Income tax expense represents minimum state taxes. No tax benefit has been recorded in relation to the pre-tax loss for the three and six months ended June 30,March 31, 2021 and 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.

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 June 30, 2020, short-term liability related to the loan payable was approximately $15,000 and the long-term liability was approximately $38,000. The Company intends to useused 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, whichpandemic. The amounts are intended to be eligible for forgiveness, subject towere forgiven as of January 7, 2021 and the provisionsgain of the CARES Act and could be subject to claw back.extinguishment of debt of $53,000 was recorded as Other income as of March 31, 2021.

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 June 30, 2020,March 31, 2021, 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 June 30, 2020.March 31, 2021. No such shares were repurchased during any of the three and six months ended June 30, 2020March 31, 2021 and 2019.

2020.

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 June 30, 2020, 66,667March 31, 2021, 33,334 stock awards remained unvested and 33,33366,666 shares are to be issued.

The Company recorded compensation expense of approximately $3,000$3,300 and $3,000 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and compensation expense of approximately $6,000 and $4,000 for the six months ended June 30, 2020 and 2019, respectively, related to those stock awards. The total unrecognized compensation expense related to these unvested stock awards at June 30, 2020March 31, 2021 is $21,900,$12,300, which will be recognized over the remaining vesting period of approximately 20.9 years. 

Common stock optionsCapital Stock

TheDuring the quarter ended March 31, 2021, a) the Company adopted a stock-based compensation plan for employees and non-employee membersincurred $20,000 of director fees payable in 76,923 shares of its Boardcommon stock which were not issued as of DirectorsMarch 31, 2021 and b) 33,333 stock awards vested which were not issued at March 31, 2021. During the year ended 2020, there were 193,827 shares of Company common stock to be issued to the independent directors of the Company, in November 2003 (the “2003 Plan”),payment of quarterly directors’ fees due to them for services in 2020 and 33,333 stock awards to be issued to a director of the National Patent Development Corporation 2007 Incentive Stock Plan in December 2007 (the “2007 NPDC Plan”).Company. 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 were 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 exemptionsthe exemption from the registration requirements of the securities laws.

The Company recorded compensation expense of $0 and $100, respectively, for the three and six months ended June 30, 2020 and 2019, respectively, under these plans. 

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 dateSection 5 of the grant. 

AsSecurities Act of June 30, 2020, all options were vested and there were outstanding options to acquire 550,000 common shares under1933 (“1933 Act”) provided by Section 4(a)(2) of the 2007 NPDC Plan, 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 and second quarters of 2020.1933 Act. 

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 required the Company to continue to perform routine maintenance and administrative procedures consistent with DEEP’s Dam Safety regulations, the cost of which was not material to the Company’s financial position or results of operations.

On July 27, 2018,2017, the Company entered into a Consent Order with the DEEP relative to Acme Pond Dam. The Acme Pond Dam Consent Order required 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 estimated cost of work to be performed under the Action Plan was $90,000 and was accrued for at December 31, 2018. Total expenses for the repair work conducted in accordance with the Action Plan during the year ending December 31, 2019 was approximately $150,000. All repair work required for both the ACME Pond Dam and the Killingly 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 properties to the Town of 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, 20192020 filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 30, 2020.12, 2021.

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) 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 June 30, 2020March 31, 2021 compared to the three months ended June 30, 2019March 31, 2020

For the three months ended June 30, 2020,March 31, 2021, the Company had a loss from operations before income taxes of $346,000$249,000 compared to a loss from operations before income taxes of $499,000$318,000 for the three months ended June 30, 2019.  March 31, 2020.

The decreased loss before income taxes of $153,000$69,000 was primarily as athe result of a decrease in Other operating expenses of $197,000 mainly as the result$48,000 and decrease in Compensation and benefits of decreased professional fees and decreased rent expense,$27,000 offset by a decrease in Interest and other income of $45,000.$6,000.

Compensation and benefits

For the three months ended March 31, 2021, Compensation and benefits were $106,000 as compared to $133,000 for the three months ended March 31, 2020.

The decreased Compensation and benefits of $27,000 was primarily the result of a decrease in the health plan, medical expense, and unemployment tax for the three months ended March 31, 2021 in comparison to the three months ended March 31, 2020.

Other operating expenses

For the three months ended June 30, 2020,March 31, 2021, Other operating expenses were $221,000$196,000 as compared to $418,000$244,000 for the three months ended June 30, 2019.March 31, 2020. The decreased operating expenses of $197,000$48,000 were primarily the result of decreased insurance expenses of $20,000, decreased professional fees of $111,000,$26,000, decreased renttravel and entertainment expense of $43,000$11,000, and decreased other expenses of $21,000.$11,000.

Income taxes

The Company did not record any income tax expense for the three months ended June 30, 2020. For the three months ended June 30, 2019,March 31, 2021 and 2020, the Company recorded income tax expense from continuing operations of $14,000 and $25,000, respectively,less than $1,000, which representedrepresents minimum state taxes. No tax benefit has been recorded in relation to the pre-tax loss for the three months ended June 30,March 31, 2021 and 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. 

Other Assets

The Company has interests in landInterest and certain flowage rights in undeveloped property (the “properties”) primarily located in Killingly, Connecticut, which are deemed to be fully impaired as of June 30, 2020 and are subject to a proposed transfer (See Note 10 to the condensed consolidated financial statements).

Six months ended June 30, 2020 compared to the six months ended June 30, 2019other income

For the sixthree months ended June 30, 2020, the Company had a loss from operations beforeMarch 31, 2021, interest and other income taxes of $664,000was $53,000 as compared to a loss from operations of $980,000$59,000 for the sixthree months ended June 30, 2019.  

The decreased loss before income taxes of $316,000 was the result of a decrease in Compensation and benefits of $21,000 and a decrease in Other operating expenses of $427,000, offset by a decrease inMarch 31, 2020. Interest and other income of $132,000,during the period ended March 31, 2021 primarily asrelates to the resultforgiveness of the recovery inPPP loan while interest and other income during the first quarter of 2019period ended March 31, 2020 primarily relates to a reimbursement due to the liquidation of an old investment of $100,000 in a private entity that was deemed worthless.

Compensation and benefits

For the six months ended June 30, 2020, Compensation and benefits were $259,000 as compared to $280,000 for the six months ended June 30, 2019 as the result of the Company having fewer employees and a decrease in the health plan expense for the six months ended June 30, 2020 in comparison to the six months ended June 30, 2019.

Other operating expenses

For the six months ended June 30, 2020, Other operating expenses were $465,000 as compared to $892,000 for the six months ended June 30, 2019. The decreased operating expenses of $427,000 were primarily the result of decreased insurance expenses of $40,000, decreased professional fees of $227,000, decreased rent expense of $97,000 and decreased other expenses of $63,000.

Income taxes

The Company did not record any income tax expense for the six months ended June 30, 2020. For the six months ended June 30, 2019, the Company recorded income tax expense from continuing operations of $14,000 and $25,000, respectively, which represented minimum state taxes. No tax benefit has been recorded in relation to the pre-tax loss for the six months ended June 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. interest income.

Financial condition

Liquidity and Capital Resources

At June 30, 2020,March 31, 2021, the Company had cash and cash equivalents totaling $6,494,000,$6,139,000, 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 June 30, 2021.2022.

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 54 for valuation on Investments.

The decrease in cash and cash equivalents of $842,000$330,000 for the quarter ended June 30, 2020March 31, 2021 was primarily the result of $645,000$330,000 used in operating activities and $250,000 used to invest in long term U.S. Treasury Bills, offset by proceeds from a PPP loan of $53,000.activities.

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��sCompany’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 June 30, 2020March 31, 2021 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 June 30, 2020,March 31, 2021, 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 June 30, 2020,March 31, 2021, pursuant to the 5,000,000 shares repurchase plans. The Company did not repurchase shares of common stock during the quarter ended June 30, 2020.March 31, 2021.

None

________________________

*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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