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ITEM 1.
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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CADUS CORPORATION
Condensed Consolidated Balance Sheets
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June 30,
2016
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December 31,
2015
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(Unaudited)
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ASSETS
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|
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Assets:
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Real estate inventory
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$
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34,020,047
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$
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32,716,718
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Cash and cash equivalents
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7,447,471
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8,936,147
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Interest receivable
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1,519
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542
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Prepaid and other assets
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57,784
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38,548
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Investment in other ventures
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192,925
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192,692
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Website, net
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16,667
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20,000
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Total assets
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$
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41,736,413
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$
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41,904,647
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Liabilities:
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Accrued expenses and other liabilities
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$
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493,239
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$
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325,216
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Total liabilities
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493,239
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325,216
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Commitments
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Stockholders’ equity:
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Common stock
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264,297
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264,297
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Additional paid-in capital
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80,291,992
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80,291,992
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Accumulated deficit
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(39,013,040
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)
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(38,676,783
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)
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Treasury stock – at cost
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(300,075
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)
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(300,075
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)
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Total stockholders’ equity
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41,243,174
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41,579,431
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Total liabilities and stockholders’ equity
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$
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41,736,413
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$
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41,904,647
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See accompanying notes to condensed consolidated
financial statements.
CADUS CORPORATION
Condensed Consolidated Statements of
Operations
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Three Months Ended
June 30,
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2016
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2015
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(Unaudited)
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(Unaudited)
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Total revenues
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$
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—
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$
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—
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Costs and expenses:
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General and administrative expenses
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94,661
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116,825
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Real estate expenses
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40,048
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16,106
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Amortization of website
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1,666
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—
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(Gain) loss from equity in other ventures
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(163
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)
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315
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Total costs and expenses
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136,212
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133,246
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Operating loss
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(136,212
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)
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(133,246
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)
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Other income:
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Interest income
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4,601
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668
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Loss before provision for income taxes
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(131,611
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)
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(132,578
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)
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Provision for income taxes
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—
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—
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Net loss
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$
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(131,611
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)
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$
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(132,578
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)
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Basic and diluted net (loss) per weighted average share of common stock outstanding
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$
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(0.01
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)
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$
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(0.01
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)
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Weighted average shares of common stock outstanding – basic and diluted
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26,288,080
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26,288,080
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See accompanying notes to condensed consolidated
financial statements.
CADUS CORPORATION
Condensed Consolidated Statements of
Operations
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Six Months Ended
June 30,
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2016
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2015
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(Unaudited)
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(Unaudited)
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Total revenues
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$
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—
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$
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—
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Costs and expenses:
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General and administrative expenses
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283,870
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324,905
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Real estate expenses
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57,787
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31,695
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Amortization of website
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3,333
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—
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(Gain) loss from equity in other ventures
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(233
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)
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439
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Total costs and expenses
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344,757
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357,039
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Operating loss
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(344,757
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)
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(357,039
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)
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Other income:
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Interest income
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8,500
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948
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Loss before provision for income taxes
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(336,257
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)
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(356,091
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)
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Provision for income taxes
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—
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—
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Net loss
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$
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(336,257
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)
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$
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(356,091
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)
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Basic and diluted net (loss) per weighted average share of common stock outstanding
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$
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(0.01
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)
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$
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(0.01
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)
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Weighted average shares of common stock outstanding – basic and diluted
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26,288,080
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26,288,080
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See accompanying notes to condensed consolidated
financial statements.
CADUS
CORPORATION
Condensed Consolidated Statements of
Cash Flows
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Six Months Ended
June 30,
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2016
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2015
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(Unaudited)
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(Unaudited)
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Cash flows from operating activities:
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Net loss
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$
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(336,257
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)
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$
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(356,091
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)
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Adjustments to reconcile net (loss) to net cash (used in) operating activities:
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Amortization of website
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3,333
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—
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(Gain) loss from equity in other ventures
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(233
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)
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439
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Changes in assets and liabilities:
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Increase in prepaid and other assets
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(20,213
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)
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(55,501
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)
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Increase in real estate inventory
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(1,303,329
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)
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(981,090
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)
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Increase in accrued expenses and other liabilities
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168,023
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93,022
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Net cash used in operating activities
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(1,488,676
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)
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(1,299,221
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)
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Net decrease in cash and cash equivalents
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(1,488,676
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)
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(1,299,221
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)
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Cash and cash equivalents - beginning of period
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8,936,147
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11,877,951
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Cash and cash equivalents - end of period
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$
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7,447,471
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$
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10,578,730
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See accompanying notes to condensed consolidated
financial statements.
CADUS CORPORATION
Notes to Condensed Consolidated Financial
Statements (Unaudited)
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Note - 1
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Organization and Basis of Preparation
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The information presented as
of June 30, 2016 and for the three and six month periods then ended is unaudited, but includes all adjustments (consisting only
of normal recurring accruals) that the Company’s management believes to be necessary for the fair presentation of results for the
periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America have been omitted pursuant to the requirements of
the Securities and Exchange Commission, although the Company believes that the disclosures included in these financial statements
are adequate to make the information not misleading. The December 31, 2015 condensed consolidated balance sheet was derived from
audited consolidated financial statements. These financial statements should be read in conjunction with the Company’s annual report
on Form 10-K for the year ended December 31, 2015.
The consolidated financial statements
include the accounts of Cadus and its wholly owned subsidiaries, Cadus Technologies, Inc., Blivet LLC, MB 2013 LLC and Happy Dragon
LLC. All intercompany balances and transactions have been eliminated in consolidation. The Company operates in one segment: the
purchase of homes and land for purposes of renovation or construction and resale. The Company has decided not to maintain its drug
discovery technologies.
The results of operations for
the three and six month periods ended June 30, 2016 are not necessarily indicative of the results to be expected for the year ending
December 31, 2016.
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Note - 2
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Cash Equivalents
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The Company includes as cash
equivalents all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.
There were cash equivalents of $7,209,112 at June 30, 2016 and there were cash equivalents of $8,701,601 at December 31, 2015.
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Note - 3
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Net (Loss) Per Share
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Basic net (loss) per share is
computed by dividing the net (loss) by the weighted average of common shares outstanding. Diluted earnings per share is calculated
based on the weighted average of common shares outstanding plus the effect of common stock equivalents (stock options). There were
no outstanding stock options for the three and six month periods ended June 30, 2016 and 2015.
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Note - 4
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Fair Value of Financial Instruments
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The Company uses financial instruments
in the normal course of its business. The carrying values of cash and cash equivalents and accrued expenses approximate fair value.
The fair value of the Company’s investment in a privately held company is not readily available. The Company believes the fair value
of this investment in a privately held company approximated its carrying value at June 30, 2016 and December 31, 2015.
CADUS CORPORATION
Notes to Condensed Consolidated Financial
Statements (Unaudited)
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Note - 5
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Real Estate Operations
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In connection with the Company’s
program to purchase residential properties for purposes of renovation or construction and resale, as of June 30, 2016, the Company
had purchased for an aggregate original price of approximately $29.9 million, and continued to own, through two indirect wholly-owned
subsidiaries, twelve residential properties in Miami-Dade County, Florida and one residential property in East Hampton, New York.
The company incurred $57,787
in real estate expenses for the six months ended June 30, 2016, and $31,695 for the six months ended June 30, 2015, consisting
of utilities, maintenance, insurance, taxes and other operating costs and expenses with respect to properties owned.
Real estate inventory is recorded
at cost. The cost of residential property includes the purchase price of the property, legal fees and other acquisition costs (e.g.
recording, title search, survey, lien and permit searches, and inspection costs). Costs directly related to planning, developing
and constructing a property are capitalized and classified as real estate inventory in the consolidated balance sheets. Capitalized
development costs include interest, property taxes, insurance, and other direct project costs incurred during the period of development.
After acquisition, real estate
inventory is analyzed periodically for changes in fair values and any subsequent write down is charged to operating expenses. The
Company did not have such a write down during the six months ended June 30, 2016 and 2015.
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Note - 6
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Accrued Expenses
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Accrued expenses consist of
the following:
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June 30, 2016
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December 31, 2015
|
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Real estate taxes
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$
|
217,066
|
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$
|
—
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Real estate costs
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270,106
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|
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283,383
|
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Legal
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|
—
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17,035
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Accounting
|
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|
—
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6,065
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Property expenses
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6,067
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16,853
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Stockholder relations
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—
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1,250
|
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Sundry
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—
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|
|
|
630
|
|
|
|
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$
|
493,239
|
|
|
$
|
325,216
|
|
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Note - 7
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Recently Issued Accounting Standards
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Recent accounting pronouncements
issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future
consolidated financial statements.
CADUS CORPORATION
Notes to Condensed Consolidated Financial
Statements (Unaudited)
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Note - 8
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Subsequent Events
|
The Company has evaluated the
impact of events occurring after June 30, 2016 up to the date of issuance of these consolidated interim financial statements for
adjustment or disclosure.
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ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Overview
The Company seeks opportunities to profit
from the purchase of individual homes or individual residential lots for purposes of renovation or construction and resale. The
Company has completed renovation of one home (located at 3437 N. Moorings Way, Coconut Grove, FL) which has been listed for resale
and is near completion of the renovation of a second home (located at 3506 Main Lodge Road, Coconut Grove, FL) which has already
been listed for resale. In addition, the following six vacant lots are currently listed for sale:
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·
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18970 N. Bay Road, Sunny Isles Beach, FL 33160
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·
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1420 Biscaya Drive, Surfside, FL 33154
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·
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1211 Stillwater Drive, Miami Beach, FL 33141
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·
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700 88th Street, Surfside, FL 33154
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·
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11400 N. Bayshore Drive, North Miami, FL 33181
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·
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11404 N. Bayshore Drive, North Miami, FL 33181
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The Company has started construction of
a new home on its vacant lot located at 2535 Shelter Avenue, Miami Beach, FL 33140 and has listed this property for sale while
under construction. The Company has obtained a permit for construction of a new home at 700 88th Street, Surfside, FL 33154 and
is also in the process of obtaining permits for the construction of a new home on each of two additional lots (located at 2555
Shelter Avenue, Miami Beach, FL 33140 and 241 Atlantic Isle, Sunny Isles Beach, FL 33160). In addition to its real estate activities,
the Company may consider acquisitions or investments in other industries.
At June 30, 2016, the Company had an accumulated
deficit of approximately $39.0 million. The Company’s losses have resulted principally from costs incurred in connection
with its prior biomedical research and development activities and from general and administrative costs associated with the Company’s
operations. These costs have exceeded the Company’s revenues and interest income. The Company expects to generate revenues
in the future only if it is able to profit from its real estate operations.
Results of Operations
Three Months Ended June 30, 2016 and 2015.
Revenues
There were no revenues for the three months
ended June 30, 2016 and for the three months ended June 30, 2015.
Costs and Expenses
General and administrative expenses decreased
to $94,661 for the three months ended June 30, 2016 from $116,825 for the same period in 2015. Professional and consulting fees
decreased by $10,869. Rent decreased by $3,150 due to the Company no longer leasing storage space. Patent costs decreased by $3,571
due to the Company no longer maintaining its drug discovery technologies. There were other net decreases totaling $4,574.
Results of Operations (Continued)
Real estate expenses for the three months
ended June 30, 2016 were $40,048 consisting of maintenance and utilities for properties owned. Real estate expenses for the three
months ended June 30, 2015 were $16,106. The expenses for the three months ended June 30, 2016 include real estate taxes and insurance
on the completely renovated property.
For the three months ended June 30, 2016
and 2015, the Company recognized a gain of $163 and a loss of $315, respectively, in its investment in Laurel Partners Limited
Partnership.
Interest Income
Interest income for the three months ended
June 30, 2016 was $4,601 compared to interest income of $668 for the same period in 2015. This increase is attributable primarily
to an increase in interest rates.
Net (Loss)
Net loss for the three months ended June
30, 2016 was $131,611 compared to net loss of $132,578 for the same period in 2015. The decrease in the net loss can be principally
attributed to a decrease in general and administrative expenses of $22,164, an increase in interest income of $3,933, and an increase
in gain from equity in other ventures of $478, offset by an increase in real estate expenses of $23,942 and a $1,666 increase in
amortization of website.
Six Months Ended June 30, 2016 and 2015.
Revenues
There were no revenues for the six months
ended June 30, 2016 and for the six months ended June 30, 2015.
Costs and Expenses
General and administrative expenses decreased
to $283,870 for the six months ended June 30, 2016 from $324,905 for the same period in 2015. License fees and patent costs decreased
by $28,772 due to the Company no longer maintaining its drug discovery technologies. Professional and consulting fees decreased
by $15,215. Rent decreased by $4,200 due to the Company no longer leasing storage space. In connection with closing of the storage
facility, the Company paid $6,266 for shredding and transferring records. There were other net increases of $886.
Real estate expenses for the six months ended June 30, 2016
were $57,787 consisting of maintenance and utilities for properties owned. Real estate expenses for the six months ended June 30,
2015 were $31,695. The expenses for the six months ended June 30, 2016 include real estate taxes and insurance on the completely
renovated property.
For the six months ended June 30, 2016
and 2015, the Company recognized a gain of $233 and a loss of $439 respectively, in its investment in Laurel Partners Limited Partnership.
Interest Income
Interest income for the six months ended
June 30, 2016 was $8,500 compared to interest income of $948 for the same period in 2015. This increase is attributable primarily
to an increase in interest rates.
Results of Operations (Continued)
Net (Loss)
Net (loss) for the six months ended June
30, 2016 was $336,257 compared to net loss of $356,091 for the same period in 2015. The decrease in the net loss can be attributed
to a decrease in general and administrative expenses of $41,035, an increase in interest income of $7,552, and an increase in gain
from equity in other ventures of $672, offset by an increase in real estate expenses of $26,092 and a $3,333 increase in amortization
of website.
Liquidity and Capital Resources
At June 30, 2016, the Company held cash
and cash equivalents of $7.4 million.
Depending on the availability of transactions
acceptable to the Company in connection with its real estate activities, all or a portion of the Company’s available cash
may be utilized, and the Company may seek debt or additional equity financing. The Company’s capital requirements may vary
as a result of a number of factors, including the transactions, if any, arising from the Company’s efforts to acquire, renovate,
construct and sell residential properties. There can be no assurance that the Company will raise sufficient capital on a timely
basis or on satisfactory terms or at all to meet such capital requirements.