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 is considering strategic uses for its funds to develop or acquire interests in one or more operating businesses. While the Company has focused its development or acquisition efforts on sectors in which our management has expertise, the Company does not wish to limit itself to, or to foreclose any opportunities in, any particular industry or sector. Prior to this use, the Company' anticipate will continue to be, invested in high-grade, short-term investments (such as cash and cash equivalents and U.S. Treasury Bills) consistent with the preservation of principal, maintenance of liquidity and avoidance of speculation, until such time as we need to utilize such funds, or any portion thereof, for the purposes described above. The directors will also consider alternatives for distributing some or all of its cash and cash equivalents 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.

Certain of our accounting policies require higher degrees of judgment than others in their application. These include stock-based compensation and accounting for income taxes which are summarized below.





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Stock-based compensation

Stock-based compensation cost for employees is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Stock-based compensation cost for consultants is initially measured at the grant date based on the fair value of the award, remeasured each reporting date until the instrument vests, at which time the cost is established. The cost is recognized as an expense on a straight-line basis, as adjusted each reporting period, over the requisite service period, which is generally the vesting period. See Note 8 to the Consolidated Financial Statements for further information regarding the Company's stock-based compensation assumptions and expense.





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.





Results of Operations

Year ended December 31, 2022 compared to the year ended December 31, 2021

For the year ended December 31, 2022, the Company had a loss from operations before income taxes of $1,207,000 compared to a loss from operations before income taxes of $1,116,000 for the year ended December 31, 2021.

The increased loss of $91,000 was primarily the result of an increase in Other operating expenses of $49,000, increase in Compensation and benefits of $10,000, and a decrease in Interest and other income of $32,000.





Other operating expenses

For the year ended December 31, 2022, Other operating expenses were $768,000 as compared to $719,000 for the year ended December 31, 2021.

The increased operating expenses of $49,000 were primarily the result of increased professional fees of $42,000 and increased other expenses of $27,000, offset by decreased insurance expense of $8,000 and decreased equity-based compensation expense of $12,000.





Interest and other income

For the year ended December 31, 2022, Interest and other income was $21,000 as compared to $53,000 for the year ended December 31, 2021.

The decreased interest and other income of $32,000 was primarily the result of increased interest income of $ 21,000, offset by decreased gain on extinguishment of debt of $53,000.





Income taxes

For the years ended December 31, 2022 and 2021, the income tax expense of zero and approximately $2,000, respectively, substantially represents accruals related to state minimum income taxes.

The Company recorded a full valuation allowance against its net deferred tax assets as of December 31, 2022 and 2021. Due to a full valuation allowance to offset deferred tax assets related to net operating loss carryforwards attributable to the loss, no tax benefit has been recorded in relation to the pre-tax loss for the years ended December 31, 2022 and 2021.

Financial condition, liquidity, and capital resources

Liquidity and Capital Resources

At December 31, 2022, the Company had cash and cash equivalents totaling $90,000 and short-term U.S. Treasury Bills totaling $4,130,000 which it intends to use to acquire interests in one or more operating businesses 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 believes that its working capital is sufficient to support its operating requirements through March 31, 2024.

The decrease in cash and cash equivalents of $5,306,000 for the year ended December 31, 2022 was primarily the result of $1,160,000 used in operating activities, investment in U.S. Treasury Bills of $4,098,000, and the repurchase of Treasury stock for $48,000.





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