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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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Yes
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☐ | ☒ |
Yes
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☐ | ☒ |
(Check one):
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Large Accelerated Filer
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☐ |
Accelerated Filer
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☐ |
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☒
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Smaller Reporting Company
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||||
Emerging Growth Company
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||||||||||
YES
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☐ |
NO
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☐ |
YES
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NO
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☒ |
PART I
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Page
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Item 1.
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1
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Item 1A.
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2
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Item 1B.
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8
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Item 2.
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8
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Item 3.
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8
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Item 4.
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8
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PART II
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Item 5.
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8
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Item 6.
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9
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Item 7.
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9
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Item 8.
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14
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Item 9.
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35
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Item 9A.
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35
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Item 9B.
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35
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Item 9C.
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36
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PART III
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Item 10.
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36
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Item 11.
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36
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Item 12.
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36
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Item 13.
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36
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Item 14.
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36
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PART IV
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Item 15.
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37
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Item 16.
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38
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ITEM 1. |
BUSINESS
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American Stock Transfer & Trust Company, LLC
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|
6201 15th Avenue
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Brooklyn, NY 11219
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Attention: Shareholder Services
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(800) 937-5449 or (718) 921-8200 Ext. 6820
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AmBase Corporation
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12 Lincoln Blvd., Suite 202
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Emerson, NJ 07630
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Attn: Shareholder Services
|
ITEM 1A. |
RISK FACTORS
|
- |
funds may be expended and management’s time devoted to projects that may not be completed,
|
- |
required approvals may not be obtained from governmental entities or other third parties,
|
- |
construction costs of a project may exceed original estimates, negatively impacting the economic feasibility of the project,
|
- |
projects may be delayed due to, without limitation, adverse weather conditions, labor or material shortages,
|
- |
occupancy rates and rents at a completed project may be less than anticipated, and
|
- |
expenses at completed development projects may be higher than anticipated.
|
- |
deterioration in regional and local economic and real estate market conditions,
|
- |
failure to complete construction and lease-up on schedule or within budget may increase debt service expense and construction and other costs,
|
- |
increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents,
|
- |
changes in interest rate levels and the availability of financing,
|
- |
fluctuations in tourism patterns,
|
- |
adverse changes in laws and regulations (including tax, environmental, zoning and building codes, landlord/tenant and other housing laws and regulations) and agency or court interpretations of such
laws and regulations and the related costs of compliance,
|
- |
potential changes in supply of, or demand for rental properties similar to the Company’s,
|
- |
competition for tenants and changes in rental rates,
|
- |
concentration in a single real estate asset and class,
|
- |
needs for additional capital which may be required for needed development or repositioning of one or more real estate assets may exceed the Company’s abilities or its desired minimum level of liquidity,
|
- |
difficulty in reletting properties on favorable terms or at all,
|
- |
impairments in the Company’s ability to collect rent payments when due,
|
- |
the potential for uninsured casualty and other losses,
|
- |
the impact of present or future environmental legislation and compliance with environmental laws,
|
- |
changes in federal or state tax laws, and
|
- |
acts of terrorism and war.
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ITEM 1B. |
UNRESOLVED STAFF COMMENTS
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ITEM 2. |
PROPERTIES
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ITEM 3. |
LEGAL PROCEEDINGS
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ITEM 4. |
MINE SAFETY DISCLOSURES
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ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6. |
[RESERVED]
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ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Years Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Operating expenses:
|
||||||||
Compensation and benefits
|
$
|
|
$
|
|
||||
Professional and outside services
|
|
|
||||||
Property operating and maintenance
|
|
|
||||||
Insurance
|
|
|
||||||
Other operating
|
|
|
||||||
Total operating expenses
|
|
|
||||||
Operating income (loss)
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(
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)
|
(
|
)
|
||||
Interest income
|
|
|
||||||
Income (loss) before income taxes
|
(
|
)
|
(
|
)
|
||||
Income tax expense (benefit)
|
|
(
|
)
|
|||||
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Net income (loss) per common share - basic
|
$
|
(
|
)
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$
|
(
|
)
|
||
Weighted average common shares outstanding - basic
|
|
|
Assets:
|
December 31,
2021
|
December 31,
2020
|
||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Other assets
|
|
|
||||||
Total assets
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$
|
|
$
|
|
||||
Liabilities and Stockholders’ Equity:
|
||||||||
Liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 6)
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock ($
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Treasury stock, at cost – 2021 -
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
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|
(in thousands)
|
Common
stock
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Treasury
stock
|
Total
|
|||||||||||||||
January 1, 2020
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||
Net income (loss)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
December 31, 2020
|
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||
Net income (loss)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
December 31, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Years Ended December 31,
|
||||||||
(in thousands)
|
2021
|
2020
|
||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities
|
||||||||
Changes in operating assets and liabilities:
|
||||||||
Federal income tax receivable – refunds received
|
|
|
||||||
Other assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable and accrued liabilities
|
|
(
|
)
|
|||||
Net cash provided (used) by operating activities
|
(
|
)
|
|
|||||
Net change in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents at beginning of year
|
|
|
||||||
Cash and cash equivalents at end of year
|
$
|
|
$
|
|
||||
Supplemental cash flow disclosure:
|
||||||||
Income taxes refunded (paid)
|
$
|
|
$
|
|
||||
Supplemental cash flow disclosure of non-cash operating activities:
|
||||||||
Deferred tax asset reclassified to federal income tax receivable
|
$
|
|
$
|
|
($ in thousands)
|
||||
Company’s aggregate initial investment
|
$
|
|
||
Company’s aggregate initial membership interest %
|
|
%
|
||
Other members and Sponsor initial investment
|
$
|
|
($ in thousands)
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
||||||
Company matching contributions
|
$
|
|
$
|
|
||||
Employer match %
|
|
%
|
|
%
|
(shares in thousands)
|
December 31,
2021
|
December 31,
2020
|
||||||
Par value
|
$
|
|
$
|
|
||||
Authorized shares
|
|
|
||||||
Issued shares
|
|
|
||||||
Outstanding shares
|
|
|
(shares in thousands)
|
December 31,
2021
|
December 31,
2020
|
||||||
Par value
|
$
|
|
$
|
|
||||
Authorized shares
|
|
|
||||||
Issued shares
|
|
|
||||||
Outstanding shares
|
|
|
(in thousands)
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
||||||
Common stock outstanding at beginning of period
|
|
|
||||||
Common stock repurchased for treasury
|
|
|
||||||
Issuance of treasury stock
|
|
|
||||||
Common stock outstanding at end of period
|
|
|
(in thousands)
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
||||||
Treasury stock held at beginning of period
|
|
|
||||||
Common stock repurchased for treasury
|
|
|
||||||
Issuance of treasury stock
|
|
|
||||||
Treasury stock held at end of period
|
|
|
(in thousands)
|
Year Ended December 31, 2021
|
|||
Common shares repurchased to treasury during the period
|
|
|||
Aggregate cost of shares repurchased during the period
|
$
|
|
(in thousands)
|
December 31,
2021
|
|||
Total number of common shares authorized for repurchase
|
|
|||
Total number of common shares repurchased to date
|
|
|||
Total number of shares that may yet be repurchased
|
|
($ in thousands)
|
Year Ended
December 31, 2021
|
Year Ended
December 31, 2020
|
||||||
Rent expense
|
$
|
|
$
|
|
||||
Approximate square feet of leased office space
|
|
|
(in thousands)
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
||||||
Federal - current
|
$
|
|
$
|
(
|
)
|
|||
State - current
|
|
|
||||||
Total current
|
|
(
|
)
|
|||||
Federal - deferred
|
(
|
)
|
(
|
)
|
||||
State - deferred
|
(
|
)
|
(
|
)
|
||||
Change in valuation allowance
|
|
|
||||||
Total deferred
|
|
|
||||||
Income tax expense (benefit)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
||||||
Income (loss) before income taxes
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Tax expense (benefit) :
|
||||||||
Tax at statutory federal rate
|
$
|
(
|
)
|
$
|
(
|
)
|
||
State income taxes
|
(
|
)
|
(
|
)
|
||||
Permanent items, tax credits and other adjustments
|
|
(
|
)
|
|||||
Deferred true-ups
|
|
|
||||||
Change in valuation allowance
|
|
|
||||||
Income tax expense (benefit)
|
$
|
|
$
|
(
|
)
|
Year Ended
December 31,
2021
|
Year Ended
December 31,
2020
|
|||||||
Tax at statutory federal rate
|
|
% |
|
% | ||||
State income taxes
|
|
|
||||||
Permanent difference, tax credits and other adjustments
|
|
|
||||||
Change in valuation allowance
|
(
|
)%
|
(
|
)%
|
||||
Effective income tax rate
|
|
|
(in thousands) |
December 31,
2021
|
December 31,
2020
|
||||||
Deferred tax asset
|
$
|
|
$
|
|
||||
Valuation allowance
|
(
|
)
|
(
|
)
|
||||
Net deferred tax asset recognized
|
$
|
|
$
|
|
|
(i) |
first,
|
|
(ii) |
thereafter, any additional amounts shall be distributed (a)
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
ITEM 9B. |
OTHER INFORMATION
|
ITEM 9C. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11. |
EXECUTIVE COMPENSATION
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
1. Index to Financial Statements:
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
14
|
|
Consolidated Statements of Operations
|
15
|
|
Consolidated Balance Sheets
|
16
|
|
Consolidated Statements of Changes in Stockholders’ Equity
|
17
|
|
Consolidated Statements of Cash Flows
|
18
|
|
Notes to Consolidated Financial Statements
|
19
|
Restated Certificate of Incorporation of AmBase Corporation (as amended and restated – July 15, 2017), (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017).
|
||
By-Laws of AmBase Corporation (as amended through March 15, 1996), (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017).
|
||
Amended & Restated Rights Agreement dated as of March 27, 2019 between the Company and American Stock Transfer and Trust Co. (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018).
|
||
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019).
|
||
Employment Agreement dated as of March 30, 2006 between Richard A. Bianco and the Company, (incorporated by reference to Exhibit 10H to the Company’s Annual Report on Form 10-K for the year ended December
31, 2005).
|
||
Amendment to Employment Agreement dated as of January 1, 2008 between Richard A. Bianco and the Company, (incorporated by reference to Exhibit 10E to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007).
|
||
Amendment to Employment Agreement between Richard A. Bianco and the Company extending term of employment to May 31, 2023, (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2017).
|
||
111 West 57th Partners LLC Limited Liability Company Agreement. Dated as of June 28, 2013, (incorporated by reference to
Exhibit 10.1 to Amendment no. 1 to the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended June 30, 2013).
|
||
Second Amended and Restated Limited Liability Company Agreement of 111 West 57th Investment, LLC dated December 19, 2014
(incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).
|
||
Agreement between Mr. Richard A. Bianco, the Company’s Chairman President and Chief Executive Officer (“Mr. R. A. Bianco”) and the Company for Mr. R. A. Bianco to provide to the Company a financial
commitment in the form of a line of credit up to ten million dollars ($10,000,000) or additional amount(s) as may be necessary and agreed to enable AmBase to contribute capital to the 111 West 57th Property (incorporated by reference to
Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the annual period ending December 31, 2016).
|
||
Amendment dated May 20, 2019 to the September 2017 Litigation Funding Agreement, between Mr. R. A. Bianco and the Company, (incorporated by reference to Exhibit 10.1 to the Company’s Current report on
Form 8-K filed May 21, 2019).
|
||
August 31, 2012, Supervisory Goodwill Settlement Agreement (originally filed as Exhibit 99 to the Company’s Current Report on Form 8-K filed on October 22, 2012 and incorporated by reference herein).
|
||
AmBase Corporation - Code of Ethics as adopted by Board of Directors (incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003).
|
||
Subsidiaries of the Registrant.
|
||
Rule 13a-14(a) Certification of Chief Executive Officer Pursuant to Rule 13a-14.
|
Rule 13a-14(a) Certification of Chief Financial Officer Pursuant to Rule 13a-14.
|
||
Section 1350 Certification of Chief Executive Officer pursuant to Rule 18 U.S.C. Section 1350.
|
||
Section 1350 Certification of Chief Financial Officer pursuant to Rule 18 U.S.C. Section 1350.
|
||
101.1*
|
The following financial statements from AmBase Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 formatted in XBRL: (i) Consolidated Statement of Operations; (ii) Consolidated
Balance Sheets; (iii) Consolidated Statements of Cash Flow: and (iv) Notes to Consolidated Financial Statements.
|
ITEM 16. |
FORM 10-K SUMMARY
|
/s/RICHARD A. BIANCO
|
Chairman, President and Chief Executive
|
Officer (Principal Executive Officer)
|
Date: March 25, 2022
|
/s/RICHARD A. BIANCO
|
/s/JOHN FERRARA
|
Chairman, President,
|
Vice President, Chief Financial Officer and Controller
|
Chief Executive Officer and Director
|
(Principal Financial and Accounting Officer)
|
Date: March 25, 2022
|
Date: March 25, 2022
|
/s/ALESSANDRA F. BIANCO
|
/s/RICHARD A. BIANCO, JR.
|
Director
|
Director
|
Date: March 25, 2022
|
Date: March 25, 2022
|
/s/JERRY Y. CARNEGIE
|
/s/KENNETH M. SCHMIDT
|
Director
|
Director
|
Date: March 25, 2022
|
Date: March 25, 2022
|
DIRECTORS AND OFFICERS
|
||||
Board of Directors
|
||||
Richard A. Bianco
|
Alessandra F. Bianco
|
Richard A. Bianco, Jr.
|
Jerry Y. Carnegie
|
Kenneth M. Schmidt
|
Chairman, President and
Chief Executive Officer
AmBase Corporation
|
Senior Officer
BARC Investments, LLC
|
Employee AmBase Corporation & Officer
BARC Investments, LLC
|
Private Investor
|
Private Investor
|
AmBase Officers
|
||||
Richard A. Bianco
|
John Ferrara
|
Joseph R. Bianco
|
||
Chairman, President and Chief Executive Officer
|
Vice President,
Chief Financial Officer and Controller
|
Treasurer
|
Annual Meeting of Stockholders
The 2022 Annual Meeting is currently scheduled to be held at 9:00 a.m. Eastern Time, on Thursday, June 2, 2022, at:
Hyatt Regency Hotel
1800 East Putnam Avenue
Greenwich, CT 06870
|
Corporate Headquarters
AmBase Corporation
7857 West Sample Road, Suite 134
Coral Springs, FL 33065
(201) 265-0169
|
|
Common Stock Trading
AmBase stock is traded through one or more market-makers with quotations made available on the over-the-counter market.
Issue: Common Stock
Abbreviation: AmBase
Ticker Symbol: ABCP.OB
Transfer Agent and Registrar
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
|
Stockholder Inquiries
Stockholder inquiries, including requests for the following: (i) change of address; (ii) replacement of lost stock certificates; (iii) Common Stock name registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports
on Form 10-K; (vi) proxy material; and (vii) information regarding stockholdings, should be directed to:
American Stock Transfer & Trust Co. LLC
6201 15th Ave.
Brooklyn, NY 11219
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
In addition, the Company’s public reports, including Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Proxy Statements, can be obtained through the Securities and Exchange Commission EDGAR Database over the World
Wide Web at www.sec.gov.
|
|
Independent Registered Public Accountants
Marcum LLP
185 Asylum Street
City Place I, 25th Floor
Hartford, CT 06103
|
Number of Stockholders
As of February 28, 2022, there were,
approximately 6,200 stockholders.
|
Name
|
Jurisdiction
in Which
Organized
|
Percentage Voting
Securities Owned
By Immediate
Parent
|
|
AmBase Corporation
|
Delaware
|
N/A
|
|
111 West 57th Investment LLC
|
Delaware
|
100%
|
|
Note: Interrelationships shown by indentation with 100% ownership unless otherwise indicated.
|
1. |
I have reviewed this annual report on Form 10-K of AmBase Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors
(or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
/s/ Richard A. Bianco
|
|
Richard A. Bianco
|
|
Chairman, President and Chief Executive Officer
|
|
March 25, 2022
|
1. |
I have reviewed this annual report on Form 10-K of AmBase Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
/s/ John Ferrara
|
|
John Ferrara
|
|
Vice President, Chief Financial Officer, and Controller
|
|
March 25, 2022
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Richard A. Bianco
|
|
Richard A. Bianco
|
|
Chairman, President and Chief Executive Officer
|
|
AmBase Corporation
|
|
March 25, 2022
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
|
/s/ John Ferrara
|
|
John Ferrara
|
|
Vice President and Chief Financial Officer
|
|
March 25, 2022 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Operating expenses: | ||
Compensation and benefits | $ 1,506 | $ 1,982 |
Professional and outside services | 3,358 | 3,341 |
Property operating and maintenance | 15 | 18 |
Insurance | 261 | 211 |
Other operating | 68 | 88 |
Total operating expenses | 5,208 | 5,640 |
Operating income (loss) | (5,208) | (5,640) |
Interest income | 1 | 8 |
Income (loss) before income taxes | (5,207) | (5,632) |
Income tax expense (benefit) | 1 | (28) |
Net income (loss) | $ (5,208) | $ (5,604) |
Net income (loss) per common share - basic (in dollars per share) | $ (0.13) | $ (0.14) |
Weighted average common shares outstanding - basic (in shares) | 40,738 | 40,738 |
Consolidated Balance Sheets - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Assets: | ||
Cash and cash equivalents | $ 3,003 | $ 7,925 |
Other assets | 80 | 65 |
Total assets | 3,083 | 7,990 |
Liabilities: | ||
Accounts payable and accrued liabilities | 684 | 383 |
Total liabilities | 684 | 383 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Common stock ($0.01 par value, 85,000 authorized in 2021 and 85,000 authorized in 2020, 46,410 issued and 40,738 outstanding in 2021 and 46,410 issued and 40,738 outstanding in 2020) | 464 | 464 |
Additional paid-in capital | 548,304 | 548,304 |
Accumulated deficit | (541,201) | (535,993) |
Treasury stock, at cost - 2021 - 5,672 shares; and 2020 - 5,672 shares | (5,168) | (5,168) |
Total stockholders' equity | 2,399 | 7,607 |
Total liabilities and stockholders' equity | $ 3,083 | $ 7,990 |
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Mar. 27, 2019 |
---|---|---|---|---|
Stockholders' equity: | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 85,000 | 85,000 | ||
Common stock, shares issued (in shares) | 46,410 | 46,410 | ||
Common stock, shares outstanding (in shares) | 40,738 | 40,738 | 40,738 | |
Treasury stock, at cost (in shares) | 5,672 | 5,672 | 5,672 |
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Deficit [Member] |
Treasury Stock [Member] |
Total |
---|---|---|---|---|---|
Balance at Dec. 31, 2019 | $ 464 | $ 548,304 | $ (530,389) | $ (5,168) | $ 13,211 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 0 | 0 | (5,604) | 0 | (5,604) |
Balance at Dec. 31, 2020 | 464 | 548,304 | (535,993) | (5,168) | 7,607 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 0 | 0 | (5,208) | 0 | (5,208) |
Balance at Dec. 31, 2021 | $ 464 | $ 548,304 | $ (541,201) | $ (5,168) | $ 2,399 |
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Cash flows from operating activities: | ||
Net income (loss) | $ (5,208) | $ (5,604) |
Changes in operating assets and liabilities: | ||
Federal income tax receivable - refunds received | 0 | 10,741 |
Other assets | (15) | (32) |
Accounts payable and accrued liabilities | 301 | (31) |
Net cash provided (used) by operating activities | (4,922) | 5,074 |
Net change in cash and cash equivalents | (4,922) | 5,074 |
Cash and cash equivalents at beginning of year | 7,925 | 2,851 |
Cash and cash equivalents at end of year | 3,003 | 7,925 |
Supplemental cash flow disclosure: | ||
Income taxes refunded (paid) | 0 | 10,741 |
Supplemental cash flow disclosure of non-cash operating activities: | ||
Deferred tax asset reclassified to federal income tax receivable | $ 0 | $ 5,370 |
Organization and Going Concern |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Organization and Going Concern [Abstract] | |
Organization and Going Concern |
Note 1 – Organization and Going Concern
AmBase Corporation (the “Company” or “AmBase”) is a Delaware corporation that was incorporated in 1975. AmBase is a
holding company. At December 31, 2021, the Company’s assets consisted primarily of cash and cash equivalents. The Company is engaged in the management of its assets and liabilities.
In June 2013, the Company purchased an equity interest in a real estate development property through a joint venture
agreement to purchase and develop real property located at 105 through 111 West 57th Street in New York, New York (the “111 West 57th Property”). The Company is engaged in material disputes and litigation with regard to the
111 West 57th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the “Strict Foreclosure”, (as defined and as further discussed herein), the Company recorded an impairment for the
full amount of its equity investment in the 111 West 57th Property in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57th Property represented a substantial portion of the
Company’s assets and net equity value.
For additional information regarding the Company’s recording of an impairment of its equity investment in the 111 West 57th Property
in 2017 and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see Note 3 and Note
8.
While the Company’s management is evaluating future courses of action to protect and/or recover the value of the Company’s
equity investment in the 111 West 57th Property, the adverse developments make it uncertain as to whether any such courses of action will be successful. Any such efforts are likely to require sustained effort over a period of time and
substantial additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on the Company’s financial condition and future prospects. The Company can give no assurances with
regard if it will prevail with respect to any of its claims.
A fundamental principle of the preparation of financial statements in accordance with GAAP is the assumption that an
entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. In accordance with this requirement, the
Company has prepared its accompanying consolidated financial statements assuming the Company will continue as a going concern.
The Company has incurred operating losses for the past several years. The Company has continued to keep operating expenses
at a reduced level; however, there can be no assurance that the Company’s current level of operating expenses will not increase or that other uses of cash will not be necessary. The Company believes that based on its current level of operating
expenses its existing cash and cash equivalents may not be sufficient to cover operating cash needs through the twelve month period from the financial statement reporting date. Based on the above factors, management determined there is
substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. The financial statements do not include adjustments to the carrying value of assets and liabilities which might be necessary should the Company not continue in operation.
In order to continue as a going concern, the Company must take steps to manage its current level of cash and cash
equivalents, through various ways, including but not limited to, raising additional capital through the sale of assets or long term borrowings, which may include additional borrowings from affiliates of the Company, reducing operating expenses,
and seeking recoveries from various sources. There can be no assurance that the Company will be able to adequately implement these cash management measures, in whole or in part or sell any of its assets or raise capital on terms acceptable to the
Company, if at all.
|
Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies |
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”).
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, that it deems reasonable, that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from such estimates and assumptions.
Principles of consolidation
The consolidated financial statements are comprised of the accounts of the Company and its wholly owned subsidiaries. All material intercompany
transactions and balances have been eliminated.
Equity method investment
Investments and ownership interests are accounted for under the equity method of accounting if the Company has the ability to exercise significant
influence, but not control (under GAAP), over the investment. Investments accounted for under the equity method are carried at cost, plus or minus the Company’s equity in the increases and decreases in the net assets after the date of acquisition
and certain other adjustments. The Company's share of income or loss for equity method investments is recorded in the consolidated statements of operations as equity income (loss). Dividends received, if any, would reduce the carrying amount of
the Company’s investment.
Cash and cash equivalents
Highly liquid investments, consisting principally of funds held in short-term money market accounts, with original maturities of less than three
months, are classified as cash equivalents. The majority of the Company’s cash and cash equivalents balances are maintained with a limited number of major financial institutions. Cash and cash equivalents balances at institutions may, at times, be
above the Federal Deposit Insurance Corporation insured limit per account.
Income taxes
The Company and its domestic subsidiaries file a consolidated federal income tax return. The Company recognizes both the current and deferred tax
consequences of all transactions that have been recognized in the consolidated financial statements, calculated based on the provisions of enacted tax laws, including the tax rates in effect for current and future years. Net deferred tax assets are
recognized immediately when a more likely than not criterion is met; that is, a greater than 50% probability exists that the tax benefits will actually be realized sometime in the future. For additional information including a discussion of income
tax matters see Note 7.
Earnings per share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) by the weighted average number of common shares
outstanding for the period. The Company has no stock options or securities outstanding which could be potentially dilutive.
New Accounting Pronouncements
There are no new accounting pronouncements that would likely materially affect the Company’s consolidated financial statements.
|
Investment in 111 West 57th Partners LLC |
12 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||
Investment in 111 West 57th Partners LLC [Abstract] | |||||||||||||||||||||
Investment in 111 West 57th Partners LLC |
Note 3 – Investment in 111 West 57th Partners LLC
In June 2013, the Company purchased an equity interest in the 111 West 57th
Property. The Company is engaged in material disputes and litigation with regard to the 111 West 57th Property. Despite ongoing litigation challenging the legitimacy
of the actions taken in connection with the “Strict Foreclosure”, (as defined below and as further discussed herein), in accordance with GAAP, the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th
Property in 2017.
For additional information regarding the Company’s 111 West 57th
Property equity investment, events leading up to the Strict Foreclosure, the Company’s recording of an impairment of its equity investment in the 111 West 57th
Property and the Company’s legal proceedings relating to the 111 West 57th Property, including the Company’s challenge to the Strict Foreclosure, see herein below and Note 8.
In June 2013, 111 West 57th Investment LLC (“Investment LLC”), a then
newly formed subsidiary of the Company, entered into a joint venture agreement (as amended, the “JV Agreement”) with 111 West 57th Sponsor LLC (the “Sponsor”), pursuant to which Investment LLC invested (the “Investment”) in a real estate
development property to purchase and develop the 111 West 57th Property. In consideration for making the Investment, Investment LLC was granted a membership interest
in 111 West 57th Partners LLC (“111 West 57th Partners”), which indirectly acquired
the 111 West 57th Property on June 28, 2013 (the “Joint Venture,” and such date, the “Closing Date”). The Company also indirectly contributed an additional amount to
the Joint Venture in exchange for an additional indirect interest in the Joint Venture. Other members and the Sponsor contributed additional cash and/or property to the Joint Venture. The Company recorded its investment in 111 West 57th Partners utilizing the equity method of accounting. The Joint Venture plans were to redevelop the 111 West 57th Property into a luxury residential tower and retail project.
Amounts relating to the Company’s initial June 2013 investment and other information relating to the 111 West 57th Property follow:
The JV Agreement and related operating agreements generally provide that all distributable cash shall be distributed as follows: (i) first, 100% to the members in proportion to their percentage interests until Investment LLC has received distributions yielding a 20% internal rate of return as calculated; (ii) second, 100% to the Sponsor as a return of (but not a return on) any additional capital contributions made by the Sponsor on account of manager overruns; and (iii) thereafter, (a) 50% to the members in proportion to their respective percentage interests at the time of such distribution, and (b) 50% to the Sponsor.
In March 2014, the Company entered into an amended and restated operating agreement for Investment LLC (the “Amended and Restated Investment Operating
Agreement”) to grant a 10% subordinated participation interest in Investment LLC to Mr. R. A. Bianco as a contingent future incentive for Mr. R. A. Bianco’s past, current and anticipated ongoing role to develop and commercialize the Company’s
equity investment in the 111 West 57th Property. Pursuant to the terms of the Amended and Restated Investment Operating Agreement, Mr. R.A. Bianco has no voting
rights with respect to his interest in Investment LLC, and his entitlement to receive 10% of the distributions from Investment LLC is
subject to the Company first receiving distributions equal to 150% of the Company’s initial aggregate investment in Investment LLC and
the Joint Venture, plus any additional investments by the Company, and only with respect to any distributions thereafter. At the current time, the Company has not expensed nor accrued any amounts relating to this subordinated participation
interest, as no amount or range of amounts can be reasonably estimated or assured.
During 2014, in connection with the funding of additional capital calls under the JV Agreement for required borrowing and development costs for the 111
West 57th Property, the Company’s management and its Board of Directors concluded that, given the continuing development risks of the 111 West 57th Property and the Company’s financial position, the Company should not at that time increase its already significant concentration and risk exposure to the 111 West
57th Property. Nonetheless, the Company sought to limit dilution of its interest in the Joint Venture resulting from any failure to fund the capital call requirements, but at the same time wished to avoid the time, expense and financial return
requirements (with attendant dilution and possible loss of voting rights) that obtaining a replacement third-party investor would require. The Company, therefore, entered into a second amended and restated operating agreement for Investment LLC
(“Second Amended and Restated Investment Operating Agreement”) pursuant to which Capital LLC was admitted as a member of Investment LLC. In exchange for Capital LLC contributing toward Investment LLC capital calls in respect of the 111 West 57th Property, available cash of Investment LLC will be distributed first to Capital LLC until it has received a 20% internal rate of return (calculated as provided for in the JV Agreement as noted above), second to the Company until it has received 150% of its capital, and, thereafter, available cash is split 10/90, with 10% going to Mr. R. A. Bianco as the subordinated participation interest noted above and 90% going to Capital LLC and the Company pari-passu, with Capital LLC receiving one-half of its pro-rata share based on capital contributed and the Company receiving the balance. No other material changes were made to the Amended and Restated Investment Operating Agreement, and neither Mr. R. A. Bianco nor Capital LLC has any voting rights with respect to their interest and
investment in Investment LLC.
In accordance with the JV Agreement, shortfall capital contributions may be treated either as a member loan or as a dilutive capital contribution as
set forth in the JV Agreement. The Sponsor deemed the shortfall capital contributions as dilutive capital contributions to the Company. The Company disagrees with the Sponsor’s investment percentage calculations. The Sponsor has taken the position
that the capital contribution requests, if taken together, would have caused the Company’s combined ownership percentage to be diluted below the Company’s initial membership interest percentage. The parties have a dispute with regard to the
calculation of the revised investment percentages resulting from the capital contribution requests, along with the treatment and allocation of these shortfall capital contribution amounts.
On June 30, 2015, 111 West 57th Partners obtained financing for the
111 West 57th Property. The financing was obtained in two parts: (i) a first mortgage construction loan with AIG Asset Management (US), LLC (along with its
affiliates “AIG”); and (ii) a mezzanine loan with Apollo Commercial Real Estate Finance, Inc. (along with its affiliates “Apollo”), as detailed herein. Both loans initially had certain repayment term dates with extension option(s) subject to
satisfying certain conditions. The loan agreements (the “Loan Agreements”) also include customary events of default and other customary terms and conditions. Simultaneously with the closing of the AIG and the Apollo financing, 111 West 57th Partners repaid all outstanding liabilities and obligations to Annaly CRE, LLC under the initial mortgage and acquisition loan agreement, dated June 28, 2013, between
the joint venture entities and Annaly CRE, LLC. The remaining loan proceeds were to be drawn down and used as necessary for construction and related costs, loan interest escrow and other related project expenses for development of the 111 West 57th Property.
In April 2016, the Company initiated a litigation in the New York State Supreme Court for New York County (the “NY Court”), Index No. 652301/2016, (“AmBase v. 111 West 57th Sponsor LLC, et al.”) (the “111 West 57th Action”). The defendants in that litigation include 111 West 57th Sponsor LLC, Kevin Maloney, Michael Stern and various members and affiliates, Liberty Mutual Insurance Company, and Liberty Mutual
Fire Insurance Company (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC. For additional information with regard to the Company’s legal proceedings relating to the 111 West 57th Property, see Note 8.
In December 2016, the Sponsor proposed for approval a “proposed budget” (the “Proposed Budget”), which the Sponsor claims reflected an increase in
other costs resulting in the need for additional funding in order to complete the project. The Company disputes, among other items, the calculation of the percentage increase of hard costs shown in the Proposed Budget. The Company believes the
aggregate projected hard costs in the Proposed Budget exceed a contractually stipulated limit as a percentage of the hard costs set forth in the prior approved budget, thus allowing Investment LLC the option to exercise its equity put right as set
forth in the JV Agreement (the “Equity Put Right”). Consequently, subsequent to the Sponsor’s presentation of the Proposed Budget, Investment LLC notified the Sponsor that it was exercising its Equity Put Right pursuant to the JV Agreement. The
Sponsor refused to honor the exercise of Investment LLC’s Equity Put Right. The Sponsor claims, among other things, that the conditions precedent were not met because it claims that the increase in aggregate hard costs in the Proposed Budget does
not exceed the contractually stipulated limit that would allow the exercise of the Equity Put Right.
The Company further contends that a portion of the Proposed Budget increases are manager overruns (as defined in the JV Agreement) and thus should be
paid for by the Sponsor. The Sponsor denies that the Proposed Budget increases were manager overruns. The Company continues to challenge the nature and substance of the Proposed Budget increases and how they should be treated pursuant to the JV
Agreement.
The Sponsor claimed that additional borrowings were needed to complete the project. Shortly thereafter, the Sponsor informed the Company that Apollo
had indicated that due to budget increases, it believed the current loan was “out of balance” (meaning, according to Apollo, the projected budget exceeds the original budget approved in connection with the loan); and thus 111 West 57th Partners
LLC, or its subsidiaries would need additional funding in order to bring the loan back into balance. The Company considered approving the additional financing but informed the Sponsor that it had concerns about the Proposed Budget and the
implications of the Proposed Budget, as well as other questions which needed to be addressed first.
Around this time, Apollo provided loan forbearances to the borrowers and guarantors in order to allow the Sponsor time (while the building continued to
be built) to raise the additional financing that Sponsor claimed would be needed in order to complete the 111 West 57th project. This forbearance period ended on June 29, 2017. Around this date, the Company was advised that Apollo sold a portion of
the mezzanine loan—broken off as a junior mezzanine loan—to an affiliate of Spruce Capital Partners LLC (“Spruce”) (the “Junior Mezzanine Loan”).
On June 30, 2017, Spruce declared an event of default under the Junior Mezzanine Loan and demanded immediate payment of the full outstanding balance of
the Junior Mezzanine Loan. Spruce then gave notice to the junior mezzanine borrower that it proposed to accept the pledged collateral (including the joint venture members’ collective interest in the property) in full satisfaction of the joint
venture’s indebtedness under the Junior Mezzanine Loan (i.e., a “Strict Foreclosure”).
On July 25, 2017, the Company filed a complaint against Spruce and the Sponsor and requested injunctive relief halting the Strict Foreclosure from the
New York State Supreme Court for New York County, (the “NY Court”) Index No. 655031/2017, (the “111 West 57th Spruce Action”). The defendants in the 111 West 57th Spruce action were 111 W57 Mezz Investor, LLC, Spruce Capital Partners LLC, 111 West 57th Sponsor LLC, Michael Z. Stern, and Kevin P. Maloney (collectively,
“Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC. The Company has since voluntarily discontinued its claims against
Sponsor, Stern, and Maloney, without prejudice to reinstating them in the 111 West 57th Spruce Action or any other action. For additional information with regard to
the Spruce Action, see Note 8.
On August 30, 2017, Spruce issued a Notice of Retention of Pledged Collateral in Full Satisfaction of Indebtedness. By purporting to accept the pledged
collateral, pursuant to a Strict Foreclosure process, Spruce claims to have completed the retention of the collateral pledged by the junior mezzanine borrower, and therefore, the Company’s interest in the 111 West 57th Street Property (the “Strict
Foreclosure”). Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the Strict Foreclosure, in accordance with GAAP, the Company recorded an impairment for the full amount of its equity investment in the 111
West 57th Property in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57th Property represented a substantial portion of the Company’s assets and net equity value.
In June 2018, the Company initiated another litigation in the NY Court, Index No. 655031/2017, (the “Apollo Action”). The defendants in the Apollo
Action are ACREFI Mortgage Lending, LLC, Apollo Credit Opportunity Fund III AIV I LP, AGRE Debt 1 – 111 W 57, LLC, and Apollo Commercial Real Estate Finance, Inc. (collectively, the “Apollo Defendants”). In the Apollo Action, the Company alleges
that the Apollo Defendants aided and abetted the Sponsor, Stern, and Maloney in breaching their fiduciary duties to the Company in connection with the 111 West 57th
Property and tortuously interfered with the JV Agreement. For additional information with regard to the Apollo Action, see Note 8.
For information concerning additional legal proceedings relating to the 111 West Property, see Note 8.
With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing, and will continue to
pursue, other options to realize the Company’s investment value, various legal courses of action to protect its legal rights, recovery of its asset value from various sources of recovery, as well as considering other possible economic strategies,
including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57th Property; however, there can be no assurance that the Company
will prevail with respect to any of its claims.
The Company can give no assurances regarding the outcome of the matters described herein, including as to the effect of Spruce’s actions described
herein, whether the Sponsor will perform their contractual commitments to the Company under the JV Agreement, as to what further action, if any, the lenders may take with respect to the project, as to the ultimate resolution of the ongoing
litigation proceedings relating to the Company’s investment interest in the 111 West 57th Property, as to the ultimate effect of the Sponsor’s, the Company’s or the
lenders’ actions on the project, as to the completion or ultimate success of the project, or as to the value or ultimate realization of any portion of the Company’s equity investment in the 111 West 57th Street Property. For additional information with regard to the Company’s legal proceedings relating to the 111 West 57th
Property, see Note 8.
While the Company’s management is evaluating future courses of action to protect and/or recover the value of the Company’s equity investment in the 111
West 57th Property, the adverse developments make it uncertain as to whether any such courses of action will be successful. Any such efforts are likely to require
sustained effort over a period of time and substantial additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on the Company’s financial condition and future
prospects. The Company can give no assurances with regard to if it will prevail with respect to any of its claims.
|
Savings Plans |
12 Months Ended | |||||||||||||||||||||||||||
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Savings Plans [Abstract] | ||||||||||||||||||||||||||||
Savings Plans |
Note 4 - Savings Plans
The Company sponsors the AmBase 401(k) Savings Plan (the “Savings Plan”), which is a “Section 401(k) Plan” within the meaning of
the Internal Revenue Code of 1986, as amended (the “Code”). The Savings Plan permits eligible employees to make contributions of a percentage of their compensation, which are matched by the Company at a percentage of the employees’ elected
deferral. Employee contributions to the Savings Plan are invested at the employee’s discretion in various investment funds. The Company’s matching contributions are invested in the same manner as the compensation reduction contributions. All
contributions are subject to maximum limitations contained in the Code.
The Company’s matching contributions to the Savings Plan, charged to expense, were as follows:
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Stockholders' Equity |
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Stockholders' Equity |
Note 5 - Stockholders’ Equity
Authorized common stock consists of the following:
Authorized cumulative preferred stock consists of the following:
Changes in the outstanding shares of Common Stock of the Company are as follows:
Changes in the treasury shares of Common Stock of the Company are as follows:
Common Stock Repurchase Plan
The Company’s common stock repurchase plan (the “Repurchase Plan”) allows for the repurchase by the Company of its common stock in the open market.
The Repurchase Plan is conditioned upon favorable business conditions and acceptable prices for the common stock. Purchases under the Repurchase Plan may be made, from time to time, in the open market, through block trades or otherwise. Depending
on market conditions and other factors, purchases may be commenced or suspended at any time or from time to time without prior notice. Pursuant to the Repurchase Plan, the Company has repurchased shares of common stock from unaffiliated parties at
various dates at market prices at their time of purchase, including broker commissions.
Information relating to the Repurchase Plan is as follows:
Stockholder Rights Plan
On March 27, 2019, the Company’s Board of Directors adopted an amended and restated shareholder rights plan (the “New Rights Plan”) pursuant to which
the Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of Common Stock of the
Company on April 17, 2019. In connection with the New Rights Plan, the Company entered into an amended and restated rights agreement with American Stock Transfer & Trust Company, LLC, as rights agent (the “New Rights Agreement”).
Under the New Rights Plan, each Right entitles the holder to purchase from the Company one share of the Company’s common stock, par value $0.01 per share (the “Common
Stock”), at a price equal to 50% of the then current market value of the Common Stock. The Rights are not exercisable until either a
person or group of affiliated persons acquires 25% or more of the Company’s outstanding Common Stock or upon the commencement or
disclosure of an intention to commence a tender offer or exchange offer for 20% or more of the Common Stock. The Rights are redeemable
by the Company at $0.01 per Right at any time until the earlier of the
day following an accumulation of 20% or more of the Company’s shares by
a single acquirer or group, or the occurrence of certain Triggering Events (as defined in the New Rights Agreement). In addition, the Board of Directors may, at its option and in its sole and absolute discretion, at any time after a Triggering
Event, mandatorily exchange all or part of the then outstanding and exercisable Rights for consideration per Right consisting of
of the securities that would be issuable at such time upon the exercise of one Right. The Rights Plan also provides certain administrative provisions that require a stockholder to make certain representations regarding its beneficial ownership of
Company securities upon exercise or exchange of Rights. The Rights are subject to adjustment to prevent dilution and expire on March 27, 2029. |
Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||
Commitments and Contingencies |
Note 6 – Commitments and Contingencies
Rent expense was as follows:
The Company rents on a short term basis approximately 150
square feet of office space in Coral Springs Florida, and approximately 200 square feet of office space in Emerson, NJ.
The Company follows the practical expedient method for the accounting of leases and has elected to follow the short-term lease accounting policy
election which allows lessees not to recognize right-of-use assets and liabilities for leases with a term of 12 months or less.
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Income Taxes |
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Note 7 - Income Taxes
The components of income tax expense (benefit) are as follows:
The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate and the provision for income
taxes are as follows:
A reconciliation of the United States federal statutory rate to the Company’s effective income tax rate is as follows:
For the year ended December 31, 2021, the Company recorded an income tax expense of $1,000, attributable to a provision for a tax on capital imposed by the state jurisdictions.
For the year ended December 31, 2020, the Company recorded an income tax benefit of $28,000. This amount includes an additional refund of $30,000 received in 2020
relating to the AMT credit carryforwards partially offset by a $2,000 state tax expense, attributable to a provision for a tax on capital
imposed by the state jurisdictions.
The Company has not been notified of any potential tax audits by any federal, state or local tax authorities. As such, the Company believes the
statutes of limitations for the assessment of additional federal and state tax liabilities are generally closed for tax years prior to 2018. Interest and/or penalties related to uncertain tax positions, if applicable, would be included as a
component of income tax expense (benefit). The accompanying financial statements do not include any amounts for interest and/or penalties.
The utilization of net operating loss (“NOL”) carryforwards are subject to limitations under U.S. federal income tax and various state tax laws. Based
on the Company’s federal tax returns as filed, the Company estimates it has approximately $124 million of federal NOL carryforwards
available to reduce future federal taxable income which if not utilized will begin to expire in 2026 and continue to expire at various
dates thereafter. Additionally, based on the Company’s state tax returns as filed and to be filed, the Company estimates that it has approximately $231
million of state NOL carryforwards to reduce future state taxable income which if not utilized will begin to expire in 2030 and continue
to expire at various dates thereafter.
In 2020, the Company received AMT credit carryforwards as provided for in the 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”), based on the Company’s 2019 federal income tax returns as
filed.
The Company’s management is continuing to work closely with outside advisors on the Company’s various federal tax return matters for the numerous
interrelated tax years. The IRS typically has broad discretion to examine taxpayer tax returns, even after refunds have been paid to taxpayers, which could result in adjustments to AMT credit carryforward amounts refunded. The AMT credit
carryforward amounts from prior tax years and related refund(s) received could potentially be subject to IRS or other tax authority audits. The Company cannot predict whether or not the IRS and/or other tax authorities will review the Company’s tax
returns filed, to be filed and/or as filed in prior years, and/or if they will seek repayment from the Company of any amounts already refunded as a result of an IRS review, if any. Moreover, applicable provisions of the Code and IRS regulations
permit the IRS to challenge Company tax positions and filed returns and seek recovery of refunded amounts or of additional taxes for an extended period of time after such returns are filed.
There is risk relating to assumptions regarding the outcome of tax matters, based in whole or in part upon consultation with outside advisors; risk
relating to potential unfavorable decisions in tax proceedings; and risks regarding changes in, and/or interpretations of federal and state income tax laws. The Company can give no assurances as to the final outcome of any IRS review, if any, of
the AMT credit carryforward refunds received.
The Company was a plaintiff in a legal proceeding seeking recovery of damages from the United States Government for the loss of the Company’s
wholly-owned subsidiary, Carteret Savings Bank, F.A. (the “SGW Legal Proceedings”). A settlement agreement in the SGW Legal Proceedings between the Company, the Federal Deposit Insurance Corporation-Receiver (“FDIC-R”) and the Department of
Justice (“DOJ”) on behalf of the United States of America (the “United States”), was executed (the “SGW 2012 Settlement Agreement”) which was approved by the United States Court of Federal Claims (the “Court of Federal Claims”) in October 2012. On
August 6, 2013, Senior Judge Smith issued an opinion which addressed the relief sought by AmBase. In summary, the court held that the Settlement Agreement is a contract and that it entitles the Company to receive both “(1) the amount of the tax
consequences resulting from taxation of the damages award plus (2) the tax consequences of receiving the first component.” But the Court of Federal Claims did not award an additional amount for the second component at that time given the remaining
uncertainty surrounding the ultimate tax treatment of the settlement proceeds and the gross-up, as well as uncertainty relating to the Company’s future income. The Court of Federal Claims indicated that either the Company or the government is
entitled to seek further relief “if, and when, the facts justify it.”
As part of the SGW 2012 Settlement Agreement, the Company is entitled to a tax gross-up when any federal taxes are imposed on the settlement amount.
Based on the Company’s 2012 federal income tax return as filed, in March 2013, the Company paid approximately $501,000 of federal income
taxes attributable to AMT rate calculations (the “2012 Tax Amount”) resulting from the SGW 2012 Settlement Agreement. In September 2013, the Company received reimbursement for the 2012 Tax Amount. In 2019, the Company received a letter from the
Federal Deposit Insurance Corporation (“FDIC”), requesting the Company reimburse the FDIC for the 2012 Tax Amount that the FDIC had previously reimbursed the Company. The Company is currently reviewing the FDIC request, along with the SGW 2012
Settlement Agreement and Court of Federal Claims August 2013 ruling, with its outside legal and tax advisors. The Company is unable to predict at this time whether the 2012 Tax Amount is refundable back to the FDIC in current and/or future years.
The Company’s deferred tax asset, arising primarily from NOL carryforwards, is as follows:
A full valuation allowance remains on the remaining deferred tax asset amounts, as management has no basis to conclude that realization is more likely
than not. Management does not believe that any significant changes in unrecognized income tax benefits are expected to occur over the next year.
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Legal Proceedings |
12 Months Ended |
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Dec. 31, 2021 | |
Legal Proceedings [Abstract] | |
Legal Proceedings |
Note 8 - Legal Proceedings
From time to time, the Company and its subsidiaries may be named as a defendant in various lawsuits or proceedings. At the
current time except as set forth below, the Company is unaware of any legal proceedings pending against the Company. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all sources for contributions to
settlements.
The Company is a party to material legal proceedings as follows:
AmBase Corp., et
al. v. 111 West 57th Sponsor LLC, et al. In April 2016, AmBase and certain of its subsidiaries and affiliates (collectively, the “Plaintiffs”) initiated a litigation in the New York State Supreme Court for New York
County (the “NY Court”), Index No. 652301/2016, (“AmBase v. 111 West 57th Sponsor LLC, et al.”) (the “111 West 57th Action”). The defendants in that litigation include 111 West 57th Sponsor LLC (the Sponsor”), Kevin Maloney, Michael Stern, and various members and affiliates,
Liberty Mutual Insurance Company, and Liberty Mutual Fire Insurance Company (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC. In the current version of the complaint, AmBase alleges that
Defendants violated multiple provisions in the JV Agreement, including by failing to honor the exercise of AmBase’s contractual “equity put right” as set forth in the JV Agreement (the “Equity Put Right”), and committed numerous acts of fraud and
breaches of fiduciary duty. AmBase is seeking compensatory damages, punitive damages, indemnification and equitable relief, including a declaration of the parties’ rights, and an accounting. The Company has also demanded from the Sponsor access
to the books and records for the 111 West 57th Property which the Sponsor refused, claiming they have provided all books and records as required.
The Defendants filed a motion to dismiss an earlier complaint, and on January 12, 2018, the NY Court issued an opinion
allowing some of AmBase’s claims to go forward and dismissing others (“2018 Order”). Among other claims that the NY Court declined to dismiss was AmBase’s claim that the Defendants violated the implied covenant of good faith and fair dealing by
frustrating AmBase’s Equity Put Right. Claims that the NY Court dismissed included AmBase’s claim that the Defendants breached their contract with AmBase by financing capital contributions for the project through funds obtained from third parties.
On January 16, 2018, some of the Defendants wrote to the NY Court suggesting that the opinion contained certain clerical errors and was missing a page. On January 18, 2018, the NY Court removed its previous opinion from the docket and on January
29, 2018, posted a revised opinion. On April 13, 2018, AmBase filed a notice of appeal of the 2018 Order to the New York Supreme Court Appellate Division, First Judicial Department (the “Appellate Division”). On January 22, 2020, the Company filed
a motion with the Appellate Division seeking to enlarge the time to perfect the Company’s appeal of the 2018 Order, in light of an intervening removal to and remand from federal court. On July 2, 2020, the Appellate Division granted AmBase’s motion
and enlarged the time to perfect the Company’s appeal to the October 2020 Term of the Appellate Division. On April 29, 2021, the Appellate Division affirmed Justice Bransten’s dismissal of the claims on appeal, while the claims that were not
previously dismissed remain pending in the trial court.
On April 27, 2018, the Company filed a third amended complaint adding federal RICO claims, and new claims for declaratory
judgment, breach of contract, fraud, and breach of fiduciary duty, based on information discovered during the course of discovery and events that have transpired since the Company filed its previous complaint in the 111 West 57th Action. On June
18, 2018, Defendants removed the complaint to the U.S. District Court for the Southern District of New York (the “Federal Court”), where it was docketed as case number 18-cv-5482-AT.
On October 25, 2018, the Federal Court issued an order granting Defendants’ motion to dismiss the Company’s RICO claims and
declined to exercise supplemental jurisdiction over the Company’s state-law claims, dismissing the latter claims without prejudice. On August 30, 2019, the U.S. Court of Appeals for the Second Circuit affirmed the Federal Court’s dismissal of the
federal RICO claims, vacated the Federal Court’s dismissal of the state-law claims, and remanded with instructions for the Federal Court to remand those claims to the NY Court. On September 25, 2019, the Federal Court remanded the case to the NY
Court, where it was assigned to the Honorable O. Peter Sherwood.
On June 11, 2020, Defendants filed a motion with the NY Court to dismiss some of the state law claims asserted by the
Company in the third amended complaint. On July 28, 2020, Plaintiffs filed a motion for leave to amend the third amended complaint, which Defendants opposed. The proposed complaint adds, among other things, claims arising from certain defendants’
role in the 2017 foreclosure of the junior mezzanine loan on the project. On July 22, 2021, the NY Court granted Plaintiffs leave to amend and denied the motion to dismiss without prejudice as moot in light of the Court’s decision granting
Plaintiffs leave to amend.
On July 29, 2021, Plaintiffs filed their fourth amended complaint. On September 3, 2021, Defendants submitted a motion to
dismiss the fourth amended complaint in part. Plaintiffs opposed the motion, and it was fully submitted as of October 13, 2021, and the court heard argument on October 27, 2021. The motion remains pending.
On September 30, 2021, the Liberty Mutual defendants answered the fourth amended complaint and filed a counterclaim against
the Company’s subsidiaries for specific performance of a pledge agreement securing certain insurance policies issued for the Project. Plaintiffs replied to those counterclaims on October 20, 2021. For additional information with regard to the
Company’s investment in the 111 West 57th Property, including the foreclosure, see Note 3.
AmBase Corp., et al. v. Spruce Capital Partners, et al. In July 2017, the Company initiated a second litigation in the NY Court, Index No. 655031/2017, (the “111 West 57th Spruce Action”). The defendants in
the 111 West 57th Spruce action were 111 W57 Mezz Investor, LLC (“Spruce”), Spruce Capital Partners LLC, 111 West 57th Sponsor LLC, Michael Z. Stern, and Kevin P. Maloney and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz
1 LLC. The Company has since voluntarily discontinued its claims against Sponsor, Stern, and Maloney, without prejudice to reinstating them in the 111 West 57th Spruce Action or any other action.
Spruce had given notice to the junior mezzanine borrower that it proposed to accept the pledged collateral (including the
joint venture members’ collective interest in the property) in full satisfaction of the joint venture’s indebtedness under the Junior Mezzanine Loan (i.e., a “Strict Foreclosure”). After the Sponsor refused to object to Spruce’s proposal on behalf
of the junior mezzanine borrower, and Spruce refused to commit to honor Investment LLC’s objection on its own behalf, the Company initiated the 111 West 57th Spruce Action to obtain injunctive relief halting the Strict Foreclosure. For
additional information on the events leading to this litigation see Note 3.
On July 26, 2017, the NY Court issued a temporary restraining order barring Spruce from accepting the collateral, pending a
preliminary injunction hearing scheduled for August 14, 2017. Spruce and the Sponsor subsequently filed papers in opposition to the request for a preliminary injunction and cross-motions to dismiss and quash subpoenas. On August 14, 2017, the NY
Court postponed the hearing until August 28, 2017, keeping the temporary restraining order preventing a Strict Foreclosure in effect until the August 28, 2017 hearing. Subsequently, the Company filed a response brief in support of their request for
injunctive relief halting the Strict Foreclosure process and in opposition to the motions to quash the subpoenas.
On August 28, 2017, the NY Court held a preliminary injunction hearing, lifted the temporary restraining order, denied
Plaintiffs’ request for a preliminary injunction, and granted Defendants’ cross-motions. In order to prevent the Strict Foreclosure process from going forward, the Company immediately obtained an interim stay from the New York Supreme Court
Appellate Division, First Judicial Department (“Appellate Division”). That stay remained in place until four (4) P.M. August 29, 2017, permitting the Company to obtain an appealable order, notice an appeal, and move for a longer-term stay or
injunctive relief pending appeal. The Appellate Division held a hearing on August 29, 2017, to consider the Company’s motion for an interim stay or injunctive relief pending appeal, both of which it denied, thus allowing the purported Strict
Foreclosure to move forward.
In January 2019, the Appellate Division issued a decision that resolves the Company’s appeal from the order denying a
preliminary injunction and dismissing its claims. The Appellate Division affirmed the decision below in part and otherwise dismissed the appeal. It noted that the Company should be allowed to move for leave to amend to state claims for damages
and/or the imposition of a constructive trust, as the dismissal of the Company’s claims was without prejudice.
On May 3, 2019, the Company’s subsidiary, Investment LLC, entered into a stipulation with Spruce to amend the complaint in
the 111 West 57th Spruce Action to state claims against Spruce for breaches of the Uniform Commercial Code and Pledge Agreement and various torts. The amended complaint seeks the entry of a declaratory judgment, the impression of a constructive
trust, permanent injunctive relief restraining Spruce from disposing of or encumbering the 111 West 57th Property, and damages, including punitive damages. The amended complaint did not name the Company as a
plaintiff or Spruce Capital Partners as a defendant. On May 31, 2019, Spruce filed a motion to dismiss the amended complaint. On January 29, 2020, the Court entered a decision and order granting in part and denying in part Spruce’s motion to
dismiss the amended complaint. On February 26, 2020, Spruce filed a notice of appeal to the Appellate Division seeking the appeal of the January 29, 2020 order. On March 4, 2020, Investment LLC filed a notice of cross-appeal to the Appellate
Division, seeking to appeal the January 29, 2020 order to the extent the NY Court dismissed some of Investment LLC’s claims. On March 30, 2021, the Appellate Division issued a decision and order revising the January 29, 2020, order by reinstating
Investment LLC’s derivative claim for breach of the covenant of good faith and fair dealing and dismissing the remaining claims.
While the appeal was pending, the parties to the 111 West 57th Spruce Action conducted discovery. On April 13,
2021, Investment LLC moved for leave to file a Second Amended Complaint to (1) bolster its factual allegations against the existing Defendant, (2) add claims against Spruce Capital Partners, Joshua Crane, Robert Schwartz, Arthur Becker and his
affiliates, Apollo and its affiliates, and AIG and its affiliates. On September 30, 2021, the Court granted the motion, and Investment LLC filed its Second Amended Complaint on the same day. On November 22, 2021, four groups of defendants filed
four separate motions to dismiss the claims against them. On December 13, 2021 Investment LLC filed a combined opposition to the motions. The defendants filed their replies on January 7, 2022. The motions remain pending.
Since the Company is not a party to the Loan Agreements, it does not have access to communications with the lenders, except
for those individual communications that the Sponsor has elected to share or that have been produced in the ongoing litigation. The Company has continued to demand access to such information, including access to the books and records for the 111
West 57th Property both under the JV Agreement and as part of the 111 West 57th Action and the 111 West 57th Spruce Action. For additional information with regard to the Company’s investment in the 111 West 57th Property
and the Company’s recording of an impairment of its equity investment in the 111 West 57th Property in 2017, see Note 3.
AmBase Corp., et
al. v. ACREFI Mortgage Lending LLC, et al. In June 2018, the Company initiated another litigation in the NY Court, Index No. 655031/2017, (the “Apollo Action”). The defendants in the Apollo Action are ACREFI Mortgage Lending, LLC, Apollo Credit Opportunity Fund III
AIV I LP, AGRE Debt 1 – 111 W 57, LLC, and Apollo Commercial Real Estate Finance, Inc. (collectively, the “Apollo Defendants”). In the Apollo Action, the Company alleges that the Apollo Defendants aided and abetted the Sponsor, Stern, and Maloney
in breaching their fiduciary duties to the Company in connection with the 111 West 57th Property and tortiously interfered with the JV Agreement. The Company is seeking damages as well as punitive damages for tortious interference with the JV
Agreement and aiding and abetting the Sponsor’s breaches of their fiduciary duties to the joint venture. The Apollo Defendants filed a motion to dismiss on August 17, 2018. On October 22, 2019, the NY Court entered an order dismissing the
Company’s complaint in the Apollo Action in its entirety. On November 8, 2019, the NY Court entered judgment (the “Apollo Dismissal”) dismissing the Apollo Action in favor of the Apollo Defendants. On December 10, 2019, the Company filed a notice
of appeal seeking the appeal of the Apollo Dismissal. On August 7, 2020, the Company perfected its appeal of the Apollo Dismissal. After Investment LLC filed its motion to amend the complaint in the 111 West 57th Spruce Action to add claims
against Apollo, the parties to the Apollo Action filed a stipulation to withdraw the appeal in the Apollo Action. For additional information with regard to the Company’s investment in the 111 West 57th Property, see Note 3.
AmBase Corp., et
al. v. Custom House Risk Advisors, Inc., et al. On April 2, 2020, the Company initiated litigation in the United States District Court for the Southern District of New York, Case No. 1:20-cv-02763-VSB (the “Custom House Action”). The defendants in the Custom House
Action are Custom House Risk Advisors, Inc. and Elizabeth Lowe (collectively, the “Custom House Defendants”). In the Custom House Action, the Company alleges that the Custom House Defendants (a) aided and abetted Sponsor, Stern, and Maloney in
breaching their fiduciary duties to the Company by structuring an insurance policy to the personal benefit of Sponsor, Stern and Maloney and the detriment of the 111 West 57th Project and concealing the structure and ownership of the insurance
policy from the Company and (b) committed fraud by making material misrepresentations about the terms of the policy to the Company, inducing the Company to contribute additional capital to the 111 West 57th Project to cover the costs of the
insurance policy. The Company is seeking damages as well as disgorgement of profits the Custom House Defendants earned from their wrongful conduct. On April 10, 2020, the Custom House Defendants waived service of process. The Custom House
Defendants were required to respond to the complaint by June 8, 2020. The Custom House Defendants have not responded to the Company’s complaint. In an agreement dated July 31, 2020, the Company and the Custom House Defendants agreed to certain
terms for a settlement and entered into a settlement agreement which requires that the Custom House Defendants satisfy certain conditions prior to any dismissal of the Custom House Action. On December 6, 2021, the Court approved a stipulation
dismissing the Company’s claims and agreed to retain jurisdiction to enforce the settlement agreement. For additional information with regard to the Company’s investment in the 111 West 57th Property, see Note 3.
With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing,
and will continue to pursue, other options to realize the Company’s investment value, various legal courses of action to protect its legal rights, recovery of its asset value from various sources of recovery, as well as considering other possible
economic strategies, including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57th Property; however, there can be no assurance that the Company will
prevail with respect to any of its claims.
The Company can give no assurances regarding the outcome of the matters described herein, including as to the effect of
Spruce’s actions described herein, whether the Sponsor will perform their contractual commitments to the Company under the JV Agreement, as to what further action, if any, the lenders may take with respect to the project, as to the ultimate
resolution of the ongoing litigation proceedings relating to the Company’s investment interest in the 111 West 57th Property, as to the ultimate effect of the Sponsor’s, the Company’s or the lenders’ actions on the project, as to the
completion or ultimate success of the project, or as to the value or ultimate realization of any portion of the Company’s equity investment in the 111 West 57th Street Property. For additional information with regard to the Company’s
investment in the 111 West 57th Property, see Note 3.
While the Company’s management is evaluating future courses of action to protect and/or recover the value of the Company’s equity investment in the 111 West
57th Property, the adverse developments make it uncertain as to whether any such courses of action will be successful. Any such efforts are likely to require sustained effort over a period of time and substantial additional financial
resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on the Company’s financial condition and future prospects. The Company can give no assurances with regard to if it will prevail
with respect to any of its claims.
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Litigation Funding Agreement |
12 Months Ended | ||||||
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Dec. 31, 2021 | |||||||
Litigation Funding Agreement [Abstract] | |||||||
Litigation Funding Agreement |
Note 9 – Litigation Funding Agreement
In 2017, the Company entered into a Litigation Funding Agreement (the “LFA”) with Mr. R. A. Bianco. Pursuant to the LFA, Mr. R. A. Bianco agreed to
provide litigation funding to the Company to satisfy actual documented litigation costs and expenses of the Company, including attorneys’ fees, expert witness fees, consulting fees and disbursements in connection with the Company’s legal
proceedings relating to the Company’s equity investment in the 111 West 57th Property, (the “Litigation Fund Amount”).
After receiving substantial AMT credit carryforward refunds in 2019, in light of the Company’s improved liquidity, the Company’s Board of Directors
(the “Board”) authorized the establishment of a Special Committee of the Board (the “Special Committee”) to evaluate and negotiate possible changes to the LFA. The Special Committee was comprised exclusively of the independent directors on the
Board.
In 2019, after receiving approval from the Special Committee, the Company and Mr. R. A. Bianco entered into an amendment to the LFA (the “Amendment”)
which provides for the following: (i) the repayment of $3,672,000 in funds previously provided to the Company by Mr. R. A. Bianco
pursuant to the LFA (the “Advanced Amount”), (ii) the release of Mr. R. A. Bianco from all further funding obligations under the LFA, and (iii) a modification of the relative distribution between Mr. R. A. Bianco and the Company of any Litigation
Proceeds received by the Company from the 111 West 57th Litigation, as described below.
The Amendment provides that, in the event that the Company receives any Litigation Proceeds from the 111 West 57th Litigation, such Litigation Proceeds shall be distributed as follows:
|
Subsequent Events |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events |
Note 10 - Subsequent Events
The Company has performed a review of events subsequent to the balance sheet dated December 31, 2021, through the report issuance date. The Company has
events, subsequent to December 31, 2021, and through the date these consolidated financial statements were issued, as further discussed herein.
|
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Accounting |
Basis of Accounting
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”).
|
Use of estimates |
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, that it deems reasonable, that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from such estimates and assumptions.
|
Principles of consolidation |
Principles of consolidation
The consolidated financial statements are comprised of the accounts of the Company and its wholly owned subsidiaries. All material intercompany
transactions and balances have been eliminated.
|
Equity method investment |
Equity method investment
Investments and ownership interests are accounted for under the equity method of accounting if the Company has the ability to exercise significant
influence, but not control (under GAAP), over the investment. Investments accounted for under the equity method are carried at cost, plus or minus the Company’s equity in the increases and decreases in the net assets after the date of acquisition
and certain other adjustments. The Company's share of income or loss for equity method investments is recorded in the consolidated statements of operations as equity income (loss). Dividends received, if any, would reduce the carrying amount of
the Company’s investment.
|
Cash and cash equivalents |
Cash and cash equivalents
Highly liquid investments, consisting principally of funds held in short-term money market accounts, with original maturities of less than three
months, are classified as cash equivalents. The majority of the Company’s cash and cash equivalents balances are maintained with a limited number of major financial institutions. Cash and cash equivalents balances at institutions may, at times, be
above the Federal Deposit Insurance Corporation insured limit per account.
|
Income taxes |
Income taxes
The Company and its domestic subsidiaries file a consolidated federal income tax return. The Company recognizes both the current and deferred tax
consequences of all transactions that have been recognized in the consolidated financial statements, calculated based on the provisions of enacted tax laws, including the tax rates in effect for current and future years. Net deferred tax assets are
recognized immediately when a more likely than not criterion is met; that is, a greater than 50% probability exists that the tax benefits will actually be realized sometime in the future. For additional information including a discussion of income
tax matters see Note 7.
|
Earnings per share |
Earnings per share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) by the weighted average number of common shares
outstanding for the period. The Company has no stock options or securities outstanding which could be potentially dilutive.
|
New Accounting Pronouncements |
New Accounting Pronouncements
There are no new accounting pronouncements that would likely materially affect the Company’s consolidated financial statements.
|
Investment in 111 West 57th Partners LLC (Tables) |
12 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||
Investment in 111 West 57th Partners LLC [Abstract] | |||||||||||||||||||||
Initial Investment and Other Information Relating to the 111 West 57th Property |
Amounts relating to the Company’s initial June 2013 investment and other information relating to the 111 West 57th Property follow:
|
Savings Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||
Savings Plans [Abstract] | ||||||||||||||||||||||||||||
Matching Contributions to Savings Plan |
The Company’s matching contributions to the Savings Plan, charged to expense, were as follows:
|
Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Authorized Common Stock and Cumulative Preferred Stock |
Authorized common stock consists of the following:
Authorized cumulative preferred stock consists of the following:
|
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Changes in the Outstanding Shares of Common Stock |
Changes in the outstanding shares of Common Stock of the Company are as follows:
|
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Changes in Treasury Shares of Common Stock |
Changes in the treasury shares of Common Stock of the Company are as follows:
|
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Information Relating to Common Stock Repurchase Plan |
Information relating to the Repurchase Plan is as follows:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | ||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||
Schedule of Rent Expense |
Rent expense was as follows:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Expense (Benefit) |
The components of income tax expense (benefit) are as follows:
|
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Income Tax Reconciliation |
The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate and the provision for income
taxes are as follows:
A reconciliation of the United States federal statutory rate to the Company’s effective income tax rate is as follows:
|
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Calculation of Net Deferred Tax Assets from NOL Carryforwards |
The Company’s deferred tax asset, arising primarily from NOL carryforwards, is as follows:
|
Investment in 111 West 57th Partners LLC, Summary (Details) - Investment in 111 West 57th Partners LLC [Member] $ in Thousands |
Jun. 28, 2013
USD ($)
|
---|---|
Initial Investment and Other Information Relating to the 111 West 57th Property [Abstract] | |
Company's aggregate initial investment | $ 57,250 |
Company's aggregate initial membership interest % | 60.30% |
Other members and Sponsor initial investment | $ 37,750 |
Investment in 111 West 57th Partners LLC, Additional Information Regarding Equity Investment in 111 West 57th Property (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2014 |
Dec. 31, 2021 |
|
Additional Information Regarding Equity Investment in 111 West 57th Property [Abstract] | ||
Description of partnership agreement distribution | The JV Agreement and related operating agreements generally provide that all distributable cash shall be distributed as follows: (i) first, 100% to the members in proportion to their percentage interests until Investment LLC has received distributions yielding a 20% internal rate of return as calculated; (ii) second, 100% to the Sponsor as a return of (but not a return on) any additional capital contributions made by the Sponsor on account of manager overruns; and (iii) thereafter, (a) 50% to the members in proportion to their respective percentage interests at the time of such distribution, and (b) 50% to the Sponsor. | |
Subordinated participation interest to CEO | 10.00% | |
Percentage of distribution on company's initial investment to be received prior to CEO receiving percentage distribution | 150.00% | |
Investment LLC [Member] | Capital LLC [Member] | ||
Additional Information Regarding Equity Investment in 111 West 57th Property [Abstract] | ||
Terms of distributions to Capital LLC | available cash of Investment LLC will be distributed first to Capital LLC until it has received a 20% internal rate of return (calculated as provided for in the JV Agreement as noted above), second to the Company until it has received 150% of its capital, and, thereafter, available cash is split 10/90, with 10% going to Mr. R. A. Bianco as the subordinated participation interest noted above and 90% going to Capital LLC and the Company pari-passu, with Capital LLC receiving one-half of its pro-rata share based on capital contributed and the Company receiving the balance. |
Savings Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Savings Plans [Abstract] | ||
Company matching contributions | $ 80 | $ 81 |
Employer match % | 100.00% | 100.00% |
Commitments and Contingencies (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021
USD ($)
ft²
|
Dec. 31, 2020
USD ($)
ft²
|
|
Rent Expense [Abstract] | ||
Rent expense | $ | $ 11 | $ 10 |
Approximate square feet of leased office space | 350 | 350 |
Coral Springs, Florida [Member] | ||
Rent Expense [Abstract] | ||
Approximate square feet of leased office space | 150 | |
Emerson, NJ [Member] | ||
Rent Expense [Abstract] | ||
Approximate square feet of leased office space | 200 |
Income Taxes, Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Components of income tax expense (benefit) [Abstract] | ||
Federal - current | $ 0 | $ (30) |
State - current | 1 | 2 |
Total current | 1 | (28) |
Federal - deferred | (1,106) | (1,171) |
State - deferred | (434) | (1,524) |
Change in valuation allowance | 1,540 | 2,695 |
Total deferred | 0 | 0 |
Income tax expense (benefit) | $ 1 | $ (28) |
Income Taxes, Income Tax Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Components of pretax income (loss) and difference between income taxes computed at statutory federal rate and provision for income taxes [Abstract] | ||
Income (loss) before income taxes | $ (5,207) | $ (5,632) |
Tax expense (benefit) [Abstract] | ||
Tax at statutory federal rate | (1,094) | (1,182) |
State income taxes | (445) | (1,511) |
Permanent items, tax credits and other adjustments | 0 | (30) |
Deferred true-ups | 0 | 0 |
Change in valuation allowance | 1,540 | 2,695 |
Income tax expense (benefit) | $ 1 | $ (28) |
Income Taxes, Calculation of Net Deferred Tax Assets from NOL Carryforwards (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Reconciliation of federal statutory rate to effective income tax rate [Abstract] | ||
Tax at statutory federal rate | 21.00% | 21.00% |
State income taxes | 8.50% | 27.00% |
Permanent difference, tax credits and other adjustments | 0.00% | 0.50% |
Change in valuation allowance | (29.50%) | (48.00%) |
Effective income tax rate | 0.00% | 0.50% |
Income Taxes, Federal and State NOL Carryforwards (Details) - USD ($) |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2013 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
NOL Carryforwards [Abstract] | |||
Income tax refund received | $ 30,000 | ||
Paid federal income taxes attributable to alternative minimum tax rate | $ 501,000 | ||
Federal [Member] | |||
NOL Carryforwards [Abstract] | |||
Operating loss carryforwards, amount | $ 124,000,000 | ||
Tax year expiring | 2026 | ||
State [Member] | |||
NOL Carryforwards [Abstract] | |||
Operating loss carryforwards, amount | $ 231,000,000 | ||
Tax year expiring | 2030 |
Income Taxes, Net Deferred Tax Asset (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Net Deferred Tax Asset Arising Primarily from NOL Carryforwards and AMT Credit Carryforwards [Abstract] | ||
Deferred tax asset | $ 39,680 | $ 38,140 |
Valuation allowance | (39,680) | (38,140) |
Net deferred tax asset recognized | $ 0 | $ 0 |