Cadus (KDUS) 10-Q 14 May 18 2018 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Entity Registrant Name	CADUS CORP
Entity Central Index Key	911,148
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	KDUS
Entity Common Stock, Shares Outstanding		26,288,080

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Assets:
Real estate inventory	$ 35,570,260	$ 35,439,481
Cash and cash equivalents	2,307,960	2,828,695
Interest receivable	2,552	2,412
Prepaid and other assets	168,505	105,515
Investment in other venture	195,655	194,842
Website, net	5,002	6,668
Total assets	38,249,934	38,577,613
Liabilities:
Accrued expenses	653,711	325,627
Total liabilities	653,711	325,627
Commitments
Stockholders’ equity:
Common stock	264,297	264,297
Additional paid-in capital	80,291,992	80,291,992
Accumulated deficit	(42,659,991)	(42,004,228)
Treasury stock - at cost	(300,075)	(300,075)
Total stockholders’ equity	37,596,223	38,251,986
Total liabilities and stockholders’ equity	$ 38,249,934	$ 38,577,613

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Total revenues	$ 0	$ 0
Costs and expenses:
General and administrative expenses	144,979	145,578
Pending merger fees (Note 2)	475,614	0
Real estate expenses	53,737	78,646
Amortization of website	1,666	1,667
Gain on involuntary conversion	(12,000)	0
Equity in earnings in other venture	(813)	(266)
Total costs and expenses	663,183	225,625
Operating loss	(663,183)	(225,625)
Other income:
Interest income	7,420	6,247
Net loss	$ (655,763)	$ (219,378)
Basic and diluted net (loss) per weighted average share of common stock outstanding (in dollars per share)	$ (0.02)	$ (0.01)
Weighted average shares of common stock outstanding - basic and diluted (in shares)	26,288,080	26,288,080

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income (loss)	$ (655,763)	$ (219,378)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Amortization of website	1,666	1,667
Equity in earnings in other venture	(813)	(266)
Changes in assets and liabilities:
(Increase) in prepaid and other assets	(63,130)	(11,578)
(Increase) in real estate inventory	(73,710)	(515,436)
Increase in accrued expenses	271,015	191,483
Net cash provided by (used in) operating activities	(520,735)	(553,508)
Financing activities
Net increase (decrease) in cash and cash equivalents	(520,735)	(553,508)
Cash and cash equivalents - at beginning of period	2,828,695	5,675,047
Cash and cash equivalents - at end of period	$ 2,307,960	$ 5,121,539

Organization and Basis of Prepa

Organization and Basis of Preparation	3 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]	Note - 1 Organization and Basis of Preparation The information presented as of March 31, 2018 and for the three months 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, 2017 condensed consolidated balance sheet was derived from audited consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 2017. The consolidated condensed financial statements include the accounts of the Company 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 patents from its prior biomedical research and development activities and has had no revenues from the licensing of its patents since 2010. The results of operations for the three month period ended March 31, 2018 is not necessarily indicative of the results to be expected for the full year ending December 31, 2018.

Pending Merger

Pending Merger	3 Months Ended
	Mar. 31, 2018
Business Combinations [Abstract]
Business Combination Disclosure [Text Block]	Note – 2 Pending Merger On January 20, 2018, the Company entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, Starfire Holding Corporation (“Parent”) and Parent’s wholly-owned subsidiary, Cadus Merger Sub LLC (“Merger Sub”), in accordance with the terms and subject to the conditions of which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Parent (the “Merger”). At the effective time of the Merger, each outstanding share of the Company’s Common Stock (other than certain shares as set forth in the Merger Agreement) will automatically be converted into the right to receive an amount in cash equal to $ 1.61 Completion of the Merger is subject to certain conditions, including, among others: (i) receipt of the requisite vote of the Company’s stockholders adopting the Merger Agreement (including the vote of stockholders holding a majority of the outstanding shares not owned by Parent, Merger Sub, or any of their affiliates); (ii) the absence of any order or law prohibiting the Merger; (iii) the accuracy of the parties’ respective representations and warranties, subject in some instances to materiality or “Material Adverse Effect” qualifiers, as of the date of the Merger Agreement and the closing date of the Merger; (iv) the parties’ respective performance in all material respects of their respective agreements and covenants contained in the Merger Agreement at or prior to the closing of the Merger; and (v) the absence of a “Material Adverse Effect” with respect to the Company, since the execution of the Merger Agreement. There can be no assurance that the closing conditions will be satisfied, or that the Merger will be completed within the required time period pursuant to the Merger Agreement. Satisfaction of the closing conditions may delay the completion of the Merger, and if certain closing conditions are not satisfied prior to June 30, 2018, the parties will not be obligated to complete the Merger.

Cash Equivalents

Cash Equivalents	3 Months Ended
	Mar. 31, 2018
Cash and Cash Equivalents [Abstract]
Cash and Cash Equivalents Disclosure [Text Block]	Note - 3 Cash Equivalents The Company includes as cash equivalents all highly liquid investments with original maturities of three months or less when purchased. There were cash equivalents of $ 1,856,908

Concentration of Credit Risk

Concentration of Credit Risk	3 Months Ended
	Mar. 31, 2018
Risks and Uncertainties [Abstract]
Concentration Risk Disclosure [Text Block]	Note - 4 Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. Concentration of credit risk with respect to cash and cash equivalents is limited, as the Company’s cash and cash equivalents are primarily with high quality financial institutions.

Net (Loss) Per Share

Net (Loss) Per Share	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Earnings Per Share [Text Block]	Note - 5 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. There were no outstanding common stock equivalents for the three month periods ended March 31, 2018 and 2017.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2018
Fair Value Disclosures [Abstract]
Fair Value Disclosures [Text Block]	Note - 6 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, prepaid expenses and other assets, 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 March 31, 2018 and December 31, 2017 because the only asset held by the underlying investee was cash and cash equivalents.

Variable Interest Entity

Variable Interest Entity	3 Months Ended
	Mar. 31, 2018
Variable Interest Entity [Abstract]
Variable Interest Entity Disclosure [Text Block]	Note - 7 Variable Interest Entity The Company evaluated whether the Company’s investment in other ventures is a variable interest and concluded that it is a variable interest. The Company then evaluated whether Laurel Partners Limited Partnership (“Laurel”) is a variable interest entity. The Company, as the limited partner, has no substantive kick out rights, nor any substantive participating rights, therefore, Laurel Partners Limited Partnership is a variable interest entity. In order to determine whether the Company is the primary beneficiary of Laurel, the Company evaluated the extent of its power over the activities that most significantly impact Laurel’s economic performance. Based on this evaluation, the Company concluded that it was not the primary beneficiary and, therefore, would not consolidate Laurel. The Company has no obligations to make any additional capital contributions or fund any operating losses and the only amount at risk is the remaining investment balance.

Real Estate Operations

Real Estate Operations	3 Months Ended
	Mar. 31, 2018
Real Estate [Abstract]
Real Estate Disclosure [Text Block]	Note - 8 Real Estate Operations As of March 31, 2018, the Company had purchased for an aggregate original price of approximately $ 29.9 The Company incurred $ 53,737 78,646 Real estate inventory is recorded at cost upon acquisition. 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. The Company signed a contract to sell the home located at 3437 N. Moorings Way, Coconut Grove, Florida. The closing is anticipated to be held in June 2018. After acquisition, real estate inventory is analyzed quarterly 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, 2018 and 2017.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2018
Payables and Accruals [Abstract]
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]	Note - 9 Accrued Expenses Accrued expenses consist of the following: March 31, December 31, Real estate costs and retainage $ 273,410 $ 303,057 Real estate taxes 106,460 -- Pending merger fees 266,900 21,882 Property expenses 2,641 -- Other 4,300 688 $ 653,711 $ 325,627

Recently Issued Accounting Stan

Recently Issued Accounting Standards	3 Months Ended
	Mar. 31, 2018
Accounting Changes and Error Corrections [Abstract]
Accounting Changes and Error Corrections [Text Block]	Note - 10 Recently Issued Accounting Standards Recent accounting pronouncements issued by the Financial Accounting Standards Board are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2018
Payables and Accruals [Abstract]
Schedule of Accrued Liabilities [Table Text Block]	Accrued expenses consist of the following: March 31, December 31, Real estate costs and retainage $ 273,410 $ 303,057 Real estate taxes 106,460 -- Pending merger fees 266,900 21,882 Property expenses 2,641 -- Other 4,300 688 $ 653,711 $ 325,627

Pending Merger (Details Textual

Pending Merger (Details Textual)	Jan. 20, 2018$ / shares
Business Acquisition [Line Items]
Business Acquisition, Share Price	$ 1.61

Cash Equivalents (Details Textu

Cash Equivalents (Details Textual) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Cash and Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	$ 1,856,908	$ 2,549,633

Real Estate Operations (Details

Real Estate Operations (Details Textual)	3 Months Ended
	Mar. 31, 2018USD ($)	Mar. 31, 2017USD ($)
Real Estate Properties [Line Items]
Real Estate Expense	$ 53,737	$ 78,646
Property In Miami-Dade Country [Member]
Real Estate Properties [Line Items]
Number of Real Estate Properties	12
Real Estate Investment Property, at Cost, Total	$ 29,900,000
Property In East Hampton, New York. [Member]
Real Estate Properties [Line Items]
Number of Real Estate Properties	1

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Accrued Expenses and Other Current Liabilities [Line Items]
Real estate costs and retainage	$ 273,410	$ 303,057
Real estate taxes	106,460	0
Pending merger fees	266,900	21,882
Property expenses	2,641	0
Other	4,300	688
Accrued Expenses	$ 653,711	$ 325,627