AmBase Corp 10-K for FY2022
AmBase Corp (ABCP)
10-K
2023-03-28
For: 2022-12-31
View Original
Added on
April 06, 2026
About this 10-K
AmBase Corp filed this 10-K on March 28, 2023, covering the fiscal year ended December 31, 2022 (FY2022).
Headline figures
Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $3.47M
- compared with a net loss of $5.21M a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2022
OR
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to ________
Commission file number 1-07265
(Exact name of registrant as specified in its charter)
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
Registrant’s telephone number, including area code: (201 )
265-0169
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Rights to Purchase Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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Yes
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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(Check one):
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Large Accelerated Filer
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Accelerated Filer
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Smaller Reporting Company
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Emerging Growth Company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements
of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
At February 28, 2023, there were 40,737,751
shares of registrant’s Common Stock outstanding. At June 30, 2022, the aggregate market value of registrant’s voting securities (consisting of its Common Stock) held by non-affiliates of the registrant, based on the average bid and asking price on
such date of the Common Stock of $0.21 per share was approximately $5 million. The Common Stock constitutes the registrant’s only
outstanding class of security.
Portions of the registrant’s definitive Proxy Statement for its 2023 Annual Meeting of Stockholders, which Proxy Statement the registrant intends to
file with the Securities and Exchange Commission not later than 120 days after the close of its fiscal year, are incorporated by reference with respect to certain information contained therein, in Part III of this Annual Report.
The Exhibit Index is located in Part IV, Item 15, page 37.
AmBase Corporation
Annual Report on Form 10-K
December 31, 2022
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PART I
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Page
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Item 1.
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1
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Item 1A.
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2
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Item 1B.
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8
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Item 2.
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8
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Item 3.
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8
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Item 4.
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8
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PART II
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Item 5.
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9
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Item 6.
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9
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Item 7.
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9
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Item 8.
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14
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Item 9.
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35
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Item 9A.
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35
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Item 9B.
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36
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Item 9C.
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36
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PART III
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Item 10.
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36
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Item 11.
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36
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Item 12.
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36
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Item 13.
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36
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Item 14.
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37
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PART IV
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Item 15.
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37
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Item 16.
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38
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PART I
| ITEM 1. |
BUSINESS
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General
AmBase Corporation (the “Company” or “AmBase”) is a Delaware corporation that was incorporated in 1975. AmBase is a holding company. At December 31, 2022, the Company’s assets consisted primarily of cash and cash
equivalents. The Company is engaged in the management of its assets and liabilities.
In June 2013, the Company purchased an equity interest in a real estate development property through a joint venture agreement to purchase and develop real property located at 105 through 111 West 57th Street in New York, New York (the “111 West 57th Property”). The Company is engaged
in material disputes and litigation with regard to the 111 West 57th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in
connection with the “Strict Foreclosure”, (as defined and further discussed herein), the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017. Prior to the Strict Foreclosure, the
carrying value of the Company’s equity investment in the 111 West 57th Property represented a substantial portion of the Company’s assets and net equity value.
For additional information concerning the Company’s recording of an impairment of its equity investment in the 111 West 57th Property
in 2017 and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
The executive office of the Company is located at 7857 West Sample Road, Suite 134, Coral Springs, Florida 33065. The Company had four (4) full-time and two (2) part-time employees at December 31, 2022.
Background
In August 1988, the Company acquired Carteret Bancorp Inc., which through its principal wholly owned subsidiary Carteret Savings Bank, FA, was principally engaged in retail and consumer banking, and mortgage
banking including mortgage servicing. On December 4, 1992, Carteret Savings Bank, FA was placed in receivership and a new institution, Carteret Federal Savings Bank was established to assume the assets and certain liabilities of Carteret Savings
Bank, FA.
The Company was a plaintiff in a legal proceeding, commenced in 1993, seeking recovery of damages from the United States Government for the loss of the Company’s wholly-owned subsidiary, Carteret Savings Bank, F.A.
(the “Supervisory Goodwill” legal proceedings). Pursuant to a Settlement Agreement between the Company, the Federal Deposit Insurance Corporation-Receiver (“FDIC-R”) and the Department of Justice (“DOJ”) on behalf of the United States of America
(the “United States”), (the “Settlement Agreement”) as approved by the United States Court of Federal Claims (the “Court of Federal Claims”), in October 2012, the United States paid $180,650,000 directly to AmBase (the “Settlement Amount”). On
August 6, 2013, Senior Judge Smith issued an opinion which addressed the relief sought by the Company. In summary, the court held that the Settlement Agreement is a contract and that it entitles the Company to receive both “(1) the amount of the
tax consequences resulting from taxation of the damages award plus (2) the tax consequences of receiving the first component.” But the Court of Federal Claims did not award an additional amount for the second component at that time given the
remaining uncertainty surrounding the ultimate tax treatment of the settlement proceeds and the gross-up, as well as uncertainty relating to the Company’s future income. The Court of Federal Claims indicated that either the Company or the
government is entitled to seek further relief “if, and when, the facts justify it.”
Stockholder Inquiries
Stockholder inquiries, including requests for the following: (i) change of address; (ii) replacement of lost stock certificates; (iii) Common Stock name registration changes; (iv) Quarterly Reports on Form 10-Q;
(v) Annual Reports on Form 10-K; (vi) Current Reports on Form 8-K; (vii) proxy materials; and (viii) information regarding stockholdings, should be directed to:
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American Stock Transfer & Trust Company, LLC
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6201 15th Avenue
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Brooklyn, NY 11219
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Attention: Shareholder Services
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(800) 937-5449 or (718) 921-8200 Ext. 6820
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The Company does not maintain a website. Copies of Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Annual Reports on Form 10-K and Proxy Statements can be obtained from the Company free of charge by
mailing a request to the Company as follows:
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AmBase Corporation
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12 Lincoln Blvd., Suite 202
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Emerson, NJ 07630
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Attn: Shareholder Services
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The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, the Company’s public reports, including Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, Annual Reports on Form 10-K and Proxy Statements, can be obtained through the Securities and Exchange Commission (“SEC”) EDGAR Database available on the SEC’s website at www.sec.gov. Materials filed with the SEC may
also be read or copied by visiting the SEC’s Public Reference Room, 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
| ITEM 1A. |
RISK FACTORS
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The Company is subject to various risks, many of which are beyond the Company’s control, which could have a negative effect on the Company and its financial condition. As a result of these and other factors, the
Company may experience material fluctuations in future operating results on a quarterly or annual basis which could materially and adversely affect the Company’s business, financial condition, operating results and stock price. An investment in
the Company’s stock involves various risks, including those mentioned below and elsewhere in this Annual Report on Form 10-K (this “Annual Report”), and those that are detailed from time to time in the Company’s other filings with the Securities
and Exchange Commission. You should carefully consider the following risk factors, together with all of the other information included or incorporated by reference in this Annual Report, before you decide whether to purchase the Company’s common
stock.
Operating Risks
Going Concern
The Company has incurred operating losses and used cash for operating activities for the past several years. The Company has continued to keep operating expenses at a reduced level; however, there can be no
assurance that the Company’s current level of operating expenses will not increase or that other uses of cash will not be necessary. The Company believes that based on its current level of operating expenses, its existing cash and cash
equivalents may not be sufficient to cover operating cash needs through the twelve month period from the financial statement reporting date. Based on the above factors, management determined there is substantial doubt about the Company’s ability
to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The
financial statements do not include adjustments to the carrying value of assets and liabilities, which might be necessary should the Company not continue in operation.
In order to continue as a going concern, the Company must take steps to manage its current level of cash and cash equivalents, through various ways, including but not limited to, raising additional capital through
the sale of equity or debt securities or long term borrowings, which may include additional borrowings from affiliates of the Company, reducing operating expenses, and seeking recoveries from various sources. There can be no assurance that the
Company will be able to adequately implement these cash management measures, in whole or in part or raise capital or obtain financing on terms acceptable to the Company, if at all.
To provide the necessary cash resources to continue operations and continue the litigation related to the 111 West 57th Property, the Company is currently considering and evaluating various strategic funding and/or
financing alternatives in order to raise approximately $7 million in funding. Such funding may be provided by a variety of sources, including but not limited to third parties, existing shareholders of the Company and/or Company management, and
may take in the form of litigation funding agreements, equity or debt securities, loans, or any combination thereof. Any sale of securities by the Company may not be offered or sold absent registration under the Securities Act of 1933, as amended
(the “Act”), or an applicable exemption from such registration, which may include exemptions pursuant to Rules 506(b) or 506(c) of Regulation D under the Act.
The terms and conditions of any such funding and/or financing agreements are expected to take several months to negotiate and finalize. Depending on the timing of any such agreements, the Company’s Chairman,
President and Chief Executive Office, Mr. Richard A. Bianco (“R.A. Bianco”) has indicated that, if and when needed, he would provide a working capital line of credit to the Company on an as needed basis, subject to customary and market terms and
conditions to be agreed upon at such time. However, there can be no assurance that the Company will be able to secure any such funding and/or financing arrangements on acceptable terms or at all.
For additional information with regard to the Company’s investment in the 111 West 57th Property and the legal proceedings related
thereto see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
The Company has incurred operating losses over the last several years and may not be able to achieve profitability.
We expect our operating expenses in 2023 will remain generally close to our most recent levels, although there can be no assurance that the Company’s current level of
operating expenses will not increase or that other uses of cash will not be necessary, including increased costs related to the Company’s legal proceeding depending on a variety of factors including the status of legal proceedings, appeals,
discovery expert fees, and other litigation related expenses. These losses, among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders’
equity. Because of the numerous risks and uncertainties associated with property development and management, we are unable to predict if or when we may become profitable.
The Company is in a competitive business.
The real estate industry is highly competitive. In addition, the Company expects other major real estate investors, some with much greater resources than the Company has, may compete with the Company for attractive
acquisition opportunities. These competitors include REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair the Company’s ability to make suitable
property acquisitions on favorable terms in the future.
We are a party to legal proceedings relating to our equity interest in the joint real estate venture 111 West 57th Partners, and may become subject to
additional litigation in the future, all of which continue to have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock.
We are currently party to lawsuits relating to our equity interest in the joint real estate venture 111 West 57th Property, as further described in Part II –
Item 8 – Note 8 to our consolidated financial statements. There can be no assurance that the Company will prevail with any of its claims with respect to its interests in the 111 West 57th Property or that any course of action will be successful in recovering value for the Company from this investment. If the Company is unable to recover all or most of the value of its investment in the 111 West
57th Property, there would be a material adverse effect on the Company’s financial condition and future prospects, including the Company’s ability to continue as a
going concern. In addition, in the future we may become subject to additional litigation, including claims relating to our operations, assets, offerings, and otherwise in the ordinary course of business. Some of these claims may result in
significant defense costs and potentially significant judgments against us, some of which are not, or cannot be insured against. An adverse determination with respect to any of these claims may result in our having to pay material judgments, or
settlements, which could have a material adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock. Certain litigation or the resolution of certain litigation may affect the
availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows and potentially expose us to increased risks that would be uninsured.
Illiquidity of real estate limits our ability to act quickly.
Real estate investments are relatively illiquid. Such illiquidity may limit our ability to react quickly in response to changes in economic and other conditions. If we want to sell an investment, we might not be
able to dispose of that investment in the time period we desire, and the sales price of that investment might not recoup or exceed the amount of our investment. These limitations on our ability to sell properties or investments could have a
material adverse effect on our financial condition and results of operations.
Property ownership through equity investments and/or in joint ventures could subject us to the differing business objectives of our co-venturers.
The Company has entered into, and may continue in the future to enter into, equity investments and/or joint ventures (including limited liability companies and partnerships) in which the Company does not hold a
direct or controlling interest in the assets underlying the entities in which it invests, including equity investments and/or joint ventures in which (i) the Company owns a direct interest in an entity which controls such assets, or (ii) the
Company owns a direct interest in an entity which owns indirect interests, through one or more intermediaries, of such assets. These equity investments and/or joint ventures may include ventures through which the Company would own an indirect
economic interest of less than 100 percent of a property owned directly by such joint ventures and may include equity investments and/or joint ventures that the Company does not control or manage. These investments involve risks that do not
exist with properties in which the Company owns a controlling interest with respect to the underlying assets, including the possibility that (i) we may become subject to material, legal disputes with our joint venture partners, as is the case
with respect to our investment in the 111 West 57th Property; (ii) our co-venturers or partners may, at any time, become insolvent or otherwise refuse to make
capital contributions when due, (iii) we may be subject to additional capital calls for joint venture development or other expenses which we may be unable or unwilling to meet, possibly resulting in substantial dilution of our investment, (iv) we
may become liable with respect to guarantees of payment or performance by the joint ventures, or (v) we may become subject to buy-sell arrangements which could cause us to sell our interests or acquire our co-venturer’s or partner’s interests in
a joint venture. Even where we have major decision rights or do not have major decision rights, because we lack a controlling interest, our co-venturers or partners may be in a position to take action contrary to our instructions or requests or
contrary to our policies or objectives. While we seek protective rights against such contrary actions, there can be no assurance that we will be successful in procuring any such protective rights, or if procured, that the rights will be
sufficient to fully protect us against contrary actions. Our organizational documents do not limit the amount of available funds that we may invest in equity investments and/or joint ventures and/or partnerships. If the objectives of our
co-venturers or partners are inconsistent with ours, it may adversely affect our ability to make receive and distributions or payments to our investors.
We may be unable to identify suitable properties for equity investments and acquisitions and any new investments and acquisitions may fail to perform as expected and subject
us to new risks, including risks created by geographic concentration.
The Company may not be able to identify suitable properties for equity investments and acquisitions. Even if we are able to identify suitable properties for equity investments and acquisitions, we may not be able
to carry out such equity investments or acquisitions on favorable terms, or at all. Any new equity investments in properties or newly acquired properties may not perform as expected and may subject us to unknown liability with respect to
liabilities relating to such properties for clean-up of undisclosed environmental contamination or claims by tenants, residents, vendors or other persons against the former owners of the properties. Inaccurate assumptions regarding future rental
or occupancy rates, or fluctuations in the target market could result in overly optimistic estimates of future revenues. In addition, future operating expenses or the costs necessary to bring an acquired property up to standards established for
its intended market position may be underestimated. The search for and process of acquiring such properties will also require a substantial amount of management’s time and attention.
Fluctuations in the local market in which the Company’s equity investment in a development property is located may adversely impact the Company’s financial
condition and operating results.
The 111 West 57th Property, which the Company purchased an equity investment in during 2013, is located in New York City. This geographic concentration could present risks if the New York City property market
performance falls below expectations. The economic condition of this market could affect occupancy, property revenues, and expenses, from the property and future asset value.
The Company may not be able to insure certain risks economically.
The Company may experience economic harm if any damage to the Company’s property or properties is not covered by insurance. The Company cannot be certain that the Company will be able to insure all risks that the
Company desires to insure economically or that all of the Company’s insurers will be financially viable if the Company makes a claim. The Company may suffer losses that are not covered under the Company’s insurance policies. If an uninsured loss
or a loss in excess of insured limits should occur, the Company could lose capital invested in a property or properties, as well as any potential future revenue from the property or properties.
Development and redevelopment activities may be delayed, not completed, and/or not achieve expected results.
The Company’s investments in development and redevelopment activities generally entail certain risks, including the following:
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funds may be expended, and management’s time devoted to projects that may not be completed,
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required approvals may not be obtained from governmental entities or other third parties,
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construction costs of a project may exceed original estimates, negatively impacting the economic feasibility of the project,
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projects may be delayed due to, without limitation, adverse weather conditions, labor or material shortages,
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occupancy rates and rents at a completed project may be less than anticipated, and
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expenses at completed development projects may be higher than anticipated.
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These risks may reduce the funds available for distribution to the Company and have a material adverse effect on the Company’s financial condition and results of operations. Further, investment in and the
development and redevelopment of real estate is also subject to the general risks associated with real estate investments. For further information regarding these risks, see the risk factor “The Company is
subject to risks inherent in owning, developing and leasing real estate.”
We are dependent on our key personnel whose continued service is not guaranteed and the loss of whose service could have a material adverse effect on our business.
Whether our business is successful will be dependent in part upon the leadership, strategic business direction and real estate experience of our executive officers, particularly Mr. R.A. Bianco, our Chairman,
President and Chief Executive Officer. Although we have entered into an employment agreement with Mr. R.A. Bianco, none of our executive officers or directors are subject to any covenants not to compete against the Company should they terminate
their affiliation with the Company. While we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations. Although we carry some key man life insurance on Mr. R.A. Bianco, the
amount of such coverage may not be sufficient to offset any adverse economic effects on our operations and we do not carry key man life insurance on any of our other executive officers or directors.
Changes in the composition of the Company’s assets and liabilities through acquisitions, divestitures or corporate restructuring may affect the Company’s results.
The Company may make future acquisitions or divestitures of assets or changes in how such assets are held. Any change in the composition of the Company’s assets and liabilities or how such assets and liabilities
are held could significantly affect the Company’s financial position and the risks that the Company faces.
Terrorist attacks and other acts of violence or war may affect the market, on which the Company’s common stock trades, the markets in which the Company operates the Company’s
operations and the Company’s results of operations.
Terrorist attacks or armed conflicts could affect the Company’s business or the businesses of the Company’s tenants. The consequences of armed conflicts are unpredictable, and the Company may not be able to foresee
events that could have an adverse effect on the Company’s business. More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the U.S. and worldwide financial markets and
economy. They also could be a factor resulting in, or a continuation of, an economic recession in the U.S. or abroad. Any of these occurrences could have a significant adverse impact on the Company’s operating results and revenues and may result
in volatility of the market price for the Company’s common stock.
The Company is subject to risks inherent in owning, developing and leasing real estate.
The Company is subject to varying degrees of risk generally related to leasing and owning real estate, many of which are beyond the Company’s control. In addition to general risks related to owning commercial real
estate, the Company’s risks include, among others:
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deterioration in regional and local economic and real estate market conditions,
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failure to complete construction and lease-up on schedule or within budget may increase debt service expense and construction and other costs,
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increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents,
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changes in interest rate levels, rates of inflation and the availability of financing,
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fluctuations in tourism patterns,
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adverse changes in laws and regulations (including tax, environmental, zoning and building codes, landlord/tenant and other housing laws and regulations) and agency or
court interpretations of such laws and regulations and the related costs of compliance,
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potential changes in supply of, or demand for rental properties similar to the Company’s,
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competition for tenants and changes in rental rates,
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concentration in a single real estate asset and class,
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needs for additional capital which may be required for needed development or repositioning of one or more real estate assets may exceed the Company’s abilities or its desired minimum level of liquidity,
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difficulty in reletting properties on favorable terms or at all,
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impairments in the Company’s ability to collect rent payments when due,
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the potential for uninsured casualty and other losses,
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the impact of present or future environmental legislation and compliance with environmental laws,
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changes in federal or state tax laws,
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the effects of global pandemics such as COVID-19 and government responses thereto; and
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acts of terrorism and war.
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Each of these factors could have a material adverse effect on the Company’s ability to receive distributions from its properties and investments and the Company’s financial condition and results of operations. In
addition, real estate investments are relatively illiquid, which means that the Company’s ability to promptly sell the Company’s property in response to changes in economic and other conditions may be limited.
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data that may include intellectual property, our proprietary business information and that of our tenants and business partners, including
personally identifiable information of our tenants and employees, on our networks. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error,
malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in
legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business.
The Company may not be able to generate sufficient taxable income to fully realize the Company’s deferred tax asset.
The Company has federal income tax net operating loss (“NOL”) carryforwards and other tax attributes. If the Company is unable to generate sufficient taxable income, the Company may not be able to fully realize
the benefit of the NOL carryforwards.
Because the Company from time to time maintains a majority of its assets in cash and/or securities, the Company may in the future be deemed to be an investment company under
the Investment Company Act of 1940 resulting in additional costs and regulatory burdens.
Currently, the Company believes that either it is not within the definition of “Investment Company” as the term is defined under the Investment Company Act of 1940 (the “1940 Act”) or, alternatively, may rely on
one or more of the 1940 Act’s exemptions. The Company intends to continue to conduct its operations in a manner that will exempt the Company from the registration requirements of the 1940 Act. If the Company were to be deemed to be an investment
company because of the Company’s investments securities holdings, the Company would be required to register as an investment company under the 1940 Act. The 1940 Act places significant restrictions on the capital structure and corporate
governance of a registered investment company, and materially restricts its ability to conduct transactions with affiliates. Compliance with the 1940 Act could also increase the Company’s operating costs. Such changes could have a material
adverse effect on the Company’s business, results of operations and financial condition.
Anti-takeover Risks
Our amended and restated shareholder rights plan may delay or prevent an acquisition of us that shareholders may consider favorable or may prevent efforts
by our shareholders to change our directors or our management, which could decrease the value of your common shares.
On March 27, 2019, the Company’s Board of Directors adopted the New Rights Plan which is designed to provide adequate time for our Board of Directors and shareholders to assess an unsolicited
takeover bid for our company, to provide our Board of Directors with sufficient time to explore and develop alternatives for maximizing shareholder value if a takeover bid is made, and to provide shareholders with an equal opportunity to
participate in a takeover bid and receive full and fair value for their common shares. The New Rights Plan is set to expire on March 27, 2029. The rights will become exercisable only when a person, including any party related to it, acquires or
attempts to acquire 25% or more of our outstanding common stock. Should such an acquisition occur or be announced, each right would, upon exercise, entitle a rights holder, other than the acquiring person and related persons, to purchase common
shares at a 50% discount to the market price at the time. The New Rights Plan may inhibit a change in control of the Company by a third party in a transaction not approved by the Company’s Board of Directors. If a change in control is inhibited
or delayed in this manner, it may adversely affect the market price of the Company’s common stock.
Other Risks
The current pandemic of the novel coronavirus (COVID-19) is expected to, and the future outbreak of other highly infectious or contagious diseases may, materially and
adversely impact the business, income, cash flow, results of operations and financial condition of the Company, including the 111 West 57th Property.
In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread globally, including to every state in the United States. On March 11, 2020, the
World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.
The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 has significantly and adversely
impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified, many
countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel.
Preventative measures taken to alleviate the public health crisis, including “shelter-in-place” or “stay-at-home” orders issued by local, state and federal authorities, may have a material adversely effect on the
business, income, cash flow, results of operations and financial condition of the Company, including the 111 West 57th Property, including without limitation a reduction in demand and sales prices and increased management and health maintenance
costs.
We face possible risks associated with the physical effects of climate change.
We cannot predict with certainty whether climate change is occurring and, if so, at what rate. However, the physical effects of climate change could have a material adverse effect on our 111 West 57th Property, operations, and business. To the extent climate change causes changes in weather patterns or severity, our markets could experience increase in storm
intensity (including floods, tornadoes, hurricanes, or snow and ice storms), rising sea-levels, and changes in precipitation, temperature, air quality, and quality and availability of water. Over time, these conditions could result in physical
damage to, or declining demand for, our properties or our inability to operate the buildings efficiently or at all. Climate change may also indirectly affect our business by increasing the cost of (or making unavailable) property insurance on
terms we find acceptable, increasing the cost of required resources, including energy, other fuel sources, water, and waste and snow removal services, and increasing the risk and severity of flood and earthquakes at our properties. Should the
impact of climate change be severe or occur for lengthy periods of time, our financial condition or results of operations could be adversely impacted. In addition, compliance with new or more stringent laws or regulations or stricter
interpretations of existing laws may require material expenditure by us. For example, various federal, state, and local laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by
greenhouse gas emissions. Among other things, “green” building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management. Such codes
could require us to make improvements to our existing properties, increase the costs of maintaining or improving our existing properties or developing new properties, or increase taxes and fees assessed on us or our properties. Expenditures
required for compliance with such codes may affect our cash flow and results of operations.
The military action commenced in February 2022, by the Russian Federation and Belarus in the country of Ukraine and related economic
sanctions may, materially and adversely impact the Company’s ability to obtain litigation funding and/or borrowing arrangements as a result of increased market volatility or decreased market liquidity.
Additionally, as a result of the military action commenced in February 2022, by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the
Company’s ability to sell equity or debt securities or obtain litigation funding and/or borrowing arrangements may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity for these items
being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations or ability to consummate the
sale of equity or debt securities, a litigation funding arrangement and/or borrowing arrangements are not yet determinable. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
None.
| ITEM 2. |
PROPERTIES
|
The Company rents approximately 150 square feet of office space for its executive office at 7857 West Sample Road, Suite 134, Coral Springs, FL 33065 on a short term basis. The Company also rents on a short term
basis approximately 200 square feet of office space in Emerson, NJ.
| ITEM 3. |
LEGAL PROCEEDINGS
|
For a discussion of the Company’s legal proceedings, see Part II - Item 8 - Note 8 to the Company’s consolidated financial statements.
From time to time, the Company and its subsidiaries may be named as a defendant in various lawsuits or proceedings. At the current time, except as set forth in Part II - Item 8 -
Note 8 to the Company’s consolidated financial statements, the Company is unaware of any legal proceedings pending against the Company. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all
sources for contributions to settlements. However, there can be no assurance that the Company will prevail with respect to any of its claims.
| ITEM 4. |
MINE SAFETY DISCLOSURES
|
Not applicable.
PART II
| ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
|
The Common Stock of the Company is quoted in the over-the-counter market under the symbol ABCP. Such prices reflect interdealer prices, without retail mark-up, markdown or commission, and may not necessarily
represent actual transactions.
As of February 28, 2023, there were approximately 6,000 beneficial owners of the Company’s Common Stock.
Common Stock Repurchase Plan
The Company’s common stock repurchase plan (the “Repurchase Plan”) allows for the repurchase by the Company of its common stock in the open market. The Repurchase Plan is conditioned upon favorable business
conditions and acceptable prices for the common stock. Purchases under the Repurchase Plan may be made, from time to time, in the open market, through block trades or otherwise. Depending on market conditions and other factors, purchases may be
commenced or suspended any time or from time to time without prior notice. No common stock repurchases have been made pursuant to the Repurchase Plan during 2022 or 2021. Due to the Company’s current financial condition and ongoing litigation
proceedings, the Company does not anticipate that it will make any stock purchases pursuant to the Repurchase Plan in the next twelve months. For additional information see Part II - Item 8 - Note 5 to the
Company’s consolidated financial statements.
| ITEM 6. |
[RESERVED]
|
Not applicable.
| ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes, which are contained in Part II - Item 8, herein.
BUSINESS OVERVIEW
AmBase Corporation (the “Company” or “AmBase”) is a Delaware corporation that was incorporated in 1975. AmBase is a holding company. At December 31, 2022, the Company’s assets consisted primarily of cash and cash
equivalents. The Company is engaged in the management of its assets and liabilities.
In June 2013, the Company purchased an equity interest in a real estate development property through a joint venture agreement to purchase and develop real property located at 105 through 111 West 57th Street in New York, New York (the “111 West 57th Property”). The Company is engaged
in material disputes and litigation with regard to the 111 West 57th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in
connection with the “Strict Foreclosure”, (as defined and further discussed herein), the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017. Prior to the Strict Foreclosure, the
carrying value of the Company’s equity investment in the 111 West 57th Property represented a substantial portion of the Company’s assets and net equity value.
For additional information regarding the Company’s recording of an impairment of its equity investment in the 111 West 57th Property
in 2017 and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s assets at December 31, 2022, aggregated $410,000, consisting principally of cash and cash equivalents of $349,000. At December 31, 2022, the Company’s liabilities aggregated $1,484,000. Total
stockholders’ deficit was $1,074,000.
The Company has incurred operating losses and used cash for operating activities for the past several years. The Company has continued to keep operating expenses at a reduced level; however, there can be no
assurance that the Company’s current level of operating expenses will not increase or that other uses of cash will not be necessary. The Company believes that based on its current level of operating expenses, its existing cash and cash
equivalents may not be sufficient to cover operating cash needs through the twelve month period from the financial statement reporting date. Based on the above factors, management determined there is substantial doubt about the Company’s ability
to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The
financial statements do not include adjustments to the carrying value of assets and liabilities, which might be necessary should the Company not continue in operation.
In order to continue as a going concern, the Company must take steps to manage its current level of cash and cash equivalents, through various ways, including but not limited to, raising additional capital through
the sale of equity or debt securities or long term borrowings, which may include additional borrowings from affiliates of the Company, reducing operating expenses, and seeking recoveries from various sources. There can be no assurance that the
Company will be able to adequately implement these cash management measures, in whole or in part or raise capital or obtain financing on terms acceptable to the Company, if at all.
In June 2013, the Company purchased an equity interest in the 111 West 57th Property. The Company is engaged in material disputes and
litigation with regard to the 111 West 57th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the “Strict
Foreclosure”, (as defined and further discussed herein), in accordance with GAAP, the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property of $63,745,000 in 2017. Prior to the Strict
Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57th Property represented a substantial portion of the Company’s assets and net
equity value.
For additional information concerning the Company’s recording of an impairment of its equity investment in the 111 West 57th Property
in 2017 and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing, and will continue to pursue, other options to realize the Company’s investment value,
various legal courses of action to protect its legal rights, recovery of its asset value from various sources of recovery, as well as considering other possible economic strategies, including the possible sale of the Company’s interest in and/or
rights with respect to the 111 West 57th Property; however, there can be no assurance that the Company will prevail with respect to any of its claims.
The Company can give no assurances regarding the outcome of the matters described herein, including as to the effect of Spruce’s actions described herein, whether the Sponsors will perform their contractual
commitments to the Company under the JV Agreement, as to what further action, if any, the lenders may take with respect to the project, as to the ultimate resolution of the ongoing litigation proceedings relating to the Company’s investment
interest in the 111 West 57th Property, as to the ultimate effect of the Sponsors’, the Company’s or the lenders’ actions on the project, as to the completion or
ultimate success of the project, or as to the value or ultimate realization of any portion of the Company’s equity investment in the 111 West 57th Property. For
additional information with regard to the Company’s investment in the 111 West 57th Property and the legal proceedings related thereto see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
While the Company’s management is evaluating future courses of action to protect and/or recover the value of the Company’s equity investment in the 111 West 57th Property, the adverse developments make it uncertain as to whether any such courses of action will be successful. Any such efforts are likely to require sustained effort over a period of time and substantial
additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on the Company’s financial condition and future prospects. The Company can give no assurances with regard to
if it will prevail with respect to any of its claims.
To provide the necessary cash resources to continue operations and continue the litigation related to the 111 West 57th Property, the Company is currently considering and evaluating various strategic funding and/or
financing alternatives in order to raise approximately $7 million in funding. Such funding may be provided by a variety of sources, including but not limited to third parties, existing shareholders of the Company and/or Company management, and
may take in the form of litigation funding agreements, equity or debt securities, loans, or any combination thereof. Any sale of securities by the Company may not be offered or sold absent registration under the Securities Act of 1933, as amended
(the “Act”), or an applicable exemption from such registration, which may include exemptions pursuant to Rules 506(b) or 506(c) of Regulation D under the Act.
The terms and conditions of any such funding and/or financing agreements are expected to take several months to negotiate and finalize. Depending on the timing of any such agreements, the Company’s Chairman,
President and Chief Executive Office, Mr. Richard A. Bianco (“R.A. Bianco”) has indicated that, if and when needed, he would provide a working capital line of credit to the Company on an as needed basis, subject to customary and market terms and
conditions to be agreed upon at such time. However, there can be no assurance that the Company will be able to secure any such funding and/or financing arrangements on acceptable terms or at all.
In 2017, the Company entered into a Litigation Funding Agreement (the “LFA”) with Mr. R.A. Bianco. Pursuant to the LFA, Mr. R.A. Bianco agreed to provide litigation funding to the Company, to satisfy actual
documented litigation costs and expenses of the Company, including attorneys’ fees, expert witness fees, consulting fees and disbursements in connection with the Company’s legal proceedings related to the Company’s equity investment in the 111
West 57th Property. In 2019, the Company and Mr. R.A. Bianco entered into an amendment to the LFA (the “Amendment). For additional information including the terms of the Litigation Funding Agreement, as amended by the Amendment, see Part II – Item 8 – Note 9 to the Company’s consolidated financial statements.
For the year ended December 31, 2022, cash of $2,654,000 was used by operations for the payment of operating expenses and prior year accruals.
For the year ended December 31, 2021, cash of $4,922,000 was used by operations for the payment of operating expenses and prior year accruals.
Accounts payable and accrued liabilities as of December 31, 2022, increased as compared to December 31, 2021. The amounts in the respective years are principally related to accruals for legal expenses in connection
with the 111 West 57th Property legal proceedings.
There are no material commitments for capital expenditures as of December 31, 2022. Inflation has had no material impact on the business and operations of the Company.
RESULTS OF OPERATIONS
The Company recorded a net loss of $3,473,000 or $0.09 per share for the year ended December 31, 2022. For the year ended December 31, 2021, the Company recorded a net loss of $5,208,000 or $0.13 per share.
Compensation and benefits decreased to $1,410,000 in 2022 from $1,506,000 in 2021. The decrease in 2022 as compared to 2021 is primarily due to a decrease in benefit costs in 2022 versus 2021.
Professional and outside services expenses decreased to $1,668,000 in 2022 from $3,358,000 in 2021. The decrease in 2022 as compared to 2021 is principally the result of lower level of legal
and professional fees incurred in 2022 in connection with the Company’s legal proceedings relating to the Company’s investment in the 111 West 57th Property. For
additional information with regard to the Company’s investment in the 111 West 57th Property and the legal proceedings related thereto, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
Property operating and maintenance expenses increased to $17,000 in 2022 from $15,000 in 2021. The increase is primarily due to a slight increase in property operating and maintenance expenses
in 2022 versus 2021.
Insurance expenses decreased to $257,000 in 2022, compared with $261,000 in 2021. The decrease is primarily due to an decrease in insurance premium costs.
Other operating expenses increased slightly to $72,000 in 2022 compared with $68,000 in 2021 due to a general higher level of expenses in 2022 versus 2021.
Interest income in 2022 increased to $9,000 compared to $1,000 in 2021. The increased interest income is due to a higher yield on cash equivalents on hand in 2022 versus 2021.
Interest expense of $57,000 in 2022 is attributable to interest expense paid to a professional firm for outstanding and unpaid professional fees.
For the year ended December 31, 2022, the Company recorded an income tax expense of $1,000 attributable to a provision for a tax on capital imposed by the state jurisdictions. For additional information see Part II – Item 8 – Note 7 to the Company’s consolidated financial statements.
For the year ended December 31, 2021, the Company recorded an income tax expense of $1,000 attributable to a provision for a tax on capital imposed by the state jurisdictions. For additional information, see Part II – Item 8 – Note 7 to the Company’s consolidated financial statements.
A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes is included in Part II - Item
8 – Note 7 to the Company’s consolidated financial statements. For additional information including a discussion of income tax matters, see Part II – Item 8 – Note 7 to the Company’s consolidated
financial statements.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our consolidated financial statements are based on the selection and application of accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions about
future events that affect the amounts reported in our financial statements and the accompanying notes. Future events and their effects cannot be determined with absolute certainty. The determination of estimates requires the exercise of judgment.
Actual results could differ from those estimates, and any such differences may be material to the consolidated financial statements. We believe that the following accounting policies, which are important to our consolidated financial position and
consolidated results of operations, require a higher degree of judgment and complexity in their application and represent the critical accounting policies used in the preparation of our consolidated financial statements. If different assumptions
or conditions were to prevail, the results could be materially different from our reported results. For a summary of all our accounting policies, including the accounting policies discussed below, see Part II -
Item 8 - Note 2 to the Company’s consolidated financial statements.
Equity Method Investment: Investments and ownership interests are accounted for under the equity method of accounting if the Company has the ability to
exercise significant influence, but not control (under GAAP), over the investment. Investments accounted for under the equity method are carried at cost, plus or minus the Company’s equity in the increases and decreases in the net assets after
the date of acquisition and certain other adjustments. The Company’s share of income or loss for equity method investments is recorded in the consolidated statements of operations as equity income (loss). Dividends received, if any, would reduce
the carrying amount of the Company’s investment.
Legal Proceedings: From time to time the Company and its subsidiaries may be named as a defendant in various lawsuits or proceedings. At the current
time, except as set forth in Part II - Item 8 - Note 8 to the Company’s consolidated financial statements, the Company is unaware of any legal proceedings pending against the Company. Management of the
Company, in consultation with outside legal counsel, continually reviews the likelihood of liability and associated costs of pending and threatened litigation including the basis for the calculation of any litigation reserves which may be
necessary. The assessment of such reserves includes an exercise of judgment and is a matter of opinion. The Company intends to aggressively contest all threatened litigation and contingencies, as well as pursue all sources for contributions to
settlements. For a discussion of lawsuits and proceedings, see Part II - Item 8 - Note 8 to the Company’s consolidated financial statements.
Income Tax Audits: The Company’s federal, state and local tax returns, from time to time, may be audited by the tax authorities, which could result in
proposed assessments or a change in the NOL carryforwards and of AMT credits currently available. In connection with the IRS examination of the Company’s 2012 federal income tax return, the IRS accepted the Company’s federal NOL loss
carryforward deductions from 1997 through 2006 which were utilized as part of the Company’s 2012 federal income tax return to reduce the Company’s 2012 federal taxable income. The Company has not been notified of any other potential tax audits
by any federal, state or local tax authorities. As such, the Company believes the statutes of limitations for the assessment of additional federal and state tax liabilities are generally closed for tax years prior to 2019.
Deferred Tax Assets: As of December 31, 2022, and 2021, the Company had deferred tax assets arising primarily from net operating loss carryforwards
available to offset taxable income in future periods. A valuation allowance remains on the remaining deferred tax asset amounts relating to the NOL carryforwards as management has no basis to conclude that realization is more likely than not.
The valuation allowance was calculated in accordance with current standards, which places primary importance on a company’s cumulative operating results for the current and preceding years. We intend to maintain a valuation allowance for the
deferred tax asset amount relating to the NOL carryforwards until sufficient positive evidence exists to support a reversal. See Part II - Item 8 - Note 7 to the Company’s consolidated financial
statements.
New Accounting Pronouncements: There are no new accounting pronouncements that would likely materially affect the Company’s financial statements for the
periods reported herein.
Cautionary Statement for Forward-Looking Information
This Annual Report together with other statements and information publicly disseminated by the Company may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended (the “Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or make oral statements that constitute forward-looking statements. The Company intends such forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or
quantified. The forward-looking statements may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, anticipated market performance, anticipated litigation results or the
timing of pending litigation, and similar matters. When used in this Annual Report, the words “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends” and variations of such words and similar expressions are intended to identify
forward-looking statements that involve risks and uncertainties. The Company cautions readers that a variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in
the Company’s forward-looking statements. These risks and uncertainties, many of which are beyond the Company’s control, include, but are not limited to those set forth in “Item 1A, Risk Factors” and elsewhere in this Annual Report and in the
Company’s other public filings with the Securities and Exchange Commission including, but not limited to: (i) risks with regard to the ability of the Company to continue as a going concern; (ii) assumptions regarding the outcome of legal and/or
tax matters, based in whole or in part upon consultation with outside advisors; (iii) risks arising from unfavorable decisions in tax, legal and/or other proceedings; (iv) transaction volume in the securities markets; (v) the volatility of the
securities markets; (vi) fluctuations in interest rates; (vii) risks inherent in the real estate business, including, but not limited to, insurance risks, tenant defaults, risks associated with real estate development activities, changes in
occupancy rates or real estate values; (viii) changes in regulatory requirements which could affect the cost of doing business; (ix) general economic conditions; (x) risks with regard to whether or not the Company’s current financial resources
will be adequate to fund operations over the next twelve months from financial statement issuance date and/or continue operations; (xi) changes in the rate of inflation and the related impact on the securities markets; and (xii) changes in
federal and state tax laws. Additionally, there is risk relating to assumptions regarding the outcome of tax matters, based in whole or in part upon consultation with outside advisors; risk relating to
potential unfavorable decisions in tax proceedings; risks regarding changes in, and/or interpretations of federal and state income tax laws; and risk of IRS and/or state tax authority assessment of additional tax plus interest. These are not the
only risks that we face. There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also impair our business and financial position.
Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. The Company undertakes no obligation to revise or update these forward-looking statements to
reflect events or circumstances that arise after the date of this Annual Report or to reflect the occurrence of unanticipated events. Accordingly, there is no assurance that the Company’s expectations will be realized.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID )
To the Shareholders and Board of Directors of
AmBase Corporation and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AmBase Corporation and Subsidiaries (the “Company”) as of
December 31, 2022, and 2021, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2022, and
the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results
of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise
substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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
audits 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.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2007, such date takes into account the acquisition of a portion of UHY LLP by
Marcum LLP in April 2010.
March 28, 2023
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
|
Years Ended December 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Operating expenses:
|
||||||||
|
Compensation and benefits
|
$
|
|
$
|
|
||||
|
Professional and outside services
|
|
|
||||||
|
Property operating and maintenance
|
|
|
||||||
|
Insurance
|
|
|
||||||
|
Other operating
|
|
|
||||||
|
Total operating expenses
|
|
|
||||||
|
Operating income (loss)
|
(
|
)
|
(
|
)
|
||||
|
Interest income
|
|
|
||||||
|
Interest expense
|
( |
) | ||||||
|
Income (loss) before income taxes
|
(
|
)
|
(
|
)
|
||||
|
Income tax expense (benefit)
|
|
|
||||||
|
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Net income (loss) per common share - basic
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Weighted average common shares outstanding - basic
|
|
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
|
Assets:
|
December 31,
2022
|
December 31,
2021
|
||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Other assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities and Stockholders’ Equity (Deficit):
|
||||||||
|
Liabilities:
|
||||||||
|
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
||||
|
Total liabilities
|
|
|
||||||
|
Commitments and contingencies (Note 6)
|
||||||||
|
Stockholders’ equity(deficit):
|
||||||||
|
Common stock ($
|
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
|
Treasury stock, at cost – 2022 -
|
(
|
)
|
(
|
)
|
||||
|
Total stockholders’ equity (deficit)
|
(
|
)
|
|
|||||
|
Total liabilities and stockholders’ equity (deficit)
|
$
|
|
$
|
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
Years Ended December 31, 2022
and 2021
|
(in thousands)
|
Common
stock
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Treasury
stock
|
Total
|
|||||||||||||||
|
January 1, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||
|
Net income (loss)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
|
December 31, 2021
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||
|
Net income (loss)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
|
December 31, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||
The accompanying notes are an integral part of these consolidated financial statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
|
Years Ended December 31,
|
||||||||
|
(in thousands)
|
2022
|
2021
|
||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities
|
||||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Other assets
|
|
(
|
)
|
|||||
|
Accounts payable and accrued liabilities
|
|
|
||||||
|
Net cash provided (used) by operating activities
|
(
|
)
|
(
|
)
|
||||
|
Net change in cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
|
Cash and cash equivalents at beginning of year
|
|
|
||||||
|
Cash and cash equivalents at end of year
|
$
|
|
$
|
|
||||
|
Supplemental cash flow disclosure:
|
||||||||
|
Income taxes refunded (paid)
|
$
|
|
$
|
|
||||
| Interest expense paid on accounts payable |
$ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 – Organization and Going Concern
AmBase Corporation
(the “Company” or “AmBase”) is a Delaware corporation that was incorporated in 1975. AmBase is a holding company. At December 31, 2022, the Company’s assets consisted primarily of cash and cash equivalents. The Company is engaged in the
management of its assets and liabilities.
A fundamental
principle of the preparation of financial statements in accordance with GAAP is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement
of liabilities occurring in the ordinary course of business. In accordance with this requirement, the Company has prepared its accompanying consolidated financial statements assuming the Company will continue as a going concern.
The Company has
incurred operating losses and used cash for operating activities for the past several years. The Company has continued to keep operating expenses at a reduced level; however, there can be no assurance that the Company’s current level of operating
expenses will not increase or that other uses of cash will not be necessary. The Company believes that based on its current level of operating expenses, its existing cash and cash equivalents may not be sufficient to cover operating cash needs
through the twelve month period from the financial statement reporting date. Based on the above factors, management determined there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date
that the financial statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include adjustments to the carrying value
of assets and liabilities, which might be necessary should the Company not continue in operation.
In order to continue
as a going concern, the Company must take steps to manage its current level of cash and cash equivalents, through various ways, including but not limited to, raising additional capital through the sale of equity or debt securities or long term
borrowings, which may include additional borrowings from affiliates of the Company, reducing operating expenses, and seeking recoveries from various sources. There can be no assurance that the Company will be able to adequately implement these
cash management measures, in whole or in part or raise capital or obtain financing on terms acceptable to the Company, if at all.
In June 2013, the
Company purchased an equity interest in a real estate development property through a joint venture agreement to purchase and develop real property located at 105 through 111 West 57th Street in New York, New York (the “111 West 57th Property”).
The Company is engaged in material disputes and litigation with regard to the 111 West 57th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the “Strict Foreclosure”, (as defined and as
further discussed herein), the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111
West 57th Property represented a substantial portion of the Company’s assets and net equity value.
For additional
information regarding the Company’s recording of an impairment of its equity investment in the 111 West 57th Property in 2017 and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the
Strict Foreclosure, see Note 3 and Note 8.
While the Company’s
management is evaluating future courses of action to protect and/or recover the value of the Company’s equity investment in the 111 West 57th Property, the adverse developments make it uncertain as to whether any such courses of action will be
successful. Any such efforts are likely to require sustained effort over a period of time and substantial additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on
the Company’s financial condition and future prospects. The Company can give no assurances with regard if it will prevail with respect to any of its claims.
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”).
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, that it deems reasonable, 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 revenues and expenses during the reporting period. Actual results could
differ from such estimates and assumptions.
Principles of consolidation
The consolidated financial statements are comprised of the accounts of the Company and its wholly owned subsidiaries. All material intercompany
transactions and balances have been eliminated.
Equity method investment
Investments and ownership interests are accounted for under the equity method of accounting if the Company has the ability to exercise significant
influence, but not control (under GAAP), over the investment. Investments accounted for under the equity method are carried at cost, plus or minus the Company’s equity in the increases and decreases in the net assets after the date of acquisition
and certain other adjustments. The Company's share of income or loss for equity method investments is recorded in the consolidated statements of operations as equity income (loss). Dividends received, if any, would reduce the carrying amount of
the Company’s investment.
Cash and cash equivalents
Highly liquid investments, consisting principally of funds held in short-term money market accounts, with original maturities of less than three
months, are classified as cash equivalents. The majority of the Company’s cash and cash equivalents balances are maintained with a limited number of major financial institutions. Cash and cash equivalents balances at institutions may, at times, be
above the Federal Deposit Insurance Corporation insured limit per account.
Income taxes
The Company and its domestic subsidiaries file a consolidated federal income tax return. The Company recognizes both the current and deferred tax
consequences of all transactions that have been recognized in the consolidated financial statements, calculated based on the provisions of enacted tax laws, including the tax rates in effect for current and future years. Net deferred tax assets are
recognized immediately when a more likely than not criterion is met; that is, a greater than 50% probability exists that the tax benefits will actually be realized sometime in the future. For additional information including a discussion of income
tax matters see Note 7.
Earnings per share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) by the weighted average number of common shares
outstanding for the period. The Company has no stock options or securities outstanding which could be potentially dilutive.
New Accounting Pronouncements
There are no new accounting pronouncements that would likely materially affect the Company’s consolidated financial statements.
Note 3 – Investment in 111 West 57th Partners LLC
In June 2013, the Company purchased an equity interest in the 111 West 57th
Property. The Company is engaged in material disputes and litigation with regard to the 111 West 57th Property. Despite ongoing litigation challenging the legitimacy
of the actions taken in connection with the “Strict Foreclosure”, (as defined below and as further discussed herein), the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017.
For additional information regarding the Company’s 111 West 57th
Property equity investment, events leading up to the Strict Foreclosure, the Company’s recording of an impairment of its equity investment in the 111 West 57th
Property and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see herein below and Note 8.
In June 2013, 111 West 57th Investment LLC (“Investment LLC”), a then
newly formed subsidiary of the Company, entered into a joint venture agreement (as amended, the “JV Agreement”) with 111 West 57th Sponsor LLC (the “Sponsor”), pursuant to which Investment LLC invested (the “Investment”) in a real estate
development property to purchase and develop the 111 West 57th Property. In consideration for making the Investment, Investment LLC was granted a membership interest
in 111 West 57th Partners LLC (“111 West 57th Partners”), which indirectly acquired
the 111 West 57th Property on June 28, 2013 (the “Joint Venture,” and such date, the “Closing Date”). The Company also indirectly contributed an additional amount to
the Joint Venture in exchange for an additional indirect interest in the Joint Venture. Other members and the Sponsor contributed additional cash and/or property to the Joint Venture. The Company recorded its investment in 111 West 57th Partners utilizing the equity method of accounting. The Joint Venture plans were to redevelop the 111 West 57th Property into a luxury residential tower and retail project.
Amounts relating to the Company’s initial June 2013 investment and other information relating to the 111 West 57th Property follow:
|
($ in thousands)
|
||||
|
Company’s aggregate initial investment
|
$
|
|
||
|
Company’s aggregate initial membership interest %
|
|
%
|
||
|
Other members and Sponsor initial investment
|
$
|
|
||
In March 2014, the Company entered into an amended and restated operating agreement for Investment LLC (the “Amended and Restated Investment Operating
Agreement”) to grant a 10% subordinated participation interest in Investment LLC to Mr. R.A. Bianco as a contingent future incentive for Mr. R.A. Bianco’s past, current and anticipated ongoing role to develop and commercialize the Company’s equity
investment in the 111 West 57th Property. Pursuant to the terms of the Amended and Restated Investment Operating Agreement, Mr. R.A. Bianco has no voting rights with
respect to his interest in Investment LLC, and his entitlement to receive 10 % of the distributions from Investment LLC is subject to the
Company first receiving distributions equal to 150 % of the Company’s initial aggregate investment in Investment LLC and the Joint
Venture, plus any additional investments by the Company, and only with respect to any distributions thereafter. At the current time, the Company has not expensed nor accrued any amounts relating to this subordinated participation interest, as no
amount or range of amounts can be reasonably estimated or assured.
During 2014, in connection with the funding of additional capital calls under the JV Agreement for required borrowing and development costs for the 111
West 57th Property, the Company’s management and its Board of Directors concluded that, given the continuing development risks of the 111 West 57th Property and the Company’s financial position, the Company should not at that time increase its already significant concentration and risk exposure to the 111 West
57th Property. Nonetheless, the Company sought to limit dilution of its interest in the Joint Venture resulting from any failure to fund the capital call requirements, but at the same time wished to avoid the time, expense and financial return
requirements (with attendant dilution and possible loss of voting rights) that obtaining a replacement third-party investor would require. The Company, therefore, entered into a second amended and restated operating agreement for Investment LLC
(“Second Amended and Restated Investment Operating Agreement”) pursuant to which Capital LLC was admitted as a member of Investment LLC. In exchange for Capital LLC contributing toward Investment LLC capital calls in respect of the 111 West 57th Property, available cash of Investment LLC will be distributed first to Capital LLC until it has received a 20% internal rate of return (calculated as provided for in the JV Agreement as noted above), second to the Company until it has received 150% of its capital, and, thereafter, available cash is split 10/90, with 10% going to Mr. R.A. Bianco as the subordinated participation interest noted above and 90% going to Capital LLC and the Company pari-passu, with Capital LLC receiving one-half of its pro-rata share based on capital contributed and the Company receiving the balance. No other material changes were made to the Amended and Restated Investment Operating Agreement, and neither Mr. R.A. Bianco nor Capital LLC has any voting rights with respect to their interest and
investment in Investment LLC.
In accordance with the JV Agreement, shortfall capital contributions may be treated either as a member loan or as a dilutive capital contribution as
set forth in the JV Agreement. The Sponsor deemed the shortfall capital contributions as dilutive capital contributions to the Company. The Company disagrees with the Sponsor’s investment percentage calculations. The Sponsor has taken the position
that the capital contribution requests, if taken together, would have caused the Company’s combined ownership percentage to be diluted below the Company’s initial membership interest percentage. The parties have a dispute with regard to the
calculation of the revised investment percentages resulting from the capital contribution requests, along with the treatment and allocation of these shortfall capital contribution amounts.
On June 30, 2015, 111 West 57th Partners obtained financing for the
111 West 57th Property. The financing was obtained in two parts: (i) a first mortgage construction loan with AIG Asset Management (US), LLC (along with its
affiliates “AIG”); and (ii) a mezzanine loan with Apollo Commercial Real Estate Finance, Inc. (along with its affiliates “Apollo”), as detailed herein. Both loans initially had certain repayment term dates with extension option(s) subject to
satisfying certain conditions. The loan agreements (the “Loan Agreements”) also include customary events of default and other customary terms and conditions. Simultaneously with the closing of the AIG and the Apollo financing, 111 West 57th Partners repaid all outstanding liabilities and obligations to Annaly CRE, LLC under the initial mortgage and acquisition loan agreement, dated June 28, 2013, between
the joint venture entities and Annaly CRE, LLC. The remaining loan proceeds were to be drawn down and used as necessary for construction and related costs, loan interest escrow and other related project expenses for development of the 111 West 57th Property.
In April 2016, the Company initiated a litigation in the New York State Supreme Court for New York County (the “NY Court”), Index No. 652301/2016, (“AmBase v. 111 West 57th Sponsor LLC, et al.”) (the “Sponsor Action”). The defendants in that litigation include 111 West 57th Sponsor LLC, Kevin Maloney, Michael Stern, and various members and affiliates, Liberty Mutual Insurance Company, and Liberty Mutual Fire
Insurance Company (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC. For additional information with regard to the Company’s legal proceedings relating to the 111 West 57th Property, see Note 8.
In December 2016, the Sponsor proposed for approval a “proposed budget” (the “Proposed Budget”), which the Sponsor claims reflected an increase in
other costs resulting in the need for additional funding in order to complete the project. The Company disputes, among other items, the calculation of the percentage increase of hard costs shown in the Proposed Budget. The Company believes the
aggregate projected hard costs in the Proposed Budget exceed a contractually stipulated limit as a percentage of the hard costs set forth in the prior approved budget, thus allowing Investment LLC the option to exercise its equity put right as set
forth in the JV Agreement (the “Equity Put Right”). Consequently, subsequent to the Sponsor’s presentation of the Proposed Budget, Investment LLC notified the Sponsor that it was exercising its Equity Put Right pursuant to the JV Agreement. The
Sponsor refused to honor the exercise of Investment LLC’s Equity Put Right. The Sponsor claims, among other things, that the conditions precedent were not met because it claims that the increase in aggregate hard costs in the Proposed Budget does
not exceed the contractually stipulated limit that would allow the exercise of the Equity Put Right.
The Company further contends that a portion of the Proposed Budget increases are manager overruns (as defined in the JV Agreement) and thus should be
paid for by the Sponsor. The Sponsor denies that the Proposed Budget increases were manager overruns. The Company continues to challenge the nature and substance of the Proposed Budget increases and how they should be treated pursuant to the JV
Agreement.
The Sponsor claimed that additional borrowings were needed to complete the project. Shortly thereafter, the Sponsor informed the Company that Apollo
had indicated that due to budget increases, it believed the current loan was “out of balance” (meaning, according to Apollo, the projected budget exceeds the original budget approved in connection with the loan); and thus 111 West 57th Partners
LLC, or its subsidiaries would need additional funding in order to bring the loan back into balance. The Company considered approving the additional financing but informed the Sponsor that it had concerns about the Proposed Budget and the
implications of the Proposed Budget, as well as other questions which needed to be addressed first.
Around this time, Apollo provided loan forbearances to the borrowers and guarantors in order to allow the Sponsor time (while the building continued to
be built) to raise the additional financing that Sponsor claimed would be needed in order to complete the 111 West 57th project. This forbearance period ended on June 29, 2017. Around this date, the Company was advised that Apollo sold a portion of
the mezzanine loan—broken off as a junior mezzanine loan—to an affiliate of Spruce Capital Partners LLC (“Spruce”) (the “Junior Mezzanine Loan”).
On June 30, 2017, Spruce declared an event of default under the Junior Mezzanine Loan and demanded immediate payment of the full outstanding balance of
the Junior Mezzanine Loan. Spruce then gave notice to the junior mezzanine borrower that it proposed to accept the pledged collateral (including the joint venture members’ collective interest in the property) in full satisfaction of the joint
venture’s indebtedness under the Junior Mezzanine Loan (i.e., a “Strict Foreclosure”).
On July 25, 2017, the
Company filed a complaint against Spruce and the Sponsor and requested injunctive relief halting the Strict Foreclosure from the New York State Supreme Court for New York County, (the “NY Court”) Index No. 655031/2017, (the “Lender Action”). The
defendants in the Lender Action were 111 W57 Mezz Investor, LLC, Spruce Capital Partners LLC, 111 West 57th Sponsor LLC, Michael Z. Stern, and Kevin P. Maloney (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111
West 57th Mezz 1 LLC. The Company has since voluntarily discontinued its claims against Sponsor, Stern, and Maloney, without prejudice to reinstating them in the Lender Action or any other action. For additional information with regard to the
Lender Action, see Note 8.
On August 30, 2017, Spruce issued a Notice of Retention of Pledged Collateral in Full Satisfaction of Indebtedness. By purporting to accept the pledged
collateral, pursuant to a Strict Foreclosure process, Spruce claims to have completed the retention of the collateral pledged by the junior mezzanine borrower, and therefore, the Company’s interest in the 111 West 57th Property (the “Strict
Foreclosure”). Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the Strict Foreclosure, the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57th Property represented a substantial portion of the Company’s assets and net equity value.
For additional
information regarding the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see Note 8.
With respect to its
disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing, and will continue to pursue, other options to realize the Company’s investment value, various legal courses of action to protect its legal
rights, recovery of its asset value from various sources of recovery, as well as considering other possible economic strategies, including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57th Property;
however, there can be no assurance that the Company will prevail with respect to any of its claims.
The Company can give
no assurances regarding the outcome of the matters described herein, including as to the effect of Spruce’s actions described herein, whether the Sponsor will perform their contractual commitments to the Company under the JV Agreement, as to what
further action, if any, the lenders may take with respect to the project, as to the ultimate resolution of the ongoing litigation proceedings relating to the Company’s investment interest in the 111 West 57th Property, as to the ultimate effect
of the Sponsor’s, the Company’s or the lenders’ actions on the project, as to the completion or ultimate success of the project, or as to the value or ultimate realization of any portion of the Company’s equity investment in the 111 West 57th
Property.
While the Company’s
management is evaluating future courses of action to protect and/or recover the value of the Company’s equity investment in the 111 West 57th Property, the adverse developments make it uncertain as to whether any such courses of action will be
successful. Any such efforts are likely to require sustained effort over a period of time and substantial additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on
the Company’s financial condition and future prospects. The Company can give no assurances with regard to if it will prevail with respect to any of its claims.
Note 4 - Savings Plans
The Company sponsors the AmBase 401(k) Savings Plan (the “Savings Plan”), which is a “Section 401(k) Plan” within the meaning of
the Internal Revenue Code of 1986, as amended (the “Code”). The Savings Plan permits eligible employees to make contributions of a percentage of their compensation, which are matched by the Company at a percentage of the employees’ elected
deferral. Employee contributions to the Savings Plan are invested at the employee’s discretion in various investment funds. The Company’s matching contributions are invested in the same manner as the compensation reduction contributions. All
contributions are subject to maximum limitations contained in the Code.
The Company’s matching contributions to the Savings Plan, charged to expense, were as follows:
|
($ in thousands)
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
|
Company matching contributions
|
$
|
|
$
|
|
||||
|
Employer match %
|
|
%
|
|
%
|
||||
Note 5 - Stockholders’ Equity
Authorized common stock consists of the following:
|
(shares in thousands)
|
December 31,
2022
|
December 31,
2021
|
||||||
|
Par value
|
$
|
|
$
|
|
||||
|
Authorized shares
|
|
|
||||||
|
Issued shares
|
|
|
||||||
|
Outstanding shares
|
|
|
||||||
Authorized cumulative preferred stock consists of the following:
|
(shares in thousands)
|
December 31,
2022
|
December 31,
2021
|
||||||
|
Par value
|
$
|
|
$
|
|
||||
|
Authorized shares
|
|
|
||||||
|
Issued shares
|
|
|
||||||
|
Outstanding shares
|
|
|
||||||
Changes in the outstanding shares of Common Stock of the Company are as follows:
|
(in thousands)
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
|
Common stock outstanding at beginning of period
|
|
|
||||||
|
Common stock repurchased for treasury
|
|
|
||||||
|
Issuance of treasury stock
|
|
|
||||||
|
Common stock outstanding at end of period
|
|
|
||||||
Changes in the treasury shares of Common Stock of the Company are as follows:
|
(in thousands)
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
|
Treasury stock held at beginning of period
|
|
|
||||||
|
Common stock repurchased for treasury
|
|
|
||||||
|
Issuance of treasury stock
|
|
|
||||||
|
Treasury stock held at end of period
|
|
|
||||||
Common Stock Repurchase Plan
The Company’s common stock repurchase plan (the “Repurchase Plan”) allows for the repurchase by the Company of its common stock in the open market.
The Repurchase Plan is conditioned upon favorable business conditions and acceptable prices for the common stock. Purchases under the Repurchase Plan may be made, from time to time, in the open market, through block trades or otherwise. Depending
on market conditions and other factors, purchases may be commenced or suspended at any time or from time to time without prior notice. Pursuant to the Repurchase Plan, the Company has repurchased shares of common stock from unaffiliated parties at
various dates at market prices at their time of purchase, including broker commissions. Due to the Company’s current financial condition and ongoing litigation proceedings, the Company does not anticipate that it will make any stock purchases
pursuant to the Repurchase Plan in the next twelve months.
Information relating to the Repurchase Plan is as follows:
|
(in thousands)
|
Year Ended
December 31,
2022
|
|||
|
Common shares repurchased to treasury during the period
|
|
|||
|
Aggregate cost of shares repurchased during the period
|
$
|
|
||
|
(in thousands)
|
December 31,
2022
|
|||
|
Total number of common shares authorized for repurchase
|
|
|||
|
Total number of common shares repurchased to date
|
|
|||
|
Total number of shares that may yet be repurchased
|
|
|||
Stockholder Rights Plan
On March 27, 2019, the Company’s Board of Directors adopted an amended and restated shareholder rights plan (the “New Rights Plan”) pursuant to which
the Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of Common Stock of the
Company on April 17, 2019. In connection with the New Rights Plan, the Company entered into an amended and restated rights agreement with American Stock Transfer & Trust Company, LLC, as rights agent (the “New Rights Agreement”).
Under the New Rights Plan, each Right entitles the holder to purchase from the Company one share of the Company’s common stock, par value $0.01 per share (the “Common
Stock”), at a price equal to 50 % of the then current market value of the Common Stock. The Rights are not exercisable until either a
person or group of affiliated persons acquires 25 % or more of the Company’s outstanding Common Stock or upon the commencement or
disclosure of an intention to commence a tender offer or exchange offer for 20 % or more of the Common Stock. The Rights are redeemable
by the Company at $0.01 per Right at any time until the earlier of 10 days following an accumulation of 20 % or more of the Company’s shares by a
single acquirer or group, or the occurrence of certain Triggering Events (as defined in the New Rights Agreement). In addition, the Board of Directors may, at its option and in its sole and absolute discretion, at any time after a Triggering
Event, mandatorily exchange all or part of the then outstanding and exercisable Rights for consideration per Right consisting of 50 % of
the securities that would be issuable at such time upon the exercise of one Right. The Rights Plan also provides certain administrative provisions that require a stockholder to make certain representations regarding its beneficial ownership of
Company securities upon exercise or exchange of Rights. The Rights are subject to adjustment to prevent dilution and expire on March 27, 2029.
Note 6 – Commitments and Contingencies
Rent expense was as follows:
|
($ in thousands)
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
|
Rent expense
|
$
|
|
$
|
|
||||
|
Approximate square feet of leased office space
|
|
|
||||||
The Company rents on a short-term basis approximately 150
square feet of office space in Coral Springs, Florida, and approximately 200 square feet of office space in Emerson, NJ.
The Company follows the practical expedient method for the accounting of leases and has elected to follow the short-term lease accounting policy
election which allows lessees not to recognize right-of-use assets and liabilities for leases with a term of 12 months or less.
Note 7 - Income Taxes
The components of income tax expense (benefit) are as follows:
|
(in thousands)
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
|
Federal - current
|
$
|
|
$
|
|
||||
|
State - current
|
|
|
||||||
|
Total current
|
|
|
||||||
|
Federal - deferred
|
(
|
)
|
(
|
)
|
||||
|
State - deferred
|
(
|
)
|
(
|
)
|
||||
|
Change in valuation allowance
|
|
|
||||||
|
Total deferred
|
|
|
||||||
|
Income tax expense (benefit)
|
$
|
|
$
|
|
||||
The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate and the provision for income
taxes are as follows:
|
(in thousands)
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
|
Income (loss) before income taxes
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Tax expense (benefit):
|
||||||||
|
Tax at statutory federal rate
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
State income taxes
|
(
|
)
|
(
|
)
|
||||
|
Change in valuation allowance
|
|
|
||||||
|
Income tax expense (benefit)
|
$
|
|
$
|
|
||||
A reconciliation of the United States federal statutory rate to the Company’s effective income tax rate is as follows:
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
|||||||
|
Tax at statutory federal rate
|
|
% |
|
% | ||||
|
State income taxes
|
|
|
||||||
|
Change in valuation allowance
|
(
|
)
|
(
|
)
|
||||
|
Effective income tax rate
|
|
%
|
|
%
|
||||
For the year ended December 31, 2022, the Company recorded an income tax expense of $1 ,000, attributable to a provision for a tax on capital imposed by the state jurisdictions.
For the year ended December 31, 2021, the Company recorded an income tax expense of $1 ,000, attributable to a provision for a tax on capital imposed by the state jurisdictions.
The Company has not been notified of any potential tax audits by any federal, state, or local tax authorities. As such, the Company believes the
statutes of limitations for the assessment of additional federal and state tax liabilities are generally closed for tax years prior to 2019. Interest and/or penalties related to uncertain tax positions, if applicable, would be included as a
component of income tax expense (benefit). The accompanying financial statements do not include any amounts for interest and/or penalties.
The utilization of net operating loss (“NOL”) carryforwards are subject to limitations under U.S. federal income tax and various state tax laws. Based
on the Company’s federal tax returns as filed, the Company estimates it has approximately $128 million of federal NOL carryforwards
available to reduce future federal taxable income which if not utilized will begin to expire in 2026 and continue to expire at various
dates thereafter. Additionally, based on the Company’s state tax returns as filed and to be filed, the Company estimates that it has approximately $234
million of state NOL carryforwards to reduce future state taxable income which if not utilized will begin to expire in 2030 and continue
to expire at various dates thereafter.
The Company’s management is continuing to work closely with outside advisors on the Company’s various federal tax return matters for the numerous
interrelated tax years. The IRS typically has broad discretion to examine taxpayer tax returns, even after refunds have been paid to taxpayers, which could result in adjustments to AMT credit carryforward amounts refunded. The AMT credit
carryforward amounts from prior tax years and related refund(s) received could potentially be subject to IRS or other tax authority audits. The Company cannot predict whether or not the IRS and/or other tax authorities will review the Company’s tax
returns filed, to be filed and/or as filed in prior years, and/or if they will seek repayment from the Company of any amounts already refunded as a result of an IRS review, if any. Moreover, applicable provisions of the Code and IRS regulations
permit the IRS to challenge Company tax positions and filed returns and seek recovery of refunded amounts or of additional taxes for an extended period of time after such returns are filed.
There is risk relating to assumptions regarding the outcome of tax matters, based in whole or in part upon consultation with outside advisors; risk
relating to potential unfavorable decisions in tax proceedings; and risks regarding changes in, and/or interpretations of federal and state income tax laws. The Company can give no assurances as to the final outcome of any IRS review, if any, of
the AMT credit carryforward refunds received.
The Company was a plaintiff in a legal proceeding seeking recovery of damages from the United States Government for the loss of the Company’s
wholly-owned subsidiary, Carteret Savings Bank, F.A. (the “SGW Legal Proceedings”). A settlement agreement in the SGW Legal Proceedings between the Company, the Federal Deposit Insurance Corporation-Receiver (“FDIC-R”) and the Department of
Justice (“DOJ”) on behalf of the United States of America (the “United States”), was executed (the “SGW 2012 Settlement Agreement”) which was approved by the United States Court of Federal Claims (the “Court of Federal Claims”) in October 2012. On
August 6, 2013, Senior Judge Smith issued an opinion which addressed the relief sought by AmBase. In summary, the court held that the Settlement Agreement is a contract and that it entitles the Company to receive both “(1) the amount of the tax
consequences resulting from taxation of the damages award plus (2) the tax consequences of receiving the first component.” But the Court of Federal Claims did not award an additional amount for the second component at that time given the remaining
uncertainty surrounding the ultimate tax treatment of the settlement proceeds and the gross-up, as well as uncertainty relating to the Company’s future income. The Court of Federal Claims indicated that either the Company or the government is
entitled to seek further relief “if, and when, the facts justify it.”
The Company’s deferred tax asset, arising primarily from NOL carryforwards, is as follows:
| (in thousands) |
December 31,
2022
|
December 31,
2021
|
||||||
|
Deferred tax asset
|
$
|
|
$
|
|
||||
|
Valuation allowance
|
(
|
)
|
(
|
)
|
||||
|
Net deferred tax asset recognized
|
$
|
|
$
|
|
||||
A full valuation allowance remains on the remaining deferred tax asset amounts, as management has no basis to conclude that realization is more likely
than not. Management does not believe that any significant changes in unrecognized income tax benefits are expected to occur over the next year.
Note 8 - Legal Proceedings
From time to time, the Company and its subsidiaries may be named as a defendant in various lawsuits or proceedings. At the
current time except as set forth below, the Company is unaware of any legal proceedings pending against the Company. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all sources for contributions to
settlements. However, there can be no assurance that the Company will prevail with respect to any of its claims.
The Company is a party to material legal proceedings as follows:
AmBase Corp., et
al. v. 111 West 57th Sponsor LLC, et al. In April 2016, AmBase and certain of its subsidiaries and affiliates (collectively, the “Plaintiffs”) initiated a litigation in the New York State Supreme Court for New York
County (the “NY Court”), Index No. 652301/2016, (“AmBase v. 111 West 57th Sponsor LLC, et al.”) (the “Sponsor Action”). The defendants in that litigation include 111 West 57th Sponsor LLC (the “Sponsor”), Kevin Maloney, Michael Stern, and various members and affiliates,
Liberty Mutual Insurance Company, and Liberty Mutual Fire Insurance Company (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC. In the current version of the complaint, AmBase alleges that
Defendants violated multiple provisions in the JV Agreement, including by failing to honor the exercise of AmBase’s contractual “equity put right” as set forth in the JV Agreement (the “Equity Put Right”), and committed numerous acts of fraud and
breaches of fiduciary duty. AmBase is seeking compensatory damages, punitive damages, indemnification and equitable relief, including a declaration of the parties’ rights, and an accounting. The Company has also demanded from the Sponsor access
to the books and records for the 111 West 57th Property which the Sponsor refused, claiming they have provided all books and records as required.
The Defendants filed a motion to dismiss an earlier complaint, and on January 12, 2018, the NY Court issued an opinion
allowing some of AmBase’s claims to go forward and dismissing others (“2018 Order”). Among other claims that the NY Court declined to dismiss was AmBase’s claim that the Defendants violated the implied covenant of good faith and fair dealing by
frustrating AmBase’s Equity Put Right. Claims that the NY Court dismissed included AmBase’s claim that the Defendants breached their contract with AmBase by financing capital contributions for the project through funds obtained from third parties.
On January 16, 2018, some of the Defendants wrote to the NY Court suggesting that the opinion contained certain clerical errors and was missing a page. On January 18, 2018, the NY Court removed its previous opinion from the docket and on January
29, 2018, posted a revised opinion. On April 13, 2018, AmBase filed a notice of appeal of the 2018 Order to the New York Supreme Court Appellate Division, First Judicial Department (the “Appellate Division”). On January 22, 2020, the Company filed
a motion with the Appellate Division seeking to enlarge the time to perfect the Company’s appeal of the 2018 Order, in light of an intervening removal to and remand from federal court. On July 2, 2020, the Appellate Division granted AmBase’s motion
and enlarged the time to perfect the Company’s appeal to the October 2020 Term of the Appellate Division. On April 29, 2021, the Appellate Division affirmed Justice Bransten’s dismissal of the claims on appeal, while the claims that were not
previously dismissed remain pending in the trial court.
On April 27, 2018, the Company filed a third amended complaint adding federal RICO claims, and new claims for declaratory
judgment, breach of contract, fraud, and breach of fiduciary duty, based on information discovered during the course of discovery and events that have transpired since the Company filed its previous complaint in the Sponsor Action. On June 18,
2018, Defendants removed the complaint to the U.S. District Court for the Southern District of New York (the “Federal Court”), where it was docketed as case number 18-cv-5482-AT.
On October 25, 2018, the Federal Court issued an order granting Defendants’ motion to dismiss the Company’s RICO claims and
declined to exercise supplemental jurisdiction over the Company’s state-law claims, dismissing the latter claims without prejudice. On August 30, 2019, the U.S. Court of Appeals for the Second Circuit affirmed the Federal Court’s dismissal of the
federal RICO claims, vacated the Federal Court’s dismissal of the state-law claims, and remanded with instructions for the Federal Court to remand those claims to the NY Court. On September 25, 2019, the Federal Court remanded the case to the NY
Court, where it was assigned to the Honorable O. Peter Sherwood.
On June 11, 2020, Defendants filed a motion with the NY Court to dismiss some of the state law claims asserted by the
Company in the third amended complaint. On July 28, 2020, Plaintiffs filed a motion for leave to amend the third amended complaint, which Defendants opposed. The proposed complaint adds, among other things, claims arising from certain defendants’
role in the 2017 foreclosure of the junior mezzanine loan on the project. On July 22, 2021, the NY Court granted Plaintiffs leave to amend and denied the motion to dismiss without prejudice as moot in light of the Court’s decision granting
Plaintiffs leave to amend.
On July 29, 2021, Plaintiffs filed their fourth amended complaint. On September 3, 2021, Defendants submitted a motion to
dismiss the fourth amended complaint in part, which Plaintiffs opposed. On May 9, 2022, the NY Court issued a Decision and Order on Defendants’ motion to dismiss, allowing some of AmBase’s claims to go forward and dismissing others (“May 9, 2022
Order”). The NY Court declined to dismiss AmBase’s claims that the Defendants breached their contracts with AmBase by permitting transfers or encumbrances upon 111 West 57th Control LLC’s membership interests in connection with third-party
financing without seeking or obtaining prior written approval. The Court also declined to dismiss AmBase’s claim that Defendants breached their obligations under the Development Agreement by, among other things, failing to use “commercially
reasonable efforts” to plan, design, develop, construct, and obtain permits for the Property in a timely manner and failing to devote sufficient time and attention to its obligations under the Development Agreement.
Claims that the NY Court dismissed included AmBase’s claims that Defendants breached their contract with AmBase by making
capital contributions to Sponsor from third parties; consenting to the strict foreclosure without obtaining AmBase’s prior written approval in violation of the “Major Decisions” provision; refusing to cooperate and share information with AmBase’s
construction consultant; and engaging in fraud and intentional misconduct in violation of Joint Venture Agreement section 8.5. The NY Court also dismissed AmBase’s claim that Defendants made fraudulent misrepresentations or omissions (as
duplicative of the breach of contract claims) and three claims whose dismissal was compelled by a prior decision of the First
Department, namely, AmBase’s claims that Sponsor, Stern, and Maloney breached their fiduciary duties of loyalty; to impose a constructive trust on the insurance loss fund; and to impose a constructive trust on Stern’s, Maloney’s, JDS’s, PMG’s, and
the construction manager’s construction management fees and Stern’s and Maloney’s equity interest in the Project. Finally, the Court dismissed AmBase’s current allegations that piercing certain of Defendants’ corporate veils is warranted. On
January 18, 2023, the Company filed a notice of appeal appealing the May 9, 2022 Order with regard to all defendants in the Sponsor Action.
On September 30, 2021, the Liberty Mutual defendants answered the fourth amended complaint and filed a counterclaim against
the Company’s subsidiaries for specific performance of a pledge agreement securing certain insurance policies issued for the Project. Plaintiffs replied to those counterclaims on October 20, 2021.
On January 30, 2023, Sponsor, Stern, Maloney, and various defendant members and affiliates filed their answer and asserted
two counterclaims against the Company’s subsidiaries for breach of the Joint Venture Agreement in connection with a proposed refinancing
of the Project in 2016. Plaintiffs replied to those counterclaims on February 21, 2023. The parties are continuing to discuss discovery scheduling and outstanding disclosures but attempts to meet and confer have thus far failed. A conference with
the NY Court might be scheduled to further discuss discovery issues.
For additional information with regard to the Company’s investment in the 111 West 57th Property, including the foreclosure, see Note 3.
AmBase Corp., et al. v. Spruce Capital Partners, et al. In July 2017, the Company initiated a second litigation in the NY Court, Index No. 655031/2017, (the “Lender Action”). The defendants in the 111 West 57th
Spruce action were 111 W57 Mezz Investor, LLC (“Spruce”), Spruce Capital Partners LLC, 111 West 57th Sponsor LLC, Michael Z. Stern, and Kevin P. Maloney and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC.
The Company has since voluntarily discontinued its claims against Sponsor, Stern, and Maloney, without prejudice to reinstating them in the 111 West 57th Spruce Action or any other action.
Spruce had given notice to the junior mezzanine borrower that it proposed to accept the pledged collateral (including the
joint venture members’ collective interest in the property) in full satisfaction of the joint venture’s indebtedness under the Junior Mezzanine Loan (i.e., a “Strict Foreclosure”). After the Sponsor refused to object to Spruce’s proposal on behalf
of the junior mezzanine borrower, and Spruce refused to commit to honor Investment LLC’s objection on its own behalf, the Company initiated the 111 West 57th Spruce Action to obtain injunctive relief halting the Strict Foreclosure. For
additional information on the events leading to this litigation see Note 3.
On July 26, 2017, the NY Court issued a temporary restraining order barring Spruce from accepting the collateral, pending a
preliminary injunction hearing scheduled for August 14, 2017. Spruce and the Sponsor subsequently filed papers in opposition to the request for a preliminary injunction and cross-motions to dismiss and quash subpoenas. On August 14, 2017, the NY
Court postponed the hearing until August 28, 2017, keeping the temporary restraining order preventing a Strict Foreclosure in effect until the August 28, 2017 hearing. Subsequently, the Company filed a response brief in support of their request for
injunctive relief halting the Strict Foreclosure process and in opposition to the motions to quash the subpoenas.
On August 28, 2017, the NY Court held a preliminary injunction hearing, lifted the temporary restraining order, denied
Plaintiffs’ request for a preliminary injunction, and granted Defendants’ cross-motions. In order to prevent the Strict Foreclosure process from going forward, the Company immediately obtained an interim stay from the New York Supreme Court
Appellate Division, First Judicial Department (“Appellate Division”). That stay remained in place until four (4) P.M. August 29, 2017, permitting the Company to obtain an appealable order, notice an appeal, and move for a longer-term stay or
injunctive relief pending appeal. The Appellate Division held a hearing on August 29, 2017, to consider the Company’s motion for an interim stay or injunctive relief pending appeal, both of which it denied, thus allowing the purported Strict
Foreclosure to move forward.
In January 2019, the Appellate Division issued a decision that resolves the Company’s appeal from the order denying a
preliminary injunction and dismissing its claims. The Appellate Division affirmed the decision below in part and otherwise dismissed the appeal. It noted that the Company should be allowed to move for leave to amend to state claims for damages
and/or the imposition of a constructive trust, as the dismissal of the Company’s claims was without prejudice.
On May 3, 2019, the Company’s subsidiary, Investment LLC, entered into a stipulation with Spruce to amend the complaint in
the Lender Action to state claims against Spruce for breaches of the Uniform Commercial Code and Pledge Agreement and various torts. The amended complaint seeks the entry of a declaratory judgment, the impression of a constructive trust, permanent
injunctive relief restraining Spruce from disposing of or encumbering the 111 West 57th Property, and damages, including punitive damages. The amended complaint did not name the Company as a plaintiff or Spruce Capital
Partners as a defendant. On May 31, 2019, Spruce filed a motion to dismiss the amended complaint. On January 29, 2020, the Court entered a decision and order granting in part and denying in part Spruce’s motion to dismiss the amended complaint. On
February 26, 2020, Spruce filed a notice of appeal to the Appellate Division seeking the appeal of the January 29, 2020 order. On March 4, 2020, Investment LLC filed a notice of cross-appeal to the Appellate Division, seeking to appeal the January
29, 2020 order to the extent the NY Court dismissed some of Investment LLC’s claims. On March 30, 2021, the Appellate Division issued a decision and order revising the January 29, 2020, order by reinstating Investment LLC’s derivative claim for
breach of the covenant of good faith and fair dealing and dismissing the remaining claims.
While the appeal was pending, the parties to the Lender Action conducted discovery. On April 13, 2021, Investment LLC moved
for leave to file a Second Amended Complaint to (1) bolster its factual allegations against the existing Defendant, (2) add claims against Spruce Capital Partners, Joshua Crane, and Robert Schwartz (“Spruce Defendants”), Arthur Becker and his
affiliates (“Atlantic Defendants”), Apollo and its affiliates (“Apollo Defendants”), and AIG and its affiliates (“AIG Defendants”). On September 30, 2021, the Court granted the motion, and Investment LLC filed its Second Amended Complaint on the
same day. On November 22, 2021, the various defendants filed separate motions to dismiss the claims against them. On December 13, 2021, Investment LLC filed a combined opposition to the motions. The defendants filed their replies on January 7,
2022.
On May 17, 2022, Plaintiffs in the Lender Action filed a motion requesting that the court hold oral argument on the pending
motions to dismiss. The court granted the motion and heard argument on July 22, 2022. During argument, counsel for Plaintiffs made an oral motion to amend the complaint to add an express allegation that Defendants committed the tort of interference
with contractual relations by procuring Sponsor’s breach of the implied covenant of good faith and fair dealing in the JV Agreement. The court called for supplemental briefs on the issue, which were filed on August 5, 2022.
On December 15, 2022, the NY Court issued a decision and order granting in part and denying in part the motions to dismiss
(“December 15, 2022 Order”). Specifically, the NY Court declined to dismiss Plaintiffs’ claims against Spruce and ACREFI Mortgage Lending, LLC, Apollo Credit Opportunity Fund III AIV I LP, and AGRE Debt 1 – 111 W 57, LLC (“Apollo Lenders”) for
breach of the Pledge Agreement in connection with the strict foreclosure. The NY Court dismissed Plaintiffs’ claims for tortious interference with contract against the Spruce Defendants, AIG Defendants, and Apollo Defendants, and Plaintiffs’ claim
for unjust enrichment against the Atlantic Defendants.
On January 3, 2023, the Apollo Lenders filed a notice of appeal to the Appellate Division seeking appeal of the December 15,
2022 Order. On January 18, 2023, the Company filed notices of appeal and cross-appeal appealing the December 15, 2022, Order with regard to all Defendants. On January 30, 2023, the Apollo Lenders filed their opening brief. On March 1, 2023,
Plaintiff filed its combined opposition and opening brief as to all Defendants.
On January 13, 2023, the Apollo Lenders filed their answer and affirmative defenses to the Company’s Second Amended
Complaint together with crossclaims against 111 W57th Mezz Investor LLC, Spruce Capital Partners LLC, Joshua Crane, Robert Schwartz, Michael Stern, Kevin Maloney, 111 West 57th Sponsor LLC, 111 West 57th Control LLC, and 111 West 57th Manager LLC
(the “Crossclaim Defendants”). The crossclaims are for (1) contribution against all Crossclaim Defendants; (2) indemnification against 111 W57th Mezz Investor LLC, Spruce Capital, Crane, and Schwartz; and (3) a declaratory judgment that 111 W57th
Mezz Investor LLC, through Spruce Capital, Crane, and Schwartz, has indemnified the Apollo Lenders against any and all loss that the Apollo Lenders have incurred or may incur in defending against this case. On January 23, 2023, the Apollo Lenders
filed a notice of voluntary discontinuance without prejudice, voluntarily discontinuing their first crossclaim for contribution only as it is brought against Stern, Maloney, Sponsor, 111 West 57th Control LLC, and 111 West 57th Manager LLC.
On January 30, 2023, Defendant 111 W57 Mezz Investor LLC filed its answer to Plaintiff’s Second Amended Complaint.
Because the Court has resolved the motions to dismiss, Plaintiffs expect that discovery will recommence soon.
Since the Company is not a party to the Loan Agreements, it does not have access to communications with the lenders, except
for those individual communications that the Sponsor has elected to share or that have been produced in the ongoing litigation. The Company has continued to demand access to such information, including access to the books and records for the 111
West 57th Property both
under the JV Agreement and as part of the Sponsor Action and the Lender Action. For additional information with regard to the Company’s investment in the 111 West 57th Property and the Company’s recording of an impairment of its equity investment in the 111 West 57th Property in 2017, see Note 3.
AmBase Corp., et al. v. ACREFI Mortgage Lending LLC, et al. In June 2018, the Company initiated another litigation in the NY Court, Index No. 655031/2017, (the “Apollo Action”). The defendants in the Apollo Action were ACREFI Mortgage Lending, LLC, Apollo Credit Opportunity Fund III AIV I
LP, AGRE Debt 1 – 111 W 57, LLC, and Apollo Commercial Real Estate Finance, Inc. (collectively, the “Apollo Defendants”). In the Apollo Action, the Company alleged that the Apollo Defendants aided and abetted the Sponsor, Stern, and Maloney in
breaching their fiduciary duties to the Company in connection with the 111 West 57th Property and tortiously interfered with the JV Agreement. The Company was seeking damages as well as punitive damages for tortious interference with the JV
Agreement and aiding and abetting the Sponsor’s breaches of their fiduciary duties to the joint venture. The Apollo Defendants filed a motion to dismiss on August 17, 2018. On October 22, 2019, the NY Court entered an order dismissing the Company’s
complaint in the Apollo Action in its entirety. On November 8, 2019, the NY Court entered judgment (the “Apollo Dismissal”) dismissing the Apollo Action in favor of the Apollo Defendants. On December 10, 2019, the Company filed a notice of appeal
seeking the appeal of the Apollo Dismissal. On August 7, 2020, the Company perfected its appeal of the Apollo Dismissal. After Investment LLC filed its motion to amend the complaint in the Lender Action to add claims against Apollo, the parties to
the Apollo Action filed a stipulation to withdraw the appeal in the Apollo Action. For additional information with regard to the Company’s investment in the 111 West 57th Property, see Note 3.
AmBase Corp., et
al. v. Custom House Risk Advisors, Inc., et al. On April 2, 2020, the Company initiated litigation in the United States District Court for the Southern District of New York, Case No. 1:20-cv-02763-VSB (the “Custom House Action”). The defendants in the Custom House
Action are Custom House Risk Advisors, Inc. and Elizabeth Lowe (collectively, the “Custom House Defendants”). In the Custom House Action, the Company alleges that the Custom House Defendants (a) aided and abetted Sponsor, Stern, and Maloney in
breaching their fiduciary duties to the Company by structuring an insurance policy to the personal benefit of Sponsor, Stern and Maloney and the detriment of the 111 West 57th Project and concealing the structure and ownership of the insurance
policy from the Company and (b) committed fraud by making material misrepresentations about the terms of the policy to the Company, inducing the Company to contribute additional capital to the 111 West 57th Project to cover the costs of the
insurance policy. The Company is seeking damages as well as disgorgement of profits the Custom House Defendants earned from their wrongful conduct. On April 10, 2020, the Custom House Defendants waived service of process. The Custom House
Defendants were required to respond to the complaint by June 8, 2020. The Custom House Defendants have not responded to the Company’s complaint. In an agreement dated July 31, 2020, the Company and the Custom House Defendants agreed to certain
terms for a settlement and entered into a settlement agreement which requires that the Custom House Defendants satisfy certain conditions prior to any dismissal of the Custom House Action. On December 6, 2021, the Court approved a stipulation
dismissing the Company’s claims and agreed to retain jurisdiction to enforce the settlement agreement. For additional information with regard to the Company’s investment in the 111 West 57th Property, see Note 3.
With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing,
and will continue to pursue, other options to realize the Company’s investment value, various legal courses of action to protect its legal rights, recovery of its asset value from various sources of recovery, as well as considering other possible
economic strategies, including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57th Property; however, there can be no assurance that the Company will
prevail with respect to any of its claims.
The Company can give no assurances regarding the outcome of the matters described herein, including as to the effect of
Spruce’s actions described herein, whether the Sponsor will perform their contractual commitments to the Company under the JV Agreement, as to what further action, if any, the lenders may take with respect to the project, as to the ultimate
resolution of the ongoing litigation proceedings relating to the Company’s investment interest in the 111 West 57th Property, as to the ultimate effect of the Sponsor’s, the Company’s or the lenders’ actions on the project, as to the
completion or ultimate success of the project, or as to the value or ultimate realization of any portion of the Company’s equity investment in the 111 West 57th Property. For additional information with regard to the Company’s
investment in the 111 West 57th Property, see Note 3.
While the Company’s management is evaluating future courses of action to protect and/or recover the value of the Company’s
equity investment in the 111 West 57th Property, the adverse developments make it uncertain as to whether any such courses of action will be successful. Any such efforts are likely to require sustained effort over a period of time and
substantial additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on the Company’s financial condition and future prospects. The Company can give no assurances with
regard to if it will prevail with respect to any of its claims.
Note 9 – Litigation Funding Agreement
In 2017, the Company entered into a Litigation Funding Agreement (the “2017 LFA”) with Mr. R.A. Bianco, to provide litigation funding to the Company
for litigation costs in connection with the Company’s legal proceedings relating to the Company’s equity investment in the 111 West 57th Property, (the “Litigation Fund Amount”).
In 2019, after receiving approval from the Special Committee, the Company and Mr. R.A. Bianco entered into an amendment to the 2017 LFA (the “2019 LFA
Amendment”). In summary the 2019 LFA Amendment provided for the release of Mr. R.A. Bianco from all further funding obligations under the 2017 LFA and that, in the event the Company receives any Litigation Proceeds from the 111 West 57th
Litigation, such Litigation Proceeds shall be distributed as follows:
|
|
(i) |
first,
|
|
|
(ii) |
thereafter, any additional amounts shall be distributed (a)
|
Note 10 - Subsequent Events
The Company has performed a review of events
subsequent to the balance sheet dated December 31, 2022, through the report issuance date. Other than as discussed herein, the Company has no events, subsequent to December 31, 2022, and through the date these consolidated financial statements
were issued.
In February 2023, the Company and Mr. R.A. Bianco entered into an agreement for Mr. R.A. Bianco to provide a senior loan to the Company for working
capital (the “Loan Payable”).
Information regarding the loan(s) payable is as follows:
|
|
Date of Loan |
Rate
|
Due Date
|
February,
2023
|
||||||
|
Loan Payable
|
|
|
|
|
$
|
|
||||
|
$
|
|
|||||||||
The Loan Payable is due on the earlier of the date the Company receives funds from any source, (excluding funds received by the Company by any litigation
funding entity to fund any of the 111 West 57th legal proceedings), sufficient to pay all amounts due under the Loan Payable, including all accrued interest thereon, including without limitation, from a settlement of the 111 West 57th
legal proceedings or (b) the date(s) indicated above.
The Company and Mr. R.A. Bianco further agreed that amounts due pursuant to the Loan Payable plus interest can be converted by Mr. R.A. Bianco, at his
option, into a litigation funding agreement pari-pasu with any litigation funding agreement entered into by the Company with a litigation funding entity.
For additional information regarding the Company’s litigation funding effort, see Note 1. For additional information regarding the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see Note 3 and Note 8.
| ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
None.
| ITEM 9A. |
CONTROLS AND PROCEDURES
|
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings with the SEC is recorded, processed, summarized and reported within the time
period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures, management has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management is required to apply judgment in evaluating its controls and procedures.
During the fiscal period covered by this report, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the
effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal
control over financial reporting is designed, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
The Company’s management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. This evaluation was based on the framework in Internal
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Based on management’s evaluation under the framework in Internal Control—Integrated Framework (2013), management concluded that internal control over financial reporting was effective as of December 31, 2022.
This annual report does not include an attestation report of the Company’s independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by
the Company’s independent public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
| ITEM 9B. |
OTHER INFORMATION
|
On March 24, 2023, after over ten years of exemplary service, Mr. Kenneth M. Schmidt formally informed AmBase Corporation (the “Company”) that he would not stand for
re-election to the Company’s Board of Directors (the “Board”) at the end of his current term in June 2023. Mr. Schmidt has served on the Company’s Board since March 2013, and serves as the Chairman of the Company’s Personnel Committee and as a
member of the Company’s Accounting and Audit Committee. There are no disagreements between Mr. Schmidt and the Company.
| ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
|
Not applicable.
PART III
| ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Information concerning executive officers and directors required by this item will be set forth in the Company’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 1, 2023, which is
incorporated herein by reference, which the Company intends to file with the Securities and Exchange Commission not later than 120 days after the end of its 2022 fiscal year.
Code of Ethics
We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer and other senior officers. A copy of the Code of Ethics was filed with the SEC as Exhibit 14 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2003.
| ITEM 11. |
EXECUTIVE COMPENSATION
|
For the information required to be set forth by the Company in response to this item, see the Company’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 1, 2023, under the captions
“Executive Compensation,” “Employment Contracts,” and “Compensation of Directors” which are incorporated herein by reference, which the Company intends to file with the Securities and Exchange Commission not later than 120 days after the end of its
2022 fiscal year.
| ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Security Ownership of Certain Beneficial Owners and Management
For other information required to be set forth by the Company in response to this item, see the Company’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 1, 2023, under the caption
“Stock Ownership”, which is incorporated herein by reference, which the Company intends to file with the Securities and Exchange Commission not later than 120 days after the end of its 2022 fiscal year.
| ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
For the information required to be set forth by the Company in response to this item, see the Company’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 1, 2023, under the captions
“Proposal No. 1 - Election of Directors” and “Information Concerning the Board and its Committees,” which are incorporated herein by reference, which the Company intends to file with the Securities and Exchange Commission not later than 120 days
after the end of its 2022 fiscal year.
| ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
The information concerning Principal Accounting Fees and Services is set forth by the Company under the heading “Proposal 2 - Independent Registered Public Accounting Firm”, “Independent Registered Public Accountant
Matters,” in the Company’s Definitive Proxy Statement for its Annual Meeting of Shareholders to be held on June 1, 2023, which is incorporated herein by reference, which the Company intends to file with the Securities and Exchange Commission not
later than 120 days after the end of its 2022 fiscal year.
PART IV
|
1. Index to Financial Statements:
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID 688)
|
14
|
|
|
Consolidated Statements of Operations
|
15
|
|
|
Consolidated Balance Sheets
|
16
|
|
|
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
|
17
|
|
|
Consolidated Statements of Cash Flows
|
18
|
|
|
Notes to Consolidated Financial Statements
|
19
|
|
|
(b)
|
Exhibits:
|
|
Restated Certificate of Incorporation of AmBase Corporation (as amended and restated – July 15, 2017), (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017).
|
||
|
By-Laws of AmBase Corporation (as amended through March 15, 1996), (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017).
|
||
|
Amended & Restated Rights Agreement dated as of March 27, 2019, between the Company and American Stock Transfer and Trust Co. (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2018).
|
||
|
|
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019).
|
|
|
Employment Agreement dated as of March 30, 2006, between Richard A. Bianco and the Company, (incorporated by reference to Exhibit 10H to the Company’s Annual Report on Form 10-K for the year ended December 31,
2005).
|
||
|
Amendment to Employment Agreement dated as of January 1, 2008, between Richard A. Bianco and the Company, (incorporated by reference to Exhibit 10E to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007).
|
||
|
Amendment to Employment Agreement between Richard A. Bianco and the Company extending term of employment to May 31, 2023, (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2017).
|
||
|
Amendment to Employment Agreement between Richard A. Bianco and the Company extending term of employment to May 31, 2028, (incorporated by reference to Exhibit 10.1 Company’s Current report on Form 8-K filed
January 20, 2023).
|
||
|
111 West 57th Partners LLC Limited Liability Company Agreement. Dated as of June 28, 2013, (incorporated by reference to Exhibit
10.1 to Amendment no. 1 to the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2013).
|
||
|
Second Amended and Restated Limited Liability Company Agreement of 111 West 57th Investment, LLC dated December 19, 2014
(incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).
|
||
|
Agreement between Mr. Richard A. Bianco, the Company’s Chairman President and Chief Executive Officer (“Mr. R.A. Bianco”) and the Company for Mr. R.A. Bianco to provide to the Company a financial commitment in
the form of a line of credit up to ten million dollars ($10,000,000) or additional amount(s) as may be necessary and agreed to enable AmBase to contribute capital to the 111 West 57th Property (incorporated by reference to Exhibit 10.9 to the
Company’s Annual Report on Form 10-K for the annual period ending December 31, 2016).
|
||
|
Amendment dated May 20, 2019, to the September 2017 Litigation Funding Agreement, between Mr. R.A. Bianco and the Company, (incorporated by reference to Exhibit 10.1 to the Company’s Current report on Form 8-K
filed May 21, 2019).
|
||
| 10.9 |
Senior Promissory Note between Richard A. Bianco, the Company’s President and Chief Executive Officer (“Mr. R.A. Bianco”) and the Company, (incorporated by reference to Exhibit 10.1 to the Company’s Current
report on Form 8-K filed February 9, 2023).
|
|
| 10.10 | August 31, 2012, Supervisory Goodwill Settlement Agreement (originally filed as Exhibit 99 to the Company’s Current Report on Form 8-K filed on October 22, 2012, and incorporated by reference herein). |
|
AmBase Corporation - Code of Ethics as adopted by Board of Directors (incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003).
|
||
|
Subsidiaries of the Registrant.
|
||
|
Rule 13a-14(a) Certification of Chief Executive Officer Pursuant to Rule 13a-14.
|
||
|
Rule 13a-14(a) Certification of Chief Financial Officer Pursuant to Rule 13a-14.
|
||
|
Section 1350 Certification of Chief Executive Officer pursuant to Rule 18 U.S.C. Section 1350.
|
||
|
Section 1350 Certification of Chief Financial Officer pursuant to Rule 18 U.S.C. Section 1350.
|
||
|
101.1*
|
The following financial statements from AmBase Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 formatted in XBRL: (i) Consolidated Statement of Operations; (ii) Consolidated
Balance Sheets; (iii) Consolidated Statements of Cash Flow: and (iv) Notes to Consolidated Financial Statements.
|
Exhibits, except as otherwise indicated above, are filed herewith.
* filed herewith.
| ITEM 16. |
FORM 10-K SUMMARY
|
Not applicable.
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
|
AMBASE CORPORATION
|
|
| /s/RICHARD A. BIANCO | |
| Chairman, President and Chief Executive | |
| Officer (Principal Executive Officer) | |
| Date: March 28, 2023 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the dates indicated.
| /s/RICHARD A. BIANCO | /s/JOHN FERRARA |
| Chairman, President, | Vice President, Chief Financial Officer and Controller |
| Chief Executive Officer and Director | (Principal Financial and Accounting Officer) |
| Date: March 28, 2023 | Date: March 28, 2023 |
| /s/ALESSANDRA F. BIANCO | /s/RICHARD A. BIANCO, JR. |
| Director | Director |
| Date: March 28, 2023 | Date: March 28, 2023 |
| /s/JERRY Y. CARNEGIE | /s/SCOTT M. SALANT, ESQ. |
| Director | Director |
| Date: March 28, 2023 | Date: March 28, 2023 |
| /s/KENNETH M. SCHMIDT | |
| Director | |
| Date: March 28, 2023 |
|
DIRECTORS AND OFFICERS
|
||||||||
|
Board of Directors
|
||||||||
| Richard A. Bianco | Alessandra F. Bianco | Richard A. Bianco, Jr. | Jerry Y. Carnegie | Scott M. Salant, Esq | ||||
|
Chairman, President and
Chief Executive Officer
AmBase Corporation
|
Senior Officer
BARC Investments, LLC
|
Employee AmBase Corporation & Officer
BARC Investments, LLC
|
Private Investor
|
Private Investor
|
||||
|
.
|
||||||||
|
Kenneth M. Schmidt
Private Investor
|
||||||||
|
AmBase Officers
|
||||||||
| Richard A. Bianco | John Ferrara | Joseph R. Bianco | ||||||
|
Chairman, President and Chief Executive Officer
|
Vice President,
Chief Financial Officer and Controller
|
Treasurer
|
||||||
INVESTOR INFORMATION
|
Annual Meeting of Stockholders
The 2023 Annual Meeting is currently scheduled to be held at 9:00 a.m. Eastern Time, on Thursday, June 1, 2023, at:
Hyatt Regency Hotel
1800 East Putnam Avenue
Greenwich, CT 06870
|
Corporate Headquarters
AmBase Corporation
7857 West Sample Road, Suite 134
Coral Springs, FL 33065
(201) 265-0169
|
|
|
Common Stock Trading
AmBase stock is traded through one or more market-makers with quotations made available on the over-the-counter market.
Issue: Common Stock
Abbreviation: AmBase
Ticker Symbol: ABCP.OB
Transfer Agent and Registrar
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
|
Stockholder Inquiries
Stockholder inquiries, including requests for the following: (i) change of address; (ii) replacement of lost stock certificates; (iii) Common Stock name registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on Form
10-K; (vi) proxy material; and (vii) information regarding stockholdings, should be directed to:
American Stock Transfer & Trust Co. LLC
6201 15th Ave.
Brooklyn, NY 11219
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
In addition, the Company’s public reports, including Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Proxy Statements, can be obtained through the Securities and Exchange Commission EDGAR Database over the World Wide Web at
www.sec.gov.
|
|
|
Independent Registered Public Accountants
Marcum LLP
185 Asylum Street
City Place I, 25th Floor
Hartford, CT 06103
|
Number of Stockholders
As of February 28, 2023, there were,
approximately 6,000 stockholders.
|
40
EXHIBIT 21
AMBASE CORPORATION
SUBSIDIARY LISTING
AS OF DECEMBER 31, 2022
|
Name
|
Jurisdiction
in Which Organized
|
Percentage Voting
Securities Owned
By Immediate
Parent
|
|
|
AmBase Corporation
|
Delaware
|
N/A
|
|
|
111 West 57th Investment LLC
|
Delaware
|
100%
|
|
|
Note: Interrelationships shown by indentation with 100% ownership unless otherwise indicated.
|
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Richard A. Bianco, certify that:
|
1.
|
I have reviewed this annual report on Form 10-K of AmBase Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter
in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
|
/s/ Richard A. Bianco
|
|
|
Richard A. Bianco
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
March 28, 2023
|
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, John Ferrara, certify that:
|
1.
|
I have reviewed this annual report on Form 10-K of AmBase Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial
reporting.
|
|
/s/ John Ferrara
|
|
|
John Ferrara
|
|
|
Vice President, Chief Financial Officer, and Controller
|
|
|
March 28, 2023
|
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
In connection with the annual report of AmBase Corporation (the “Company”) on Form 10-K for the period ending December 31, 2022, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Richard A. Bianco, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Richard A. Bianco
|
|
|
Richard A. Bianco
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
AmBase Corporation
|
|
|
March 28, 2023
|
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
In connection with the annual report of AmBase Corporation (the “Company”) on Form 10-K for the period ending December 31, 2022, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, John Ferrara, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ John Ferrara
|
|
|
John Ferrara
|
|
|
Vice President and Chief Financial Officer
|
|
|
March 28, 2023
|