Attached files
file | filename |
---|---|
EXCEL - IDEA: XBRL DOCUMENT - CADUS CORP | Financial_Report.xls |
EX-31.2 - EXHIBIT 31.2 - CADUS CORP | v410210_ex31-2.htm |
EX-31.1 - EXHIBIT 31.1 - CADUS CORP | v410210_ex31-1.htm |
EX-32.1 - EXHIBIT 32.1 - CADUS CORP | v410210_ex32-1.htm |
EX-32.2 - EXHIBIT 32.2 - CADUS CORP | v410210_ex32-2.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 0-28674
CADUS CORPORATION
(Exact Name of Registrant as Specified on its Charter)
Delaware | 13-3660391 | |
(State of Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
767 Fifth Avenue, New York, New York | 10153 | |
(Address of Principal Executive Offices) | (Zip Code) | |
Registrant’s Telephone Number, Including Area Code | (212) 702-4300 |
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b-2 of the Exchange Act). (Check one):
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company x | |
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act).
Yes ¨ No x
The number of shares of registrant’s common stock, $0.01 par value, outstanding as of April 30, 2015 was 26,288,080.
CADUS CORPORATION
INDEX
2 |
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections or expectations of earnings, revenue, financial performance, liquidity and capital resources or other financial items; any statement of our plans, strategies and objectives for our future operations; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumption underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and other similar words. Although Cadus Corporation (the “Company”) believes that the expectations reflected in our forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to the Company's ability to acquire residential homes or land for renovation or construction and resale, the Company’s ability to engage contractors to perform such renovation and construction, the Company’s ability to sell such renovated or new homes at a profit, the Company’s ability to acquire or invest in other businesses or assets, the Company’s capital needs and uncertainty of future funding, as well as other risks and uncertainties discussed in the Company’s annual report on Form 10-K for the year ended December 31, 2014. The forward-looking statements made in this Quarterly Report on Form 10-Q are made only as of the date hereof and the Company does not have or undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances unless otherwise required by law.
3 |
ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Condensed Consolidated Balance Sheets
March 31, 2015 | December 31, 2014 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Assets: | ||||||||
Real estate held for development | $ | 30,590,798 | $ | 30,183,696 | ||||
Cash and cash equivalents | 11,260,618 | 11,877,951 | ||||||
Interest receivable | 93 | 156 | ||||||
Prepaid and other assets | 93,125 | 12,498 | ||||||
Investment in other ventures | 192,977 | 193,101 | ||||||
Patents, net | 1 | 1 | ||||||
Total assets | $ | 42,137,612 | $ | 42,267,403 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Accrued expenses and other liabilities | $ | 178,306 | $ | 84,583 | ||||
Total liabilities | 178,306 | 84,583 | ||||||
Commitments | ||||||||
Stockholders’ equity: | ||||||||
Common stock | 264,297 | 264,297 | ||||||
Additional paid-in capital | 80,291,992 | 80,291,992 | ||||||
Accumulated deficit | (38,296,908 | ) | (38,073,394 | ) | ||||
Treasury stock – at cost | (300,075 | ) | (300,075 | ) | ||||
Total stockholders’ equity | 41,959,306 | 42,182,820 | ||||||
Total liabilities and stockholders’ equity | $ | 42,137,612 | $ | 42,267,403 |
See accompanying notes to condensed consolidated financial statements.
4 |
Condensed Consolidated Statements of Operations
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(Unaudited) | (Unaudited) | |||||||
Total revenues | $ | -0- | $ | -0- | ||||
Costs and expenses: | ||||||||
General and administrative expenses | 208,080 | 253,970 | ||||||
Real estate expenses | 15,589 | 95,747 | ||||||
Amortization of patent costs | -0- | 21,608 | ||||||
Loss from equity in other ventures | 124 | 126 | ||||||
Total costs and expenses | 223,793 | 371,451 | ||||||
Operating loss | (223,793 | ) | (371,451 | ) | ||||
Other income: | ||||||||
Interest income | 279 | 344 | ||||||
Loss before provision for income taxes | (223,514 | ) | (371,107 | ) | ||||
Provision for income taxes | - | - | ||||||
Net loss | $ | (223,514 | ) | $ | (371,107 | ) | ||
Basic and diluted (loss) per weighted average share of common stock outstanding | $ | (0.01 | ) | $ | (0.03 | ) | ||
Weighted average shares of common stock outstanding – basic and diluted | 26,288,080 | 13,144,040 |
See accompanying notes to condensed consolidated financial statements.
5 |
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(Unaudited) | (Unaudited) | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (223,514 | ) | $ | (371,107 | ) | ||
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||||||||
Amortization of patent costs | -0- | 21,608 | ||||||
Loss from equity in other ventures | 124 | 126 | ||||||
Changes in assets and liabilities: | ||||||||
Increase in prepaid and other assets | (80,564 | ) | (37,382 | ) | ||||
Increase in escrow deposits | -0- | (974,500 | ) | |||||
Increase in real estate investments | (407,102 | ) | (10,640,879 | ) | ||||
Increase in accrued expenses and other liabilities | 93,723 | 246,442 | ||||||
Net cash used in operating activities | (617,333 | ) | (11,755,692 | ) | ||||
Financing activities: | ||||||||
Capital contributed by shareholder | -0- | 268,526 | ||||||
Deferred stock registration costs | -0- | (27,424 | ) | |||||
Net cash provided by financing activities | -0- | 241,102 | ||||||
Net decrease in cash and cash equivalents | (617,333 | ) | (11,514,590 | ) | ||||
Cash and cash equivalents - beginning of period | 11,877,951 | 22,134,451 | ||||||
Cash and cash equivalents - end of period | $ | 11,260,618 | $ | 10,619,861 |
See accompanying notes to condensed consolidated financial statements.
6 |
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note - 1 | Organization and Basis of Preparation |
The information presented as of March 31, 2015 and for the three month period 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, 2014 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, 2014.
In connection with the Company’s program for the purchase of individual homes or residential lots for purposes of renovation or construction and resale, in the fourth quarter of 2013 the company formed three new subsidiaries, Blivet LLC, MB 2013 LLC and Happy Dragon LLC.
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 or seek to license its drug discovery technologies.
The results of operations for the three month period ended March 31, 2015 is not necessarily indicative of the results to be expected for the year ending December 31, 2015.
Note - 2 | Cash Equivalents |
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 $10,900,820 at March 31, 2015 and there were cash equivalents of $11,200,483 at December 31, 2014.
Note - 3 | Net (Loss) Per Share |
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 months ended March 31, 2015 and 2014.
Note - 4 | Fair Value of Financial Instruments |
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
7 |
CADUS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note - 4 | Fair Value of Financial Instruments (Continued) |
Company believes the fair value of this investment in a privately held company approximated its carrying value at March 31, 2015 and December 31, 2014.
Note - 5 | Real Estate Operations |
In connection with the Company’s program to purchase residential properties for purposes of renovation or construction and resale, as of March 31, 2015, 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 $15,589 in real estate expenses for the three months ended March 31, 2015, consisting of utilities, maintenance and other operating costs and expenses with respect to properties acquired.
Real estate held for development 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 held for development 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 held for development 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 three months ended March 31, 2015.
Note - 6 | Accrued Expenses |
Accrued expenses consist of the following:
March 31, 2015 | December 31, 2014 | |||||||
Architect costs | $ | -0- | $ | 50,638 | ||||
Franchise tax | -0- | 7,315 | ||||||
Real estate taxes | 73,287 | -0- | ||||||
License fee | 25,000 | -0- | ||||||
Legal | 27,038 | 5,314 | ||||||
Accounting | 32,398 | 2,000 | ||||||
Property maintenance | 7,684 | 3,506 | ||||||
Insurance | 4,772 | 9,544 | ||||||
Director’s fees | 4,875 | -0- | ||||||
Stockholder relations | 2,928 | 6,266 | ||||||
Sundry | 324 | -0- | ||||||
$ | 178,306 | $ | 84,583 |
Note - 7 | Recently Issued Accounting Standards |
Recent accounting pronouncements issued by the FASB, the AICPA and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
8 |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview
The Company was incorporated in 1992 and until July 30, 1999, devoted substantially all of its resources to the development and application of novel yeast-based and other drug discovery technologies. On July 30, 1999, the Company sold its drug discovery assets and ceased its internal drug discovery operations and research efforts for collaborative partners. Subsequent to the sale of its drug discovery assets, the Company had continued to license, and seek to license, its technologies. The Company has received no revenues from the licensing of its technologies since 2010, has not entered into a new license for its technologies since 2000, and has determined not to maintain or seek to license its drug discovery technologies. In recent years, the Company had also sought to use all or a portion of its available cash, and where appropriate, seek additional debt or equity financing, to acquire or invest in one or more companies or other assets. Although it pursued a number of prospective acquisitions, none was consummated.
Since the fourth quarter of 2013, the Company has sought opportunities to profit from purchasing individual homes or individual residential lots for purposes of renovation or construction and resale in Miami-Dade County, Florida, although the Company has also purchased a single-family residential zoned vacant lot in East Hampton, New York. In addition to its real estate activities, the Company may continue to consider acquisitions or investments in various other industries.
At March 31, 2015, the Company had an accumulated deficit of approximately $38.3 million. The Company’s losses have resulted principally from costs incurred in connection with its 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. As a result of the sale of its drug discovery assets and the cessation of its internal drug discovery operations and research efforts for collaborative partners, the Company ceased to have research funding revenues and substantially reduced its operating expenses. 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 Month Ended March 31, 2015 and 2014.
Revenues
There were no revenues for the three months ended March 31, 2015 and for the three months ended March 31, 2014.
Costs and Expenses
General and Administrative Expenses decreased to $208,080 for the three months ended March 31, 2015 from $253,970 for the same period in 2014. Professional fees decreased by $87,207 from those incurred for the three months ended March 31, 2014 in connection with required filings with the SEC in 2014 as a result of the Company ceasing to be a shell company. Payroll and payroll taxes increased by $32,293 due to the employment of the Company’s President for the entire quarter in 2015. Shareholder Relations increased by $8,384 due to the Annual Shareholder’s Meeting in January 2015. There were other net increases of $640.
Real estate expenses for the three months ended March 31, 2015 were $15,589 consisting of maintenance and utilities for properties owned. Real estate expenses for the three months ended March 31, 2014 were
9 |
Results of Operations (Continued)
$95,747 consisting of operating and legal expenses in connection with properties that were acquired and negotiations for properties that were not acquired.
For the three months ended March 31, 2015 and 2014, the Company recognized a loss of $124 and $126, respectively, in its investment in Laurel Partners Limited Partnership.
Interest Income
Interest income for the three months ended March 31, 2015 was $279 compared to interest income of $344 for the same period in 2014. This decrease is attributable primarily to a decrease in funds being invested.
Net (Loss)
Net loss for the three months ended March 31, 2015 was $223,514 compared to a net loss of $371,107 for the same period in 2014. The decrease in net loss can be principally attributed to a decrease in general and administrative expenses of $45,890 and a decrease in real estate expenses of $80,158, a decrease in amortization of patent costs of $21,608 and a decrease in interest income of $65.
Liquidity and Capital Resources
At March 31, 2015, the Company held cash and cash equivalents of $11.3 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.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Under SEC regulations, we are considered a smaller reporting company and are not required to provide the information under this item.
Item 4. CONTROLS AND PROCEDURES
Based on the evaluation of the Company’s disclosure controls and procedures conducted as of the end of the period covered by this report on Form 10-Q, the Company’s President and Chief Executive Officer and the Company’s Treasurer (who performs functions similar to those of a principal financial officer), concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) are effective. In addition, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. It should be noted that any system of controls, however well designed and operated, can provide only reasonable assurance, and not absolute assurance, that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
10 |
Item 1. | Legal Proceedings. |
None.
Item 1A. | Risk Factors. |
There were no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on March 31, 2015.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
None.
Item 3. | Defaults Upon Senior Securities. |
None.
Item 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
Item 5. | Other Information. |
None.
Item 6. | Exhibits. |
The Exhibits listed in the Exhibit Index are included in this quarterly report on Form 10-Q.
11 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CADUS CORPORATION | |||
(Registrant) | |||
Dated: May 15, 2015 | By: | /s/ Hunter C. Gary | |
Hunter C. Gary | |||
President and Chief Executive Officer |
Dated: May 15, 2015 | By: | /s/ David Blitz |
David Blitz | ||
Treasurer and Secretary |
12 |
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
Exhibit No. | Description | |
31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
13 |