See accompanying notes to condensed consolidated financial statements.

WRIGHT INVESTORS’ SERVICE HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

Three and Nine months ended September 30, 20192020 and 20182019

(unaudited)

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, 20182019 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, 20182019 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 20192020 interim period are not necessarily indicative of results to be expected for the entire year.

Description of activities

On July 17, 2018,The Company has no or nominal operations. As a result, the Company completedis 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 primary operating subsidiary securities is likely to be more expensive and time consuming and may make the Company’s securities less attractive to investors.

The Winthrop Corporation (“Winthrop”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”), to Khandwala Capital Management, Inc., a company principally owned and controlled by Amit S. Khandwala,may fall within the Co-Chief Executive Officer and Chief Investment Officerscope of Winthrop, prior tobeing an “inadvertent investment company” under section 3(a)(1)(C) of such Act if the sale, for $6,000,000 in cash as well as $173,000 from Winthrop for repaymentvalue of the intercompany balance betweenCompany’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 Winthrop (“Sale”)cash and certain cash equivalents). 

Winthrop’s results of operations for the three and nine months ended September 30, 2018 have been reclassified as discontinued operations to be consistent with the current period’s presentation.

As a public company after the Sale, we intendThe Company intends to evaluate and explore all available strategic options. WeThe 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 itsthe 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, we intendthe Company intends to invest the proceeds of the Sale and ourits 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,

In June 2016, the Company has no or nominal operations. AsFinancial 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 result, we are a “shell company”, as definedreduction in Rule 405the amortized cost basis of the Securities Actsecurities. These changes will result in earlier recognition of 1933,credit losses. The standard, as amended, or the Securities Act,is effective for periods beginning after December 15, 2022 for both interim 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 securitiesannual periods. Early adoption is likely to be more expensive and time consuming and may make our securities less attractive to investors.

permitted. The Company isdoes not engaged inexpect the businessadoption 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 of 1940, as amended (the “Investment Company Act”), a company may fall within the scope of beingASU 2016-13 to have an “inadvertent investment company” under section 3(a)(1)(C) of such Act if the value ofimpact on 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). As of September 30, 2019, the Company is not considered an inadvertent investment company.condensed consolidated financial statements.

In February 2016, the FASB established ASC Topic 842, Leases (Topic 842), by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard 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 new guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. The Company adopted this standard on January 1, 2019, which did not have a material impact on the condensed consolidated financial statements.

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.

Loss per share for the three months ended September 30, 20192020 and 20182019 respectively, is calculated based on 19,744,32119,873,110 and 19,570,00019,744,321 weighted average outstanding shares of common stock. Included in the share numberstock, including a weighted average 33,333 shares which are vested Restricted Stock Units (“RSUs”) of 11,701 for the three months endedissuable at September 30, 2018. There were no vested Restricted Stock Units for the quarter ended September 30, 2019.2020.

Loss per share for the nine months ended September 30, 20192020 and 20182019 respectively, is calculated based on 19,705,49019,867,555 and 19,475,00019,705,490 weighted average outstanding shares of common stock. Included in the share numberstock, including a weighted average 27,778 shares which are vested RSUs of 98,367 for the nine months endedissuable at September 30, 2018. There were no vested Restricted Stock Units for the nine months ended September 30, 2019.2020.

Options for 550,000 shares of common stock, for the nine months ended September 30, 2019 and 2018, respectively, and unvested RSUs for 100,000 shareseach of common stock for the three and nine months ended September 30, 2020 and 2019, and stock awards for 66,667 and 100,000 shares of common stock for each of the three and nine months ended September 30, 2020 and 2019, respectively, were not included in the diluted computation as their effect would be anti-dilutive since the Company incurred net losses for both periods.

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:

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 September 30, 2019,2020, and December 31, 2018,2019, the Company had $5,819,000held $6,050,000 and $2,980,000, respectively, of investments of$7,144,000 in U.S. government debt securities, which it holds as trading securities. U.S. government debt 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 September 30, 2020 and December 31, 2019.

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

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 at $3,800 per month for office space in a building located in Mt. Kisco, NY. The lease commenced on September 1, 2019 and will expire on February 29, 2020, after which it can be renewed on a monthly basis. According to ASC 842, this lease is considered a short-term lease. The Company elected to apply the short-term measurement and recognition exemption, and the lease payments will be recognized in net income on a straight-line basis over the lease term.

Lease expense charged to operations related to the facilities aggregated $61,000 and $31,000 in the three months ended September 30, 2019 and September 30, 2018, respectively. Rent expense allocated to Winthrop in the amount of $27,000 is included in Loss from discontinued operations for the three months ended September 30, 2018. Lease expense charged to operations related to the facilities aggregated $181,000 and $61,000 in the nine months ended September 30, 2019 and September 30, 2018, respectively. Rent expense allocated to Winthrop in the amount of $112,000 is included in Loss from discontinued operations for the nine months ended September 30, 2018. Cash payment for the operating lease for the nine months ended September 30, 2019 aggregated to $199,000.

IncomeThe income tax expensebenefit predominantly represents minimum state taxes.an adjustment to the accrued income tax liability. No tax benefit has been recorded in relation to the pre-tax loss for the three and nine months ended September 30, 20192020 and 2018,2019, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The Act contains several new or changed income tax provisions, including but not limited to the following: increased limitation threshold for determining deductible interest expense; class life changes to qualified improvements and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years. The Company has evaluated the new tax provisions of the CARES Act and determined the impact to be either immaterial or not applicable.

On May 1, 2020, the Company received $53,000 from Fieldpoint Private Bank pursuant to the Paycheck Protection Program (the “PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan matures on May 4, 2022 (the “Maturity Date”), accrues interest at 1% per annum and may be prepaid in whole or in part without penalty. No principal or interest payments are due within the initial six months of the PPP Loan. Thereafter, monthly payments of principal and interest are due. The interest accrued during the initial six-month period is due and payable, together with the remaining principal, on the Maturity Date. As of September 30, 2020, short-term liability related to the loan payable was approximately $32,000 and the long-term liability was approximately $21,000. The Company intends to use all proceeds from the PPP Loan to retain employees, maintain payroll and make operating expense payments to support business continuity throughout the COVID-19 pandemic, which amounts are intended to be eligible for forgiveness, subject to the provisions of the CARES Act and could be subject to claw back.

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. As of September 30, 2019,2020, 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 as of September 30, 2019.2020. No such shares were repurchased during any of the three and nine months ended September 30, 20192020 and 2018.

2019.

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 September 30, 2020, 66,667 stock awards remained unvested and 33,333 shares are to be issued.

The Company recorded compensation expense of approximately $3,000 and $3,000 for the three months ended September 30, 2020 and 2019, respectively, and compensation expense of approximately $9,000 and $7,000 for the nine months ended September 30, 2020 and 2019, respectively, related to those stock awards. The total unrecognized compensation expense related to these unvested stock awards at September 30, 2020 is $18,700, which will be recognized over the remaining vesting period of approximately 1.5 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, respectively, for the three and nine months ended September 30, 2019 and 2018. 

The Company issued 100,000 options to a consultant on March 28, 2016 which vest equally over 3 years and are subject to post vesting restrictions for sale for three years with an exercise price of $1.29, which price was equal to the market value at the date of the grant. 

The fair value of the options granted on March 28, 2016 were reduced by an 8% discount for post vesting restrictions.

As of September 30, 2019,2020, all options were vested and there were outstanding options to acquire 550,000 common shares under the 2007 NPDC Plan. AllPlan, 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 options exercised during the first, second, and third quarters 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, less an average discount of 8% for post-vesting restrictions on sale until the three-year anniversary of the grant date, or an average price per share of $1.56 and $1.70, respectively. As of September 30, 2019, and 2018, the RSU’s were already fully vested and the related 200,000 shares of the Company’s common stock were issued during the year ended December 31, 2018.

On February 13, 2019, 100,000 restricted stock units (“RSUs”) were issued to a newly appointed director of the Company. The RSUs vest equally, annually, over 3 years. The RSUs are valued based on the closing price of $0.42 of the Company’s common stock on February 13, 2019, less an average discount of 8% for post-vesting restrictions on sale until the three-year anniversary of the grant date, or an average price per share of $0.39.

The Company recorded compensation expense of $7,000 and $16,000 for the nine months ended September 30, 2019 and 2018, respectively, related to these RSUs. The total unrecognized compensation expense related to these unvested RSUs at September 30, 2019 is $31,000, which will be recognized over the remaining vesting period of approximately 2.5 years.

2020.

The Company has interests in land and certain flowage rights in undeveloped property (the “properties”) primarily located in Killingly, Connecticut. As of December 31, 2018, the properties were shown in the Consolidated Balance Sheet at $0 after recording an impairment loss of $355,000. The properties were deemed to be fully impaired as of December 31, 2018.

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 requiresrequired the Company to continue to perform routine maintenance and administrative procedures consistent with DEEP’s Dam Safety regulations, the cost of which iswas 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 requiresrequired 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 identified work underTotal expenses for the Action Plan is ongoing. The estimated cost of work to be performed under the Action Plan was $90,000 and was accrued for at December 31, 2018. Repairrepair work conducted in accordance with the Action Plan during the third quarter ofyear ending December 31, 2019 resulted in expenses ofwas approximately $50,000$150,000. All repair work required for both the ACME Pond Dam and the remaining balanceKillingly 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, and a Certificate of Compliance for Consent Order for the Killingly Pond Dam was issued on May 22, 2020.

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 accrual decreasedproperties to $40,000 asthe Town of September 30, 2019.  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.

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, 20182019 filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 29, 2019.30, 2020.

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

On July 17, 2018, we completed the sale of The Winthrop Corporation (the “Sale”) 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 Condensed Consolidated Financial Statements).  

The Winthrop Corporation’s results of operations for the three and nine months ended September 30, 2018 have been reclassified as discontinued operations to be consistent with the current period’s presentation.

Upon the consummation of the Sale of The Winthrop Corporation, we becameCompany 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.

OurThe Company’s Board of Directors is considering strategic uses for the Winthrop Corporation Sale proceeds including, without limitation, using suchits 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 Winthrop Corporation Sale proceedsthe 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) 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.

Results of operations

Three months ended September 30, 20192020 compared to the three months ended September 30, 20182019

For the three months ended September 30, 2019,2020, the Company had a loss from continuingoperations before income taxes of $47,000 compared to a loss from operations before income taxes of $458,000 compared to a loss from continuing operations of $484,000 for the three months ended September 30, 2018.  2019.

The decreased loss before income taxes of $26,000$411,000 was theprimarily as a result of a decrease in Other operating expenses of $259,000 mainly as the result of decreased professional fees and decreased rent expense, offset by an increase of Compensation and benefits of $138,000$59,000 and an increase ofin Interest and other income of $23,000 that was related to$211,000, primarily as the investments in U.S. Treasury Bills, partially offset by increased Other operating expensesresult of$135,000 mainly as a consequence of increased legal fees related to the reimbursement of certain legal expenses to a shareholder for the sale of their shares in the Company, and increased consulting fees.Company’s former ticker symbol (WISH) for consideration of $250,000.

Compensation and benefits

For the three months ended September 30, 2019,2020, Compensation and benefits were $46,000$105,000 as compared to $184,000$46,000 for the three months ended September 30, 20182019 primarily as the result of the Company having fewer employees as of the three months ended September 30, 2019 in comparison to the three months ended September 30, 2018 and thea temporary decrease of the CEO compensation during the third quarter of 2019. Effective October 1, 2019, the Company’s Compensation Committee returned Mr. Eisen’sreversed the temporary decrease of the CEO’s compensation to $300,000 per annum to reflect his duties in exploring strategic alternatives for the Company. The increase compensation was offset by a decrease in the health plan expense for the three months ended September 30, 2020 in comparison to the three months ended September 30, 2019.

Other operating expenses

For the three months ended September 30, 2019,2020, Other operating expenses were $452,000$193,000 as compared to $317,000$452,000 for the three months ended September 30, 2018.2019. The increaseddecreased operating expenses of $135,000$259,000 were primarily the result of increased legaldecreased professional fees related to the reimbursement of certain legal expenses to a shareholder for the sale$180,000, decreased rent expense of their shares in the Company, increased consulting fees$50,000 and general office expense associated with the move to a new office building, partially offset by decreased travel and entertainment expenses and expenses associated with remediation of the reservoirs.

Other Assets

The Company monitors investment in non-strategic assets for impairment by considering current factors, including the economic environment, market conditions, operational performance and other specific factors relating to the business underlying the investment, and records impairments in carrying values when necessary.   

The Company has interests in land and certain flowage rights in undeveloped property (the “properties”) primarily located in Killingly, Connecticut, which are deemed to be fully impaired as of September 30, 2019 and December 31, 2018.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

For the nine months ended September 30, 2019, the Company had a loss from continuing operations before income taxes of $1,438,000 compared to a loss from continuing operations of $1,476,000 for the nine months ended September 30, 2018.  

The decreased loss before income taxes of $38,000 was the result of a decrease in Compensation and benefits of $230,000 and an increase in Interest and other income of $208,000, that includes the recovery of an old investment in a private entity of $100,000 that was deemed worthless and interest income earned from investments in U.S. Treasury Bills, partially offset by increased Other operating expenses of $400,000, mainly as a consequence of increased rent expense due to the full absorption of rent by the Company and increased consulting fees and increased legal fees related to the reimbursement of certain legal expenses to a shareholder for the sale of their shares in the Company, partially offset by decrease in expenses associated with the remediation of the reservoirs and decrease in travel and entertainment expenses.

Compensation and benefits

For the nine months ended September 30, 2019, Compensation and benefits were $326,000 as compared to $556,000 for the nine months ended September 30, 2018 as the result of the Company having fewer employees and the decrease of the CEO compensation during the third quarter of 2019. Effective October 1, 2019, the Company’s Compensation Committee returned Mr. Eisen’s compensation to $300,000 per annum to reflect his duties in exploring strategic alternatives for the Company.

Other operating expenses

For the nine months ended September 30, 2019, Other operating expenses were $1,344,000 as compared to $944,000 for the nine months ended September 30, 2018. The increased operating expenses of $400,000 mainly as a consequence of increased rent expense due to the full absorption of rent by the Company and increased consulting fees and increased legal fees related to the reimbursement of certain legal expenses to a shareholder for the sale of their shares in the Company, partially offset by decrease in expenses associated with the remediation of the reservoirs and decrease in travel and entertainment expenses.$29,000.

Income taxes

The Company recorded an income tax benefit of $19,000 for the three months ended September 30, 2020, which predominantly represents an adjustment to the income tax liability. For the three and nine months ended September 30, 2019, the Company recorded income tax expense from continuing operations of $1,000, and $26,000, respectively. For the three and nine months ended September 30, 2018, the Company recorded an income tax expense of $3,000 and $39,000, respectively. Such amounts representwhich represented minimum state taxes. No tax benefit has been recorded in relation to the pre-tax loss for the three and nine months ended September 30, 20192020 and 2018,2019, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the loss.losses. 

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

For the nine months ended September 30, 2020, the Company had a loss from operations before income taxes of $711,000 compared to a loss from operations of $1,438,000 for the nine months ended September 30, 2019.  

The decreased loss before income taxes of $727,000 was the result of a decrease in Other operating expenses of $686,000, offset by an increase in Compensation and benefits of $38,000 and an increase in Interest and other income of $79,000, primarily as the result of the sale of the Company’s former ticker symbol (WISH) for consideration of $250,000.

Compensation and benefits

For the nine months ended September 30, 2020, Compensation and benefits were $364,000 as compared to $326,000 for the nine months ended September 30, 2019 primarily as the result of a temporary decrease of the CEO compensation during the third quarter of 2019. Effective October 1, 2019, the Company’s Compensation Committee reversed the temporary decrease of the CEO’s compensation to reflect his duties in exploring strategic alternatives for the Company. The increase compensation was offset by a decrease in the health plan expense for the nine months ended September 30, 2020 in comparison to the nine months ended September 30, 2019.

Other operating expenses

For the nine months ended September 30, 2020, Other operating expenses were $658,000 as compared to $1,344,000 for the nine months ended September 30, 2019. The decreased operating expenses of $686,000 were primarily the result of decreased professional fees of $409,000, decreased rent expense of $147,000, decrease expenses associated with remediation of the reservoirs of $27,000, and decreased other expenses of $103,000.

Income taxes

The Company recorded an income tax benefit of $19,000 for the nine months ended September 30, 2020, which predominantly represents an adjustment to income tax liability. For the nine months ended September 30, 2019, the Company recorded income tax expense from continuing operations of $26,000, which represented minimum state taxes. No tax benefit has been recorded in relation to the pre-tax loss for the nine months ended September 30, 2020 and 2019, 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 September 30, 2019,2020, the Company had cash and cash equivalents totaling $1,999,000.$6,734,000, 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 November 30, 2021.

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 5note 4 for valuation on Investments.

The decrease in cash and cash equivalents of $4,164,000$602,000 for the nine monthsquarter ended September 30, 20192020 was primarily the result of $1,335,000$655,000 used in operating activities, mainly due to net lossoffset by proceeds from a PPP loan of $1,464, and $2,829,000 used to invest in U.S. Treasury Bills.$53,000.

The Company believes that its working capital is sufficient to support its operating requirements through September 30, 2020.

Not required.

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, 20192020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

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 September 30, 2019,2020, the Company had repurchased 2,041,971 shares of its common stock and, a total of 2,958,029 shares remained available for repurchase at September 30, 2019,2020, pursuant to the 5,000,000 shares repurchase plans. The Company did not repurchase shares of common stock during the quarter ended September 30, 2019.2020.

As requested by Harvey P. Eisen, effective July 1, 2019, the Company’s Board of Directors voted unanimously to reduce Mr. Eisen’s compensation from an annual amount of $300,000 to an annual amount of $20,000 for the period of July 1, 2019 through September 30, 2019. Effective October 1, 2019, the Company’s Compensation Committee returned Mr. Eisen’s compensation to $300,000 per annum to reflect his duties in exploring strategic alternatives for the Company.None

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*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.

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.

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