Wright Investors Service Holdings, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. General Overview The Company is a “shell company”, as defined in Rule 12b-2 of the Exchange Act. Because the Company is a shell company, its stockholders are unable to utilize Rule 144 to sell “restricted stock” as defined in Rule 144 or to otherwise use Rule 144 to sell its securities, and the Company is ineligible to utilize registration statements on Form S-3 or Form S-8 for so long as the Company remains a shell company. As a consequence, among other things, the offering, issuance and sale of its securities is likely to be more expensive and time consuming and may make its securities less attractive to investors. See “Item 1A. Risk Factors”. The Company’s Board of Directors continues to evaluate possible strategic uses for its funds to develop or acquire interests in one or more operating businesses. Prior to this use, the Company will continue to be invested in high-grade, short-term investments (such as cash and cash equivalents and money market mutual funds) consistent with the preservation of principal, maintenance of liquidity and avoidance of speculation. The directors will also consider alternatives for distributing some or all of its cash and cash equivalents, and investments 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 in 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 there is no active market for sale of such land. The Company and its representatives continue to discuss a proposed ownership transfer with interested parties. 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, 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. 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. See Note 5 to the Consolidated Financial Statements for further information regarding the Company’s income taxes. 8 Table of Contents Results of Operations Year ended December 31, 2025 compared to the year ended December 31, 2024 For the year ended December 31, 2025, the Company had a net loss of $1,024,000 compared to a net loss of $920,000 for the year ended December 31, 2024. The increased loss of $104,000 was primarily the result of an increase in Compensation and benefits of $10,000, increase in Other operating expenses of $7,000, and a decrease in Interest and other income, net of $87,000. Compensation and benefits For the year ended December 31, 2025, Compensation and benefits were $462,000 compared to $452,000 for the year ended December 31, 2024. The increased Compensation and benefits of $10,000 was the result of increased payroll benefits. Other operating expenses For the year ended December 31, 2025, Other operating expenses were $634,000 as compared to $627,000 for the year ended December 31, 2024. The increased operating expenses of $7,000 were primarily the result of decreased travel and entertainment expenses of $39,000, decreased professional fees of $11,000, offset by increased fees related to the repair and maintenance of Company owned dam properties of $52,000, and increased other expenses of $5,000. The dam properties were fully impaired as of December 31, 2018. Interest and other income, net For the year ended December 31, 2025, Interest and other income, net was $72,000 as compared to $159,000 for the year ended December 31, 2024. The decreased interest and other income, net of $87,000 was primarily the result of the lower yields related to the investments in money market mutual funds and lower balances of such investments. Income taxes For the years ended December 31, 2025 and 2024, the Company recorded no income tax expense. The Company recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024. Due to a full valuation allowance on the deferred tax assets related to net operating loss carryforwards, no tax benefit has been recorded in relation to the pre-tax loss for the years ended December 31, 2025 and 2024. 9 Table of Contents Financial condition, liquidity, and capital resources Liquidity and Capital Resources At December 31, 2025, the Company had cash and cash equivalents totaling $33,000 and short-term investments in money market mutual funds totaling $1,267,000 which it intends to use to acquire interests in one or more operating businesses, continue to evaluate possible strategic options, and to fund the Company’s general and administrative expenses. The directors will also consider alternatives for distributing some or all of its cash and cash equivalents and investments to stockholders. The Company acknowledges that its working capital may not be sufficient to support its operating requirements through March 31, 2027. The decrease in cash and cash equivalents of $1,407,000 for the year ended December 31, 2025 was primarily the result of $1,054,000 used in operating activities and proceeds from redemptions of investments in money market mutual funds of $248,000, offset by the purchase of money market mutual funds of $601,000. The Company’s recurring operating losses and negative cash flows from operations for the fiscal year ended December 31, 2025, raise substantial doubt about its ability to continue as a going concern for the one-year period from the date of filing of this Form 10-K. Based on the Company’s current cash and investment balances and projected cash burn, Management has implemented, or is in the process of implementing, operational cost reductions to decrease cash outflows and extend the Company's liquidity runway. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required. 10 Table of Contents