form10q3312010.htm
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, 2010
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
(State of incorporation)
|
|
95-2962743
(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 April
30, 2010, there were 43,075,410 shares outstanding of the registrant’s common
stock, $0.01 par value per share.
AmBase
Corporation
Quarterly
Report on Form 10-Q
March
31, 2010
TABLE
OF CONTENTS
|
PART I
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FINANCIAL INFORMATION
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Page
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Item
1.
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Financial
Statements (unaudited)
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1
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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14
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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16
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Item
4T.
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Controls
and Procedures
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17
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PART II
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OTHER INFORMATION
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Item
1.
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Legal
Proceedings
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18
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Item
1A.
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Risk
Factors
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18
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Item
2.
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Unregistered
Sales of Equity and Securities and Use of Proceeds
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18
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Item
3.
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Defaults
Upon Senior Securities
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18
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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18
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Item
5.
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Other
Information
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18
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Item
6.
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Exhibits
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18
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Signatures
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19
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PART I - FINANCIAL
INFORMATION
Item
1. FINANCIAL STATEMENTS
AMBASE
CORPORATION AND SUBSIDIARIES
Consolidated
Balance Sheets
(Unaudited)
(in
thousands, except for share and per share mounts)
|
Assets:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,351
|
|
$
|
1,715
|
|
|
Investment
securities:
|
|
|
|
|
|
|
|
|
Held
to maturity (market value $9,398 and $10,000,
respectively)
|
|
|
9,399
|
|
|
9,996
|
|
|
Total
investment securities
|
|
|
9,399
|
|
|
9,996
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate owned:
|
|
|
|
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|
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|
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Land
|
|
|
554
|
|
|
554
|
|
|
Buildings
|
|
|
1,900
|
|
|
1,900
|
|
|
|
|
|
2,454
|
|
|
2,454
|
|
|
Accumulated
depreciation
|
|
|
(449
|
)
|
|
(436
|
)
|
|
|
|
|
|
|
|
|
|
|
Real
estate owned, net
|
|
|
2,005
|
|
|
2,018
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
323
|
|
|
72
|
|
|
Total
assets
|
|
|
|
|
|
|
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|
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Liabilities
and Stockholders’ Equity:
|
|
|
|
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|
|
|
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Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
114
|
|
$
|
289
|
|
|
Other
liabilities
|
|
|
9
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
123
|
|
|
301
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 3)
|
|
|
|
|
|
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Stockholders’
equity:
|
|
|
|
|
|
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|
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Common
stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued and
43,075,410 outstanding)
|
|
|
464
|
|
|
464
|
|
|
Additional
paid-in capital
|
|
|
548,044
|
|
|
548,044
|
|
|
Accumulated
deficit
|
|
|
(533,444
|
)
|
|
(532,899
|
)
|
|
Treasury
stock, at cost - 3,334,597 shares
|
|
|
(2,109
|
)
|
|
(2,109
|
)
|
|
Total
stockholders’ equity
|
|
|
12,955
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
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
|
|
|
|
|
2010
|
|
2009
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
$
|
417
|
|
$
|
434
|
|
|
Professional
and outside services
|
|
|
50
|
|
|
389
|
|
|
Property
operating and maintenance
|
|
|
32
|
|
|
32
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|
|
Depreciation
|
|
|
13
|
|
|
13
|
|
|
Insurance
|
|
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7
|
|
|
17
|
|
|
Other
operating
|
|
|
30
|
|
|
31
|
|
|
|
|
|
549
|
|
|
916
|
|
|
Operating
loss
|
|
|
(549
|
)
|
|
(916
|
)
|
|
Interest
income
|
|
|
5
|
|
|
9
|
|
|
Realized
gains on sales of investment securities
|
|
|
10
|
|
|
-
|
|
|
Other
income
|
|
|
-
|
|
|
50
|
|
|
Loss
before income taxes
|
|
|
(534
|
)
|
|
(857
|
)
|
|
|
|
|
|
|
|
|
|
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Income
tax expense
|
|
|
(11
|
)
|
|
(2
|
)
|
|
Net
loss
|
|
$
|
(545
|
)
|
$
|
(859
|
)
|
|
|
|
|
|
|
|
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|
|
Per
share data:
|
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders - basic
|
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
|
Net
loss attributable to common stockholders - assuming
dilution
|
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
43,075
|
|
|
43,215
|
|
|
Assuming
dilution
|
|
|
43,075
|
|
|
43,215
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
|
(545
|
)
|
$
|
(859
|
)
|
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
13
|
|
|
13
|
|
|
Realized
gains on sales of investment securities
|
|
|
(10
|
)
|
|
-
|
|
|
Changes
in other assets and liabilities:
|
|
|
|
|
|
|
|
|
Accrued
interest receivable on investment securities
|
|
|
(5
|
)
|
|
(4
|
)
|
|
Other
assets
|
|
|
49
|
|
|
(413
|
)
|
|
Accounts
payable and accrued liabilities
|
|
|
(175
|
)
|
|
(160
|
)
|
|
Other
liabilities
|
|
|
(3
|
)
|
|
(2
|
)
|
|
Net
cash used by operating activities
|
|
|
(676
|
)
|
|
(1,425
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Maturities
of investment securities - held to maturity
|
|
|
10,000
|
|
|
11,400
|
|
|
Purchases
of investment securities - held to maturity
|
|
|
(9,398
|
)
|
|
(10,891
|
)
|
|
Sales
of investment securities
|
|
|
209
|
|
|
-
|
|
|
Purchases
of investments securities
|
|
|
(199
|
)
|
|
-
|
|
|
Investment
in real estate limited partnership
|
|
|
(300
|
)
|
|
-
|
|
|
Net
cash provided by investing activities
|
|
|
312
|
|
|
509
|
|
|
|
|
|
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
|
|
(364
|
)
|
|
(916
|
)
|
|
Cash
and cash equivalents at beginning of year
|
|
|
1,715
|
|
|
2,667
|
|
|
Cash
and cash equivalents at end of period
|
$
|
|
1,351
|
|
$
|
1,751
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow disclosure:
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
$
|
|
51
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
Note
1 - Organization
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. 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 are
condensed and 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, 2009.
The
Company’s assets currently consist primarily of cash and cash equivalents,
investment securities, and real estate. 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 June
2009, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting
Standards Codification (“ASC”) 105, Generally Accepted Accounting Principles,
which established the FASB Accounting Standards Codification as the sole source
of authoritative generally accepted accounting principles. Pursuant
to the provisions of FASB ASC 105, the Company has updated references to GAAP in
its financial statements issued for the period ended March 31,
2010. The adoption of FASB ASC 105 did not impact the Company’s
financial positions or results of operations.
There are
no new accounting pronouncements that would materially affect the Company’s
financial statements or results of operations for the periods reported
herein.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
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, 2009, 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 - On February 12 and 17, 2009, the Court heard closing
arguments. At the conclusion of closing arguments, the Court ruled that the FDIC
and DOJ could file short supplemental briefs addressing certain limited issues
by March 6, 2009, and that the Company could file a short responsive brief which
was filed on March 25, 2009. In May 2009, the DOJ requested and simultaneously
filed with the Court an additional supplemental brief. The Court
granted the DOJ’s motion and permitted the DOJ’s additional supplemental
brief. The Company subsequently requested and the Court allowed the
Company to file a responsive supplemental brief to the DOJ brief which was filed
in June 2009. The Company does not know when the Court will issue its
final decision. 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.
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. Castle v.
United States, 301 F.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.uscfc.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 Federal Claims, may be found on that court’s website
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. The Company can give no assurances regarding the ultimate outcome of
the Supervisory Goodwill Litigation.
Federal income tax refund suit on
Carryback Claims. In March 2000, the Company filed with the IRS
several claims and amendments to previously filed claims with respect to 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. See Note 8 – Income Taxes for
further information. In February 2005, the IRS formally disallowed the
Carryback Claims. On April 29, 2008, the Company filed suit with respect
to the Carryback Claims in the United States District Court for the District of
Connecticut, seeking federal tax refunds for tax year 1989, plus interest.
On September 29, 2009, the U.S. Department of Justice, representing defendant
United States in the suit, filed a Motion to Dismiss. In response, on
October 19, 2009, the Company filed its opposition to the Government’s Motion to
Dismiss, as well as the Company’s own Motion for Partial Summary
Judgment. The Company expects the Court to issue a ruling in response
to these motions that may or may not be dispositive of the case. The
Company can give no assurances as to the final amount of refunds, if any, or
when they might be received.
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.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
Note
5 - Investment Securities
Investment
securities - held to maturity, consist of U.S. Treasury Bills with original
maturities of three months or more and are carried at amortized cost (which
includes accrued interest), based upon the Company’s intent and ability to hold
these investments to maturity.
Investment
securities consist of the following:
|
|
March
31, 2010
|
|
December
31, 2009
|
|
|
(in
thousands)
|
|
|
|
|
Cost
or Amortized Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held
to Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasury Bills
|
$
|
9,399
|
|
$
|
9,399
|
|
$
|
9,398
|
|
$
|
9,996
|
|
$
|
9,996
|
|
$
|
10,000
|
|
|
|
$
|
9,399
|
|
$
|
9,399
|
|
$
|
9,398
|
|
$
|
9,996
|
|
$
|
9,996
|
|
$
|
10,000
|
|
The gross
unrealized gain (loss) on investment securities at March 31, 2010 and December
31, 2009 consist of the following:
(in
thousands)
|
Held
to Maturity:
|
|
|
2010
|
|
|
2009
|
|
|
Gross
unrealized gain (loss)
|
|
$
|
(1
|
)
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
Realized
gain on the sales of investment securities available for sale
follow:
(in
thousands)
|
|
|
|
|
|
Net
sale proceeds
|
|
$
|
209
|
|
|
Cost
basis
|
|
|
(199
|
)
|
|
Realized
gain
|
|
$
|
10
|
|
No
investment securities were sold during the three months ended March 31,
2009.
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. Depreciation expense for
buildings is calculated on a straight-line basis over 39 years. Tenant
improvements, if any, would typically be depreciated over the lesser of the
remaining life of the tenants’ lease or the estimated useful lives of the
improvements.
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, the Company
believes the property’s fair market value exceeds the property’s current
carrying value. The Company’s impairment analysis includes a
comprehensive range of factors including but not limited to: the
location of the property; property condition; current market conditions;
comparable sales; current market rents in the area; new building zoning
restrictions; raw land values; new building construction costs; building
operating costs; leasing values; and cap rates for comparable buildings in the
area. Varying degrees of weight are given each factor. Based on the
Company’s analysis these factors taken together and/or considered individually
form the basis for the Company’s analysis that no impairment condition
exists.
The
Company performs impairment tests if events or circumstances would indicate that
the property’s carrying value would not be recoverable. As noted
above, based on the Company’s analysis the Company believes the carrying value
of the property as of March 31, 2010, has not been impaired and; therefore, the
carrying value of the asset is fully recoverable by the Company.
Note
7 – Other Assets
Other
assets at March 31, 2010, include a minority interest investment in a real
estate limited liability company, carried at cost.
Note
8 - 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 $41 million as of March 31,
2010 and December 31, 2009, arising primarily from net operating loss (“NOL”)
carryforwards and alternative minimum tax (“AMT”) credits. This
amount does not include the anticipated tax effects of NOL’s which could be
generated from the Company’s investment 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 March 31, 2010 or December 31, 2009.
Further, no significant changes in unrecognized income tax benefits are
currently expected to occur over the next year. Interest and/or
penalties related to underpayments 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 Internal Revenue
Service (“IRS”) or state authorities. In October 2009, the Company
received notification from the IRS that they would be reviewing the Company’s
2007 federal income tax return. In connection with the IRS audit, in
April 2010, the IRS issued the Company a Notice of Proposed Adjustment for tax
year 2007, proposing to disallow approximately $16.6 million of deductions
previously recognized by the Company on its 2007 Federal income tax return (the
“IRS Proposed Adjustment”). The IRS Proposed Adjustment seeks to
disallow the Company’s tax deduction for the payment made by the Company in 2007
in satisfaction of its Supplemental Retirement Plan obligation. This
matter is currently ongoing. The Company has not been notified of any
potential tax audits by any 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 2006.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
Based
upon the Company’s federal income tax returns as filed from 1993 to 2008
(subject to IRS audit adjustments), excluding all effects of the inclusion of
Carteret/Carteret FSB from December 4, 1992 forward, as further discussed below,
as of March 31, 2010, the Company has NOL carryforwards aggregating
approximately $38.5 million, available to reduce future federal taxable income,
which expire if unused beginning in 2009. In addition to the NOL carryforwards
noted herein, the Company currently estimates that, an additional $2.4 million
of NOL carryforwards could be generated from the 2009 tax year which would
expire if unused in 2029. Additionally, an
additional 16.7 million of NOL carryforwards could be generated from the 2007
tax year which would expire if unused in 2027; however, as discussed above, in
connection with the IRS’s 2007 Federal income tax return audit, the IRS is
proposing to disallow approximately $16.6 million of the NOL carry forwards
generated from the 2007 tax year; this matter is ongoing. In 2009,
approximately $2.2 million of NOL carry forwards expired to the extent they
remain unused. The unused carry forwards will have expired unless
they are utilized in prior tax year or absorbed in an earlier year based on
inclusion of certain items in the consolidated group. The utilization
of certain carry forwards and carrybacks is subject to limitations under U.S.
federal income tax laws. In addition, the Company has approximately $21 million
of AMT credit carry forwards (“AMT Credits”), which are not subject to
expiration. Based on the
filing of the Carryback Claims, as defined further below, the Company would seek
to utilize 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. §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. §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. §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”).
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 its investment in Carteret/Carteret FSB can be converted into NOL’s, as
tax losses are incurred, 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 reflected on the Company’s 1992 amended federal income tax return, as
further described below, the Company estimated that as of December 1992 it had a
remaining tax basis related to its’ investment 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”). The Company is still in the process of reviewing its consolidated
federal income tax returns for 1993 and subsequent years.
The
Company expects that the 1992 Amended Return will generate approximately $56
million of NOL’s for tax year 1992, which the Company is seeking to carryback to
prior tax years to produce refunds of tax previously paid. The 1992 Amended
Return has not yet been accepted by the IRS. See “Carryback Claims,” below for
further information. As part of the 1992 Amended Return, approximately $56
million, (of the $158 million), of Carteret/Carteret FSB tax basis is expected
to be converted into NOL’s, (as tax losses are incurred) in tax year 1992, and
will have expired in 2007, unless they are utilized as part of the “Carryback Claims,” or
absorbed in earlier years based on inclusion of certain items in the
consolidated group.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
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 incurred by
Carteret/Carteret FSB and may be carried back or carried forward to other tax
years; may be utilized in other tax years; or could begin to expire no earlier
than 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 with the IRS several carryback claims and amendments to
previously filed carryback claims (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 United States District Court for the District of Connecticut
for the tax refunds it seeks, plus interest, with respect to the Carryback
Claims. On September 29, 2009, the U.S. Department of Justice,
representing defendant United States in the suit, filed a Motion to
Dismiss. In response, on October 19, 2009, the Company filed its
opposition to the Government’s Motion to Dismiss, as well as the Company’s own
Motion for Partial Summary Judgment. The Company expects the Court to
issue a ruling in repose to these motions that may or may not be dispositive of
the case. The Company can give no assurances as to the final amount
of refunds, if any, or when they might be received. See Note 3 – Legal
Proceedings.
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, is alleged to be in excess of $120 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. However, 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. The FDIC,
as indicated above, continues to report the 1995 federal income tax liability,
including interest and penalty, as a component of the alleged Carteret FSB
receivership deficit. 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; 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, although
this cannot be assured because a contrary result is possible, given the
uncertainty with various legal and factual assumptions underlying the Company’s
beliefs. This assessment 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 statute of limitation
provisions contained in the Internal Revenue Code, as amended. As explained
above, although the Company does not believe that Carteret FSB or the Company
will have a material federal income tax liability related to Carteret FSB for
tax year 1995 (or any other tax year), the Company 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
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 inter-relationship 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.
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, 2018. 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, 2010, there were 4,164,000
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.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
No stock
based compensation expense was recorded in the three months ended March 31, 2010
and March 31, 2009, as all previously granted outstanding options vested as of
January 2, 2007. No stock option awards have been granted since
January 2005. Compensation expense relating to stock options would be
recorded in the Consolidated Statement of Operations with a corresponding
increase in additional paid capital in the Consolidated Statement of
Stockholders’ Equity.
The fair
value of option awards are estimated on the date of grant using the
Black-Scholes-Merton option valuation model (“Black-Scholes”) that uses certain
assumptions at the time of valuation. Expected volatilities are based on
historical volatility of the Company’s stock. The Company uses historical data
to estimate option exercises and employee terminations within the valuation
model. The expected term of options granted is estimated based on the
contractual lives of option grants, option vesting period and historical data
and represents the period of time that options granted are expected to be
outstanding. The risk-free interest rate for periods within the contractual life
of the option is based on the U.S. Treasury bond yield in effect at the time of
grant. No adjustments were made to the input assumptions for the calculation of
the fair value of stock options granted in 2005 from the pro forma amounts
previously presented in the Company’s prior period financial
statements.
The
Black-Scholes option valuation model requires the input of highly subjective
assumptions, including the expected life of the stock-based award and stock
price volatility. The assumptions utilized were management’s best estimates, but
these estimates involve inherent uncertainties and the application of management
judgment. As a result, if other assumptions had been used, our recorded
stock-based compensation expense could have been materially different from the
amounts previously recorded. In addition, the Company is required to estimate
the expected forfeiture rate and only recognize expense for those shares
expected to vest. If our actual forfeiture rate is materially different from our
estimate, the share-based compensation expense could be materially
different.
The
Company believes that the use of the Black-Scholes model meets the fair value
measurement objectives of accounting principles generally accepted in the United
States of America 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, 2010:
|
|
|
Number
of Shares
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average Remaining
Contractual
Life (in years)
|
|
Outstanding
at January 1, 2010
|
|
|
851,000
|
|
$
|
0.87
|
|
|
|
|
|
Expired
|
|
|
(15,000
|
)
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2010
|
|
|
836,000
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
|
836,000
|
|
$
|
0.87
|
|
$
|
3.18
|
|
At March
31, 2010, 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 periods ended
March 31, 2010 or March 31, 2009. As of March 31, 2010, there was no
unamortized compensation cost related to non-vested share-based compensation
arrangements for stock options granted under the 1993 Plan.
Options
to purchase 836,000 shares of common stock for the three months ended March 31,
2010, and 851,000 shares of common stock for the three months ended March 31,
2009, were excluded from the computation of diluted earnings per share because
these options were antidilutive.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
Note
10 - Pension and 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 up to 30% of compensation, which are matched by the
Company at a percentage determined annually. The employer match is
75% of the amount the employee elects to defer. 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. The Company’s matching contributions to the Savings
Plan, charged to expense, were $35,000 for the three months ended March 31, 2010
and $36,000 for the three months ended March 31, 2009. All
contributions are subject to maximum limitations contained in the
Code.
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 of 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.
|
|
|
Total
Number of Shares Purchased
|
|
Average
Price Paid per Share (including Broker Commissions)
|
|
Total
Number Shares Purchased as Part of Publicly Announced
Plans
|
|
Maximum
Number Shares that may yet be Purchased under the Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance January 1, 2010
|
|
|
-
|
|
|
-
|
|
|
3,208,109
|
|
|
6,791,891
|
|
|
January
1, 2010 - January 31, 2010
|
|
|
-
|
|
|
-
|
|
|
3,208,109
|
|
|
6,791,891
|
|
|
February
1, 2010 - February 28, 2010
|
|
|
-
|
|
|
-
|
|
|
3,208,109
|
|
|
6,791,891
|
|
|
March
1, 2010 - March 31, 2010
|
|
|
-
|
|
|
-
|
|
|
3,208,109
|
|
|
6,791,891
|
|
|
Total
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note
12 - Subsequent Events
The
Company has performed a review of events subsequent to the balance sheet dated
March 31, 2010, through the report issuance date.
AMBASE
CORPORATION AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
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,
2009.
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, 2010, aggregated $13,078,000 consisting
principally of cash and cash equivalents of $1,351,000, investment securities of
$9,399,000, and real estate owned of $2,005,000. At March 31, 2010,
the Company’s liabilities aggregated
$123,000. Total stockholders equity was $12,955,000.
For the
three months ended March 31, 2010, cash of $676,000 was used by operations, due
to the payment of prior year accruals and operating expenses. The
cash needs of the Company for the three months ended March 31, 2010 were
satisfied by the Company’s current financial resources and the receipt of
investment earnings received on investment securities and cash equivalents.
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, 2009, cash of $1,425,000 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 ended March 31, 2009 were satisfied by the receipt of investment earnings
received on investment securities and cash equivalents and the Company’s current
financial resources.
Other
assets as of March 31, 2010, increased as compared to December 31, 2009, due to
a $300,000 minority interest investment in a real estate limited liability
company made by the Company in January 2010. Other liabilities as of
March 31, 2010, decreased from December 31, 2009, principally as a result of the
payment of prior year accruals.
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, 2010, 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, 2010, has not been
impaired.
There are
no material commitments for capital expenditures as of March 31,
2010. Inflation has had no material impact on the business and
operations of the Company.
Results
of Operations for the Three Months Ended March 31, 2010 vs. the Three Months
Ended March 31, 2009
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 2010 was non-operating revenue consisting of investment
earnings.
Compensation
and benefits decreased to $417,000 in the three months ended March 31, 2010,
compared with $434,000 in the respective 2009 period. The decrease is
primarily due to a lower level of benefit costs in the 2010 period versus the
same 2009 period.
No stock
based compensation expense was recorded in the three months ended March 31, 2010
or March 31, 2009, 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 decreased to $50,000 in the three months ended March 31,
2010 compared to $389,000 in the respective 2009 period. The decrease
in the 2010 three months period as compared to the respective 2009 period is principally the result
of a lower level of legal and professional fees relating to the Supervisory
Goodwill litigation in 2010 versus 2009. The Supervisory Goodwill
litigation expenses in the 2009 period included expenses incurred in connection
with post trial arguments and post trial brief preparation which were concluded
in June 2009.
Insurance
expenses decreased to $7,000 in the three months ended March 31, 2010, compared
with $17,000 in the respective 2009 period. The decrease is generally
due to a decline in insurance premium costs due to cost containment
efforts.
Interest
income in the three months ended March 31, 2010, decreased to $5,000 from $9,000
in the respective 2009 period. The decreased interest income is
principally due to a decreased investment yield in 2010, compared with 2009 and
to a lesser extent, a lower level of cash equivalents and investment
securities. 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, 2010.
Other
income of $50,000 for the three months ended March 31, 2009, is attributable to
reimbursement received by the Company in March 2009, for expenses relating to a
proposed real estate transaction which was terminated in 2008.
The
Company recognized an income tax provision of $11,000 for the three months ended
March 31, 2010, as compared with an income tax provision of $2,000 for the three
months ended March 31, 2009. The income tax provisions for the three
months ended March 31, 2010 and March 31, 2009, are 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.
TABULAR
DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
(in
thousands)
|
|
Payments
Due by Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
$
|
9
|
|
$
|
9
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
Total
|
|
$
|
9
|
|
$
|
9
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
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:
|
($
in thousands)
|
|
March
31, 2010
|
|
December
31, 2009
|
|
|
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasury Bills
|
|
$
|
9,399
|
|
$
|
9,398
|
|
$
|
9,996
|
|
$
|
10,000
|
|
|
Weighted
average interest rate
|
|
|
0.10
|
%
|
|
|
|
|
-
|
|
|
|
|
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 year.
Due to
current market factors, the Company has maintained its available cash resources
in U.S. Treasury Bills, which are currently providing a low investment
yield.
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 Exchange Act of 1934 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, 2010. 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) and 15d-15(e) promulgated under the Exchange Act) are 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 Rules 13a-15(f) and 15d-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
As the
Company does not maintain a website, 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
The
Company is subject to the informational requirements of the Exchange Act.
Accordingly, 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 (“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.
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, 2009 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
13, 2010