UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section
13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2008
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-7265
AMBASE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-2962743
(State of incorporation) (I.R.S. Employer Identification No.)
100 PUTNAM GREEN, 3RD FLOOR
GREENWICH, CONNECTICUT 06830
(Address of principal executive offices) (Zip Code)
(203) 532-2000
(Registrant's telephone number, including area code)
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 (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X 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 definition of "large accelerated filer", "accelerated filer", and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer __ Accelerated Filer __ Non-Accelerated Filer X
Smaller Reporting Company __
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
YES NO X
------- -------------
At May 9, 2008, there were 43,599,264 shares outstanding of the
registrant's common stock, $0.01 par value per share.
AmBase Corporation
Quarterly Report on Form 10-Q
March 31, 2008
TABLE OF CONTENTS Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).....................................................................1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................................14
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................17
Item 4T. Controls and Procedures.............................................................................17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................................................18
Item 1A. Risk Factors........................................................................................18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.........................................18
Item 3. Defaults Upon Senior Securities.....................................................................18
Item 4. Submission of Matters to a Vote of Security Holders.................................................18
Item 5. Other Information...................................................................................18
Item 6. Exhibits............................................................................................18
Signatures ....................................................................................................19
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(in thousands, except for share and per share amounts)
March 31, December 31,
2008 2007
======== =========
Assets:
Cash and cash equivalents......................................................... $ 2,355 $ 2,894
Investment securities:
Held to maturity (market value $15,405 and $16,329, respectively)............. 15,373 16,313
-------- --------
Total investment securities....................................................... 15,373 16,313
-------- --------
Real estate owned:
Land............................................................................ 554 554
Buildings and improvements...................................................... 1,900 1,900
-------- --------
2,454 2,454
Accumulated depreciation.......................................................... (347) (334)
-------- --------
Real estate owned, net............................................................ 2,107 2,120
Other assets...................................................................... 35 232
-------- --------
Total assets...................................................................... $ 19,870 $ 21,559
======== ========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities.......................................... $ 1,675 $ 962
Other liabilities................................................................. 16 19
-------- --------
Total liabilities................................................................. 1,691 981
-------- --------
Commitments and contingencies (Note 3)............................................ - -
Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued and
43,669,664 outstanding in 2008 and 43,858,664 outstanding in 2007)............. 464 464
Additional paid-in capital........................................................ 548,044 548,044
Accumulated deficit............................................................... (528,375) (526,057)
Treasury stock, at cost - 2,740,443 and 2,551,343 shares, respectively............ (1,954) (1,873)
-------- --------
Total stockholders' equity........................................................ 18,179 20,578
-------- --------
Total liabilities and stockholders' equity........................................ $ 19,870 $ 21,559
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended March 31
(Unaudited)
(in thousands, except per share data)
Three Months
2008 2007
==== ====
Operating expenses:
Compensation and benefits......................................... $ 500 $ 1,132
Professional and outside services................................. 1,867 464
Property operating and maintenance................................ 22 23
Depreciation .................................................... 13 13
Insurance......................................................... 18 19
Other operating................................................... 51 38
--------- ---------
2,471 1,689
--------- ---------
Operating loss.................................................... (2,471) (1,689)
--------- ---------
Interest income................................................... 153 465
Realized gains on sales of investment securities.................. - 156
--------- ---------
Loss before income taxes.......................................... (2,318) (1,068)
Income tax expense................................................ - (25)
--------- ---------
Net loss.......................................................... $ (2,318) $ (1,093)
========= =========
Net loss per common share:
Net loss - basic.................................................. $ (0.05) $ (0.02)
========= ========
Net loss - assuming dilution...................................... $ (0.05) $ (0.02)
========= ========
Weighted average common shares outstanding:
Basic............................................................. 43,729 44,969
========= ========
Diluted........................................................... 43,729 44,969
========= ========
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
Three Months Ended March 31
(Unaudited)
(in thousands)
Three Months
2008 2007
====== =====
Net loss............................................................ $(2,318) $(1,093)
Amortization of minimum pension liability adjustment................ - 284
------- -------
Comprehensive loss.................................................. $(2,318) $ (809)
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31
(Unaudited)
(in thousands)
2008 2007
Operating activities: ==== ====
Net loss.............................................................................. $(2,318) $ (1,093)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization......................................................... 13 13
Accretion of discount - investment securities......................................... - (22)
Realized gains on investment securities available for sale............................ - (156)
Amortization of minimum pension liability adjustment.................................. - 284
Changes in other assets and liabilities:
Accrued interest receivable....................................................... 7 (133)
Other assets...................................................................... 197 1,211
Accounts payable and accrued liabilities.......................................... 713 (536)
Other liabilities................................................................. (3) 234
Other, net........................................................................ (1) 1
------- --------
Net cash used by operating activities................................................. (1,392) (197)
------- --------
Investing activities:
Maturities of investment securities - held to maturity................................ 7,100 14,112
Purchases of investment securities - held to maturity................................. (6,166) (14,950)
Sales of investment securities - available for sale................................... - 770
------- --------
Net cash provided (used) by investing activities...................................... 934 (68)
------- --------
Financing activities:
Common stock purchased for treasury................................................... (81) -
------- --------
Net cash used by financing activities................................................. (81) -
------- --------
Net change in cash and cash equivalents............................................... (539) (265)
Cash and cash equivalents at beginning of period...................................... 2,894 2,601
------- --------
Cash and cash equivalents at end of period............................................ $ 2,355 $ 2,336
======= ========
Supplemental cash flow disclosures:
Income taxes paid..................................................................... $ 1 $ 32
======= ========
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 Basis of Presentation
The accompanying consolidated financial statements of AmBase Corporation
and its wholly-owned subsidiaries (the "Company") are unaudited and subject to
year-end adjustments. All material intercompany transactions and balances have
been eliminated. In the opinion of management, the interim financial statements
reflect all adjustments, consisting only of normal recurring adjustments unless
otherwise disclosed, necessary for a fair presentation of the Company's
financial position, results of operations and cash flows. Results for interim
periods are not necessarily indicative of results for the full year. Certain
reclassifications may have been made to the prior year consolidated financial
statements to conform with the current year presentation. The consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP") for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. 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. The unaudited
interim financial statements presented herein should be read in conjunction with
the Company's consolidated financial statements filed in its Annual Report on
Form 10-K for the year ended December 31, 2007.
The Company's assets currently consist primarily of cash and cash
equivalents, investment securities, and real estate owned. The Company currently
earns non-operating revenue principally consisting of earnings on investment
securities and cash equivalents. The Company continues to evaluate a number of
possible acquisitions, and is engaged in the management of its assets and
liabilities, including the contingent assets, as described in Part II - Item 1.
From time to time, the Company and its subsidiaries may be named as a defendant
in various lawsuits or proceedings. The Company intends to aggressively contest
all litigation and contingencies, as well as pursue all sources for
contributions to settlements.
The Company's management believes that operating cash needs for the next
twelve months will be met principally by the receipt of earnings on investment
securities and cash equivalents, and the Company's current financial resources.
Note 2 - Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standard Board ("FASB") issued
SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"). SFAS No. 157 defines
fair values, establishes a framework for measuring fair value of assets and
liabilities, and expands disclosure requirements regarding the fair value
measurement. SFAS 157 does not expand the use of fair value measurements. This
statement, as issued, is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years. FASB Staff Position (FSP) FAS No. 157-2 was issued in February 2008 and
deferred the effective date of SFAS 157 for nonfinancial assets and liabilities
to fiscal years beginning after November 2008. As such, the Company adopted SFAS
157 as of January 1, 2008 for financial assets and liabilities only. There was
no significant effect on the Company's financial statements. As of March 31,
2008, the Company's financial assets include held to maturity investments. The
Company determines fair value for such investments based on quoted market prices
in active markets (i.e. Level 1 as defined under SFAS 157). The Company is
continuing to carry such investments at amortized cost. The Company does not
believe that the adoption of SFAS 157 to non-financial assets and liabilities
will significantly effect its financial statements.
In February 2007, the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and Liabilities - including an amendment of FASB Statement No.
115" ("SFAS 159"). SFAS 159 expands the use of fair value accounting but does
not affect existing standards which requires assets or liabilities to be carried
at fair value. The objective of SFAS 159 is to improve financial reporting by
providing companies with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. Under SFAS 159, a company
may elect to use fair value to measure eligible items at specified election
dates and report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each subsequent reporting date. Eligible
items include, but are limited to, accounts receivable, accounts payable, and
issued debt. If elected, SFAS 159 is effective for fiscal years beginning after
November 15, 2007. The Company has not elected to measure any additional assets
or liabilities at fair value that are not already measured at fair value under
existing standards.
In December 2007, the FASB issued SFAS No. 141 (revised 2007, "Business
Combinations" ("SFAS 141(R)"). SFAS 141(R) establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
non-controlling interest in the acquiree and the goodwill acquired. SFAS 141(R)
also establishes disclosure requirements to enable the evaluation of the nature
and financial effects of the business combination. SFAS 141(R) is effective for
fiscal years beginning after December 15, 2008. The Company will apply the
provisions of SFAS 141(R) to any acquisition after January 1, 2009.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In December 2007, the FASB issued SFAS No. 160, "Accounting for
Noncontrolling Interests" ("SFAS 160"). SFAS 160 clarifies the classification of
noncontrolling interests in consolidated balance sheets and reporting
transactions between the reporting entity and holders of noncontrolling
interests. Under this statement, noncontrolling interests are considered equity
and reported as an element of consolidated equity. Further, net income
encompasses all consolidated subsidiaries with disclosure of the attribution of
net income between controlling and noncontrolling interests. SFAS No. 160 is
effective prospectively for fiscal years beginning after December 15, 2008.
Currently, there are no noncontrolling interest in any of the Company's
subsidiaries.
Note 3 - Legal Proceedings
The information contained in Item 8 - Note 10 in the Company's Annual
Report on Form 10-K for the year ended December 31, 2007, is incorporated by
reference herein and the defined terms set forth below have the same meaning
ascribed to them in that report. There have been no material developments in
such legal proceedings, except as set forth below.
The Company is or has been a party in a number of lawsuits or proceedings,
including the following:
Supervisory Goodwill Litigation - Trial testimony of fact and expert
witnesses for the Company, the DOJ, and the FDIC was completed on April 4, 2008.
At trial, fact witness and expert witness testimony was presented by AmBase, and
by the United States Government represented by the Department of Justice
("DOJ"). In addition, the FDIC-Receiver (purporting to act as a
plaintiff-intervener in its capacity as successor-in-interest to Carteret)
participated in the trial and the examination of witnesses. The Company put
forth various theories of damages, including claims for the recovery of the
value of Carteret as of the date of the breach or the date of judgment, as well
as for the recovery of certain so-called "wounded bank" damages incurred by
Carteret as a result of the breach. The DOJ responded with various theories,
including, among other things, that Carteret would have failed even if
Supervisory Goodwill was counted. The DOJ also challenged the Company's
calculations of the value of Carteret and the damages theories and evidence
underlying the Company's "wounded bank" claims. The FDIC has essentially adopted
the Company's damages claims evidence, but has continued to argue (along with
DOJ) that the FDIC-Receiver is entitled to recover on these claims.
The Government and the FDIC-Receiver claim that the Carteret receivership
deficit consists of the FDIC's subrogated claim against the thrift, interest,
taxes, and administrative expenses charged by the FDIC-Receiver to the Carteret
receivership estate. Because the receivership deficit continues to accrue
interest, it grows on a daily basis. The FDIC-Receiver alleges that, as of
December 31, 2007, the receivership deficit was approximately $321 million,
which included the FDIC's subrogated claim and other claims of $24 million,
interest on the subrogated claim in excess of $180 million, (which the
FDIC-Receiver claims is owed to the FDIC from the Carteret receivership), and
estimated federal income taxes including interest and penalty thereon of
approximately $114 million, which the FDIC has described as contingent. At trial
the FDIC-Receiver did not present any expert testimony articulating a theory of
damages for Carteret. While the failure to seek damages in excess of the
receivership deficit has previously been held to be cause for dismissal for lack
of standing, the FDIC-Receiver has stated that it believes it still has standing
in the Company's case based upon the damage theories the Company presented. The
Company believes that the FDIC-Receiver's receivership deficit claims are wrong,
but this must be decided by the courts.
After the completion of trial testimony, the Court held a status conference
in April 2008 pursuant to which the Court issued a post trial scheduling order
providing for the filing of post trial briefs and proposed findings of fact by
the Company, and DOJ and the FDIC. Such post-trial briefing is currently
scheduled to be concluded by September 2008. The Court has not yet established a
date for the parties' presentation of closing arguments. The Company believes
any decision rendered by Judge Smith on damages, as well as his decision
relating to his authority to review and consider the validity of the alleged
receivership deficit, will likely be appealed to the U.S. Court of Appeals for
the Federal Circuit.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Both the Court of Federal Claims and the Court of Appeals for the Federal
Circuit have issued numerous decisions in cases that involve claims against the
United States based upon its breach of its contracts with savings and loan
institutions through its 1989 enactment of FIRREA. In particular, the Federal
Circuit has issued decisions rejecting Takings Clause claims advanced by
shareholders of failed thrifts. See e.g., Castle v. United States, 301F.3d 1328
(Fed. Cir. 2002); Bailey v. United States, 341 F. 3d 1342 (Fed. Cir 2003). In
June 2004, the United States Supreme Court denied the petition for certiorari
filed by Bailey. The Court of Federal Claims decisions and certain filings in
the Company's case, as well as other decisions in Winstar related cases, are
publicly available on the Court of Federal Claims web site at
www.cofc.uscourts.gov. In addition, decisions in Winstar related cases that have
been issued by the U.S. Court of Appeals, the court that hears appeals from
decisions by the Court of Claims, may be found on that court's web site at
www.cafc.uscourts.gov. Decisions in other Winstar related cases may be relevant
to the Company's Supervisory Goodwill claims, but are not necessarily indicative
of the ultimate outcome of the Company's actions.
Note 4 - 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.
Note 5 - Investment Securities
Investment securities - held to maturity consist of U.S. Treasury Bills
with original maturities of over three months which are carried at amortized
cost based upon the Company's intent and ability to hold these investments to
maturity.
Investment securities consist of the following:
March 31, 2008 December 31, 2007
====================================== =======================================
Cost or Cost or
Carrying Amortized Fair Carrying Amortized Fair
(in thousands) Value Cost Value Value Cost Value
======== ========= ======= ======== ========== ======
Held to Maturity:
U.S. Treasury Bills........ $ 15,373 $ 15,373 $ 15,405 $ 16,313 $ 16,313 $ 16,329
--------- --------- -------- --------- -------- ---------
$ 15,373 $ 15,373 $ 15,405 $ 16,313 $ 16,313 $ 16,329
========= ========= ======== ========= ======== =========
The gross unrealized gains (losses) on investment securities, at March 31,
2008 and December 31, 2007 consist of the following:
(in thousands) 2008 2007
====== ======
Held to Maturity:
Gross unrealized gains.................................................................. $ 32 $ 17
====== ======
Gross unrealized losses................................................................. $ - $ (1)
====== ======
Realized gains on the sales of investment securities available for sale for
the three months ended March 31 as follows:
(in thousands) 2007
====
Net sale proceeds....................................................................... $ 770
Cost basis.............................................................................. (614)
--------
Realized gains.......................................................................... $ 156
========
No investment securities were sold during the three month period ended
March 31, 2008.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 6 - Property Owned
The Company owns one commercial office building in Greenwich, Connecticut
that contains approximately 14,500 square feet. The Company utilizes
approximately 3,500 square feet for its executive offices; the remaining space
is currently unoccupied and available for lease.
Although the portion of the building not being utilized by the Company is
currently unoccupied and available for lease, based on the Company's analysis,
including but not limited to current market rents in the area, leasing values,
and comparable property sales, the Company believes the property's fair market
value exceeds the property's current carrying value; and, therefore the carrying
value of the property as of March 31, 2008, has not been impaired.
Depreciation expense for buildings is calculated on a straight-line basis
over 39 years. Tenant improvements, if any, would be typically depreciated over
the lesser of the remaining life of the tenants' lease or the estimated useful
lives of the improvements. The building and improvements are carried at cost,
net of accumulated depreciation of $347,000 and $334,000, at March 31, 2008 and
December 31, 2007, respectively.
Note 7 - Income Taxes
The Company and its 100% owned 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 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, greater than 50% probability exists that the tax benefits will actually be
realized sometime in the future.
The Company has calculated a net deferred tax asset of $32 million as of
March 31, 2008 and December 31, 2007, arising primarily from net operating loss
("NOL") carryforwards, alternative minimum tax ("AMT") credits (not including
the anticipated tax effects of NOL's which could be generated from the Company's
tax basis in Carteret Savings Bank, F.A. and subsidiaries ("Carteret"),
resulting from the election decision, as more fully described below). A
valuation allowance has been established for the entire net deferred tax asset
as management, at the current time, has no basis to conclude that realization is
more likely than not.
There were no unrecognized tax benefits at December 31, 2007 or March 31,
2008. Further, no significant changes in unrecognized income tax benefits are
currently expected to occur over the next year. Interest and/or penalties
related to under payments of income taxes, if applicable, would be included in
interest expense and operating expenses, respectively. The accompanying
financial statements do not include any amounts for any such interest and/or
penalties. The Company's federal income tax returns for the years subsequent to
1992 have not been reviewed by the IRS or state authorities and 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 statute of limitations for
federal and state purposes are generally closed for tax years prior to 2004.
Based upon the Company's federal income tax returns as filed from 1993 to
2006 (subject to IRS audit adjustments), excluding all effects of the inclusion
of Carteret/Carteret FSB from December 4, 1992 forward as noted above, as of
March 31, 2008, the Company has NOL carryforwards aggregating approximately $33
million, available to reduce future federal taxable income which expire if
unused beginning in 2009.
The utilization of certain carryforwards is subject to limitations under
U.S. federal income tax laws. In addition, the Company has approximately $21
million of AMT credit carryforwards ("AMT Credits"), which are not subject to
expiration. Based on the filing of the Carryback Claims, as further discussed
below, the Company is seeking to realize approximately $8 million of the $21
million of AMT Credits.
As a result of the Office of Thrift Supervision's December 4, 1992
placement of Carteret in receivership, under the management of the Resolution
Trust Corporation ("RTC")/Federal Deposit Insurance Corporation ("FDIC"), and
then proposed Treasury Reg. ss.1.597-4(g), the Company had previously filed its
1992 and subsequent federal income tax returns with Carteret disaffiliated from
the Company's consolidated federal income tax return. Based upon the impact of
Treasury Reg. ss.1.597-4(g), which was issued in final form on December 20,
1995, a continuing review of the Company's tax basis in Carteret, and the impact
of prior year tax return adjustments on the Company's 1992 federal income tax
return as filed, the Company decided not to make an election pursuant to final
Treasury Reg. ss.1.597-4(g) to disaffiliate Carteret from the Company's
consolidated federal income tax return effective as of December 4, 1992 (the
"Election Decision").
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company has made numerous requests to the RTC/FDIC for tax information
pertaining to Carteret and the resulting successor institution, Carteret Federal
Savings Bank ("Carteret FSB"); however, all of the information still has not
been received. The Company believes, as a result of remaining consolidated with
Carteret FSB for federal income tax return purposes, that the Company's tax
basis in Carteret/Carteret FSB can be converted into NOL's which could be
available to carryforward/carryback into various federal income tax return
years. However; since all of the Carteret FSB tax information has not been
received the Company is unable to determine with certainty, the amount of or the
years in which any NOL's may ultimately be generated; if the NOL
carryforwards/carrybacks will be utilized in prior federal income tax return
years; or the final expiration dates of any of the NOL carryforwards/carrybacks
ultimately generated.
Based on information received to date, and prior to the recognition of the
1992 tax losses expected to be generated as a result of amending the Company's
1992 federal income tax return, as further described below, the Company
estimated that as of December 1992 it initially had a remaining tax basis in
Carteret/Carteret FSB of approximately $158 million.
Based on the Company's Election Decision, described above, and the receipt
of some of the requested information from the RTC/FDIC, the Company amended its
1992 consolidated federal income tax return to include the federal income tax
effects of Carteret and Carteret FSB, (the "1992 Amended Return"). As part of
the 1992 Amended Return, approximately $56 million, (of the initial $158
million), of Carteret/Carteret FSB tax basis is expected to be converted into
NOL carryforwards in tax year 1992 and will have expired in 2007, unless they
are absorbed in earlier years based on inclusion of certain items in the
consolidated group. The Company is still in the process of reviewing its
consolidated federal income tax returns for 1993 and subsequent years.
The Carteret/Carteret FSB tax basis, of approximately $102 million,
remaining after recognition of the 1992 Amended Return, may be converted into
NOL carryforwards/carrybacks as additional tax losses are generated by
Carteret/Carteret FSB and may be carried back or carried forward to other tax
years; utilized in other tax years; or could begin to expire in 2008 based upon
the year any NOL's are ultimately generated. The Company can give no assurances
with regard to the 1992 Amended Return, subsequent year returns, or the final
amount or expiration of NOL carryforwards/carrybacks ultimately generated, if
any, from the Company's tax basis in Carteret/Carteret FSB.
Any NOL's ultimately generated from the Company's tax basis in
Carteret/Carteret FSB, would be in addition to the NOL carryforwards/carrybacks
generated based on the Company's federal income tax returns as previously filed,
as further detailed above.
In March 2000, the Company filed several carryback claims and amendments to
previously filed carryback claims with the IRS (the "Carryback Claims") seeking
refunds from the IRS of alternative minimum tax and other federal income taxes
paid by the Company in prior years plus applicable IRS interest, based on the
filing of the 1992 Amended Return. In April 2003, IRS examiners issued a letter
to the Company proposing to disallow the Carryback Claims. The Company sought
administrative review of the letter by protesting to the Appeals Division of the
IRS. In February 2005, IRS Appeals officials completed their review of the
Carryback Claims, and disallowed them. On April 29, 2008, the Company filed suit
in the U.S. District Court for the District of Connecticut for the tax refunds
it seeks, plus interest, with respect to the Carryback Claims. The Company can
give no assurances as to the final amounts of refunds, if any, or when they
might be received as a result of this tax refund suit.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The FDIC has previously filed a federal income tax return for Carteret FSB
for 1995 (as well as other years), which indicates that Carteret FSB allegedly
could owe a 1995 federal income tax liability of $32 million, which including
interest and penalty thereon, could be in excess of $110 million. The FDIC has
stated to the United States Court of Federal Claims ("Court of Claims") that the
tax amounts are only estimates and are highly contingent. Based on proceedings
in other Supervisory Goodwill cases, it is possible that the IRS may try to
collect the alleged Carteret FSB federal income taxes from the Carteret FSB
receivership.
The Company believes the Carteret FSB federal income tax returns filed by
the FDIC were improperly filed and are neither accurate nor valid. As part of
the Supervisory Goodwill legal proceedings, the Company presented to the Court
of Claims various arguments to support the position that no federal income tax
would be owed as a result of the Carteret FSB receivership operations for tax
year 1995, or any other tax year; however, the Department of Justice and the
FDIC have stated to the Court of Claims that they do not believe the Court of
Claims has jurisdiction over that issue. The Supervisory Goodwill proceedings
remain pending in the Court of Claims.
Based on the information received to date, if the correct Carteret FSB
federal income tax results were included with the Company's originally filed
federal income tax returns, the Company based upon consultation with its legal
and tax advisors believes that no additional material federal income tax would
be owed by the Company for tax year 1995 (or any other tax year). This analysis
included among other items, a review of the Carteret FSB federal income tax
returns as prepared by the FDIC and the correction of errors originally reported
therein, the proper application of federal NOL carryforwards and carrybacks, and
the adherence to provisions contained in the Internal Revenue Code, as amended.
The Company; however, can give no assurances of the final amounts, if any, of
federal income taxes owed by the Carteret FSB receivership or by the Company as
a result of the Carteret FSB receivership operations.
The Company is continuing to try to resolve these matters as part of the
Supervisory Goodwill legal process and is also continuing to review the Carteret
FSB federal income tax returns and the results of their inclusion with the
Company's federal income tax returns as previously filed. The Company is also
pursuing the Carryback Claims, as further described above, which could have an
impact on the analysis of the prior year tax information. For further
information on the Supervisory Goodwill legal proceedings, see Note 3 herein.
The discussion of the Carteret FSB federal income tax results is intended
to provide details as to the potential interrelationship of the Carteret FSB
federal income tax returns with the Company's federal income tax positions. It
is not a reflection of any federal income tax liability of the Company arising
from the Carteret receivership operations.
Note 8 - Comprehensive Income (Loss)
Comprehensive income (loss) for the three months ended March 31, 2007 was
composed of net income (loss) and other comprehensive income (loss) which
includes the change in unrealized gains (losses) on investment securities
available for sale and recognition of additional minimum pension liability, as
follows:
Three Months Ended
(in thousands) March 31, 2007
===============================================
Minimum Unrealized Accumulated
Pension Gains (Losses) Other
Liability on Investment Comprehensive
Adjustment Securities Income (Loss)
========== ============= =============
Balance beginning of period.. $ (474) $ 138 $ (336)
Reclassification adjustment for
gains realized in net loss. - (67) (67)
Change during the period..... 284 67 351
--------- ------------- -------------
Balance end of period........ $ (190) $ 138 $ (52)
========= ============= =============
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 9 - Stock-Based Compensation
Under the Company's 1993 Stock Incentive Plan (the "1993 Plan"), the
Company may grant to officers and employees of the Company and its subsidiaries,
stock options ("Options"), stock appreciation rights ("SARs"), restricted stock
awards ("Restricted Stock"), merit awards ("Merit Awards") and performance share
awards ("Performance Shares"), through May 28, 2008. The Board of Directors and
Personnel Committee have approved an amendment to the 1993 Plan to extend the
termination date for the period during which awards may be granted under the
1993 Plan for an additional 10 years to May 28, 2018 from May 28, 2008, subject
to the approval by a majority vote of the Company's stockholders at the
Company's Annual Meeting of stockholders scheduled for May 16, 2008. An
aggregate of 5,000,000 shares of the Company's Common Stock are reserved for
issuance under the 1993 Plan (upon the exercise of Options and Stock
Appreciation Rights, upon awards of Restricted Stock and Performance Shares);
however, of such shares, only 2,500,000 shares in the aggregate shall be
available for issuance for Restricted Stock Awards and Merit Awards. Such shares
shall be authorized but unissued shares of Common Stock. As of March 31, 2008,
there were 4,134,000 shares available for future stock option grants. Options
may be granted as incentive stock options ("ISOs") intended to qualify for
favorable tax treatment under Federal tax law or as nonqualified stock options
("NQSOs"). SARs may be granted with respect to any Options granted under the
1993 Plan and may be exercised only when the underlying Option is exercisable.
The 1993 Plan requires that the exercise price of all Options and SARs be equal
to or greater than the fair market value of the Company's Common Stock on the
date of grant of that Option. The term of any ISO or related SAR cannot exceed
ten years from the date of grant, and the term of any NQSO cannot exceed ten
years and one month from the date of grant. Subject to the terms of the 1993
Plan and any additional restrictions imposed at the time of grant, Options and
any related SARs ordinarily will become exercisable commencing one year after
the date of grant. Options granted generally have a ten year contractual life
and generally have vesting terms of two years from the date of grant. In the
case of a "Change of Control" of the Company (as defined in the 1993 Plan),
Options granted pursuant to the 1993 Plan may become fully exercisable as to all
optioned shares from and after the date of such Change of Control in the
discretion of the Committee or as may otherwise be provided in the grantee's
Option agreement. Death, retirement, or absence for disability will not result
in the cancellation of any Options.
No stock based compensation expense was recorded in the three months ended
March 31, 2008 or March 31, 2007, as all previously granted options vested as of
January 2, 2007. No stock option awards have been granted since January 2005.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company believes that the use of the Black-Scholes model meets the fair
value measurement objectives of SFAS 123R and reflects all substantive
characteristics of the instruments being valued. No stock options have been
granted since January 2005.
The following table reports stock option activity during the three month
period ended March 31, 2008:
Weighted
Weighted Average
Average Remaining
Number of Exercise Contractual
Shares Price Life (in years)
--------- -------- ---------------
Outstanding at January 1, 2008...... 876,000 $0.93
Expired............................. (10,000) 3.65
--------- ========
Outstanding at March 31, 2008....... 866,000 $0.90 5.04
========= ========= ====
Exercisable at March 31, 2008....... 866,000 $0.90 5.04
========= ========= ====
At March 31, 2008, the exercise price of stock options outstanding and
exercisable was greater than the market price of the Company's stock; therefore,
no intrinsic value for stock options is included herein.
There were no outstanding option shares vesting during the three month
period ended March 31, 2008. The total fair value of shares vested during the
three month period ended March 31, 2007, was $96,000. As of March 31, 2008,
there was no remaining unamortized compensation cost related to non-vested
share-based compensation arrangements for stock options granted under the 1993
Plan.
Options to purchase 866,000 shares of common stock for the three months
ended March 31, 2008, and 876,000 shares of common stock for the three months
ended March 31, 2007, were excluded from the computation of diluted earnings per
share because these options were antidilutive.
Note 10 - Pension and Savings Plans
The Company previously sponsored a non tax-qualified supplemental
retirement plan, initially adopted by the Company in 1985, and as amended and
restated (the "Supplemental Plan"), under which only one current executive
officer of the Company was the sole participant. The cost of the Supplemental
Plan was accrued but not funded.
In accordance with an amendment to the Supplemental Plan, as previously
adopted in March 2006, the liability for the Supplemental Plan was fully
satisfied on May 31, 2007, by the lump-sum benefit payment of $16,676,115 (to
Mr. Bianco, the Company's Chairman, President and Chief Executive Officer), and
immediately thereafter, the Supplemental Plan automatically terminated. The
lump-sum Supplemental Plan benefit payment was paid from the Company's available
financial resources. There was no Supplemental Plan expense for the three months
ended March 31, 2008, compared to $519,000 for the three months ended March 31,
2007. As a result of the termination of the Supplemental Plan, as of June 1,
2007, no further Supplemental Plan expense will be recognized by the Company.
See the Company's Annual Report on Form 10-K for the year ended December 31,
2007, Item 8, Note 7 for further information.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 11 - Common Stock Repurchase Plan
In January 2002, the Company announced a common stock repurchase plan (the
"Repurchase Plan") which allows for the repurchase by the Company for up to 10
million shares 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.
(a) Total (b) (c) Total Number
Number of Average Shares Purchased (d) Maximum Number
Shares Price Paid as Part of Publicly Shares that may yet be
Purchased per Share Announced Plans Purchased under the Plan
---------- --------------- --------------------- ------------------------------
Beginning balance January 1, 2008......... 2,424,855 7,575,145
January 1, 2008 - January 31, 2008........ 189,100 $0.43 2,613,955 7,386,045
February 1, 2008 - February 28, 2008...... - - 2,613,955 7,386,045
March 1, 2008 - March 31, 2008............ - - 2,613,955 7,386,045
-------
Total.................................... 189,100
=======
FORWARD LOOKING STATEMENTS
This quarterly report may contain "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 Quarterly 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 Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, 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: (i) transaction
volume in the securities markets; (ii) the volatility of the securities markets;
(iii) fluctuations in interest rates; (iv) risks inherent in the real estate
business, including, but not limited to tenant defaults, changes in occupancy
rates or real estate values; (v) changes in regulatory requirements which could
affect the cost of doing business; (vi) general economic conditions; (vii)
changes in the rate of inflation and the related impact on the securities
markets; (viii) changes in federal and state tax laws; and (ix) risks arising
from unfavorable decisions in our current material litigation matters, or
unfavorable decisions in other supervisory goodwill cases. 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 quarterly report or to
reflect the occurrence of unanticipated events. Accordingly, there is no
assurance that the Company's expectations will be realized.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which follows, should be read in conjunction with the consolidated
financial statements and related notes, which are contained in Part I - Item 1,
herein and the Company's Annual Report on Form 10-K for the year ended December
31, 2007
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BUSINESS OVERVIEW
AmBase is a holding company which, through a wholly-owned subsidiary, owns
a commercial office building in Greenwich, Connecticut. The Company previously
owned an insurance company and a savings bank.
In February 1991, the Company sold its ownership interest in The Home
Insurance Company and its subsidiaries. On December 4, 1992, Carteret Savings
Bank, FA ("Carteret") was placed in receivership by the Office of Thrift
Supervision ("OTS").
The Company's assets currently consist primarily of cash and cash
equivalents, investment securities, and real estate owned. The Company earns
non-operating revenue principally consisting of investment earnings on
investment securities and cash equivalents. The Company continues to evaluate a
number of possible acquisitions and is engaged in the management of its assets
and liabilities, including the contingent assets associated with its legal
claims, as described in Part I - Item 1. From time to time, the Company and its
subsidiaries may be named as a defendant in various lawsuits or proceedings. The
Company intends to aggressively contest all litigation and contingencies, as
well as pursue all sources for contributions to settlements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets at March 31, 2008, aggregated $19,870,000 consisting
principally of cash and cash equivalents of $2,355,000, investment securities of
$15,373,000 and real estate owned of $2,107,000. At March 31, 2008, the
Company's liabilities aggregated $1,691,000. Total stockholders equity was
$18,179,000.
For the three months ended March 31, 2008, cash of $1,392,000 was used by
operations, primarily due to the payment of legal expenses relating to the
Supervisory Goodwill trial and to a lesser extent the payment of prior year
accruals and operating expenses, partially offset by the receipt of interest
income and investment earnings. The cash needs of the Company for the three
months of 2008 were satisfied by the receipt of investment earnings received on
investment securities and cash equivalents and the Company's current financial
resources. Management believes that the Company's capital resources are
sufficient to continue operations for the next twelve months.
For the three months ended March 31, 2007, cash of $197,000 was used by
operations, including the payment of prior year accruals and operating expenses
partially offset by the receipt of rental income, interest income, and
investment earnings. The cash needs of the Company for the first three months of
2007 were satisfied by the Company's financial resources and the receipt of
investment earnings on investment securities and cash equivalents.
The Company continues to evaluate a number of possible acquisitions and is
engaged in the management of its assets and liabilities, including the
contingent assets associated with its legal claims. Discussions and negotiations
are ongoing with respect to certain of these matters. The Company intends to
aggressively contest all litigation and contingencies, as well as pursue all
sources for contributions to settlements. For a discussion of lawsuits and
proceedings, including the Supervisory Goodwill litigation see Part I - Item 1 -
Note 3.
As of March 31, 2008, the Company owns one commercial office building in
Greenwich, Connecticut. The building is approximately 14,500 square feet;
approximately 3,500 square feet is utilized by the Company for its executive
offices; the remaining space is currently unoccupied and available for lease.
Although the portion of the building not being utilized by the Company is
currently unoccupied and available for lease, based on the Company's analysis
including but not limited to current market rents in the area, leasing values,
and comparable property sales, the Company believes the property's fair market
value exceeds the property's current carrying value; and, therefore the carrying
value of the property as of March 31, 2008, has not been impaired.
There are no material commitments for capital expenditures as of March 31,
2008. Inflation has had no material impact on the business and operations of the
Company.
Pursuant to the Company's common stock repurchase plan (the "Repurchase
Plan"), during the three months ended March 31, 2008, the Company repurchased
for approximately $81,000 an aggregate of 189,100 shares of common stock from
unaffiliated parties at various prices. See Part I - Item 1 - Note 11 for
further details with regard to the Repurchase Plan.
Results of Operations for the Three Months ended March 31, 2008 vs. the
Three Months Ended March 31, 2007
The Company currently earns non-operating revenue consisting principally of
investment earnings on investment securities and cash equivalents. The Company's
management believes that operating cash needs for the next twelve months will be
met principally by the receipt of investment earnings on investment securities
and cash equivalents and the Company's current financial resources. The
Company's main source of revenue in 2007 was non-operating revenue consisting of
investment earnings.
No rental income from real estate owned was earned for the three months
ended March 31, 2008 or for the three months ended March 31, 2007
Compensation and benefits decreased to $500,000 in the three months ended
March 31, 2008, compared with $1,132,000 in the respective 2007 period. The
decrease is primarily due to a decrease in the Supplemental Plan expense in the
three month period ended March 31, 2008, as a result of the Supplemental Plan
termination as of May 31, 2007, versus the same 2007 periods as further
described below and a lower level of incentive compensation accruals in the 2008
period versus the same 2007 period.
There was no Supplemental Plan expense for the three months ended March 31,
2008, compared to $519,000 for the three months ended March 31, 2007. As a
result of the termination of the Supplemental Plan, as of June 1, 2007, no
further Supplemental Plan expense will be recognized by the Company.
The Supplemental Plan expense reflects recognition of an expense of
$235,000 for the three month period ended March 31, 2007, recorded to increase
the Supplemental Plan liability to the present value of the May 31, 2007
lump-sum payment amount of $16,676,115, utilizing a 5.75% discount rate factor
based on the 2007 Employment Agreement between the Company and Mr. Bianco and
the amendment of the Supplemental Plan.
An additional Supplemental Plan expense of $284,000 in the three months
ended March 31, 2007, was recorded to amortize the Supplemental Plan minimum
pension liability adjustment. The minimum pension liability adjustment, which
was included as a component of stockholders' equity within accumulated other
comprehensive loss in the Company's consolidated financial statements, was
$1,326,000 as of March 31, 2006, and was amortized on a straight line basis over
the 14-month period from April 1, 2006, through May 31, 2007, as an additional
Supplemental Plan expense of $284,000 per quarter. The amortization of the
additional minimum pension liability in the 2007 period, although recorded as a
component of compensation expense in the Company's consolidated statement of
operations, did not result in a decrease in total stockholders' equity, as its
recognition results in an increase in one component and a corresponding decrease
in another component of stockholders' equity.
No stock based compensation expense was recorded in the three month period
ended March 31, 2008 or March 31, 2007, as all previously granted outstanding
options vested as of January 2, 2007. No stock option awards have been granted
since January 2005.
Professional and outside services increased to $1,867,000 in the three
months ended March 31, 2008, compared to $464,000 in the respective 2007 period.
The increase in the 2008 three month period as compared to the respective 2007
period is principally the result of a higher level of legal and professional
fees relating to the Supervisory Goodwill litigation in 2008 versus 2007. The
Supervisory Goodwill litigation expenses for the 2008 period include expenses
relating to the preparation for the trial and actual trial expenses incurred
during February and March 2008. The Supervisory Goodwill litigation expenses in
the 2007 period included expenses incurred in connection with discovery and
preparation expert reports and deposition of the Company's and government
witnesses.
Interest income in the three months ended March 31, 2008, decreased to
$153,000 from $465,000 in the respective 2007 period. The decrease is
principally due to a lower level of cash equivalents and investment securities
as a result of the Supplemental Plan lump-sum benefit payment to Mr. Bianco. The
payment decreased the Company's cash equivalents and investment securities by
approximately $16.7 million, resulting in a decrease in the interest income
earned by the Company beginning in June 2007; the decreased interest income is
also due to a decreased investment yield in the period ending March 31, 2008,
compared with the respective 2007 period. See Item 3 - Quantitative and
Qualitative Disclosure about Market Risk for information concerning the
Company's weighted average interest rate yield on investment securities as of
March 31, 2008.
For the three months ended March 31, 2007, realized gains on sales of
investment securities available for sale were $156,000.
The Company recognized no income tax provision for the three months ended
March 31, 2008, as compared with $25,000 for the three months ended March 31,
2007. The income tax provision is primarily attributable to a provision for a
minimum tax on capital to the state of Connecticut. Income taxes applicable to
operating income (loss) are generally determined by applying the estimated
effective annual income tax rates to pretax income (loss) for the year-to-date
interim period. Income taxes applicable to unusual or infrequently occurring
items are provided in the period in which such items occur.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company holds short-term investments as a source of liquidity. The
Company's interest rate sensitive investments with maturity dates of less than
one year consist of the following:
March 31, 2008 December 31, 2007
======================== =========================
Carrying Fair Carrying Fair
Value Value Value Value
(in thousands) -------- ------ -------- ------
U.S. Treasury Bills and Notes............... $15,373 $15,405 $16,313 $16,329
======= ======= ======== =======
Weighted average interest rate.............. 2.88% 4.77%
======= ========
The Company's current policy is to minimize the interest rate risk of its
short-term investments by investing in U.S. Treasury Bills with maturities of
less than one year. There were no significant changes in market exposures or the
manner in which interest rate risk is managed during the period.
The Company held no portfolio of equity securities as of March 31, 2008 or
December 31, 2007.
Item 4T. CONTROLS AND PROCEDURES
Our disclosure controls and procedures include our controls and other
procedures to ensure that information required to be disclosed in this and other
reports under the Securities Exchange Act of 1934, as amended the ("Exchange
Act"), is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer to allow timely decisions
regarding required disclosure and to ensure that such information is recorded,
processed, summarized and reported within the time periods.
Our Chief Executive Officer and Chief Financial Officer have conducted an
evaluation of our disclosure controls and procedures as of March 31, 2008. Based
upon this evaluation, our Chief Executive Officer and Chief Financial Officer
have concluded that our disclosure controls and procedures (as defined in Rule
13a-15(e) promulgated under the Exchange Act) are sufficiently effective to
ensure that the information required to be disclosed by us in the reports we
file under the Exchange Act is recorded, processed, summarized and reported with
adequate timeliness.
There have been no changes during the most recent fiscal quarter in our
internal control over financial reporting as defined in Rule 13a-15(f) of the
Exchange Act that have materially affected, or are reasonably likely to
materially affect our internal control over financial reporting.
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 stock holdings,
should be directed to:
American Stock Transfer and Trust Company
59 Maiden Lane
New York, NY 10038
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
Copies of Quarterly reports on Form 10-Q, Annual Reports on Form 10-K and
Proxy Statements can also be obtained directly from the Company free of charge
by sending a request to the Company by mail as follows:
AmBase Corporation
100 Putnam Green, 3rd Floor
Greenwich, CT 06830
Attn: Shareholder Services
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 Internet
at www.sec.gov. Materials filed with the SEC may also be read or copied by
visiting the SEC's Public Reference Room, 450 Fifth Street, NW, Washington, DC
20549. Information on the operation of the Public Reference Room may be obtained
by calling 1-800-SEC-0330.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
For a discussion of the Company's legal proceedings, including a discussion
of the Company's Supervisory Goodwill litigation, see Part I - Item 1 - Note 3 -
Legal Proceedings.
Item 1A. RISK FACTORS
There have been no material changes from risk factors previously disclosed
in the Company's Annual Report on Form 10-K for the year ended December 31, 2007
in response to Item 1A to Part I of Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS
Exhibit 31.1 Rule 13a-14(a) Certification of Chief Executive Officer
Exhibit 31.2 Rule 13a-14(a) Certification of Chief Financial Officer
Exhibit 32.1 Section 1350 Certification of Chief Executive Officer
Exhibit 32.2 Section 1350 Certification of Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMBASE CORPORATION
/s/ John P. Ferrara
------------------------------------------------------
By: JOHN P. FERRARA
Vice President, Chief Financial Officer and Controller
(Duly Authorized Officer and Principal Financial and
Accounting Officer)
Date: May 14, 2008