Wright Investors Service Holdings, Inc. 10-Q

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, 2022 filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 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 the Exchange Act. Because we are a shell company, our stockholders are unable to utilize Rule 144 to sell “restricted stock” as defined in Rule 144 or to otherwise use Rule 144 to sell our securities, and we are ineligible to utilize registration statements on Form S-3 or Form S-8 for so long as we remain a shell company and for 12 months thereafter. As a consequence, among other things, the offering, issuance and sale of our securities is likely to be more expensive and time consuming and may make our securities less attractive to investors. The Company’s Board of Directors is considering strategic uses for its funds to develop or acquire interests in one or more operating businesses. While we have focused our development or acquisition efforts on sectors in which our management has expertise, we do not wish to limit ourselves to, or to foreclose any opportunities in, any particular industry or sector. Prior to this use, the Company’s funds have been, and we anticipate will continue to be, invested in high-grade, short-term investments (such as cash and cash equivalents and U.S. Treasury Bills) 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 and Investments in U.S. Treasury Bills to stockholders. Results of operations Three months ended March 31, 2023 compared to the three months ended March 31, 2022 The Company had a loss from operations before income taxes of $314,000 for the three months ended March 31, 2023 and 2022. Compensation and benefits For the three months ended March 31, 2023, Compensation and benefits were $115,000 as compared to $117,000 for the three months ended March 31, 2022. Other operating expenses For the three months ended March 31, 2023, Other operating expenses were $205,000 as compared to $197,000 for the three months ended March 31, 2022. 10 Table of Contents The increased operating expenses of $8,000 were primarily the result of increased professional fees of $29,000 and increased other expenses of $4,000, offset by decreased insurance expense of $5,000 and 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 March 31, 2023, the Company recorded no income tax expense from operations. No tax benefit has been recorded in relation to the pre-tax loss for the three months ended March 31, 2023 and 2022, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses. Financial condition Liquidity and Capital Resources At March 31, 2023, the Company had cash and cash equivalents totaling $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, 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 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 increase in cash and cash equivalents of $13,000 for the quarter ended March 31, 2023 was primarily the result of $281,000 used in operating activities offset by $294,000 provided by investing activities. 11 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk Not required.