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EX-32 - EXHIBIT 32 - Wright Investors Service Holdings, Inc.ex32.htm
EX-31.2 - EXHIBIT 31.2 - Wright Investors Service Holdings, Inc.ex31_2.htm
EX-31.1 - EXHIBIT 31.1 - Wright Investors Service Holdings, Inc.ex31_1.htm
EX-21 - EXHIBIT 21 - Wright Investors Service Holdings, Inc.ex21.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

(Mark One)

xANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2019

 

oTRANSITION REPORT UNDER 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)

  (IRS Employer Identification Number)

 

  118 North Bedford Road, Ste. 100, Mount Kisco, NY 10549  
  (Address of Principal Executive Offices, including Zip Code)  

 

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

 

Securities registered pursuant to Section 12(b) of the Act:   None
     
Securities registered pursuant to Section 12(g) of the Act:   Common Stock, $0.01 Par Value
    (Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o    No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes o   No x

 

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 o

 

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted 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  o

 

  
 

 

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 o   Accelerated filer o
Non-accelerated filer x   Smaller reporting company x
    Emerging growth company o

 

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.  o

 

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

 

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant, computed by reference to the price at which the common stock was last sold, or the average bid and asked price of such common stock, as of the last business day of the registrant’s most recently completed second quarter, is $4,000,000.

 

As of March 15, 2020, 19,839,777 shares of the registrant’s common stock were outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Part III of this report incorporates certain information by reference from the registrant’s proxy statement for the 2019 annual meeting of stockholders, or an amendment to this Annual Report on Form 10-K, to be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2019. 

 

 

  
 

 

TABLE OF CONTENTS

 

  Page
 
PART I
Item 1. Business 2
Item 1A. Risk Factors 3
Item 1B. Unresolved Staff Comments 5
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Mine Safety Disclosures 7
 
PART II
 
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 7
Item 6. Selected Financial Data 7
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 7
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 10
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 26
Item 9A. Controls and Procedures 26
Item 9B. Other Information 26
 
PART III
Item 10. Directors, Executive Officers and Corporate Governance 27
Item 11. Executive Compensation 27
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 27
Item 13. Certain Relationships and Related Transactions, and Director Independence 27
Item 14. Principal Accounting Fees and Services 27
Item 15. Exhibits and Financial Statement Schedules 27
Item 16. Form 10-K Summary 28
 
PART IV
     
SIGNATURES 29

 

 i 

 

Cautionary Statement Regarding Forward-Looking Statements

 

This Annual Report on Form 10-K 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.

 

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.

 

Factors that may cause actual results to differ from historical results or those results expressed or implied, include, but are not limited to, those listed below under Item 1A. “Risk Factors”.

 

If significant risks and uncertainties occur, or if our estimates or underlying assumptions prove inaccurate, actual results could differ materially.  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.

 

Additional information concerning the factors that could cause actual results to differ materially from those in the forward-looking statements is contained in Item 1. “Business”, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and elsewhere in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission (the “SEC”).  We undertake no obligation to publicly revise any forward-looking statements or cautionary factors, except as required by law.

 

 1 

 

PART I

 

Item 1.  Business.

 

General Development of Business

 

Wright Investors’ Service Holdings, Inc. (formerly National Patent Development Corporation) (the “Company”, “Wright Holdings”, “we” or “us”) was incorporated on March 10, 1998 as a wholly-owned subsidiary of GP Strategies Corporation (“GP Strategies”) and in November 2004, the Company’s common stock was spun-off to holders of record of GP Strategies common stock and GP Strategies Class B capital stock.  The Company’s common stock is quoted on the OTC Pink Sheets and is traded under the symbol “WISH”.

 

The Company currently has a substantial portion of its assets consisting of cash and cash equivalents; it also owns certain impaired value land and water flowage rights.

 

Sale of The Winthrop Corporation

 

On April 11, 2018, the Board of Directors of the Company voted to enter into an Agreement providing for the sale of The Winthrop Corporation (“Winthrop”), to Khandwala Capital Management, Inc., a company principally owned and controlled by Amit S. Khandwala, the Co-Chief Executive Officer and Chief Investment Officer of Winthrop, prior to the Sale, for $6,000,000, subject to certain adjustments for intercompany accounts at closing (the “Sale”).

 

The Sale was approved by the Company’s stockholders on July 16, 2018 at the annual stockholders meeting, and the Sale was completed on July 17, 2018. The Company received $6,000,000 in cash as well as $173,000 from Winthrop for repayment of the intercompany balance between the Company and Winthrop.

 

Winthrop’s results of operations through July 16, 2018 have been accounted for as a discontinued operation in the accompanying Consolidated Statement of Operations for the year ended December 31, 2018.

 

Description of the Business of the Company after the Sale

 

Following the Sale, we remain a public company. We have and will continue to evaluate and potentially explore all available strategic options. We will continue to work to maximize stockholder value. Such strategic options may include developing or acquiring a majority interest or at least a controlling interest (as defined for purposes of the Investment Company Act of 1940, as amended (the “Investment Company Act”) in a company (or companies) with principal business operations in an industry that we believe will provide attractive opportunities for growth. We are not limited to any particular industry or type of business. The directors will also consider alternatives for distributing some or all of the proceeds to stockholders. Until such time as a decision is made as to how the proceeds from the Sale and other liquid assets of the Company are so deployed, we intend to invest the proceeds and our other 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.

 

After the Sale, the Company had no or nominal operations and, as a result, we are a “shell company”, as defined in Rule 405 of the Securities Act of 1933, as amended, or the Securities Act, and Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a shell company, our stockholders will be unable to utilize Rule 144 of the Securities Act, or Rule 144 to sell “restricted stock” as defined in Rule 144 or otherwise use Rule 144 to sell stock of the Company, and we would be 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. Among other things, as a consequence, 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.

 

We are not engaged in the business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in those activities. However, under the Investment Company Act, a company may fall within the scope of being an “inadvertent investment company” under section 3(a)(1)(C) of such Act if the value of its investment securities (as defined in the Investment Company Act) is more than 40% of its total assets (exclusive of government securities and cash and certain cash equivalents).

 

See “Risk Factors” The Company may be classified as an inadvertent investment company” and “The Company is a shell company under the federal securities laws.”

 

 2 

 

Employees

 

The Company has 2 full-time employees as of December 31, 2019.

 

Connecticut Property

 

The Company has interests in land and certain flowage rights in undeveloped property (the “properties”) primarily located in Killingly, Connecticut. The properties were fully impaired as of December 31, 2018.

 

Item 1A.  Risk Factors.

 

RISK FACTORS

 

You should carefully consider the following risk factors relating to our business and the additional information in our other reports that we file with the SEC.

 

The Company may be classified as an inadvertent investment company if we acquire investment securities in excess of 40% of our total assets.

 

The Company is not engaged in the business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in those activities. However, under the Investment Company Act, a company may fall within the scope of being an “inadvertent investment company” under section 3(a)(1)(C) of such Act if the value of its investment securities (as defined in the Investment Company Act) is more than 40% of its total assets (exclusive of government securities and cash and certain cash equivalents).

 

If the Company was required to register as an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for the Company to continue its business as contemplated and could have a material adverse effect on us.

 

The Investment Company Act and the rules thereunder contain detailed requirements for the organization and operation of investment companies. If we were required to register under the Investment Company Act, applicable restrictions and other requirements could have a material adverse effect on us. In the event that we were to be required to register as an investment company under the Investment Company Act, we would be forced to comply with substantive requirements under the Act, including:

 

·limitations on our ability to borrow;

 

·limitations on our capital structure;

 

·limitations on the issuance of debt and equity securities,

 

·restrictions on acquisitions of interests in partner companies;

 

·prohibitions on transactions with affiliates;

 

·prohibitions on the issuance of options and other limitations on our ability to compensate key employees;

 

·certain governance requirements,

 

·restrictions on specific investments; and

 

·reporting, record-keeping, voting and proxy disclosure requirements.

 

In the event that we were to be deemed to be an investment company subject to registration as such under the Investment Company Act, compliance costs and burdens upon us may increase and the additional requirements may constrain our ability to conduct business, which may adversely affect our business, results of operations or financial condition.

 

 3 

 

The Company is a shell company under the federal securities laws.

 

Following consummation of the Sale, the Company has no or nominal operations. Pursuant to Rule 405 of the Securities Act and Exchange Act Rule 12b-2, a shell company is defined as a registrant that has no or nominal operations, and either:

 

·no or nominal assets;

 

·assets consisting solely of cash and cash equivalents; or

 

·assets consisting of any amount of cash and cash equivalents and nominal other assets.

 

Our consolidated balance sheet reflects that after closing, our assets consist primarily of cash and cash equivalents. Accordingly, after consummation of the Sale, we became a shell company. Applicable securities rules prohibit shell companies from using a Form S-8 registration statement to register securities pursuant to employee compensation plans and from utilizing Form S-3 for the registration of securities for so long as the Company is a shell company and for 12 months thereafter.

 

Additionally, Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being a shell company. To the extent that we acquire a business in the future, we must file a current report on Form 8-K containing the financial and other information required in a registration statement on Form 10 within four business days following completion of such a transaction.

 

To assist the SEC in the identification of shell companies, we are required to check a box on our quarterly reports on Form 10-Q and our annual reports on Form 10-K indicating that we are a shell company.

 

Since we are required to comply with additional disclosure because we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company. In addition, under Rule 144 of the Securities Act, a holder of restricted securities of a “shell company” is not allowed to resell their securities in reliance upon Rule 144. Preclusion from any prospective purchase using the exemptions from registration afforded by Rule 144 may make it more difficult for us to sell equity securities in the future and the inability to utilize registration statements on Forms S-8 and S-3 would likely increase our cost to register securities in the future. Additionally, the loss of the use of Rule 144 and Forms S-3 and S-8 may make investments in our securities less attractive to investors and may make the offering and sale of our securities to employees, directors and others under compensatory arrangements more expensive and less attractive to recipients.

 

Unless we select a particular industry or target business with which to complete a business combination, you will be unable to ascertain the risks of the industry or business in which we may ultimately operate.

 

The Company may develop or acquire a majority interest or at least a controlling interest (as defined for purposes of the Investment Company Act) in a company (or companies) with principal business operations in an industry that we believe will provide attractive opportunities for growth. We are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible risks of the particular industry in which we may ultimately operate. Although we will evaluate the risks inherent in a particular target business, we cannot assure you that all of the significant risks present in that target business will be properly assessed. Even if we properly assess those risks, some of them may be outside of our control or ability to affect.

 

Resources will be expended in researching potential acquisitions that might not be consummated.

 

The investigation of target businesses and the negotiation, drafting and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention in addition to costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond our control.

 

There can be no guarantee that we will quickly identify a potential target business or complete a business combination.

 

The process to identify potential acquisition targets, to investigate and evaluate the future business prospects thereof and to negotiate an acceptable purchase agreement with one or more target companies can be time consuming and costly. The Company may incur operating losses, resulting from payroll, rent and other overhead and professional fees, while we are searching for a business to develop or acquire.

 

 4 

 

Following the sale of The Winthrop Corporation, the Company has no revenue from operations; therefore, our existing assets may be diminished and ultimately depleted by our corporate overhead and other expenses.

 

Following the Sale, the Company has no revenue from operations and have been experiencing significant negative cash flow. Expenditures related to corporate overhead generated and other related items are expensed. Until such time as we develop or acquire an operating business or businesses that generate revenue, we will continue to deplete our existing assets.

 

Risks Related to Our Stock

 

The Company has agreed to restrictions and adopted policies that could have possible anti-takeover effects and reduce the value of our stock.

 

Several provisions of our Certificate of Incorporation and Bylaws could deter or delay unsolicited changes in control of the Company. These include limiting the stockholders’ powers to amend the Bylaws or remove directors and prohibiting the stockholders from increasing the size of the Board of Directors or acting by written consent instead of at a stockholders’ meeting. Our Board of Directors has the authority, without further action by the stockholders to fix the rights and preferences of and issue preferred stock. These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in control or management of the Company including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices. These provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interests.

 

Risks Related to Owning Our Common Stock

 

A large portion of our common stock is held by a small group of large shareholders. Future sales of our common stock in the public market by the Company or its large stockholders could adversely affect the trading price of our common stock.

 

As of December 31, 2019, Bedford Oak Advisors, LLC and William H. Miller beneficially owned 27.78% and 14.47% of the Company’s common stock, respectively. Bedford Oak Advisors, LLC is controlled by Mr. Harvey P. Eisen, the Company’s Chairman and Chief Executive Officer. Mr. Eisen beneficially owned at such date an aggregate of 29.04% of the Company’s common stock, which percentage includes the 27.78% beneficially owned by Bedford Oak Advisors, LLC. The Company has entered into Investor Rights Agreements with former Winthrop stockholders that received shares of our common stock in connection with a prior acquisition. The Investor Rights Agreement is a registration rights agreement, which include both customary demand and “piggyback” registration provisions, allow the respective stockholders to cause us to file one or more registration statements for the resale of their respective shares of the Company’s common stock and cooperate in certain underwritten offerings. Sales by us or our large stockholders of a substantial number of shares of our common stock in the public market pursuant to registration rights or otherwise, or the perception that these sales might occur, could cause the market price of our common stock to decline.

 

Our common stock is thinly traded, which can cause volatility in its price.

 

Our stock is thinly traded due to our small market capitalization and the high level of ownership of our common stock by a small group of shareholders.  Thinly traded stock can be more susceptible to market volatility.  This market volatility could significantly affect the market price of our common stock without regard to our operating performance.

 

Possible additional issuances of our stock will cause dilution.

 

At December 31, 2019, we had outstanding 19,839,777 shares of our common stock. In addition, there are options to purchase a total of 550,000 shares of common stock, all of which are exercisable as of December 31, 2019. The Company is authorized to issue up to 30,000,000 shares of common stock and are therefore able to issue additional shares without being required under corporate law to obtain shareholder approval.  If we issue additional shares, or if our existing shareholders exercise their outstanding options, our other shareholders may find their holdings drastically diluted, which if it occurs, means they would own a smaller percentage of our Company.

 

Item 1B.  Unresolved Staff Comments.

 

None.

 

 5 

 

Item 2.  Properties.

 

In August 2014, the Company entered into a five-year sublease in Greenwich, Connecticut for 10,000 square feet of office space which expired on September 30, 2019. In July 2019, the Company entered into a six-month lease for office space in a building located in Mt. Kisco, NY. The lease commenced on September 1, 2019 and expires on February 29, 2020, after which it will be renewed on a monthly basis for $3,800 per month.

 

Item 3.  Legal Proceedings.

 

On September 26, 2014, the Connecticut Department of Energy and Environmental Protection (“DEEP”) issued two Orders requiring the investigation and repair of two dams in which the Company and its subsidiaries have certain ownership interests.  The first Order required that the Company investigate and make specified repairs to the ACME Pond Dam located in Killingly, Connecticut.  The second Order, as subsequently revised by DEEP on October 10, 2014, required that the Company investigate and make specified repairs to the Killingly Pond Dam located in Killingly, Connecticut.  The Company administratively appealed and contested the allegations in both Orders.  On July 27, 2017, the Company entered into a Consent Order with the DEEP relative to Killingly Pond Dam. The Killingly Pond Consent Order required the Company to continue to perform routine maintenance and administrative procedures consistent with DEEP’s Dam Safety regulations, the cost of which was not material to the Company’s financial position or results of operations.

 

On July 27, 2018, the Company entered into a Consent Order with the DEEP relative to Acme Pond Dam. The Acme Pond Dam Consent Order required the Company to investigate and recommend repairs to Acme Pond Dam. Based up on the work performed by the Company’s retained consulting engineering firm, the Company submitted its recommended Action Plan (the “Action Plan”) for Acme Pond Dam pursuant to the Consent Order on November 30, 2017 and such recommended Action Plan was approved by DEEP as submitted on May 23, 2019. The estimated cost of contracted work to be performed under the Action Plan was $90,000 and was accrued for at December 31, 2018. Total expenses, including professional fees, for the repair work conducted in accordance with the Action Plan during the year ending December 31, 2019 were approximately $150,000.

 

All repair work required for both the ACME Pond Dam and the Killingly Pond Dam was completed as of December 31, 2019. DEEP issued a Certificate of Compliance for Consent Order for the ACME Pond Dam on February 7, 2020. The Company is currently waiting for the final administrative sign off for Killingly Pond Dam. On February 11, 2020, the Company and its representatives met with the Town of Killingly Town Council to discuss a proposed ownership transfer of the properties to the Town of Killingly or a group of interested parties. The proposal is currently under the review of the Town of Killingly Town Council, in conjunction with the Town Manager.

 

Indemnification of Directors and Officers

 

Section 145 of the Delaware General Corporation Law (the “DGCL”) provides, generally, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (except actions by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A corporation may similarly indemnify such person for expenses actually and reasonably incurred by such person in connection with the defense or settlement of any action or suit by or in the right of the corporation, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, in the case of claims, issues and matters as to which such person shall have been adjudged liable to the corporation, provided that a court shall have determined, upon application, that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

 

The Company’s certificate of incorporation and bylaws provide that, subject to limited exceptions and requirements, the Company is required to indemnify its directors and officers, and each person serving at the request of the Company as a director, officer, incorporator, partner, manager or trustee of another entity, to the fullest extent permitted by the DGCL.  The Company’s bylaws also provide that, subject to limited exceptions and requirements, the Company is required to advance to such person’s expenses (including attorney’s fees) incurred by them in defending and preparing for the defense of any proceeding or investigation in respect of which indemnification may be available.

 

 6 

 

Section 102(b)(7) of the DGCL provides, generally, that the certificate of incorporation of a corporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision may not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section 174 of Title 8 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. No such provision may eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provision became effective.  The Company’s certificate of incorporation contains such a provision limiting the personal liability of the Company’s directors to the extent permitted by the DGCL. 

 

Item 4.  Mine Safety Disclosures

 

None.

 

PART II

 

Item 5.  Market for the Registrant’s Common Equity and Related Stockholder Matters.

 

The Company’s common stock, $0.01 par value, is quoted on the OTC Pink Sheets under the symbol “WISH”.  Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

 

The Company did not declare or pay any cash dividends on its common stock in 2019 or 2018. The Company currently intends to retain future earnings to finance the growth and development of its business however, the directors will also consider alternative for distributing some or all of its cash and cash equivalents to stockholders.

 

Issuer 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. At December 31, 2019 and 2018, the Company had repurchased an aggregate of 2,041,971 shares of its common stock and a total of 2,958,029 shares remained available for repurchase at December 31, 2019 and 2018, pursuant to the 5,000,000 shares repurchase plans. The Company did not repurchase any common stock during the year ended December 31, 2019.

 

Item 6.  Selected Financial Data.

 

Not required.

 

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

General Overview

 

On July 17, 2018, we completed the Sale of The Winthrop Corporation to Khandwala Capital Management, Inc., a company principally owned and controlled by Amit S. Khandwala, the Co-Chief Executive Officer and Chief Investment Officer of Winthrop, prior to the Sale, for $6,000,000, subject to certain adjustments for intercompany accounts at closing (see Note 1 to the Consolidated Financial Statements).  See “Item 1. Business – General Development of Business”.

 

The Winthrop Corporation’s results of operations through July 17, 2018 has been accounted for as a discontinued operation in the Consolidated Statements of Operations for the year ended December 31, 2018.

 

Upon the consummation of the Sale of The Winthrop Corporation, we became 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.  See “Item 1. Business –Sale of Winthrop Corporation”, and “Item 1A. Risk Factors”.

 

 7 

 

Our Board of Directors is considering strategic uses for the Sale of The Winthrop Corporation proceeds including, without limitation, using such funds, together with other funds of the Company, 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 Sale of The Winthrop Corporation proceeds 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 (see Note 1 to the Consolidated Financial Statements). 

 

Investments

 

Investment in undeveloped properties.

 

The Company owns certain non-strategic assets, which includes an investment in land and certain flowage rights in undeveloped property (the “properties”) primarily located Killingly, Connecticut, which were fully impaired as of December 31, 2018, due to the Company's belief that the value of the land is nominal as a result of ongoing remediation efforts and no active market for sale of such land.

 

Environmental matters

 

On September 26, 2014, the Connecticut Department of Energy and Environmental Protection (“DEEP”) issued two Orders requiring the investigation and repair of two dams in which the Company and its subsidiaries have certain ownership interests.  The first Order required that the Company investigate and make specified repairs to the ACME Pond Dam located in Killingly, Connecticut.  The second Order, as subsequently revised by DEEP on October 10, 2014, required that the Company investigate and make specified repairs to the Killingly Pond Dam located in Killingly, Connecticut.  The Company administratively appealed and contested the allegations in both Orders.  On July 27, 2017, the Company entered into a Consent Order with the DEEP relative to Killingly Pond Dam. The Killingly Pond Consent Order required the Company to continue to perform routine maintenance and administrative procedures consistent with DEEP’s Dam Safety regulations, the cost of which was not material to the Company’s financial position or results of operations.

 

On July 27, 2018, the Company entered into a Consent Order with the DEEP relative to Acme Pond Dam. The Acme Pond Dam Consent Order required the Company to investigate and recommend repairs to Acme Pond Dam. Based up on the work performed by the Company’s retained consulting engineering firm, the Company submitted its recommended Action Plan (the “Action Plan”) for Acme Pond Dam pursuant to the Consent Order on November 30, 2017 and such recommended Action Plan was approved by DEEP as submitted on May 23, 2019. The estimated cost of contracted work to be performed under the Action Plan was $90,000 and was accrued for at December 31, 2018. Total expenses, including professional fees, for the repair work conducted in accordance with the Action Plan during the year ending December 31, 2019 were approximately $150,000.

 

All repair work required for both the ACME Pond Dam and the Killingly Pond Dam was completed as of December 31, 2019. DEEP issued a Certificate of Compliance for Consent Order for the ACME Pond Dam on February 7, 2020. The Company is currently waiting for the final administrative sign off for Killingly Pond Dam. On February 11, 2020, the Company and its representatives met with the Town of Killingly Town Council to discuss a proposed ownership transfer of the properties to the Town of Killingly or a group of interested parties. The proposal is currently under the review of the Town of Killingly Town Council, in conjunction with the Town Manager.

 

Management discussion of critical accounting policies

 

The following discussion and analysis of the financial condition and results of operations are based on the consolidated financial statements and notes to consolidated financial statements contained in this report that have been prepared in accordance with the rules and regulations of the SEC and include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

 

Certain of our accounting policies require higher degrees of judgment than others in their application.  These include stock-based compensation and accounting for income taxes which are summarized below.

 

 8 

 

Stock-based compensation

 

Stock-based compensation cost for employees is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Stock-based compensation cost for consultants is initially measured at the grant date based on the fair value of the award, remeasured each reporting date until the instrument vests, at which time the cost is established. The cost is recognized as an expense on a straight-line basis, as adjusted each reporting period, over the requisite service period, which is generally the vesting period. See Note 10 to the Consolidated Financial Statements for further information regarding the Company’s stock-based compensation assumptions and expense.

 

Income taxes

 

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to carryforwards and to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

The accounting for uncertain tax positions guidance requires that the Company recognize the financial statement benefit of a tax position only after determining that the Company would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties on uncertain tax positions as interest and other expenses, respectively. 

 

Results of Operations

 

Year ended December 31, 2019 compared to the year ended December 31, 2018

 

For the year ended December 31, 2019, the Company had a loss from continuing operations before income taxes of $1,978,000 compared to a loss from continuing operations before income taxes of $2,487,000 for the year ended December 31, 2018.   

 

The decreased loss of $509,000 was primarily the result of decreased Compensation and benefits of $352,000, decreased impairment loss of $355,000, increased other operating expenses of $393,000, and increased interest income of $195,000.

 

Compensation and benefits

 

For the year ended December 31, 2019, Compensation and benefits were $449,000 as compared to $801,000 for the year ended December 31, 2018. 

 

The decreased Compensation and benefits of $352,000 in 2019 was primarily the result of less employees after the sale of Winthrop in 2018.

 

Other operating expenses

 

For the year ended December 31, 2019, Other operating expenses were $1,791,000 as compared to $1,398,000 for the year ended December 31, 2018. 

 

The increased operating expenses of $393,000 were primarily the result of increased consulting fees as a result of less full-time employees and increased legal fees related to reviewing strategic opportunities. The increased expenses were partially offset by decreased reserves for future repairs related to the Company’s interests in land and flowage rights in undeveloped property in Killingly, Connecticut. The reserve for repairs was accrued in 2018 and the repair work was completed in 2019.

 

Impairment of undeveloped land

 

For the year ended December 31, 2018, the Company recorded an impairment loss in the amount of $355,000 due to the Company’s belief that the value of the land is nominal as a result of ongoing remediation efforts and no active market for sale of such land.

 

 9 

 

Income taxes

 

For the years ended December 31, 2019 and 2018, the income tax expense related to continuing operations of $25,000 and $40,000, respectively, substantially represents state minimum income taxes.

 

The sale of Winthrop on July 17, 2018, which resulted in a gain of approximately $1,200,000, had no impact on income tax expense. Due to differences in basis for tax purposes and financial reporting purposes, the sale resulted in a tax loss of approximately $2,000,000.

 

With the exception of the deferred tax asset related to the AMT credit carryforward, the Company recorded a full valuation allowance against its net deferred tax assets. Due to a full valuation allowance to offset deferred tax assets related to net operating loss carryforwards attributable to the loss, no tax benefit has been recorded in relation to the pre-tax loss from continuing operations for the years ended December 31, 2019 and December 31, 2018.

 

Income from discontinued operations

 

During the year ended December 31, 2018, income from discontinued operations was as follows:

 

    Year Ended December 31, 2018  
Net assets held for sale at July 16, 2018   $ (4,957 )
Selling price, as adjusted     6,173  
Transaction costs     (552 )
Income from discontinued operation     146
Income from discontinued operation   $ 810  

 

Financial condition, liquidity and capital resources

 

Liquidity and Capital Resources

 

At December 31, 2019, the Company had cash and cash equivalents totaling $7,336,000, 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 March 31, 2021.

 

The increase in cash and cash equivalents of $1,173,000 for the year ended December 31, 2019 was the result of $1,807,000 used in operating activities, offset by net cash provided by investing activities from the redemption of U.S. Treasury Bills of $2,980,000.

 

During the year ended December 31, 2018, the sale of Winthrop provided net proceeds of $5,448,000, which is included in the net cash provided by investing activities. 

 

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

 

Not required.

 

 10 

 

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

 

Index to the Consolidated Financial Statements

 

Financial Statements of Wright Investors’ Service Holdings, Inc.

 

  Page
   
Report of Independent Registered Public Accounting Firm 12
   
Consolidated Statements of Operations - Years ended December 31,
2019 and 2018
13
   
Consolidated Balance Sheets - December 31, 2019 and 2018 14
   
Consolidated Statements of Cash Flows - Years ended December
31, 2019 and 2018
15
   
Consolidated Statements of Changes in Stockholders’ Equity –
Years ended December 31, 2019 and 2018
16
   
Notes to Consolidated Financial Statements 17

 

 11 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Stockholders of

Wright Investors' Service Holdings, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Wright Investors' Service Holdings, Inc. (the "Company") as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019 and 2018, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ EisnerAmper LLP

 

We have served as the Company's auditor since 2004.

 

 

EISNERAMPER LLP

New York, New York

March 30, 2020

 

 12 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

   Years Ended December 31, 
   2019   2018 
Expenses        
Compensation and benefits  $449   $801 
Other operating   1,791    1,398 
Impairment of undeveloped land   -    355 
    2,240    2,554 
           
Operating loss from continuing operations   (2,240)   (2,554)
Interest income and other, net   262    67 
Loss from continuing operations before income taxes   (1,978)   (2,487)
Income tax expense   (25)   (40)
Net loss from continuing operations  $(2,003)  $(2,527)
Income from discontinued operations, net of tax   -    810 
Net loss  $(2,003)  $(1,717)
           
Basic and diluted (loss) income per share
Continuing operations per share
  $(0.10)  $(0.13)
Discontinuing operations per share   -    0.04 
Net loss per share  $(0.10)  $(0.09)

 

See accompanying notes to consolidated financial statements.

 

 13 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

 CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

   December 31, 
   2019   2018 
Assets        
Current assets          
Cash and cash equivalents  $7,336   $6,163 
Income tax receivable   15    51 
Prepaid expenses and other current assets   131    146 
Investments in U.S. Treasury Bills   -    2,980 
Total current assets   7,482    9,340 
           
Deferred tax asset   37    74 
Other assets   26    58 
Total assets  $7,545   $9,472 
           
Liabilities and stockholders’ equity          
Current liabilities          
Accounts payable and accrued expenses   190    204 
Total current liabilities   190    204 
           
           
Total liabilities   190    204 
           
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 20,654,996 in 2019 and
20,462,462 in 2018; outstanding 19,839,777
in 2019 and 19,647,243 in 2018
   206    204 
           
Additional paid-in capital   34,134    34,046 
           
Accumulated deficit   (25,286)   (23,283)
           
Treasury stock, at cost (815,219 in 2019 and 2018)   (1,699)   (1,699)
Total stockholders' equity   7,355    9,268 
Total liabilities and stockholders’ equity  $7,545   $9,472 

 

See accompanying notes to consolidated financial statements.

 

 14 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except per share amounts)

 

   Years Ended December 31, 
   2019   2018 
Cash flows from operating activities          
           
Net loss  $(2,003)  $(1,717)
Adjustments to reconcile net loss to cash used in operating activities:          
Equity based compensation, including issuance of stock to directors   90    117 
Amortization expense – right-of-use assets   192    - 
Unrealized appreciation on investments in U.S. Treasury Bills   -   (15)
Gain on sale of Winthrop, net of transaction costs   -    (664)
Impairment loss on undeveloped land   -    355 
Changes in other operating items:          
Deferred tax asset   37    74 
Income tax receivable   36    (69)
Prepaid expenses, other current assets and other assets   47    (19)
Accounts payable and accrued expenses   (14)   17 
Operating lease liability   (192)   - 
Net cash used in operating activities   (1,807)   (1,921)
           
Cash flows from investing activities          
Investments in U.S. Treasury Bills   (15,860)   (2,965)
Proceeds from redemption of U.S. Treasury Bills   18,840    - 
Proceeds from sale of Winthrop, net of transaction costs   -    5,448 
Net cash provided by investing activities   2,980    2,483 
           
Net increase in cash and cash equivalents   1,173    562 
Cash and cash equivalents at the beginning of the year   6,163    5,601 
Cash and cash equivalents at the end of the year  $7,336   $6,163 
           
Supplemental disclosures of cash flow information          
Net cash (refunded) paid during the year for Income taxes  $(49)  $35 
           

Non-cash investing and financing activities:

          

Right-of-use-assets obtained from operating lease liabilities upon adoption of new lease standard

  $192   $0 

 

See accompanying notes to consolidated financial statements.

 

 15 

 

WRIGHT INVESTORS' SERVICE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2019 AND 2018

 

(in thousands, except share data)

 

 

                       Total 
       Additional       Treasury   stock- 
   Common stock (Issued)   paid -in   Accumulated   stock, at   holders 
   shares   amount   capital   deficit   cost   equity 
                         
Balance at December 31, 2017   19,962,014   $199   $33,933   $(21,409)  $(1,699)  $11,024 
ASC 606 cumulative adjustment   -    -    -    (157)   -    (157)
Adjusted balance at January 1, 2018   19,962,014    199    33,933    (21,566)   (1,699)   10,867 
Net loss   -    -    -    (1,717)   -    (1,717)
Equity based compensation expense   -    -    16    -    -    16 
Issuance of vested restricted shares   200,000    2    -    -    -    2 
Issuance of common stock to directors   300,448    3    97    -    -    100 
Balance at December 31, 2018   20,462,462    204    34,046    (23,283)   (1,699)   9,268 
Net loss   -    -    -    (2,003)   -    (2,003)
Equity based compensation expense   -    -    10    -    -    10 
Issuance of common stock to directors   192,534    2    78    -    -    80 
Balance at December 31, 2019   20,654,996   $206   $34,134   $(25,286)  $(1,699)  $7,355 

 

See accompanying notes to consolidated financial statements.

 

 16 

  

WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.

Notes to Consolidated Financial Statements

 

1.Description of activities

 

On July 17, 2018, Wright Investors' Service Holdings, Inc. (the "Company") completed the sale of its primary operating subsidiary, The Winthrop Corporation (“Winthrop”), to Khandwala Capital Management, Inc., a company principally owned and controlled by Amit S. Khandwala, the Co-Chief Executive Officer and Chief Investment Officer of Winthrop, prior to the sale, for $6,000,000 in cash as well as $173,000 from Winthrop for repayment of the intercompany balance between the Company and Winthrop (“Sale”). 

  

As a public company after the Sale, 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 proceeds from the Sale and other liquid assets of the Company are so deployed, the Company intends to invest the proceeds of the Sale and its other 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.

 

Currently, the Company has no or nominal operations. As a result, the Company is a “shell company”, as defined in Rule 405 of the Securities Act of 1933, as amended, or the Securities Act, and Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a shell company, its stockholders will be unable to utilize Rule 144 of the Securities Act, or Rule 144 to sell “restricted stock” as defined in Rule 144 or otherwise use Rule 144 to sell stock of the Company, and the Company would be ineligible to utilize registration statements on Form S-3 or Form S-8 for so long as the Company remains a shell company and for 12 months thereafter. Among other things, as a consequence, the offering, issuance and sale of its securities is likely to be more expensive and time consuming and may make the Company’s securities less attractive to investors.

 

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. However, under the Investment Company Act of 1940, as amended (the “Investment Company Act”), a company may fall within the scope of being an “inadvertent investment company” under section 3(a)(1)(C) of such Act if the value of the Company’s investment securities (as defined in the Investment Company Act) is more than 40% of the Company’s total assets (exclusive of government securities and cash and certain cash equivalents).

 

See “Risk Factors “The Company may be classified as an inadvertent investment company if the Company acquires investment securities in excess of 40% of its total assets” and “The Company is a shell company under the federal securities laws.” As of December 31, 2019, the Company is not considered an inadvertent investment company.

 

2.Discontinued operation

 

Revenue recognition from contracts with customers related to discontinued operation

 

Revenue from investment advisory services and investment management services were recognized over the period in which the service was performed.  Accordingly, the amount of such revenue billed as of the balance sheet date relating to periods after the balance sheet date were accounted for as deferred revenue.  Revenue from research reports was recognized monthly upon the receipt of payment from the third-party industry distributors.

 

In May 2014, the FASB issued ASU 2014-09,  Revenues from Contracts with Customers (Topic 606)  (“ASU 2014-09”), as subsequently amended, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent revenue recognition guidance, including industry-specific guidance.  The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  This standard is effective for public companies for years ending after December 15, 2017, with early adoption permitted.

 

The Company adopted the new standard on January 1, 2018, using the modified retrospective method, which provides for a cumulative effect adjustment in the amount of $157,000 to beginning 2018 accumulated deficit and to opening Accounts receivable for the revenue related to the recognition of financial research data and sub advisor fees. The revenue for the year ended December 31, 2018 if recorded under the previous accounting guidance, was not materially different from the revenue recognized upon the adoption of ASC 606 on January 1, 2018.

 

 17 

 

For the year ended December 31, 2018, the results of operations that are included as a part of income from discontinued operation were as follows (in thousands):

 

   Years Ended December 31, 2018 
Revenues     
Investment management services  $1,237 
Other investment advisory services   1,165 
Financial research and related data   485 
    2,887 
Expenses     
Compensation and benefits   1,371 
Other operating   1,332 
    2,703 
      
Interest expense and other loss, net   (38)
      
Income from discontinued operation  $146 

 

 

Income from discontinued operation for the year ended December 31, 2018 was as follows:

 

   Year Ended December 31, 2018 
Net assets held for sale at July 16, 2018  $(4,957)
Selling price, as adjusted   6,173 
Transaction costs   (552)
Income from discontinued operation   146
Income from discontinued operation  $810 

 

3.Summary of significant accounting policies

 

Principles of consolidation.

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, all of which are inactive. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from these estimates.

 

Cash and cash equivalents

 

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.  Cash equivalents, which are carried at fair value or amortized cost, as applicable, consist of holdings in a money market fund and in treasury bills. Cash and cash equivalents amounted to approximately $7,336,000 and $6,163,000 at December 31, 2019 and 2018, respectively.

 

 18 

 

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 December 31, 2019, and 2018, the Company held $7,144,000 and $7,973,000 in U.S. government 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 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 securities, which have maturities of three months or less at time of purchase, are reported as Cash and cash equivalents on the balance sheet as of December 31, 2019 and 2018.

 

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

 

  

Fair Value Measurements

as of December 31, 2019

 
   12/31/2019   Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 
                     
Cash and cash equivalents  $7,336   $192   $7,144    - 

 

  

Fair Value Measurements

as of December 31, 2018

 
   12/31/2018   Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 
                 
Cash and cash equivalents  $6,163   $1,170   $4,993    - 
Investments in U.S. Treasury Bills   2,980    -    2,980    - 

 

 19 

 

Investment in undeveloped land

 

The Company owns certain non-strategic assets, including an investment in land and certain flowage rights in undeveloped property (the “properties”) primarily located Killingly, Connecticut. The Company recorded an impairment loss in the amount of $355,000 during 2018. The properties were fully impaired as of December 31, 2018.

 

Basic and diluted loss per share

 

Basic and diluted loss per share for the years ended December 31, 2019 and 2018, respectively, is calculated based on 19,736,479 and 19,510,985 weighted average outstanding shares of common stock including common shares underlying vested restricted stock units (“RSUs”). Options for 550,000 shares of common stock in 2019 and 2018, respectively, and unvested stock awards for 100,000 shares of common stock in 2019 were not included in the diluted computation as their effect would be anti-dilutive since the Company incurred net operating losses for both years.

 

Stock-based compensation

 

Stock-based compensation cost for employees is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Stock-based compensation cost for consultants is initially measured at the grant date based on the fair value of the award, remeasured each reporting date until the instrument vests, at which time the cost is established. The cost is recognized as an expense on a straight-line basis, as adjusted each reporting period, over the requisite service period, which is generally the vesting period. See Note 10 to the Consolidated Financial Statements for further information regarding the Company’s stock-based compensation assumptions and expense.

 

Income taxes

 

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to carryforwards and to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

The accounting for uncertain tax positions guidance requires that the Company recognize the financial statement benefit of a tax position only after determining that the Company would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties on uncertain tax positions as interest and other expenses, respectively.  The Company has no income tax uncertainties at December 31, 2019 and 2018.

 

Concentrations of credit risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments. Investments in cash and money market funds are insured up to $250,000 per depositor, per insured bank. Investments in treasury bills are insured up to $500,000. For the year ended December 31, 2019, a substantial portion of the Company's investments in treasury bills are in excess of these limits. For the year end December 31, 2018, a substantial portion of the Company's investments in cash and treasury bills are in excess of these limits.

 

4.Adoption of new accounting guidance

 

In February 2016, the FASB established ASC Topic 842, Leases (Topic 842), which establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. Lease expense is recognized based on an effective interest method for finance leases, and on a straight-line basis over the term of the lease for operating leases. The Company has adopted this standard on January 1, 2019, which did not have a material impact on the consolidated financial statements. The adoption resulted in the recording of an asset of $173,000, net of deferred rent of $19,000 and a liability of $192,000.

 

 20 

 

In March 2016, the FASB issued ASU 2016-09, “Compensation- Stock Compensation (Topic 718):  Improvements to Employee Share Based Payment Accounting.”  ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classifications in the statement of cash flows.  ASU 2016-09 is effective for the fiscal years beginning after December 15, 2016 and interim periods within those fiscal years.  During 2017, the Company has adopted ASU 2016-09 which did not have any impact in the Company’s financial statements.  In accordance with ASU 2016-09, the Company has made the accounting policy election to continue to estimate forfeitures based upon historical occurrences. The Company has adopted this standard on January 1, 2018, which did not have a material impact on the consolidated financial statements.

 

In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  The ASU generally requires companies to measure investments in equity securities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The new guidance must be applied using a modified-retrospective approach and is effective for periods beginning after December 15, 2017 and early adoption is not permitted.   The Company has adopted this standard on January 1, 2018, which did not have a material impact on the consolidated financial statements.

  

5.Certain New Accounting guidance not yet adopted

 

In January 2017, FASB issued ASU 2017-04, “Intangibles- Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the second step of the previous FASB guidance for testing goodwill for impairment and is intended to reduce cost and complexity of goodwill impairment testing. The standard is effective for periods beginning after December 15, 2019 for both interim and annual periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have an impact on its consolidated financial statements.

 

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 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 consolidated financial statements.

 

6.Leases

 

In August 2014, the Company entered into a five-year sublease in Greenwich, Connecticut for 10,000 square feet of office space which expired on September 30, 2019. The Company adopted ASC 842 – Leases on January 1, 2019 and elected the “package of practical expedients” noted in the transition guidance, which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The lease continued to be classified as an operating lease. Upon adoption on January 1, 2019, the Company recognized Right of Use Asset (“ROU”) of approximately $173,000 and an operating lease liability of $192,000, and reversed a deferred rent liability of approximately $19,000, which represented the present value of future lease payments as of January 1, 2019. As of September 30, 2019, the ROU asset was fully amortized and operating lease liability was fully paid upon the expiration of the lease on the same date.

 

In July 2019, the Company entered into a six-month lease for office space in a building located in Mt. Kisco, NY. The lease commenced on September 1, 2019 and expired on February 29, 2020, after which it will be renewed on a monthly basis for $3,800 per month.

 

 21 

 

7.Accounts payable and accrued expenses

 

Accounts payable and accrued expenses consist of the following (in thousands):

 

   Year Ended December 31, 
   2019   2018 
         
Accrued professional fees  $127   $76 
Other   63    128 
Total  $190   $204 

 

8.Income taxes

 

The components of income tax expense (benefit) are as follows (in thousands):

 

   Year Ended December 31, 
   2019   2018 
Current        
Federal  $(37)  $(74)
State and local   25    40 
Total current   (12)   (34)
           
Deferred          
Federal  $37   $74 
State and local   -    - 
Total deferred  $37   $74 
           
Total income tax expense  $25   $40 

 

For the years ended December 31, 2019 and 2018, the current income tax benefit related to operations represents a refundable alternative minimum tax credit net of minimum state income taxes. For the years ended December 31, 2019 and 2018, deferred income tax expense represents the utilization of the alternative minimum tax credit carryforward.

 

The difference between the benefit for income taxes computed at the statutory rate and the reported amount of tax expense (benefit) from operations is as follows:

 

   Year ended December 31,
   2019  2018
Federal income tax rate   (21.0)%   (21.0)%
State income tax (net of federal effect)   29.2    (15.7)
Change in valuation allowance   (24.2)   82.4 
Deferred tax asset write-down   16.9    - 
Sale of Winthrop   -    (46.5)
Non-deductible expenses   0.4    3.7 
Effective tax rate   1.3%   2.9%

 

 22 

 

The deferred tax assets and liabilities are summarized as follows (in thousands):

   December 31, 
   2019   2018 
Deferred tax assets:          
Net operating loss carryforwards  $4,884   $5,608 
Capital loss carryforwards   724    576 
Equity-based compensation   111    111 
Tax credit carryforwards   37    74 
Unrealized loss on investments   100    - 
Accrued liabilities & other   6    6 
Gross deferred tax assets   5,862    6,375 
Less: valuation allowance   (5,825)   (6,301)
Deferred tax assets after valuation allowance   37    74 
           
Net Deferred tax assets  $37    74 

 

The sale of Winthrop on July 17, 2018, which resulted in a gain of approximately $1,200,000, had no impact on income tax expense. Due to differences in basis for tax purposes and financial reporting purposes, the sale resulted in a tax loss of approximately $2,000,000.

 

Legislation commonly referred to as the Tax Cuts and Jobs Act (the "Act") was enacted in December 2017. Among other things, the Act reduced the U.S. federal corporate tax rate from 35 percent to 21 percent, eliminated the alternative minimum tax (“AMT”) for corporations, and provided that AMT credit carryforwards are refundable over a period of time beginning with the Company’s 2018 tax year. Losses incurred from January 1, 2018 are limited to 80% of taxable income. As a result of the Act, the AMT credit carryforward was determined to be more likely than not to be realized.

 

A valuation allowance is provided when it is more likely than not that some portion of deferred tax assets will not be realized. The valuation allowance decreased by approximately $476,000 and $64,000 respectively, during the years ended December 31, 2019 and 2018. The decrease in the valuation allowance during the year ended December 31, 2019 was mainly due to adjustments to the net operating loss carryforward. The decrease in the valuation allowance during the year ended December 31, 2018 was mainly due to the sale of Winthrop net of increases to the net operating loss carryforward and other deferred tax assets.

 

The Company files a consolidated federal tax return with its subsidiaries. As of December 31, 2019, the Company has a federal net operating loss carryforward of approximately $19,600,000, of which $15,425,000 expires from 2031 through 2037, and $4,175,000 does not expire. The Company also has various state and local net operating loss carryforwards totaling approximately $19,500,000, which expire between 2020 and 2039, and a capital loss carryforward of approximately $2,700,000, which expires between 2021 and 2024. Federal and state net operating loss carryforwards were reduced during the year ended December 31, 2018 by approximately $3,400,000 and $10,800,000, respectively, due to the sale of Winthrop.

 

9.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. At December 31, 2019, the Company had repurchased 2,041,971 shares of its common stock and a total of 2,958,029 of the authorization shares, remained available for repurchase at December 31, 2019.

 

During the years ended December 31, 2019 and 2018, the Company issued 192,534 and 300,448 shares of Company common stock to the independent directors of the Company, in payment of quarterly directors fees due to them during 2019.  The value of the shares of Company common stock issued was $80,000 and $100,000, respectively. 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. 

 

 23 

 

10.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.

 

The Company recorded compensation expense of $10,000 for the year ended December 31, 2019 related to those stock awards. The total unrecognized compensation expense related to these unvested stock awards at December 31, 2019 is $29,000, which will be recognized over the remaining vesting period of approximately 2.13 years. 

 

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.

 

The Company recorded compensation expense of $0 and $100 for the years ended December 31, 2019 and 2018, respectively, under these plans. 

 

The Company granted 100,000 options to a consultant on March 28, 2016 which vested equally over 3 years with an exercise price of $1.29, which price was equal to the market value at the date of the grant. 

 

As of December 31, 2019, all options were vested and there were outstanding options to acquire 550,000 common shares under the 2007 NPDC Plan. All 550,000 options were vested and exercisable, having a weighted average exercise price of $1.35 per share, a weighted average contractual term of 1.75 years and zero aggregate intrinsic value. There were no grants, forfeitures or exercises of options during the year of 2019 and 2018, respectively.

 

Restricted stock units

 

On January 19, 2015 and March 31, 2015, 100,000 restricted stock units (“RSUs”) were issued on each date to two newly appointed directors of the Company.  The RSUs vested equally over 3 years.  The RSUs are valued based on the closing price of the Company’s common stock on January 19, 2015 and March 31, 2015 of $1.70 and $1.85, respectively. During 2018, the RSU’s were already fully vested and the related 200,000 shares of the Company’s common stock were issued. 

 

The Company recorded compensation expense of $16,000 related to those RSUs for the year ended December 31, 2018.

 

11.Retirement plans

 

The Company maintained a 401(k) Savings Plan (the “Plan”), for full time employees who have completed at least one hour of service coincident with the first day of each month.  The Plan permitted pre-tax contributions by participants and did not match the participant’s contributions. The Plan was terminated in December 2018.

 

 24 

 

12.Commitments, Contingencies, and Other

 

a)The extent of the impact and effects of the recent outbreak of the coronavirus (COVID-19) on the operation and financial performance of our Company are unknown. However, the Company does not expect that the outbreak will have a material adverse effect or financial results at this time.

 

b)In July 2019, the Company entered into a six-month lease for office space in a building located in Mt. Kisco, NY. The lease commenced on September 1, 2019 and expired on February 29, 2020, after which it will be renewed on a monthly basis for $3,800 per month.

 

c)The Company has interests in land and certain flowage rights in undeveloped property (the “properties”) primarily located in Killingly, Connecticut. The properties were fully impaired as of December 31, 2018.

 

d)On September 26, 2014, the Connecticut Department of Energy and Environmental Protection (“DEEP”) issued two Orders requiring the investigation and repair of two dams in which the Company and its subsidiaries have certain ownership interests.  The first Order required that the Company investigate and make specified repairs to the ACME Pond Dam located in Killingly, Connecticut.  The second Order, as subsequently revised by DEEP on October 10, 2014, required that the Company investigate and make specified repairs to the Killingly Pond Dam located in Killingly, Connecticut.  The Company administratively appealed and contested the allegations in both Orders. On July 27, 2017, the Company entered into a Consent Order with the DEEP relative to Killingly Pond Dam. The Killingly Pond Consent Order required the Company to continue to perform routine maintenance and administrative procedures consistent with DEEP’s Dam Safety regulations, the cost of which was not material to the Company’s financial position or results of operations. On July 27, 2018, the Company entered into a Consent Order with the DEEP relative to Acme Pond Dam. The Acme Pond Dam Consent Order required the Company to investigate and recommend repairs to Acme Pond Dam. Based up on the work performed by the Company’s retained consulting engineering firm, the Company submitted its recommended Action Plan (the “Action Plan”) for Acme Pond Dam pursuant to the Consent Order on November 30, 2017 and such recommended Action Plan was approved by DEEP as submitted on May 23, 2019. The estimated cost of work to be performed under the Action Plan was $90,000 and was accrued for at December 31, 2018. Total expenses for the repair work conducted in accordance with the Action Plan during the year ending December 31, 2019 was approximately $150,000. All repair work required for both the ACME Pond Dam and the Killingly Pond Dam was completed as of December 31, 2019. DEEP issued a Certificate of Compliance for Consent Order for the ACME Pond Dam on February 7, 2020. The Company is currently waiting for the final administrative sign off for Killingly Pond Dam. On February 11, 2020, the Company and its representatives met with the Town of Killingly Town Council to discuss a proposed ownership transfer of the properties to the Town of Killingly or a group of interested parties. The proposal is currently under the review of the Town of Killingly Town Council, in conjunction with the Town Manager.

 

 25 

 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.  Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2019 were effective. 

 

The Company’s Chief Executive Officer and Chief Financial Officer have also concluded that there have not been any changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2019 that have materially affected or are reasonably likely to materially effect, the Company’s internal control over financial reporting.

 

(b) Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f).  Our internal control processes and procedures are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with United States generally accepted accounting principles.  Our internal control over financial reporting includes those policies and procedures that reasonably allow us to record, process, summarize, and report information and financial data within prescribed time periods and in accordance with Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of internal control over financial reporting as of December 31, 2019 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013) (“COSO Framework”).  Based upon our evaluation, the Company concluded that our internal control over financial reporting was effective as of December 31, 2019.

 

 This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management's report in this annual report.

 

Item 9B.    Other Information

 

None

 

 26 

 

PART III

 

Item 10.  Directors, Executive Officers and Corporate Governance.

 

The information required by this item is incorporated by reference to the Company’s definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the Company’s fiscal year end of December 31, 2019 for its annual stockholders’ meeting for 2019 (the “Proxy Statement”) under the captions “Directors and Executive Officers”, “Corporate Governance”, “Compliance with Section 16(a) of the Exchange Act”, “Code of Ethics” and “Audit Committee.”

 

Item 11.  Executive Compensation.

 

The information required by this item is incorporated by reference to the Company’s Proxy Statement for its 2019 Annual Meeting of Stockholders under the caption “Executive Compensation.”

 

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

Additional information required by this item is incorporated by reference to the Company’s Proxy Statement for its 2019 Annual Meeting of Stockholders under the caption “Stock Ownership of Management and Principal Stockholders”.

 

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

 

This information required by this item is incorporated by reference to the Company’s Proxy Statement for its 2019 Annual Meeting of Stockholders under the captions “Certain Transactions with Management” and “Director Independence”.

 

Item 14.  Principal Accounting Fees and Services.

 

The information regarding principal accountant fees and services and the Company’s pre-approval policies and procedures for audit and non-audit services provided by the Company’s independent accountants is incorporated by reference to the Company’s Proxy Statement for its 2019 Annual Meeting of Stockholders under the caption “Principal Accountant Fees and Services.”

 

Item 15. Exhibits and Financial Statement Schedules

 

(a)(1)The following financial statements are included in Part II, Item 8. Financial Statements and Supplementary Data:

 

  Page
   
Financial Statements of Wright Investors’ Service Holdings, Inc.:  
   
Report of Independent Registered Public Accounting Firm 12
   

Consolidated Statements of Operations - Years ended December 31,
2019 and 2018

 

13

   
Consolidated Balance Sheets - December 31, 2019 and 2018 14
   

Consolidated Statements of Cash Flows - Years ended December 31,
2019 and 2018

 

15

   

Consolidated Statements of Changes in Stockholders’ Equity – Years
ended December 31, 2019 and 2018

16
   
Notes to Consolidated Financial Statements 17

 

(a)(2)Schedules have been omitted because they are not required or are not applicable, or the required information has been included in the financial statements or the notes thereto.
(a)(3)See accompanying Index to Exhibits.

 

 27 

 

EXHIBITS    
   
3(i)   Articles of Incorporation.  Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form S-1, Registration No. 333-118568.
     
3(ii)   Bylaws.  Incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form S-1, Registration No. 333-118568.
     
4.1   Form of certificate representing shares of common stock, par value $0.01 per share.   Incorporated herein by reference to Exhibit 4.1 of the Registrant’s Form S-1, Registration No. 333-118568.
   
10.1   Form of Restricted Stock Unit Agreement. Incorporated herein by reference to Exhibit 10.9 of the Registrant’s Form 8-K filed on December 22, 2012.
     
10.2   Stock Purchase Agreement dated April 11,2018 by and among Khandwala Capital Management, Inc. Amit S. Khandwala and Wright Investors’ Service Holdings, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, dated April 11, 2018)
     
14   Code of Business Conduct and Ethics for Chief Executive Officer and Senior Financial Officers of the Registrant and its subsidiaries.     Incorporated herein by reference to Exhibit 14.1 to the Registrant’s Form 10-K for the year ended December 31, 2004 filed on April 15, 2005
     
21     Subsidiaries of the Registrant*
     
31.1 * Certification of the principal executive officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a)
     
31.2 * Certification of the principal financial officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a)
     
32 * 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 and the principal financial officer of the Registrant
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   XBRL Extension Labels Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

_________________________________

 

 *Filed within

 

Item 16. Form 10-K Summary

 

None.

 

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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:  March 30, 2020 By: /s/ HARVEY P. EISEN  
    Name: Harvey P. Eisen  
    Title:

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature   Capacity Date
       
       
/s/ HARVEY P. EISEN   Chairman, President and Chief Executive Officer March 30, 2020
Harvey P. Eisen   (Principal Executive Officer)  
       
       
       
/s/ HAROLD KAHN   Acting Chief Financial Officer and Acting Principal
Accounting Officer
March 30, 2020
Harold Kahn   (Principal Financial Officer)  
       
       
       
/s/ LAWRENCE G. SCHAFRAN   Director March 30, 2020
Lawrence G. Schafran      
       
       
       
/s/ DORT CAMERON III   Director March 30, 2020
Dort Cameron III      

 

 

29