Wright Investors Service Holdings, Inc. 10-K

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 – (PCAOB ID: 274 ) 11 Consolidated Balance Sheets - December 31, 2024 and 2023 12 Consolidated Statements of Operations - Years ended December 31, 2024 and 2023 13 Consolidated Statements of Comprehensive Loss – Years ended December 31, 2024 and 2023 14 Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2024 and 2023 15 Consolidated Statements of Cash Flows - Years ended December 31, 2024 and 2023 16 Notes to Consolidated Financial Statements 17 10 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To 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, 2024 and 2023, and the related consolidated statements of operations, comprehensive loss, 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, 2024 and 2023, and the consolidated results of its operations and its 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. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. We have served as the Company’s auditor since 2004. EISNERAMPER LLP Fort Lauderdale, Florida March 27, 2025 11 Table of Contents WRIGHT INVESTORS' SERVICE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) December 31, 2024 2023 Assets Current assets Cash and cash equivalents $ 1,440 $ 125 Investments 914 3,144 Prepaid expenses and other current assets 84 97 Total current assets 2,438 3,366 Other assets 8 8 Total assets $ 2,446 $ 3,374 Liabilities and stockholders’ equity Current liabilities Accounts payable and accrued expenses 115 83 Total current liabilities 115 83 Total liabilities 115 83 Commitments and Contingencies – Note 8 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 as of December 31, 2024 and 2023; outstanding 20,620,711 as of December 31, 2024 and 2023. 216 216 Additional paid-in capital 34,392 34,392 Accumulated deficit ( 30,530 ) ( 29,610 ) Accumulated other comprehensive income - 40 Treasury stock, at cost ( 1,007,969 shares at December 31, 2024 and 2023) ( 1,747 ) ( 1,747 ) Total stockholders' equity 2,331 3,291 Total liabilities and stockholders’ equity $ 2,446 $ 3,374 See accompanying notes to consolidated financial statements. 12 Table of Contents WRIGHT INVESTORS' SERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Years Ended December 31, 2024 2023 Expenses Compensation and benefits $ 452 $ 458 Other operating 627 714 Total operating expenses 1,079 1,172 Loss from operations ( 1,079 ) ( 1,172 ) Interest and other income, net 159 166 Net loss $ ( 920 ) $ ( 1,006 ) Basic and diluted weighted average common shares outstanding 20,620,711 20,620,711 Basic and diluted loss per share $ ( 0.04 ) $ ( 0.05 ) See accompanying notes to consolidated financial statements. 13 Table of Contents WRIGHT INVESTORS' SERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Years Ended December 31, 2024 2023 Net loss $ ( 920 ) $ ( 1,006 ) Other comprehensive (loss) income: Unrealized holding gain on available for sale securities 23 14 Reclassification adjustment for gains realized in net loss ( 63 ) ( 6 ) Total other comprehensive (loss) income ( 40 ) 8 Comprehensive loss $ ( 960 ) $ ( 998 ) See accompanying notes to consolidated financial statements. 14 Table of Contents WRIGHT INVESTORS' SERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2024 AND 2023 (in thousands, except per share data) Accumulated Total Additional other Treasury stock- Common stock (Issued) paid – in Accumulated comprehensive stock, at holders’ shares amount capital deficit income cost equity Balance at December 31, 2022 21,343,680 $ 213 34,395 $ ( 28,604 ) $ 32 $ ( 1,747 ) $ 4,289 Net loss - - - ( 1,006 ) - - ( 1,006 ) Other comprehensive income - - - - 8 - 8 Stock based compensation expense to directors 285,000 3 ( 3 ) - - - - Balance at December 31, 2023 21,628,680 $ 216 $ 34,392 $ ( 29,610 ) $ 40 $ ( 1,747 ) $ 3,291 Net loss - - - ( 920 ) - - ( 920 ) Other comprehensive loss - - - - ( 40 ) - ( 40 ) Balance at December 31, 2024 21,628,680 $ 216 $ 34,392 $ ( 30,530 ) $ - $ ( 1,747 ) $ 2,331 See accompanying notes to consolidated financial statements. 15 Table of Contents WRIGHT INVESTORS' SERVICE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities Net loss $ ( 920 ) $ ( 1,006 ) Adjustments to reconcile net loss to net cash used in operating activities: Realized gain on investments ( 63 ) ( 6 ) Changes in other operating items: Income tax receivable - 73 Prepaid expenses and other current assets 13 3 Accounts payable and accrued expenses 32 ( 29 ) Net cash used in operating activities ( 938 ) ( 965 ) Cash flows from investing activities Proceeds from redemptions of investments 4,257 1,735 Purchase of investments ( 2,004 ) ( 735 ) Net cash provided by investing activities 2,253 1,000 Net increase in cash and cash equivalents 1,315 35 Cash and cash equivalents at the beginning of the year 125 90 Cash and cash equivalents at the end of the year $ 1,440 $ 125 Supplemental disclosures of cash flow information Net cash refunded during the year for income taxes $ - $ ( 73 ) Unrealized (loss) gain on available for sale securities $ ( 40 ) $ 8 See accompanying notes to consolidated financial statements. 16 Table of Contents WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. Notes to Consolidated Financial Statements December 31, 2024 1. Description of activities Wright Investors’ Service Holdings, Inc. (the “Company”) has nominal operations and nominal assets aside from its cash and cash equivalents and investments in U.S. Treasury Bills and mutual funds, and is therefore considered a shell company, as defined in U.S. securities laws and regulations. The Company is not engaged in the business of investing, reinvesting, or trading in securities, and it does not hold itself out as being engaged in those activities. The Company intends to evaluate and explore all available strategic options. The Company will continue to work to maximize stockholder value. Such strategic options may include acquisition of an investment advisory business, acquisition of a financial services business, creating partnerships or joint ventures for those or other businesses and investing in other businesses that provide attractive opportunities for growth. The directors will also consider alternatives for distributing some or all of the Company’s cash and cash equivalents, and investments. Until such time as a decision is made as to how the liquid assets of the Company are so deployed, the Company intends to invest its liquid assets in high-grade, short- term investments (such as cash and cash equivalents and investments in U.S. Treasury Bills and mutual funds) consistent with the preservation of principal, maintenance of liquidity and avoidance of speculation. The Company may be classified as an inadvertent investment company if the Company acquires investment securities in excess of 40% of its total assets (exclusive of government securities, and cash and certain cash equivalents). As of December 31, 2024, the Company is not considered an inadvertent investment company. 2. 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 U.S. Treasury Bills and a money market fund. Cash and cash equivalents amounted to approximately $ 1,440,000 and $ 125,000 at December 31, 2024 and 2023, respectively. 17 Table of Contents WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. Notes to Consolidated Financial Statements December 31, 2024 Investment Valuation The Company’s investments in marketable securities consist of investments in debt securities which are U.S. Treasury bills, and equity securities which are mutual funds. 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, 2024 and December 31, 2023, the Company held investments in equity securities which consist of mutual funds of $ 914,000 and $ 735,000 , respectively. As of December 31, 2023, the Company held investments in U.S. government debt securities of $ 2,409,000 . 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. Mutual funds and 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. Mutual funds are categorized in Level 1 of the fair value hierarchy, depending on the unadjusted quoted prices in active markets for identical assets. 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 Consolidated Balance Sheets as of December 31, 2024 and 2023. Short-term investments in marketable debt 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. For debt securities, unrealized gains and losses are recorded net of tax as a component of Accumulated other comprehensive income within stockholders' equity. Credit losses related to available-for-sale debt securities are recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. Realized gains and losses are calculated based on the specific identification method and are included in Interest and other income, net, in the Consolidated Statements of Operations. The Company follows the guidance in ASC 321, “Investments – Equity Securities” (“ASC 321”) for its investments in equity securities with unrealized and realized gains and losses recorded as Interest and other income, net, on the Consolidated Statement of Operations. The following table presents the Company’s financial instruments measured at fair value (in thousands): Fair Value Measurements as of December 31, 2024 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Investments in Mutual Funds $ 914 $ 914 $ - - Fair Value Measurements as of December 31, 2023 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Investments in U.S. Treasury bills $ 2,409 $ - $ 2,409 - Investments in Mutual Funds 735 735 - - Total $ 3,144 735 $ 2,409 - 18 Table of Contents WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. Notes to Consolidated Financial Statements December 31, 2024 Investments in equity securities as of December 31, 2024 are summarized by type below (in thousands). Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Mutual Funds 914 - - 914 Total $ 914 $ - $ - $ 914 Investments in debt and equity securities as of December 31, 2023 are summarized by type below (in thousands). Amortized Cost / Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury bills $ 2,369 $ 40 $ - $ 2,409 Mutual Funds 735 - - 735 Total $ 3,104 $ 40 $ - $ 3,144 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 future economic market conditions, and financial condition of the issuer. As of December 31, 2024, 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. 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 properties were fully impaired as of December 31, 2018. Per share data Loss per share for the year ended December 31, 2024 and 2023, respectively, is calculated based on 20,620,711 weighted average outstanding shares of common stock. 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 income taxes, including those related to uncertain tax positions as interest and other expenses, respectively. The Company had no income tax uncertainties at December 31, 2024 and 2023. Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and investments. Investments in cash and money market funds are insured up to $ 250,000 per depositor, per insured bank. Investments in U.S. Treasury Bills and mutual funds are insured up to $ 500,000 . For the years ended December 31, 2024 and 2023, a substantial portion of the Company’s investments in cash, and U.S. Treasury Bills and mutual funds are in excess of these limits. 19 Table of Contents WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. Notes to Consolidated Financial Statements December 31, 2024 Segment Disclosure The Company's operations are reported within one reportable segment and constitutes the Company and its wholly-owned subsidiaries, all of which are inactive, which are reported in the consolidated financial statements. The Company currently has no or nominal operations, no revenues from operations and is considered a shell company, as defined in the U.S. securities laws and regulations. The Company's chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM evaluates the results and performance of the reporting segment and decides how to allocate resources based on consolidated net loss which is reported on the Consolidated Statements of Operations. Additionally, the measure of segment assets is reported on the Consolidated Balance Sheets as total assets. The accounting policies for the reportable segment are the same as those described above in the summary of significant accounting policies. The expenses and net loss for the one reportable segment are the same as those presented on the Consolidated Statements of Operations. Significant expense categories, including compensation and benefits, other operating expenses, and interest and other income, net are included on the Company's Consolidated Statements of Operations. 3. New accounting standard In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that expands segment disclosures for public entities, including requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the title and position of the CODM and an explanation of how the CODM uses reported measures of segment profit or loss in assessing segment performance and allocating resources. The new guidance also expands disclosures about a reportable segment’s profit or loss and assets in interim periods and clarifies that a public entity may report additional measures of segment profit if the CODM uses more than one measure of a segment’s profit or loss. The Company adopted the standard on effective for its annual report for the year ended December 31, 2024 with no impact on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective tax rate reconciliation as well as information on income taxes paid. The guidance will first be effective in our annual disclosures for the year ending December 31, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2023-09 on our disclosures. 4. Accounts payable and accrued expenses Accounts payable and accrued expenses consist of the following (in thousands): Year Ended December 31, 2024 2023 Accrued professional fees $ 15 $ 44 Other 100 39 Total $ 115 $ 83 5. Income taxes For the years ended December 31, 2024 and 2023, the Company recorded no income tax expense. The difference between the benefit for income taxes computed at the statutory rate and the reported amount of tax benefit from operations is as follows: Year ended December 31, 2024 2023 Federal income tax rate ( 21.0 )% ( 21.0 )% State income tax (net of federal effect) ( 4.8 ) 7.1 Change in valuation allowance 24.4 ( 36.2 ) Deferred tax adjustment - 50.0 Non-deductible expenses / (non-taxable income) 1.4 0.1 Effective tax rate - % - % 20 Table of Contents WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. Notes to Consolidated Financial Statements December 31, 2024 The deferred tax assets and liabilities are summarized as follows (in thousands): Year ended December 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 5,530 $ 5,301 Unrealized loss on investments 93 87 Other 3 3 Gross deferred tax assets 5,626 5,391 Less: valuation allowance ( 5,626 ) ( 5,391 ) Deferred tax assets after valuation allowance - - Net deferred tax assets $ - - 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 increased by approximately $ 235,000 and had decreased by approximately $ 366,000 during the years ended December 31, 2024 and 2023, respectively. The increase in the valuation allowance during the year ended December 31, 2024 was mainly due to increases in the net operating loss carryforward. The decrease in the valuation allowance during the year ended December 31, 2023 was mainly attributable to decreases in the gross deferred tax asset related to the expiration of a capital loss carryforward, net of increases in the net operating loss carryforward. The Company files a consolidated federal tax return with its subsidiaries. As of December 31, 2024, the Company has a federal net operating loss carryforward of approximately $ 24,334,000 , of which $ 15,177,000 expires from 2031 through 2037 , and $ 9,157,000 does not expire. The Company also has various state and local net operating loss carryforwards totaling approximately $ 8,179,000 , which expire between 2025 and 2045 . The Company’s capital loss carryforward of approximately $ 2,371,000 expired during 2023. 6. Capital Stock The Company’s Board of Directors, without any vote or action by the holders of common stock, is authorized to issue preferred stock from time to time in one or more series and to determine the number of shares and to fix the powers, designations, preferences and relative, participating, optional or other special rights of any series of preferred stock. The Board of Directors authorized the Company to repurchase up to 5,000,000 outstanding shares of common stock from time to time either in open market or privately negotiated transactions. The Company did not repurchase any common stock during the year ended December 31, 2024 and December 31, 2023. At December 31, 2024 and 2023, the Company had repurchased an aggregate of 2,234,721 shares of its common stock and a total of 2,765,279 remained available for repurchase at December 31, 2024 and 2023. On March 9, 2023, there were 285,000 shares of Company common stock issued to the independent directors of the Company, for payment of quarterly directors’ fees due to them for services in 2022, which were classified as issuable at December 31, 2022. The equity compensation awards were issued pursuant to the exemption from the registration requirements of Section 5 of the Securities Act of 1933 (“1933 Act”) provided by Section 4(a)(2) of the 1933 Act. In March 2023, the Company amended its Directors’ Compensation Program for Directors who are not employees of 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 Board or a committee of the Board shall be terminated, and (ii) the payment of any cash compensation for attendance in person or by telephone of meetings of the Board or committees of the Board shall be terminated. 7. Incentive stock plans and stock-based compensation Common stock options The Company adopted a stock-based compensation plan for employees and non-employee members of its Board of Directors in November 2003 (the “2003 Plan”), and the National Patent Development Corporation 2007 Incentive Stock Plan in December 2007 (the “2007 NPDC Plan”). The periods during which additional awards may be granted under the plans have expired and no further awards may be granted under any of these plans after December 20, 2017. As a consequence, any equity compensation awards issued after that time will be on terms determined by the Board of Directors or the Compensation Committee of the Board of Directors and pursuant to exemptions from the registration requirements of the securities laws. As of December 31, 2024 and 2023, all options were vested and there were no outstanding options under the 2007 NPDC Plan. There were no grants, forfeitures or exercises of options during the years ended December 31,2024 and 2023. 21 Table of Contents WRIGHT INVESTORS’ SERVICE HOLDINGS, INC. Notes to Consolidated Financial Statements December 31, 2024 8. Commitments, Contingencies, and Other 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. In September 2014, the Connecticut Department of Energy and Environmental Protection (“DEEP”) issued two Consent Orders requiring the investigation and repair of two dams, Acme Pond Dam and Killingly Pond Dam, in which the Company and its subsidiaries have certain ownership interests. Both matters have been fully resolved. In February 2020 and May 2020, DEEP issued to the Company Certificates of Compliance for the Consent Orders relating to Acme Pond Dam and Killingly Pond Dam, respectively. 22 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.