UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the quarterly period ended September 30, 2022
   
or
 
☐ 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: 000-50587

 

WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   13-4005439

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

118 North Bedford Road, Ste. 100, Mount Kisco, NY 10549
(Address of principal executive offices) (Zip code)

 

(914) 242-5700
(Registrant’s telephone number, including area code)

 

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 ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐   Accelerated filer ☐
Non-accelerated filer ☒   Smaller reporting company ☒
    Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒  No ☐

 

Securities registered pursuant to Section 12(b) of the Act:           None 

 

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class Trading Symbol (s) Name of each exchange on which registered
     
Common Stock, $0.01 par value IWSH OTC

 

As of November 11, 2022, there were 20,335,711 shares of the registrant’s common stock, $0.01 par value, outstanding. 

 

 

   
 

 

WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.

 

TABLE OF CONTENTS

 

  Part I.  Financial Information Page No.
     
Item 1. Financial Statements of Wright Investors’ Service Holdings, Inc. 1
     
  Condensed Consolidated Statements of Operations-
Three Months and Nine Months Ended September 30, 2022 and 2021 (Unaudited)		 1
     
  Condensed Consolidated Statement of Comprehensive Loss-
Three Months and Nine Months Ended September 30, 2022 and 2021 (Unaudited)		 2
     
 

Condensed Consolidated Balance Sheets -
September 30, 2022 (Unaudited) and December 31, 2021

 3
     
 

Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2022 and 2021 (Unaudited)

 4
     
 

Condensed Consolidated Statement of Changes in Stockholders’ Equity-
Three Months and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

 5
     
 

Notes to Condensed Consolidated Financial Statements -
Three Months and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

 6
     
     
     
Item 2.

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

 10
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
     
Item 4. Controls and Procedures 13
     
  Part II. Other Information  
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
     
Item 5. Other Information 14
     
Item 6. Exhibits 15
   
SIGNATURES 16

 

   

 

PART I. FINANCIAL INFORMATION

 

Item 1.Financial Statements.

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2022   2021   2022   2021 
                 
Expenses                    
Compensation and benefits  $110   $111   $340   $335 
Other operating   167    187    579    558 
    277    298    919    893 
Loss from operations   (277)   (298)   (919)   (893)
Interest and other income, net   15    
-
    18    53 
Loss from operations before income taxes   (262)   (298)   (901)   (840)
Income tax expense   
-
    (1)   
-
    (2)
Net loss  $(262)  $(299)  $(901)  $(842)
                     
Basic and diluted weighted average common shares outstanding
   20,495,711    20,357,195    20,469,581    20,245,169 
                     
Basic and diluted loss per share
  $(0.01)  $(0.01)  $(0.04)  $(0.04)

 

See accompanying notes to condensed consolidated financial statements.

 

 1 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(in thousands, except per share amounts)

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2022   2021   2022   2021 
                 
Net loss  $(262)  $(299)  $(901)  $(842)
Unrealized gain on available for sale securities    4    
-
    4    
-
 
Comprehensive loss  $(258)  $(299)  $(897)  $(842)

 

See accompanying notes to condensed consolidated financial statements.

 

 2 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

   September 30,   December 31, 
   2022   2021 
   (unaudited)      
Assets          
Current assets          
Cash and cash equivalents  $2,068   $5,396 
Income tax receivable   73    73 
Prepaid expenses and other current assets   34    46 
Investments in U.S. Treasury Bills   2,421    
-
 
Total current assets   4,596    5,515 
           
Other assets   8    8 
           
Total assets  $4,604   $5,523 
           
Liabilities and stockholders’ equity          
Current liabilities          
           
Accounts payable and accrued expenses  $57   $93 
Total current liabilities   57    93 
           

Total liabilities

  $57   $93 
           

Stockholders’ equity

          
Preferred stock, par value $0.01 per share, authorized 10,000,000 shares; none issued   
-
    
-
 
           
Common stock, par value $0.01 per share, authorized 30,000,000 shares; Issued 21,343,680 and 21,025,748 as of September 30, 2022 and December 31, 2021, respectively; Outstanding 20,335,711 and 20,210,529 at September 30, 2022 and December 31, 2021, respectively, and 160,000 and 215,632 shares issuable as of September 30, 2022 and December 31, 2021, respectively   213    210 
           
Additional paid-in capital   34,375    34,316 
Accumulated deficit   (28,298)   (27,397)
Accumulated other comprehensive income   4    
-
 
Treasury stock, at cost (1,007,969 shares at September 30, 2022 and 815,219 at December 31, 2021)   (1,747)   (1,699)
Total stockholders' equity   4,547    5,430 
Total liabilities and stockholders’ equity  $4,604   $5,523 

 

See accompanying notes to condensed consolidated financial statements.

 

 3 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

   Nine Months Ended
September 30,		 
   2022   2021 
Cash flows from operating activities          
           
Net loss  $(901)  $(842)
Adjustments to reconcile net loss to net cash used in operating activities:          
Equity based compensation, including vesting of stock to directors   62    70 
Gain on extinguishment of debt   
-
    (53)
Changes in other operating items:          
Prepaid expenses and other current assets   12    (2)
Accounts payable and accrued expenses   (36)   (8)
Net cash used in operating activities   (863)   (835)
           

Cash flows from investing activities

          
Purchases of U.S. Treasury Bills   (2,417)   - 
Net cash used in investing activities   (2,417)   - 
           
Cash flows from financing activities          
Purchase of Treasury Stock   (48)   
-
 
Net cash used in financing activities   (48)   
-
 
           
Net decrease in cash and cash equivalents   (3,328)   (835)
Cash and cash equivalents at the beginning of the period   5,396    6,469 
Cash and cash equivalents at the end of the period  $2,068   $5,634 
           
           
           
Supplemental disclosures of cash flow information          
Net cash paid during the period for income taxes  $
-
   $3 
Unrealized gain on available for sale securities  $4    $
- 
 

 

See accompanying notes to condensed consolidated financial statements. 

 

 4 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

THREE AND NINE MONTHS ENDED September 30, 2022 and 2021

(UNAUDITED)

 

(in thousands, except per share data)

 

                   Accumulated       Total 
           Additional       other   Treasury   stock- 
   Common stock (Issued)   paid -in   Accumulated   comprehensive   stock, at   Holders 
   shares   amount   capital   deficit   income   cost   Equity 
Balance at December 31, 2020   20,654,996   $206   $34,226   $(26,279)  $-   $(1,699)  $6,454 
Net loss   -    
-
    
-
    (249)   
-
    
-
    (249)
Equity based compensation expense   -    
-
    3    
-
    
-
    
-
    3 
Stock based compensation expense to directors   -    
-
    20    
-
    
 
    
-
    20 
Balance at March 31, 2021   20,654,996   $206   $34,249   $(26,528)  $-   $(1,699)  $6,228 
Net loss   -    
-
    
-
    (294)   
-
    
-
    (294)
Equity based compensation expense   -    
-
    4    
-
    
-
    
-
    4 
Stock based compensation expense to directors   -    
-
    20    
-
    
-
    
-
    20 
Balance at June 30, 2021   20,654,996   $206   $34,273   $(26,822)  $
-
   $(1,699)  $5,958 
Net loss   -    
-
    -    (299)   
-
    
-
    (299)
Equity based compensation expense   -    
-
    3    
-
    
-
    
-
    3 
Stock based compensation expense to directors   370,752    4    16    
-
    
-
    
-
    20 
Balance at September 30, 2021   21,025,748   $210   $34,292   $(27,121)  $
-
   $(1,699)  $5,682 

 

 

                                   
Balance at December 31, 2021   21,025,748   $210   $34,316   $(27,397)  $
-
   $(1,699)  $5,430 
Net loss   -    
-
    
-
    (314)   
-
    
-
    (314)
Equity based compensation expense   100,000    1    1    
-
    
-
    
-
    2 
Stock based compensation expense to directors   -    
-
    20    
-
    
-
    
-
    20 
Balance at March 31, 2022   21,125,748   $211   $34,337   $(27,711)  $
-
   $(1,699)  $5,138 
Net loss   -    
-
    
-
    (325)   
-
    
-
    (325)
Purchase of Treasury Stock   -    
-
    
-
    
-
    
-
    (48)   (48)
Stock based compensation expense to directors   217,932    2    18    
-
    
-
    
-
    20 
Balance at June 30, 2022   21,343,680   $213   $34,355   $(28,036)  $
-
   $(1,747)  $4,785 
Net loss   -    
-
    
-
    (262)   
-
    
-
    (262)
Other comprehensive income   -    
-
    
-
    
-
    4    
-
    4 
Stock based compensation expense to directors   -    
-
    20    
-
    
-
    
-
    20 
Balance at September 30, 2022   21,343,680   $213   $34,375   $(28,298)  $4   $(1,747)  $4,547 

 

See accompanying notes to condensed consolidated financial statements.

 

 5 

 

WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.

 

Notes to Condensed Consolidated Financial Statements

 

Three months ended September 30, 2022 and 2021

 

(unaudited)

 

1.Basis of presentation and description of activities

 

Basis of presentation

 

The accompanying interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  The information and note disclosures normally included in complete financial statements have been condensed or omitted pursuant to such rules and regulations.  The Condensed Consolidated Balance Sheet as of December 31, 2021 has been derived from audited financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 as presented in our Annual Report on Form 10-K. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation. The results for the 2022 interim period are not necessarily indicative of results to be expected for the entire year.

 

Description of activities

 

Wright Investors’ Service Holdings, Inc. (the “Company”) has nominal operations and nominal assets aside from its cash and cash equivalents, and is therefore considered a shell company, as defined in U.S. securities laws and regulations. The Company is not engaged in the business of investing, reinvesting, or trading in securities, and it does not hold itself out as being engaged in those activities.

 

The Company intends to evaluate and explore all available strategic options. The Company will continue to work to maximize stockholder value. Such strategic options may include acquisition of an investment advisory business, acquisition of a financial services business, creating partnerships or joint ventures for those or other businesses and investing in other businesses that provide attractive opportunities for growth. The directors will also consider alternatives for distributing some or all of the Company’s cash and cash equivalents. Until such time as a decision is made as to how the liquid assets of the Company are so deployed, the Company intends to invest its liquid assets in high-grade, short- term investments (such as cash and cash equivalents) consistent with the preservation of principal, maintenance of liquidity and avoidance of speculation.

 

The Company may be classified as an inadvertent investment company if the Company acquires investment securities in excess of 40% of its total assets. As of September 30, 2022, the Company is not considered an inadvertent investment company.

 

2.New accounting guidance not yet adopted

 

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-13 (ASU 2016-13) "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. The standard, as amended, is effective for periods beginning after December 15, 2022 for both interim and annual periods. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-13 to have an impact on its condensed consolidated financial statements.

 

3.Per share data

 

Loss per share for the three months ended September 30, 2022 and 2021, respectively, is calculated based on 20,495,711 and 20,357,195 weighted average outstanding shares of common stock, including weighted average issuable shares of 160,000 and 146,666 at September 30, 2022 and 2021, respectively.

 

 6 

 

Loss per share for the nine months ended September 30, 2022 and 2021, respectively, is calculated based on 20,469,581 and 20,245,169 weighted average outstanding shares of common stock, including weighted average 152,276 and 294,166 shares which are issuable at September 30, 2022 and 2021, respectively.

 

4.Investment valuation

 

The Company carries its investments at fair value. Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction costs. A fair value hierarchy provides for prioritizing inputs to valuation techniques used to measure fair value into three levels:

 

Level 1   Unadjusted quoted prices in active markets for identical assets or liabilities.
     
Level 2   Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.
     
Level 3   Unobservable inputs. Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.

 

An asset or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 or Level 2 assets or liabilities.

 

As of September 30, 2022 and December 31, 2021, the Company held $2,421,000 and $5,250,000 in U.S. government debt securities. U.S. government securities are valued using a model that incorporates market observable data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. U.S. government debt securities are categorized in Level 2 of the fair value hierarchy, depending on the inputs used and market activity levels for specific securities. The U.S. government debt securities, which have maturities of three months or less at time of purchase, are reported as Cash and cash equivalents, and those with longer maturities are reported as investments, on the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021. 

 

Short-term investments in marketable securities have a stated maturity of twelve months or less from the balance sheet date. These securities are considered as available for sale and are reported at fair value. Unrealized gains and losses would be recorded net of tax as a component of Accumulated other comprehensive income within Shareholders' equity. Declines in market value from the original cost deemed to be "other-than-temporary" are charged to Interest and other income, net, in the period in which the loss occurs. The Company considers both the duration for which a decline in value has occurred and the extent of the decline in its determination of whether a decline in value has been “other than temporary.” Realized gains and losses are calculated based on the specific identification method and are included in Interest and other income, net, in the Condensed Consolidated Statement of Operations.

 

 7 

 

The following table presents the Company’s financial instruments at fair value (in thousands):

 

  

Fair Value Measurements

as of September 30, 2022

 
  

 

 

 

 

 

9/30/2022

   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		  

 

Significant
Other
Observable
Inputs
(Level 2)

  

 

 

Significant
Unobservable
Inputs
(Level 3)

 
                     
Investments in U.S. Treasury bills  $2,421   $
            -
   $2,421   $
        -
 

 

 

  

Fair Value Measurements

as of December 31, 2021

 
  

 

 

 

 

 

12/31/2021

   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		  

 

Significant
Other
Observable
Inputs
(Level 2)

  

 

 

Significant
Unobservable
Inputs
(Level 3)

 
                     
U.S. Treasury bills included in cash and cash equivalents  $5,250   $
            -
   $5,250   $
        -
 

 

Investments in debt securities as of September 30, 2022 are summarized by type below (in thousands).

 

  

Amortized

Cost

  

Unrealized

Gains

  

Unrealized

Losses

  

Fair

Value

 
U.S. Treasury bills  $2,417   $4   $
-
   $2,421 
                     
Total  $2,417   $       4   $
       -
   $2,421 

 

5.Income taxes

 

No tax benefit has been recorded in relation to the pre-tax loss for the three and nine months ended September 30, 2022 and 2021, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses.

 

6.Capital Stock

 

The Company’s Board of Directors, without any vote or action by the holders of common stock, is authorized to issue preferred stock from time to time in one or more series and to determine the number of shares and to fix the powers, designations, preferences and relative, participating, optional or other special rights of any series of preferred stock.

 

The Board of Directors authorized the Company to repurchase up to 5,000,000 outstanding shares of common stock from time to time either in open market or privately negotiated transactions. On April 5, 2022, in accordance with the Board of Directors’ prior authorization, the Company purchased 192,750 shares of its common stock in a privately negotiated transaction at a price of $0.25 per share for an amount of approximately $48,000. At September 30, 2022, the Company had repurchased 2,234,721 shares of its common stock and a total of 2,765,279 of the authorized shares, remained available for repurchase as of September 30, 2022.

 

 8 

 

During the quarter ended September 30, 2022, a) the Company incurred $20,000 of director fees payable in 80,000 shares of its common stock to the independent directors of the Company, in payment of quarterly directors’ fees due to them for services in the third quarter of 2022, which were not issued as of September 30, 2022. As of September 30, 2022, there were 160,000 shares of Company common stock to be issued to the independent directors of the Company, in payment of quarterly directors’ fees due to them for services in the second and third quarters of 2022. The equity compensation awards were issued pursuant to the exemption from the registration requirements of Section 5 of the Securities Act of 1933 (“1933 Act”) provided by Section 4(a)(2) of the 1933 Act.

 

7.Incentive stock plans and stock-based compensation

 

Stock awards

 

On February 13, 2019, 100,000 stock awards were issued to a newly appointed director of the Company. The stock awards vest equally, annually, over 3 years. The stock awards are valued based on the closing price of $0.42 of the Company’s common stock on February 13, 2019. At September 30, 2022, all shares had vested and were issued.

 

The Company recorded compensation expense of zero and approximately $3,000 for each of the three months ended September 30, 2022 and 2021, respectively, related to those stock awards. The Company recorded compensation expense of approximately $1,750 and $10,300 for each of the nine months ended September 30, 2022 and 2021, respectively, related to those stock awards. There was no unrecognized compensation expense related to these unvested stock awards at September 30, 2022. 

 

Common stock options

 

The Company adopted a stock-based compensation plan for employees and non-employee members of its Board of Directors in November 2003 (the “2003 Plan”), and the National Patent Development Corporation 2007 Incentive Stock Plan in December 2007 (the “2007 NPDC Plan”). The periods during which additional awards may be granted under the plans have expired and no further awards may be granted under any of these plans after December 20, 2017. As a consequence, any equity compensation awards issued after that time will be on terms determined by the Board of Directors or the Compensation Committee of the Board of Directors and pursuant to exemptions from the registration requirements of the securities laws.

 

As of September 30, 2022, all options were vested and there were no outstanding options under the 2007 NPDC Plan. There were no grants, forfeitures or exercises of options during the three and nine months ended September 30, 2022.

 

 9 

 

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Cautionary Statement Regarding Forward-Looking Statements

 

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward looking statements. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. The words “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “could,” “project,” “predict,” “expect,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements.

 

Factors that may cause actual results to differ from those results expressed or implied, include, but are not limited to, those listed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 11, 2022.

 

These forward-looking statements generally relate to our plans, objectives and expectations for future events and include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts.  These statements are based upon our opinions and estimates as of the date they are made.  Although we believe that the expectations reflected in these forward-looking statements are reasonable, such forward-looking statements are subject to known and unknown risks and uncertainties that may be beyond our control, which could cause actual results, performance and achievements to differ materially from results, performance and achievements projected, expected, expressed or implied by the forward-looking statements.  While we cannot assess the future impact that any of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our common stock, the differences could be significant. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report and you are urged to consider all such risks and uncertainties. In light of the uncertainty inherent in such forward-looking statements, you should not consider their inclusion to be a representation that such forward-looking matters will be achieved. 

 

General Overview

 

The Company is a “shell company”, as defined in Rule 12b-2 of the Exchange Act.  Because we are a shell company, our stockholders are unable to utilize Rule 144 to sell “restricted stock” as defined in Rule 144 or to otherwise use Rule 144 to sell our securities, and we are ineligible to utilize registration statements on Form S-3 or Form S-8 for so long as we remain a shell company and for 12 months thereafter.  As a consequence, among other things, the offering, issuance and sale of our securities is likely to be more expensive and time consuming and may make our securities less attractive to investors.

 

The Company’s Board of Directors is considering strategic uses for its funds to develop or acquire interests in one or more operating businesses.  While we have focused our development or acquisition efforts on sectors in which our management has expertise, we do not wish to limit ourselves to, or to foreclose any opportunities in, any particular industry or sector.  Prior to this use, the Company’s funds have been, and we anticipate will continue to be, invested in high-grade, short-term investments (such as cash and cash equivalents) consistent with the preservation of principal, maintenance of liquidity and avoidance of speculation, until such time as we need to utilize such funds, or any portion thereof, for the purposes described above.   The directors will also consider alternatives for distributing some or all of its cash and cash equivalents to stockholders.

 

Results of operations

 

Three months ended September 30, 2022 compared to the three months ended September 30, 2021

 

For the three months ended September 30, 2022, the Company had a loss from operations before income taxes of $262,000 compared to a loss from operations before income taxes of $298,000 for the three months ended September 30, 2021.

 

The decreased loss before income taxes of $36,000 was primarily a result of a decrease in Other operating expenses of $20,000, increase in Interest and other income of $15,000, and a decrease of compensation of $1,000 for the three months ended September 30, 2022.

 

Compensation and benefits

 

For the three months ended September 30, 2022, Compensation and benefits were $110,000 as compared to $111,000 for the three months ended September 30, 2021.

 

 10 

 

Other operating expenses

 

For the three months ended September 30, 2022, Other operating expenses were $167,000 as compared to $187,000 for the three months ended September 30, 2021. The decreased operating expenses of $20,000 were primarily the result of decreased insurance expenses of $21,000, increased professional fees of $3,000, and decreased other expenses of $2,000.

 

Interest and other income

 

For the three months ended September 30, 2022, Interest and other income was $15,000 as compared to zero for the three months ended September 30, 2021. The increased interest and other income of $15,000 was primarily the result of the investments in U.S. Treasury securities and the resulting interest income of $15,000 during the three months ended September 30, 2022.

 

Income taxes

  

For the three months ended September 30, 2022 and 2021, the Company recorded zero and approximately $1,000 income tax expense from operations, respectively. No tax benefit has been recorded in relation to the pre-tax loss for the three months ended September 30, 2022 and 2021, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses. 

 

Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

 

For the nine months ended September 30, 2022, the Company had a loss from operations before income taxes of $901,000 compared to a loss from operations before income taxes of $840,000 for the nine months ended September 30, 2021. 

 

The increased loss before income taxes of $61,000 was primarily the result of an increase in Other operating expenses of $21,000, and increase in Compensation and benefits of $5,000, offset by a decrease in Interest and other income of $35,000.

 

Compensation and benefits

 

For the nine months ended September 30, 2022, Compensation and benefits were $340,000 as compared to $335,000 for the nine months ended September 30, 2021.

 

The increased Compensation and benefits of $5,000 is the result of an increase in salary expense for the nine months ended September 30, 2022 in comparison to the nine months ended September 30, 2021.

 

Other operating expenses

 

For the nine months ended September 30, 2022, Other operating expenses were $579,000 as compared to $558,000 for the nine months ended September 30, 2021. The increased operating expenses of $21,000 were primarily the result of increased professional fees of $19,000, decreased insurance expenses of $11,000, and increased other expenses of $13,000.

 

Interest and other income

 

For the nine months ended September 30, 2022, Interest and other income was $18,000 as compared to $53,000 for the nine months ended September 30, 2021. The decreased interest and other income of $35,000 was primarily the result of the investments in U.S. Treasury securities and the resulting interest income of $18,000, offset by decreased other income due to the extinguishment of debt of $53,000 during the nine months ended September 30, 2021.

 

Income taxes

  

For the nine months ended September 30, 2022 and 2021, the Company recorded zero and approximately $2,000 income tax expense from operations, respectively. No tax benefit has been recorded in relation to the pre-tax loss for the nine months ended September 30, 2022 and 2021, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses. 

 

 11 

 

Financial condition

 

Liquidity and Capital Resources

 

At September 30, 2022, the Company had cash and cash equivalents totaling $2,068,000, which it intends to use to acquire interests in one or more operating businesses, to fund the Company’s general and administrative expenses, and the directors will also consider alternatives for distributing some or all of its cash and cash equivalents to stockholders. The Company believes that its working capital is sufficient to support its operating requirements through November 30, 2023.

 

Cash equivalents represent short-term, highly liquid investments, which are readily convertible to cash and have maturities of three months or less at time of purchase. Please refer to note 4 for valuation of Investments.

 

The decrease in cash and cash equivalents of $3,328,000 for the nine months ended September 30, 2022 was primarily the result of $863,000 used in operating activities, investment in U.S. Treasury Bills of $2,417,000, and the repurchase of Treasury stock for $48,000.

 

 12 

 

Item 3.Quantitative and Qualitative Disclosures About Market Risk

 

Not required.

 

Item 4.Controls and Procedures

 

The Company’s principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon such evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

 

The Company’s principal executive officer and principal financial officer have also concluded that there was no change in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 13 

 

PART II. OTHER INFORMATION

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

 

Purchases of Equity Securities

 

The Board of Directors authorized the Company to repurchase up to 5,000,000 outstanding shares of common stock from time to time either in open market or privately negotiated transactions. On April 5, 2022, in accordance with the Board of Directors’ prior authorization, the Company purchased 192,750 shares of its common stock in a privately negotiated transaction at a price of $0.25 per share for an amount of approximately $48,000. At September 30, 2022, the Company had repurchased 2,234,721 shares of its common stock and a total of 2,765,279 of the authorized shares, remained available for repurchase as of September 30, 2022.

 

Item 5.Other Information

 

None

 

 14 

 

Item 6.Exhibits.

 

Exhibit
No.     		   Description
     
31.1 *      Certification of principal executive officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)
     
31.2 * Certification of principal financial officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)
     
32.1 * Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the principal executive officer of the Company and the principal financial officer of the Company
     
101.INS ** XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
     
101.SCH ** XBRL tags are embedded within the Inline XBRL document
     
101.CAL ** Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF ** Inline XBRL Taxonomy Extension Definition Linkbase Document.
     
101.LAB ** Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **   

Inline XBRL Taxonomy Extension Presentation Linkbase Document

     
104 ** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

___________________

 

*Filed herewith

 

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

 

 15 

 

SIGNATURES

 

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. 

 

  WRIGHT INVESTORS’ SERVICE HOLDINGS, INC  
   

 

 

 

  
Date:  November 14, 2022 By: /s/ HARVEY P. EISEN  
    Name: Harvey P. Eisen  
    Title:

Chairman, President, and Chief Executive Officer

(Principal Executive Officer)

  

 

 

 

 

 

Date:  November 14, 2022 By: /s/ HAROLD D. KAHN  
    Name: Harold D. Kahn  
    Title:

Acting Chief Financial Officer and Acting Principal
Accounting Officer

(Principal Financial Officer)

  

 

 

16

 

 

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Wright Investors Service (PK) (USOTC:IWSH)
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Wright Investors Service (PK) (USOTC:IWSH)
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