UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | |
or | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____ |
Commission File Number: 000-50587
WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 13-4005439 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip code) |
(914) 242-5700 |
(Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer ☒ | Smaller reporting company ☒ | |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐☒ No ☒☐
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class | Trading Symbol (s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | IWSH | OTC |
As of November 3, 2017,May 12, 2023, there were 19,280,39720,620,711 shares of the registrant’s common stock, $0.01 par value, outstanding.
WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.
TABLE OF CONTENTS
Part I. Financial Information | Page No. | |
Item 1. | ||
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3 | ||
4 | ||
5 | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II. Other Information | ||
Item 2. | ||
Item 5. | Other Information | 13 |
Item 6. | ||
PART I. FINANCIAL INFORMATION
Item 1. | Financial Statements. |
WRIGHT INVESTORS' SERVICE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSBALANCE SHEETS
(in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Investment management services | $ | 583 | $ | 535 | $ | 1,608 | $ | 1,706 | ||||||||
Other investment advisory services | 564 | 702 | 1,826 | 2,124 | ||||||||||||
Financial research and related data | 216 | 180 | 595 | 518 | ||||||||||||
1,363 | 1,417 | 4,029 | 4,348 | |||||||||||||
Expenses | ||||||||||||||||
Compensation and benefits | 755 | 885 | 2,548 | 2,904 | ||||||||||||
Other operating | 797 | 928 | 2,479 | 2,833 | ||||||||||||
1,552 | 1,813 | 5,027 | 5,737 | |||||||||||||
Operating loss | (189 | ) | (396 | ) | (998 | ) | (1,389 | ) | ||||||||
Impairment of investment in LLC | - | - | - | (294 | ) | |||||||||||
Interest income (expense) and other, net | (18 | ) | 3 | (59 | ) | (33 | ) | |||||||||
Loss from operations before income taxes | (207 | ) | (393 | ) | (1,057 | ) | (1,716 | ) | ||||||||
Income tax expense | (4 | ) | (5 | ) | (33 | ) | (31 | ) | ||||||||
Net loss | $ | (211 | ) | $ | (398 | ) | $ | (1,090 | ) | $ | (1,747 | ) | ||||
Basic and diluted loss per share | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.09 | ) |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 103 | $ | 90 | ||||
Investments in U.S. Treasury Bills | 3,871 | 4,130 | ||||||
Income tax receivable | 73 | 73 | ||||||
Prepaid expenses and other current assets | 68 | 100 | ||||||
Total current assets | 4,115 | 4,393 | ||||||
Other assets | 8 | 8 | ||||||
Total assets | $ | 4,123 | $ | 4,401 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued expenses | $ | 113 | $ | 112 | ||||
Total current liabilities | 113 | 112 | ||||||
Total liabilities | $ | 113 | $ | 112 | ||||
Stockholders’ equity | ||||||||
Preferred stock, par value $0.01 per share, authorized 10,000,000 shares; none issued | - | - | ||||||
Common stock, par value $0.01 per share, authorized 30,000,000 shares; Issued 21,628,680 and 21,343,680 as of March 31, 2023 and December 31, 2022, respectively; Outstanding 20,620,711 and 20,335,711 at March 31, 2023 and December 31, 2022, respectively; 0 and 285,000 shares issuable as of March 31, 2023 and December 31, 2022, respectively | 216 | 213 | ||||||
Additional paid-in capital | 34,392 | 34,395 | ||||||
Accumulated deficit | (28,918 | ) | (28,604 | ) | ||||
Accumulated other comprehensive income | 67 | 32 | ||||||
Treasury stock, at cost (1,007,969 shares at March 31, 2023 and December 31, 2022) | (1,747 | ) | (1,747 | ) | ||||
Total stockholders' equity | 4,010 | 4,289 | ||||||
Total liabilities and stockholders’ equity | $ | 4,123 | $ | 4,401 |
See accompanying notes to condensed consolidated financial statements.
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WRIGHT INVESTORS' SERVICE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETSSTATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 6,141 | $ | 7,026 | ||||
Accounts receivable | 305 | 291 | ||||||
Prepaid expenses and other current assets | 456 | 393 | ||||||
Total current assets | 6,902 | 7,710 | ||||||
Property and equipment, net | 109 | 103 | ||||||
Intangible assets, net | 1,718 | 2,015 | ||||||
Goodwill | 3,364 | 3,364 | ||||||
Investment in undeveloped land | 355 | 355 | ||||||
Other assets | 108 | 108 | ||||||
Total assets | $ | 12,556 | $ | 13,655 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued expenses | $ | 675 | $ | 741 | ||||
Deferred revenue | 7 | 11 | ||||||
Income taxes payable | 20 | 37 | ||||||
Current portion of officers retirement bonus liability | 177 | 200 | ||||||
Total current liabilities | 879 | 989 | ||||||
Officers retirement bonus liability, net of current portion | 508 | 570 | ||||||
Total liabilities | 1,387 | 1,559 | ||||||
Stockholders’ equity | ||||||||
Common stock | 199 | 198 | ||||||
Additional paid-in capital | 33,878 | 33,716 | ||||||
Accumulated deficit | (21,209 | ) | (20,119 | ) | ||||
Treasury stock, at cost (815,219 shares at September 30, 2017 and December 31, 2016) | (1,699 | ) | (1,699 | ) | ||||
Total stockholders' equity | 11,169 | 12,096 | ||||||
Total liabilities and stockholders’ equity | $ | 12,556 | $ | 13,655 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Expenses | ||||||||
Compensation and benefits | $ | 115 | $ | 117 | ||||
Other operating | 205 | 197 | ||||||
320 | 314 | |||||||
Loss from operations | (320 | ) | (314 | ) | ||||
Interest and other income, net | 6 | - | ||||||
Loss from operations before income taxes | (314 | ) | (314 | ) | ||||
Net loss | $ | (314 | ) | $ | (314 | ) | ||
Basic and diluted weighted average common shares outstanding | 20,620,711 | 20,490,385 | ||||||
Basic and diluted loss per share | $ | (0.02 | ) | $ | (0.02 | ) |
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (1,090 | ) | $ | (1,747 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Share of loss from investment in LLC | - | 284 | ||||||
Realized loss on sale of short-term investments | - | 9 | ||||||
Interest expense related to officers retirement bonus liability | 65 | 37 | ||||||
Depreciation and amortization | 322 | 488 | ||||||
Change in value of warrant | - | 12 | ||||||
Equity based compensation, including issuance of stock to directors | 163 | 146 | ||||||
Changes in other operating items: | ||||||||
Accounts receivable | (14 | ) | (122 | ) | ||||
Deferred revenue | (4 | ) | 17 | |||||
Officers retirement bonus liability | (150 | ) | (150 | ) | ||||
Income taxes payable | (17 | ) | 21 | |||||
Prepaid expenses and other current assets | (63 | ) | (6 | ) | ||||
Accounts payable and accrued expenses | (66 | ) | (168 | ) | ||||
Net cash used in operating activities | (854 | ) | (1,179 | ) | ||||
Cash flows from investing activities | ||||||||
Proceeds from sale of short-term investments | - | 148 | ||||||
Additions to property and equipment | (31 | ) | (73 | ) | ||||
Net cash provided by (used in) investing activities | (31 | ) | 75 | |||||
Cash flows from financing activities | ||||||||
Purchase of treasury stock | - | (340 | ) | |||||
Net cash used in financing activities | - | (340 | ) | |||||
Net decrease in cash and cash equivalents | (885 | ) | (1,444 | ) | ||||
Cash and cash equivalents at the beginning of the period | 7,026 | 8,493 | ||||||
Cash and cash equivalents at the end of the period | $ | 6,141 | $ | 7,049 | ||||
Supplemental disclosures of cash flow information | ||||||||
Net cash paid during the period for | ||||||||
income taxes | $ | 49 | $ | 28 |
See accompanying notes to condensed consolidated financial statements.
2 |
WRIGHT INVESTORS' SERVICE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net loss | $ | (314 | ) | $ | (314 | ) | ||
Unrealized gain on available for sale securities | 35 | - | ||||||
Comprehensive loss | $ | (279 | ) | $ | (314 | ) |
See accompanying notes to condensed consolidated financial statements.
3 |
WRIGHT INVESTORS' SERVICE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED SEPTEMBER 30, 2017March 31, 2023 and 2022
(UNAUDITED)
(in thousands, except per share data)
Total | ||||||||||||||||||||||||
Additional | Treasury | stock- | ||||||||||||||||||||||
Common stock | paid -in | Accumulated | stock , at | holders | ||||||||||||||||||||
shares | amount | capital | deficit | cost | equity | |||||||||||||||||||
Balance at December 31, 2016 | 19,830,219 | $ | 198 | $ | 33,716 | $ | (20,119 | ) | $ | (1,699 | ) | $ | 12,096 | |||||||||||
Net loss | - | - | - | (1,090 | ) | - | (1,090 | ) | ||||||||||||||||
Equity based compensation expense | - | - | 81 | - | - | 81 | ||||||||||||||||||
Issuance of common stock to directors | 131,795 | 1 | 81 | - | - | 82 | ||||||||||||||||||
Balance at September 30, 2017 | 19,962,014 | $ | 199 | $ | 33,878 | $ | (21,209 | ) | $ | (1,699 | ) | $ | 11,169 |
Accumulated | ||||||||||||||||||||||||||
Common stock | Additional | Other | Treasury | Total | ||||||||||||||||||||||
(Issued) | paid – in | Accumulated | Comprehensive | stock at, | Stock-holders’ | |||||||||||||||||||||
shares | amount | Capital | deficit | Income | cost | equity | ||||||||||||||||||||
Balance at December 31, 2021 | 21,025,748 | $ | 210 | 34,316 | $ | (27,397 | ) | - | $ | (1,699 | ) | $ | 5,430 | |||||||||||||
Net loss | - | - | - | (314 | ) | - | - | (314 | ) | |||||||||||||||||
Equity based compensation expense | 100,000 | 1 | 1 | - | - | - | 2 | |||||||||||||||||||
Stock based compensation expense to directors | - | - | 20 | - | - | - | 20 | |||||||||||||||||||
Balance at March 31, 2022 | 21,125,748 | $ | 211 | $ | 34,337 | $ | (27,711 | ) | - | $ | (1,699 | ) | $ | 5,138 | ||||||||||||
Balance at December 31, 2022 | 21,343,680 | $ | 213 | $ | 34,395 | $ | (28,604 | ) | $ | 32 | $ | (1,747 | ) | $ | 4,289 | |||||||||||
Net loss | - | - | - | (314 | ) | - | - | (314 | ) | |||||||||||||||||
Stock based compensation expense to directors | 285,000 | 3 | (3) | - | - | - | - | |||||||||||||||||||
Other comprehensive income | - | - | - | - | 35 | - | 35 | |||||||||||||||||||
Balance at March 31, 2023 | 21,628,680 | $ | 216 | $ | 34,392 | $ | (28,918 | ) | $ | 67 | $ | (1,747 | ) | $ | 4,010 |
See accompanying notes to condensed consolidated financial statements.
4 |
WRIGHT INVESTORS' SERVICE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (314 | ) | $ | (314 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Equity based compensation, including vesting of stock to directors | - | 22 | ||||||
Changes in other operating items: | ||||||||
Prepaid expenses and other current assets | 32 | (6 | ) | |||||
Accounts payable and accrued expenses | 1 | (3 | ) | |||||
Net cash used in operating activities | (281 | ) | (301 | ) | ||||
Cash flows from investing activities | ||||||||
Proceeds from redemptions of U.S. Treasury Bills | 294 | - | ||||||
Net cash provided by investing activities | 294 | - | ||||||
Net increase (decrease) in cash and cash equivalents | 13 | (301 | ) | |||||
Cash and cash equivalents at the beginning of the period | 90 | 5,396 | ||||||
Cash and cash equivalents at the end of the period | $ | 103 | $ | 5,095 | ||||
Supplemental disclosures of cash flow information | ||||||||
Unrealized gain on available for sale securities | $ | 35 | $ | - |
See accompanying notes to condensed consolidated financial statements.
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WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2017March 31, 2023 and 20162022
(unaudited)
1. | Basis of presentation and description of activities |
Basis of presentation
The accompanying interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The information and note disclosures normally included in complete financial statements have been condensed or omitted pursuant to such rules and regulations. The Condensed Consolidated Balance Sheet as of December 31, 20162022 has been derived from audited financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 20162022 as presented in our Annual Report on Form 10-K. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for a fair presentation. The results for the 20172023 interim period are not necessarily indicative of results to be expected for the entire year.
Description of activities
Wright Investors’ Service Holdings, Inc. (hereinafter referred to(the “Company”) has nominal operations and nominal assets aside from its cash and cash equivalents and investments in U.S. Treasury Bills, and is therefore considered a shell company, as the “Company” or “Wright Holdings”),defined in U.S. securities laws and through its wholly-owned subsidiaries Wright Investors’ Service, Inc. (“Wright”), Wright Investors’ Service Distributors, Inc. (“WISDI”) and Wright’s wholly-owned subsidiary, Wright Private Asset Management, LLC (“WPAM”) (collectively, the “Wright Companies”), offers investment management services, financial advisory services and investment research to large and small investors, both taxable and tax exempt. WISDI is a registered broker dealer with the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities and Exchange Commission.
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 Compensationan investment advisory business, acquisition of a financial services business, creating partnerships or joint ventures for those or other businesses and benefitsinvesting in other businesses that provide attractive opportunities for growth. The directors will also consider alternatives for distributing some or all of the threeCompany’s cash and nine months ended September 30, 2016, respectively,cash equivalents. Until such time as a decision is made as to Other operating expenseshow the liquid assets of the Company are so deployed, the Company intends to invest its liquid assets in order to behigh-grade, short- term investments (such as cash and cash equivalents and Investment in U.S. Treasury Bills) consistent with the presentation for the threepreservation of principal, maintenance of liquidity and nine months ended September 30, 2017.avoidance of speculation.
The new guidance creates a single, principle based model for revenue recognition and expands and improves disclosures about revenue. The new guidance is effective forCompany may be classified as an inadvertent investment company if the Company on January 1, 2018. The Company has performed an initial assessmentacquires investment securities in excess of 40% of the Company’s current policies and practices and believes that there will be no change upontotal assets (exclusive of government securities). As of March 31, 2023, the adoption of ASC 606. The Company has not yet completed its final analysis.
2. | Per share data |
Loss per share for the three months ended September 30, 2017March 31, 2023 and 20162022, respectively, is calculated based on 19,258,00020,620,711 and 19,018,00020,490,385 weighted average outstanding shares of common stock. Includedstock, including weighted average issuable shares of 200,690 at March 31, 2022.
3. | 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. |
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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 March 31, 2023 and December 31, 2022, the Company held $3,871,000 and $4,130,000, respectively, in U.S. government debt securities. U.S. government securities are valued using a model that incorporates market observable data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. U.S. government debt securities are categorized in Level 2 of the fair value hierarchy, depending on the inputs used and market activity levels for specific securities. The U.S. government debt securities, which have maturities of three months or less at time of purchase, are reported as Cash and cash equivalents, and those with longer maturities are reported as investments, on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.
Short-term investments in marketable securities have a stated maturity of twelve months or less from the balance sheet date. These securities are considered as available for sale and are reported at fair value. Unrealized gains and losses would be recorded net of tax as a component of Accumulated other comprehensive income within stockholders' equity. Declines in market value from the original cost deemed to be "other-than-temporary" are charged to Interest and other income, net, in the share numberperiod in which the loss occurs. The Company considers both the duration for which a decline in value has occurred and the extent of the decline in its determination of whether a decline in value has been “other than temporary.” Realized gains and losses are vested Restricted Stock Units (“RSUs”)calculated based on the specific identification method and are included in Interest and other income, net, in the condensed consolidated statement of 145,303operations.
The following table presents the Company’s financial instruments at fair value (in thousands):
Fair Value Measurements as of March 31, 2023 | ||||||||||||||||
3/31/2023 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant | Significant | |||||||||||||
Investments in U.S. Treasury bills | $ | 3,871 | $ | - | $ | 3,871 | $ | - |
Fair Value Measurements as of December 31, 2022 | ||||||||||||||||
12/31/2022 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant | Significant | |||||||||||||
Investments in U.S. Treasury bills | $ | 4,130 | $ | - | $ | 4,130 | $ | - |
Investments in debt securities as of March 31, 2023 are summarized by type below (in thousands).
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
U.S. Treasury bills | $ | 3,804 | $ | 67 | $ | - | $ | 3,871 | ||||||||
Total | $ | 3,804 | $ | 67 | $ | - | $ | 3,871 |
7 |
All investments in debt securities are due in one year or less as of March 31, 2023.
Investments in debt securities as of December 31, 2022 are summarized by type below (in thousands).
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
U.S. Treasury bills | $ | 4,098 | $ | 32 | $ | - | $ | 4,130 | ||||||||
Total | $ | 4,098 | $ | 32 | $ | - | $ | 4,130 |
The Company may be exposed to credit losses through its available-for-sale investments. An available-for-sale security is impaired when its fair value declines below its amortized cost basis. Unrealized losses resulting from the amortized cost basis of any available-for-sale debt security exceeding its fair value are evaluated for identification of credit losses. When evaluating the investments for impairment at each reporting period, the Company reviews factors such as the extent of the unrealized loss, historical losses, current and 78,367future economic market conditions, and financial condition of the issuer. As of March 31, 2023, the Company has not recognized an allowance for expected credit losses related to its available-for-sale securities as the Company has not identified any unrealized losses for these investments attributable to credit factors.
4. | Income taxes |
No tax benefit has been recorded in relation to the pre-tax loss for the three months ended September 30, 2017March 31, 2023 and 2016, respectively.
5. | Capital Stock |
The Company’s Board of Directors, without any vote or action by the holders of common stock, is authorized to issue preferred stock from time to time in one or more series and to determine the number of shares and to fix the powers, designations, preferences and relative, participating, optional or other special rights of any series of preferred stock.
The Board of Directors authorized the Company to repurchase up to 5,000,000 outstanding shares of common stock from time to time either in open market or privately negotiated transactions. On April 5, 2022, in accordance with the Board of Directors’ prior authorization, the Company purchased 192,750 shares of its common stock in a privately negotiated transaction at a price of $0.25 per share for an amount of approximately $48,000. The Company did not repurchase any common stock during the quarter ended March 31, 2023 and 2022. At September 30, 2017,March 31, 2023, the Company had repurchased 2,234,721 shares of its common stock and a total of 2,765,279 of the authorized shares, remained available for repurchase as of March 31, 2023. At March 31, 2022, the Company had repurchased 2,041,971 shares of its common stock and a total of 2,958,029 of the authorized shares, remainremained available for repurchase at September 30, 2017.March 31, 2022.
On March 9, 2023, there were 285,000 shares of Company common stock issued to the independent directors of the Company, in payment of quarterly directors’ fees due to them for services in 2022, which had consistedwere classified as issuable at December 31, 2022. As of mutual funds managed by a subsidiaryMarch 31, 2022, there were 217,932 shares of Winthrop were liquidatedCompany common stock to be issued to the independent directors of the Company, in payment of quarterly directors’ fees due to them for services in 2021 and the first quarter of 2016 for proceeds of $148,000 and realized a loss of $9,000.
In March 2023, the Company EGS has two other members, oneamended its Directors’ Compensation Program for Directors who are not employees of whom is Marshall Geller,the Company to provide that effective January 1, 2023 and as long as the Company remains a shell company (i) the issuance of any annual stock compensation for Directors serving as a member of the Company’s Board of Directors. The EGS transaction, as well as Mr. Geller’s participation in the transaction, received the prior approvalor a committee of the Company’s Audit Committee. Mr. Geller isBoard shall be terminated, and (ii) the Managing Memberpayment of any cash compensation for attendance in person or by telephone of meetings of the LLC and also invested $333,333 and acquired 333,333 Units, representing a 33.33% Membership Interest in EGS.
6. | Incentive stock plans and |
Stock awards
On February 13, 2019, 100,000 stock awards were issued to a newly appointed director of the Company. The stock awards vest equally, annually, over 3 years. The stock awards are valued based on the closing price of $0.42 of the Company’s common stock on February 13, 2019. At March 31, 2023, all shares had vested and were issued.
The Company recorded compensation expense of $0 and approximately $1,750 for each of the three months ended March 31, 2023 and 2022, respectively, related to those stock awards. There was no unrecognized compensation expense related to these unvested stock awards at March 31, 2023.
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Common stock options
The Company had initially adopted a stock-based compensation plan for employees and non-employee members of its Board of Directors in November 2003 (the “2003 Plan”), which was subsequently amended in March 2007 (the “2003 Plan Amendment”). In December 2007, the Company adoptedand the National Patent Development Corporation 2007 Incentive Stock Plan in December 2007 (the “2007 NPDC Plan”). The plans provide for up to 3,500,000 and 7,500,000periods during which additional awards for sharesmay be granted under the 2003 Plan Amendmentplans have expired and 2007 NPDC Plan, respectively, inno 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 formBoard of discretionary grants of stock options, restricted stock shares, restricted stock units (RSUs) and other stock-based awards to employees, directors and outside service providers. The Company’s plans are administered byDirectors or the Compensation Committee of the Board of Directors which consists solely of non-employee directors. The term of any option granted under the plans will not exceed ten yearsand pursuant to exemptions from the date of grant and, in the case of incentive stock options granted to a 10% or greater holder of total voting stockregistration requirements of the Company, three years from the date of grant. The exercise price of any option granted under the plans may not be less than the fair market value of the common stock on the date of grant or, in the case of incentive stock options granted to a 10% or greater holder of total voting stock, 110% of such fair market value.securities laws.
As of September 30, 2017, the number of shares reservedMarch 31, 2022, all options were vested and available for awardthere were no outstanding options under the 2007 NPDC Plan is 6,141,786 and under the 2003 Plan Amendment is 3,500,000,
Intangible | Estimated useful life | Gross carrying amount | Accumulated Amortization | Net carrying amount | |||||||||
Investment management and Advisory Contracts | 9 years | $ | 3,181 | $ | 1,689 | $ | 1,492 | ||||||
Trademarks | 10 years | 433 | 207 | 226 | |||||||||
Proprietary software and technology | 4 years | 960 | 960 | - | |||||||||
$ | 4,574 | $ | 2,856 | $ | 1,718 |
Year ending December 31, | |
2017 (remainder) | $100 |
2018 | 397 |
2019 | 397 |
2020 | 397 |
2021 | 386 |
2022-2023 | 41 |
$1,718 |
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Adjusted EBITDA of operating segment | $ | 317 | $ | 225 | $ | 657 | $ | 550 | ||||||||
Other operating expenses: | ||||||||||||||||
Corporate (1) | (341 | ) | (428 | ) | (1,132 | ) | (1,206 | ) | ||||||||
Depreciation and amortization | (111 | ) | (162 | ) | (322 | ) | (488 | ) | ||||||||
Equity based compensation | (54 | ) | (31 | ) | (163 | ) | (146 | ) | ||||||||
Software implementation costs | - | - | (38 | ) | - | |||||||||||
Relocation and severance costs | - | - | - | (99 | ) | |||||||||||
Operating loss | (189 | ) | (396 | ) | (998 | ) | (1,389 | ) | ||||||||
Non- operating income (expense): | ||||||||||||||||
Interest income (expense) and other, net | (18 | ) | 3 | (59 | ) | (33 | ) | |||||||||
Impairment of investment in LLC | - | - | - | (294 | ) | |||||||||||
Loss from operations before income taxes | $ | (207 | ) | $ | (393 | ) | $ | (1,057 | ) | $ | (1,716 | ) | ||||
Following is a summary of the Company's total assets: | September 30, | December 31, | ||||||||||||||
2017 | 2016 | |||||||||||||||
Operating segment | $ | 6,391 | $ | 6,224 | ||||||||||||
Corporate (2) | 6,165 | 7,431 | ||||||||||||||
$ | 12,556 | $ | 13,655 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Cautionary Statement Regarding Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward looking statements. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. The words “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “could,” “project,” “predict,” “expect,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements.
Factors that may cause actual results to differ from those results expressed or implied, include, but are not limited to, those listed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20162022 filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 24, 2017.28, 2023.
These forward-looking statements generally relate to our plans, objectives and expectations for future events and include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. These statements are based upon our opinions and estimates as of the date they are made. Although we believe that the expectations reflected in these forward-looking statements are reasonable, such forward-looking statements are subject to known and unknown risks and uncertainties that may be beyond our control, which could cause actual results, performance and achievements to differ materially from results, performance and achievements projected, expected, expressed or implied by the forward-looking statements. While we cannot assess the future impact that any of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our common stock, the differences could be significant. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report and you are urged to consider all such risks and uncertainties. In light of the uncertainty inherent in such forward-looking statements, you should not consider their inclusion to be a representation that such forward-looking matters will be achieved.
General Overview
The Company is a “shell company”, as defined in Rule 12b-2 of Operations
The changeCompany’s Board of Directors is considering strategic uses for its funds to develop or acquire interests in AUM was dueone 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 depositslimit ourselves to, or to foreclose any opportunities in, any particular industry or sector. Prior to this use, the Company’s funds have been, and we anticipate will continue to be, invested in high-grade, short-term investments (such as cash and cash equivalents and U.S. Treasury Bills) consistent with the preservation of $83 millionprincipal, maintenance of liquidity and increased market valueavoidance of $110 million, offset by redemptions and withdrawals of $130 million.
Results of each account's asset allocation and security selection. Its offerings include investment management solutions utilizing individual securities or mutual funds. Mutual fund models developed by Winthrop utilize a combination of Wright Mutual Funds as well as mutual funds from other investment managers.operations
Three months ended September 30, 2017March 31, 2023 compared to the three months ended September 30, 2016March 31, 2022
The Company had a loss from operations before income taxes of $207,000 compared to a loss from operations before income taxes of $393,000$314,000 for the three months ended September 30, 2016. The reduced loss of $186,000 was primarily the result of reduced March 31, 2023 and 2022.
Compensation and benefits of $130,000, reduced Other operating expenses of $131,000, partially offset by and reduced Interest income (expense) and other, net of $21,000, and reduced revenues of $54,000. Included in the loss incurred for each of the three months ended September 30, 2017 and 2016, respectively, for Winthrop are amortization of intangibles of $99,000 and $159,000 , and compensation expense of $54,000 and $31,000 related to RSU’s and stock options issued to Company employees, directors and advisors.
For the three months ended September 30, 2017,March 31, 2023, Compensation and benefits were $755,000$115,000 as compared to $885,000$117,000 for the three months ended September 30, 2016. March 31, 2022.
Other operating expenses
For the three months ended September 30, 2017,March 31, 2023, Other operating expenses were $797,000$205,000 as compared to $928,000$197,000 for the three months ended September 30, 2016. March 31, 2022.
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The decreasedincreased operating expenses of $131,000$8,000 were primarily the result of (i) reduced amortizationincreased professional fees of intangibles$29,000 and increased other expenses of $60,000 (which was $99,000$4,000, offset by decreased insurance expense of $5,000 and $159,000, respectively,decreased directors fees of $20,000. Please refer to note 5 for information on the directors compensation plan.
Income taxes
For the three months ended September 30, 2017 and 2016), and (ii) reduced operating expenses at the corporate level of $82,000.
Financial condition
Liquidity and Capital Resources
At September 30, 2017,March 31, 2023, the Company had cash and cash equivalents totaling $6,141,000,$103,000 and short-term U.S. Treasury Bills totaling $3,871,000 which it intends to use to acquire interests in one or more operating businesses, and 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 and Investments in U.S. Treasury Bills to stockholders. The Company believes that its working capital is sufficient to support its operating activities.requirements through June 30, 2024.
Cash equivalents represent short-term, highly liquid investments, which are readily convertible to cash and have maturities of three months or less at time of purchase. Please refer to note 3 for valuation of Investments.
The decreaseincrease in cash and cash equivalents of $885,000$13,000 for the nine monthsquarter ended September 30, 2017March 31, 2023 was primarily the result of $854,000$281,000 used in operations and $31,000 used inoperating activities offset by $294,000 provided by investing activities.
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not required.
Item 4. | Controls and Procedures |
The Company’s principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon such evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.
The Company’s principal executive officer and principal financial officer have also concluded that there was no change in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2017March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Purchases of Equity Securities
The Board of Directors authorized the Company to repurchase up to 2,000,000 shares, or approximately 11%, of its5,000,000 outstanding shares of common stock from time to time either in open market or privately negotiated transactions. On August 13, 2008, the Company’s Board of Directors authorized an increase of 2,000,000 common shares to be repurchased, and onAt March 29, 2011 the Company’s Board of Directors authorized an increase of an additional 1,000,000 shares to be repurchased. At September 30, 2016,31, 2023, the Company had repurchased 2,041,9712,234,721 shares of its common stock and, a total of 2,958,0292,765,279 shares remainremained available for repurchase. There were norepurchase at March 31, 2023, pursuant to the 5,000,000 shares repurchase plans. The Company did not repurchase shares of common stock repurchases made by or on behalf of the Company during the quarter ended September 30, 2017.March 31, 2023.
Item 5. | Other Information |
None
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Item 6. | Exhibits. |
Exhibit No. | ||
Description | ||
31.1 | * | |
31.2 | * | |
32.1 | * | |
101.INS | ** | XBRL Instance |
101.SCH | ** | XBRL |
101.CAL | ** | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | ** | Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB | ** | Inline XBRL Taxonomy Extension |
101.PRE | ** | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | ** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewith
**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.
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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 inon its behalf by the undersigned, thereunto duly authorized.
WRIGHT INVESTORS’ SERVICE HOLDINGS, | |||||
Date: | By: | /s/ HARVEY P. EISEN | |||
Name: | Harvey P. Eisen | ||||
Title: | Chairman, President, and Chief Executive Officer (Principal Executive Officer) |
Date: | By: | /s/ | ||
Name: | Harold D. Kahn | |||
Title: | Acting Chief Financial Officer and Acting Principal |
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