmaceutical Corporation, and as Vice President, Corporate        
                                           Business Development and a member of the Management                 
                                           Committee of Rorer Group, Inc. (now Rhone-Poulenc Rorer).           
                                           Prior to joining Rorer Group, Inc., Mr. Luchese was with Johnson    
                                           & Johnson Company for 15 years where he held various positions      
                                           in business development, licensing, sales, new products marketing,  
                                           and finance.  Mr. Luchese also serves as a director of Proceutics,  
                                           Inc., Vaxcel, Inc. and Vetlife, Inc., wholly-owned subsidiaries of  
                                           CytRx Corporation.                                                  
                                                                    
Herbert H. McDade, Jr.        70           From 1989 to 1996 Mr. McDade was Chairman, President and               
  (1990)                                   Chief Executive Officer of Chemex Pharmaceuticals, Inc.,               
                                           becoming Chairman of Access Pharmaceutical Co. (the successor          
                                           corporation to Chemex) in January, 1996.  From 1986 to 1989 he         
                                           was Chairman and President of Armour Pharmaceutical                    
                                           Corporation, a wholly-owned subsidiary of Rorer Group, Inc. (now       
                                           Rhone-Poulenc Rorer).  Prior to 1986, Mr. McDade served as Vice        
                                           President of  the Revlon Corporation.  Mr. McDade also serves as a     
                                           director of Proceutics, Inc., Vaxcel, Inc. and Vetlife, Inc., wholly-  
                                           owned subsidiaries of CytRx Corporation, and is a member of the        
                                           Board of Trustees of Thomas Acquinas College.                          
</TABLE>
                                                               


EXECUTIVE OFFICERS OF THE REGISTRANT

        Except for Jack J. Luchese, discussed above under "Directors of the
Registrant", The following  table lists the names and ages of all executive
officers of the registrant and all persons chosen to become  executive officers,
all positions and offices with the registrant held by each such person, the
period(s)  during which such person has held such positions and offices and the
business experience during the past  five years of each such person.  Each of
the following executive officers serves until his successor is  elected and
qualifies or until his earlier death, resignation or removal.  None of the
following persons  serves as an officer or is to be selected as an officer
pursuant to any arrangement or understanding  between him and any other
person(s).


                                      14
<PAGE>   16


<TABLE>
<CAPTION>
                                              POSITIONS WITH THE COMPANY AND                           
NAME                         AGE              BUSINESS EXPERIENCE DURING AT LEAST THE PAST FIVE YEARS  
----                         ---              -------------------------------------------------------
<S>                          <C>              <C>                                                                                
R. Martin Emanuele,          42               Dr. Emanuele has been Vice President of Development of the                 
Ph.D.                                         Company since June 1990.  Previously, Dr. Emanuele served as the           
                                              RheothRx project director at the Company.  Before joining CytRx in         
                                              1988, he worked as a clinical research scientist at DuPont Critical Care   
                                              and as a visiting scientist at Institute Choay.                            

William B. Fleck              39              Mr. Fleck joined CytRx in April 1993 as Vice President, Human         
                                              Resources.  From 1992 to 1993 Mr. Fleck served as Director, Human     
                                              Resources and Training for Central Health Services (CHS).  During     
                                              1991, he was Director, Human Resources for Knowledgeware, Inc.        
                                              Prior to joining Knowledgeware, Mr. Fleck held senior human           
                                              resources management positions with MCI Communications from           
                                              1989 to 1991 and Harris/3M from 1984 to 1989.                         
                                                                      
Mark W. Reynolds              35              Mr. Reynolds joined CytRx in 1988 as Controller, becoming Chief        
                                              Financial Officer and Corporate Secretary in November 1996.  Prior to  
                                              joining CytRx, Mr. Reynolds was employed as a certified public         
                                              accountant with Arthur Andersen LLP in Atlanta, Georgia.               
</TABLE>
                                                                       


                           SECTION 16(a) REPORTING

        Section 16(a) of the Securities Exchange Act of 1934 requires the
registrant's directors and  executive officers, and persons who own more than
ten percent of the registrant's common stock, to file  with the Securities and
Exchange Commission initial reports of ownership and reports of changes in 
ownership of common stock and other equity securities of the registrant. 
Directors, executive officers and  greater than ten percent shareholders are
required by Securities and Exchange Commission regulation to  furnish the
registrant with copies of all Section 16(a) reports they file.  To the
registrant's knowledge,  based solely on review of the copies of such reports
furnished to the registrant and written representations  that no other reports
were required, during the year ended December 31, 1996 all Section 16(a) filing 
requirements applicable to directors, executive officers and greater than ten
percent beneficial owners  were complied with by such persons.


ITEM 11.  EXECUTIVE COMPENSATION

        The following table presents certain summary information concerning
compensation paid or  accrued by the Company for services rendered in all
capacities during the fiscal years ended December 31,  1994, 1995 and 1996 for
(i) the President and Chief Executive Officer of the Company; (ii) each of the 
other most highly compensated executive officers of the Company who were serving
as executive officers  at December 31, 1996 and whose total salary and bonus
exceeded $100,000; and (iii) one additional  individual who would have been one
of the registrant's four most highly compensated executive officers  other than
the President and Chief Executive Officer but for the fact that the individual
was not serving as  an executive officer of 


                                      15


<PAGE>   17
the registrant at December 31, 1996 (determined as of December 31, 1996 and 
collectively, the "Named Executive Officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                      Long-Term
                                                                     Compensation
                                                                     ------------       
                                             Annual Compensation     Securities
                                             -------------------     Underlying      All Other
Name and Principal Position        Year      Salary($)    Bonus($)    Options(#)     Compensation($)
---------------------------        ----      ---------    --------    ----------     ---------------
<S>                                <C>      <C>          <C>          <C>           <C>
Jack J. Luchese                    1996     $307,000     $ 80,000     200,000       $  4,750(2)
     President and Chief           1995      295,000       75,000     132,427(1)       4,620(2)
     Executive Officer             1994       64,500      100,000      75,000          4,620(2)

R. Martin Emanuele                 1996      162,500       15,000       5,000          4,750(2)
     Vice President,               1995      157,500       25,000      50,265(1)       4,620(2)
     Preclinical Research &        1994      146,250       17,500       6,250          4,620(2)
     Development

William B. Fleck                   1996      113,500         --        20,000          4,750(2)
     Vice President,               1995      110,000       15,000      17,912(1)       4,620(2)
     Human Resources               1994      105,000       25,000       3,750          4,620(2)

Mark W. Reynolds                   1996       82,333       25,000      25,000          4,750(2)
     Chief Financial Officer       1995       76,000        8,000      36,877(1)       4,620(2)
     Corporate Secretary           1994       71,000        8,000       1,875          4,620(2)

James M. Yahres                    1996      151,000        5,000        --            4,750(2)
     Former Vice President,        1995      146,500       15,000      27,031(1)       4,620(2)
     Finance &                     1994      141,000       25,000       3,750          4,620(2)
     Administration
</TABLE>

------------------

(1)      Includes shares underlying options and warrants which were reissued
         and repriced concurrent with the cancellation of previously issued
         options and warrants

(2)      Amounts represent matching contributions by the Company under the
         Company's 401(k) Profit Sharing Plan.



                                      16
<PAGE>   18

                       OPTION GRANTS IN LAST FISCAL YEAR

         The following table summarizes the stock options and warrants granted
during the fiscal year ended December 31, 1996 to each of the Named Executive
Officers.


<TABLE>
<CAPTION>
                                            Individual Grants
                       ------------------------------------------------------------
                                                                                        Potential Realizable
                         Number of     % of Total                                      Value at Assumed Annual
                         Securities       Options                                       Rates of Stock Price
                         Underlying      Granted to    Exercise or                 Appreciation for Option Term($)             
                          Options        Employees      Base Price    Expiration   -------------------------------
Name                    Granted (#)    in Fiscal Year   ($/Share)        Date            5%              10%
----                    -----------    --------------   ---------        ----            --              ----   
<S>                    <C>              <C>            <C>             <C>          <C>            <C>       
Jack J. Luchese        200,000 (1)       78.4%          $3.69           3/27/06      $463,810       $1,175,385

R. Martin Emanuele       5,000 (2)         2.0           3.63           12/5/06        11,399           28,887

William B. Fleck        20,000 (2)         7.8           3.63           12/5/06        45,595          115,546

Mark W. Reynolds        20,000 (2)         7.8           3.63           12/5/06        45,595          115,546
                         5,000 (2)         2.0           4.00           11/1/06        12,578           31,875
</TABLE>

----------------------------------

(1)      Warrants granted to Mr. Luchese are subject to the terms described
         under "Employment Agreement."
(2)      These options vest in equal annual installations over a three year
         period and are exercisable for ten years from the date of grant.
         Exercise price is based on the market price of CytRx Common Stock as
         of the date of grant.


 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT DECEMBER
                                   31, 1996

         The following table sets forth the number and total value of
unexercised in-the-money options at December 31, 1996 for each of the Named
Executive Officers using the price per share of the Common Stock of $3.44 on
December 31, 1996. No stock options were exercised during 1996 by any of the
Named Executive Officers.

<TABLE>
<CAPTION>
                                     Number of Securities Underlying          Value of Unexercised
                                           Unexercised Options                In-the-Money Options
                                         at December 31, 1996(#)            at December 31, 1996($)
                                         -----------------------            -----------------------
                                      Exercisable     Unexercisable      Exercisable      Unexercisable
                                      -----------     -------------      -----------      -------------
<S>                                     <C>              <C>                 <C>                <C> 
Jack J. Luchese                         632,427          250,000             $  --              $ --
R. Martin Emanuele                       77,764            8,334             8,594                --
William B. Fleck                         17,912           23,750                --                --
Mark W. Reynolds                         21,043           26,875             5,781                --
James M. Yahres                          27,031            3,750                --                --
</TABLE>


EMPLOYMENT AGREEMENT

         Jack J. Luchese was named President and Chief Executive Officer of the
Company in March 1989. Mr. Luchese's current employment agreement was amended
and restated in February 1995 (the "Agreement") to extend his employment with
the Company until December 


                                      17
<PAGE>   19
31, 1998, subject to earlier termination. The Agreement also consolidates
(through cancellation and reissuance) all warrants previously granted to Mr.
Luchese. Under the Agreement, Mr. Luchese is paid an annual base salary of 
$295,000 (effective January 1, 1995), adjusted annually in proportion to the
average annual merit increases for all other employees. In addition to his
annual base salary, Mr. Luchese is eligible to receive cash bonuses with
respect to each calendar year during the term of the Agreement as determined
from time to time by the Board of Directors of the Company in its sole
discretion. The Agreement also contains confidentiality and noncompetition
provisions.

         The Agreement also grants Mr. Luchese warrants to purchase an
aggregate of 682,427 shares of CytRx Common Stock (the "Warrants") subject to
the exercise requirements set forth in the agreement. Warrants to purchase
50,000 shares at $4.50 per share expire on February 22, 2001. Warrants to
purchase 32,427 shares at $7.00 per share expire on March 24, 2003. Warrants to
purchase 100,000 shares at $7.00 per share expire on December 31, 2004.
Warrants to purchase 500,000 shares at $4.50 per share expire on December 31,
2004. As of April 28, 1997, 644,927 of the Warrants are vested. The remaining
Warrants vest at the rate of 6,250 shares at the beginning of each calendar
quarter until October 1, 1998. All of the Warrants that have vested on the
termination of the Agreement may be exercised by Mr. Luchese at any time until
the expiration of the Warrants. In March 1996 Mr. Luchese was granted an
additional warrant to purchase an aggregate of 200,000 shares at $3.69 per
share (the "1996 Warrants"). The 1996 Warrants will vest upon the achievement
of certain corporate financing milestones as set forth in the agreement. As of
April 28, 1997, none of the 1996 Warrants are vested. The shares of stock that
may be acquired upon exercise of the Warrants and 1996 Warrants have been or
will be registered by the Company under the Securities Act of 1933, as amended.
The Warrants contain certain anti-dilution provisions and provide for
accelerated vesting in the event that Mr. Luchese's employment is terminated by
the Board of Directors without cause, in the event of his death or disability
or in the event of a change of control.

         In April 1997, the Company again amended the Agreement in order to
delete the provisions relating to a change in control of the Company. In
consideration of that amendment, the Company has entered into a separate Change
in Control Employment Agreement (the "Change in Control Agreement") with Mr.
Luchese. The Change in Control Agreement will become effective if and when a
Change in Control (as defined) occurs during the three-year period following
the date of the Change in Control Agreement or during any of the one-year
annual renewal periods (the "Change of Control Period"), or if Mr. Luchese's
employment is terminated in connection with or in anticipation of a Change of
Control (in either case, the "Effective Date").

         A Change in Control is defined in the Change in Control Agreement to
include the following: (i) an acquisition (other than directly from the
Company) by an individual, entity or group (excluding the Company or an
employee benefit plan of the Company or a corporation controlled by the
Company's shareholders) of 25% or more of the Company's Common Stock or the
Company's then outstanding voting securities; (ii) a change in a majority of
the current Board of Directors (the "Incumbent Board") (excluding any persons
approved by a vote of at least a majority of the Incumbent Board other than in
connection with an actual or threatened proxy 



                                      18
<PAGE>   20
contest); (iii) consummation of a reorganization, merger, consolidation or sale
of all or substantially all of the Company's assets (collectively, a "Business
Combination") other than a Business Combination in which all or substantially
all of the shareholders of the Company prior to such transaction own, in the
same proportion, more than 60% of the voting power of the entity resulting from
the Business Combination, at least a majority of the board of directors of the
resulting entity were members of the Incumbent Board, and after which no person
(other than the resulting entity and certain affiliates) beneficially owns 25%
or more of the voting power of the resulting entity, except to the extent such
ownership existed prior to the Business Combination; or (iv) the approval by
the Company's stockholders of a complete liquidation or dissolution of the
Company.

         Mr. Luchese's employment period under the Change in Control Agreement
begins on the Effective Date and continues for two years. During the employment
period, Mr. Luchese's position, authority, duties and responsibilities will be
at least commensurate in all material respects with those held by him during
the 120-day period prior to the Change in Control and he will receive (i) a
monthly base salary equal to or greater than the highest monthly base salary
paid to him by the Company during the previous year; (ii) an annual cash bonus
at least equal to the highest bonus paid to him in any of the three fiscal
years prior to the Effective Date, and (iii) the ability to participate in all
incentive, savings, welfare benefit, fringe benefit and retirement plans of the
Company.

         If Mr. Luchese's employment terminates during the employment period he
will receive certain severance benefits under the Change in Control Agreement.
If his employment terminates by reason of his death or disability, he will
receive certain obligations accrued through the date of termination (e.g.,
salary, prorata bonus, deferred compensation and vacation pay) plus the normal
death and disability benefits, if any, to which he is otherwise entitled,
including those under the Agreement. If he is terminated by the Company for
cause (as defined), or if he voluntarily resigns without good reason (as
defined) other than during the 30-day period beginning on the first anniversary
of the Effective Date, he will receive only his accrued benefits through the
termination date and any previously-deferred benefits, plus any other
post-termination benefits, if any, to which he is otherwise entitled, including
those under the Agreement. If he is terminated by the Company (i) without
cause, (ii) resigns voluntarily for good reason, or (iii) resigns for any
reason during the 30-day period beginning on the first anniversary of the
Effective Date, he will receive a lump sum cash payment equal to: (a) his base
salary through the date of termination, (b) a prorata bonus for the year of
termination, based upon his actual bonus earned in the prior year ("Most Recent
Bonus"), (c) an amount equal to two times the sum of his base salary and Most
Recent Bonus, and (d) any unpaid deferred compensation and vacation pay. In
addition, Mr. Luchese would be entitled to continued employee welfare benefits
for two years after the date of termination, and a lump sum payment equal to
the actuarial value of the service and compensation credit under the Company's
qualified and supplemental retirement plans that he would have received had he
remained employed for two years after the date of his termination. Mr. Luchese
will be required to repay to the Company, with interest, the lump-sum benefit
equal to two times the sum of his base salary and Most Recent Bonus if, during
the two-year employment period, he violates a certain non-competition covenant
in the Change in Control Agreement.


                                      19
<PAGE>   21
         If the total payments to Mr. Luchese under the Change in Control
Agreement and from any other source would result in the imposition of an excise
tax under Section 4999 of the Code, the payments will be reduced to the extent
necessary to avoid the imposition of such excise tax, but only if such
reduction would result in a net after-tax benefit to Mr. Luchese. The Change in
Control Agreement further provides that Mr. Luchese has no obligation to
mitigate severance payments, the Company will reimburse Mr. Luchese for all
legal fees incurred in enforcing or contesting the Change in Control Agreement,
and Mr. Luchese will hold for the benefit of the Company all confidential
information concerning the Company obtained over the course of his employment.
The Company will require its successors to expressly assume its obligations
under the Change in Control Agreement.

COMPENSATION OF DIRECTORS

         Directors who are employees of the Company receive no compensation for
their services as directors or as members of committees. Effective in March
1996, the Board compensation structure was revised to eliminate the quarterly
retainers as well as fees for service as a director of wholly-owned
subsidiaries. Non-employee directors now receive a fee of $3,000 for each
two-day Board meeting attended and $500 for each committee meeting attended.
Non-employee directors who chair a Board committee will receive an additional
$250 for each committee meeting attended. Prior to March 1996, non-employee
members of the Board of Directors received a quarterly retainer of $1,000. The
non-employee Chairman of the Board and directors who chaired a Board committee
received an additional quarterly retainer of $250. The non-employee directors
also were eligible to receive fees of $500 and $250 for each
regularly-scheduled Board meeting and committee meeting attended, respectively,
and a fee of $1,000 for each special Board meeting attended. Non-employee
directors who also served on the Board of one of the Company's wholly-owned
subsidiaries also received a quarterly retainer of $1,000 and a fee of $500 for
each subsidiary Board meeting attended.

         Pursuant to the CytRx Corporation 1994 Stock Option Plan (the "Plan"),
non-employee directors receive an initial stock option grant to purchase 5,000
shares upon the date he or she first becomes a member of the Board. Options to
purchase 1,875 shares of Common Stock are granted to each non-employee
director annually. Stock option grants to directors pursuant to the Plans
contain the same terms and provisions as stock option grants to employees,
except that options granted to directors are considered Non-Qualified Stock
Options for income tax reporting purposes. Non-employee directors who also
serve as a director of one of the Company's wholly-owned subsidiaries receive
an initial stock option grant to purchase 5,000 shares of the subsidiary's
common stock upon the date he or she first becomes a member of the subsidiary's
Board and an annual stock option grant to purchase 2,500 shares.

         During 1996, Mr. Raymond C. Carnahan, Jr. performed certain
consultation services for the Company for which he received a fee of $2,000.


                                      20
<PAGE>   22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         There are no "interlocks," as defined by the Securities and Exchange
Commission, with respect to any member of the Compensation Committee. During
1995, Messrs. Bowman, Carnahan, McDade and Vescovi served on the Compensation
Committee.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Based solely upon information made available to the Company, the
following table sets forth certain information with respect to the beneficial
ownership of Common Stock as of April 28, 1997 by (i) each person who is known
by the Company to beneficially own more than five percent of the Common Stock;
(ii) each director and nominee for director of the Company; (iii) each of the
Named Executive Officers (as defined in Item 11 above); and (iv) all executive
officers and directors as a group. Except as otherwise indicated, the holders
listed below have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them.


<TABLE>
<CAPTION>
                                                                               SHARES OF COMMON STOCK
                                                                             ---------------------------
    NAME AND ADDRESS OF BENEFICIAL OWNER                                     NUMBER       PERCENTAGE (1)
    ------------------------------------                                     ------       --------------
    <S>                                                                      <C>               <C>    
    NAMED EXECUTIVE OFFICERS AND DIRECTORS (2):                                                       
       Jack L. Bowman (3)                                                      5,379             *    
       Raymond C. Carnahan, Jr. (4)                                            4,440             *    
       R. Martin Emanuele (5)                                                 89,066            1.2%  
       William B. Fleck (6)                                                   24,073             *    
       Max Link                                                                  -                -   
       Jack J. Luchese (7)                                                   678,988            8.4   
       Herbert H. McDade, Jr. (8)                                             10,333             *    
       Mark W. Reynolds (9)                                                   24,715             *    
         All executive officers and directors as a group (8 persons)                                  
         (10)                                                                846,994           10.4   
                                                                                                      
    OTHER 5% STOCKHOLDERS:                                                                            
       Robert L. Hunter, Jr.                                                 515,428            7.0   
       3640 Churchwell Court
       Tucker, Georgia 30084
</TABLE>

----------------------------------
*      Less than 1%.

(1)      Based on 7,397,067 shares of Common Stock outstanding on April 28,
         1997.
(2)      The business address of all such persons is: c/o CytRx Corporation,
         154 Technology Parkway, Norcross, Georgia 30092.
(3)      Includes options to purchase 4,654 shares of Common Stock exercisable
         within 60 days.
(4)      Includes options to purchase 4,190 shares of Common Stock exercisable
         within 60 days.
(5)      Includes options to purchase 77,764 shares of Common Stock exercisable
         within 60 days.
(6)      Includes options to purchase 17,912 shares of Common Stock exercisable
         within 60 days.
(7)      Includes warrants to purchase 644,927 shares of Common Stock
         exercisable within 60 days.
(8)      Includes options to purchase 7,333 shares of Common Stock exercisable
         within 60 days.
(9)      Includes options to purchase 21,043 shares of Common Stock exercisable
         within 60 days.
(10)     Includes options to purchase 779,823 shares of Common Stock
         exercisable within 60 days.


                                      21
<PAGE>   23

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.


                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

 1. The consolidated financial statements listed below are
    incorporated by reference from the Company's 1996 Annual
    Report to Stockholders:

     Consolidated Balance Sheets as of December 31, 1996
     and 1995

     Consolidated Statements of Operations for the
     Years Ended December 31, 1996, 1995 and 1994

     Consolidated Statements of Stockholders' Equity for
     the Years Ended December 31, 1994, 1995 and 1996

     Consolidated Statements of Cash Flows for the
     Years Ended December 31, 1996, 1995 and 1994

     Notes to Consolidated Financial Statements

     Report of Independent Auditors dated February 19, 1997

 2. Financial Statement Schedules:

     Schedule II - Valuation and Qualifying Accounts for
     the years ended December 31, 1996, 1995 and 1994       Page 25

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

 3. Exhibits required by Item 601 of Regulation S-K:
     See Exhibit Index on page 23 of this Form 10-K.


(b) Reports on Form 8-K:

     On December 6, 1996 a Current Report on Form 8-K was filed
     pertaining to a proposed business combination transaction with
     Zynaxis, Inc.


                                      22
<PAGE>   24


                               CytRx Corporation
                            Form 10-K Exhibit Index


<TABLE>
<CAPTION>

      Exhibit
      Number
      ------
       <S>    <C>                                                     <C>
       2.1    Agreement and Plan of Merger and Contribution
              dated as of December 6, 1996, among CytRx
              Corporation, Vaxcel, Inc., Vaxcel Merger
              Subsidiary, Inc. and Zynaxis, Inc.                      (a)
       3.1    Amended and Restated of Incorporation                   (b)
       3.2    By-Laws                                                 (c)
       10.1   Agreement with Emory University,as amended              (c)
       10.2   Agreement with BASF Corporation, as amended             (c)
      *10.3   Employment Agreement dated March 24, 1989, with
              Jack J. Luchese, as amended                             (b)
      *10.4   1995 Employment Agreement, dated January 1, 1995, with
              Jack J. Luchese                                         (e)
      *10.5   1986 Stock Option Plan, as amended and restated as of 
              May, 1991                                               (b)
      *10.6   1994 Stock Option Plan                                  (d)
      *10.7   1995 Stock Option Plan                                  (f)
       11.1   Computation of Income (Loss) Per Share
       13.1   Portions of the CytRx Corporation 1996 Annual Report
              to Stockholders that are incorporated by reference
              into this report.
       21.1   Subsidiaries of Registrant
       23.1   Consent of Ernst & Young LLP
       27.1   Financial Data Schedule
</TABLE>


* Indicates a management contract or compensatory plan or arrangement.
___________________

(a)  Incorporated by reference to the Registrant's Current Report on Form 8-K
     filed on December 6, 1996.

(b)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
     filed on March 27, 1996.

(c)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-l (File No. 33-8390) filed on November 5, 1986.

(d)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 (File No. 33-93816) filed on June 22, 1995.

(e)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-3 (File No. 33-38206) filed on June 25, 1991.

(f)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 (File No. 33-93818) filed on June 22, 1995.


                                      23
<PAGE>   25
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to its
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                     CYTRX CORPORATION


                                     By: /s/ Jack J.Luchese
                                        --------------------------
                                     Jack J. Luchese, President
Date: April 28, 1997                 and Chief Executive Officer
                                     (Principal Executive Officer)





                                      24

<PAGE>   26

                               CYTRX CORPORATION
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

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

  Allowance for Bad Debts
     Year ended December 31, 1996              $            -   $     2,516      $   45,914     $        -     $    48,430 
     Year ended December 31, 1995                           -             -               -              -               -
     Year ended December 31, 1994                           -             -               -              -               -

  Allowance for Deferred Tax Assets
     Year ended December 31, 1996              $   13,600,000   $ 1,600,000      $        -     $        -     $15,200,000 
     Year ended December 31, 1995                   9,200,000     4,400,000               -              -      13,600,000 
     Year ended December 31, 1994                   6,700,000     2,500,000               -              -       9,200,000 

  Marketable Securities Valuation Reserve
     Year ended December 31, 1996              $            -   $         -      $        -     $        -     $         -
     Year ended December 31, 1995                   2,475,277             -               -      2,475,277               -
     Year ended December 31, 1994                     131,329             -       2,475,277        131,329       2,475,277 
</TABLE>



                                      25