ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes, which are contained in Part II - Item 8, herein.
BUSINESS OVERVIEW
AmBase Corporation (the “Company” or “AmBase”) is a Delaware corporation that was incorporated in 1975. AmBase is a holding company. At December 31, 2025, the Company’s assets consisted 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 57 th Street in New York, New York (the “111 West 57 th Property”). As further discussed herein, the Company is engaged in material disputes and litigation with regard to the 111 West 57 th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the “Strict Foreclosure”, (as defined and further discussed herein), the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57 th Property represented a substantial portion of the Company’s assets and net equity value.
For additional information regarding the Company’s legal proceedings relating to the 111 West 57 th Property, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
Liquidity AND CAPITAL RESOURCES
The Company’s assets at December 31, 2025, aggregated $87,000, consisting of cash and cash equivalents. At December 31, 2025, the Company’s liabilities aggregated $8,772,000, consisting of accounts payable and accrued liabilities of $3,172,000 and loan(s) payable related party of $5,600,000. Total stockholders’ deficit was $8,685,000.
In June 2013, the Company purchased an equity interest in the 111 West 57 th Property. The Company is engaged in material disputes and litigation with regard to the 111 West 57 th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the “Strict Foreclosure”, (as defined and further discussed herein), in accordance with GAAP, the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property of $63,745,000 in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57 th Property represented a substantial portion of the Company’s assets and net equity value.
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For additional information concerning the Company’s recording of an impairment of its equity investment in the 111 West 57 th Property in 2017 and the Company’s legal proceedings relating to the 111 West 57 th Property, including the Company’s challenge to the Strict Foreclosure, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing, and will continue to pursue, other options to realize the Company’s investment value, various legal courses of action to protect its legal rights, recovery of its asset value from various sources of recovery, as well as considering other possible economic strategies, including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57 th Property; however, there can be no assurance that the Company will prevail with respect to any of its claims.
The Company can give no assurances regarding the outcome of the matters described herein, including as to the effect of Spruce’s actions described herein, whether the Sponsors will perform their contractual commitments to the Company under the JV Agreement, as to what further action, if any, the lenders may take with respect to the project, as to the ultimate resolution of the ongoing litigation proceedings relating to the Company’s investment interest in the 111 West 57 th Property, as to the ultimate effect of the Sponsors’, the Company’s or the lenders’ actions on the project, as to the completion or ultimate success of the project, or as to the value or ultimate realization of any portion of the Company’s equity investment in the 111 West 57 th Street. For additional information with regard to the Company’s investment in the 111 West 57 th Property and the legal proceedings related thereto, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
The Company has incurred operating losses and used cash for operating activities for the past several years. The Company has continued to keep operating expenses at a reduced level; however, there can be no assurance that the Company’s current level of operating expenses will not increase or that other uses of cash will not be necessary. The Company believes that based on its current level of operating expenses, its existing cash and cash equivalents may not be sufficient to cover operating cash needs through the twelve month period from the financial statement reporting date. Based on the above factors, management determined there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include adjustments to the carrying value of assets and liabilities, which might be necessary should the Company not continue in operation.
In order to continue as a going concern and fund anticipated future litigation expenses, the Company will need to raise additional capital. The Company continues to explore all possible strategic alternatives to meet is capital needs, including but not limited to, raising additional capital through the sale of equity or debt securities or long-term borrowings, which may include additional borrowings from management and/or affiliates of the Company, financial institutions or other stockholders of the Company, litigation funding agreements from management and/or affiliates of the Company, financial institutions, other stockholders of the Company, or other third parties, or any combination thereof, and seeking recoveries from various sources. The Company intends for any sales of debt or equity securities or any borrowings from any parties to be on market terms to be agreed upon at the time of any transaction. However, there can be no assurance that the Company will be able to raise capital or obtain financing on terms acceptable to the Company, if at all. 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 57 th Property, the adverse developments make it uncertain as to whether any such courses of action will be . Any such efforts are likely to require sustained effort over a period of time and substantial additional capital. to recover all or most of such value would, in all likelihood, have a material 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 .
As noted above, the Company continues to explore all possible strategic alternatives to meet its capital needs. Litigation funding agreements are special types of financing arrangements that generally are structured so that the litigation funder would receive back their initial funding amount first (i.e. before any recovery is received by the Company), plus an additional multiple ranging from 1.0 times to 3.5 times the amount funded (depending on various factors), plus depending on the funder, additional fees, expenses, interest and potentially an additional percentage of the total recovery received. If the Company continues to source capital through one or more litigation funding agreements, there can be no assurance that the Company would be able to secure any such additional litigation funding on acceptable terms or at all.
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In March 2026, the Company and the Company’s Chairman, President and Chief Executive Officer, Mr. Richard A. Bianco (“Mr. R.A. Bianco” or “RAB”) agreed to enter into a litigation funding agreement (the “RAB 2026 LFA”), pursuant to which the promissory notes between RAB and the Company outstanding as of March 2, 2026, in the aggregate principal amount of $4,000,000 (the “RAB Promissory Notes”), shall be deemed converted to the RAB 2026 LFA. The accrued but unpaid interest on the RAB Promissory Notes of approximately $220,000 shall stay outstanding and continue to accrue interest on the same terms as the RAB Promissory Notes but the maturity date of this indebtedness shall be March 31, 2029. Additionally, (i) in March 2026, RAB paid the Company, $1,000,000 to be used to pay a portion of outstanding litigation related expenses and (ii) will pay the Company an additional $1,000,000 to be retained and used by the Company for working capital needs and certain other litigation related expenses, including expert witness fees, consulting fees and disbursements incurred by the Company or reasonably anticipated to be incurred by the Company, (plus such additional amounts as may be necessary from time to time and as agreed to by the Company and RAB at such time). For additional information, see Part II – Item 8 – Note 11 and Note 12 to the Company’s consolidated financial statements.
In addition, in March 2026, BARC Investments LLC (“BARC”) converted their $2,000,000 (the “2024 BARC Note”) into a litigation funding agreement (plus such additional amounts as may be necessary from time to time and as agreed to by the Company and BARC at such time), pari-passu with those provided under the RAB 2026 LFA, (the “BARC 2026 LFA”). The accrued but unpaid interest on the 2024 BARC Note of approximately $200,000 shall stay outstanding and continue to accrue interest on the same terms as the 2024 BARC Note but the maturity date of this indebtedness shall be March 31, 2029. For additional information, see Part II – Item 8 – Note 10 and Note 12 to the Company’s consolidated financial statements.
As part of the RAB 2026 LFA and the BARC 2026 LFA, the Company shall distribute any consideration it actually receives in connection with the 111 West 57 th Litigations in accordance with the terms of the RAB 2026 LFA and BARC 2026 LFA. The terms of the RAB 2026 LFA and BARC 2026 LFA will therefore further reduce the Company’s share of any future litigation proceeds.
The RAB 2026 LFA and the BARC 2026 LFA also contain customary representations and warranties and agreements of the parties and customary indemnification rights and obligations of the parties. The foregoing description(s) of the RAB 2026 LFA and the BARC 2026 LFA are qualified entirely by reference to the agreements, a copy of the RAB 2026 LFA and the BARC 2026 LFA were filed as an exhibit to the Company’s previously filed reports with the Securities and Exchange Commission and are incorporated herein by reference.
On February 28, 2024, the Company commenced a private placement offering (the “Equity Offering”) of 44,200,460 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”) for $0.20 per share of Common Stock. On April 1, 2024, the Company completed the issuance and sale of 44,200,460 Shares in the Equity Offering on the previously disclosed terms and conditions. The offer and sale of the Shares in the Equity Offering was completed in reliance on the exemption from registration under Rule 506(c) of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. Total proceeds received from the Equity Offering were $8,840,000. For additional information, see Part II – Item 8 – Note 5 to the Company’s consolidated financial statements.
In 2017, the Company entered into a Litigation Funding Agreement (the “LFA”) with Mr. R.A. Bianco. Pursuant to the LFA, Mr. R.A. Bianco agreed to provide litigation funding to the Company, to satisfy actual documented litigation costs and expenses of the Company, including attorneys’ fees, expert witness fees, consulting fees and disbursements in connection with the Company’s legal proceedings related to the Company’s equity investment in the 111 West 57th Property. In 2019, the Company and Mr. R.A. Bianco entered into an amendment to the LFA (the “Amendment). For additional information including the terms of the Litigation Funding Agreement, as amended by the Amendment, see Part II – Item 8 – Note 9 to the Company’s consolidated financial statements.
For the year ended December 31, 2025, cash of $2,327,000 was used by operations for the payment of operating expenses and prior year accruals.
For the year ended December 31, 2024, cash of $8,906,000 was used by operations for the payment of operating expenses and prior year accruals.
Accounts payable and accrued liabilities as of December 31, 2025, increased as compared to December 31, 2024, principally relating to the accrual of unpaid legal and other expenses as of December 31, 2025. The amounts in the respective years are principally related to accruals for legal expenses in connection with the 111 West 57 th Property legal proceedings.
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Loan(s) payable – related party – BARC Investments LLC was $2,000,000 as of December 31, 2025, and December 31, 2024, relating to loan(s) made to the Company from BARC Investments, LLC, (“BARC”) an affiliate of the Company owned and controlled by two of the Company’s directors and their sibling, for working capital. For additional information regarding the BARC note(s) payable and its March 2026 conversion into a litigation funding agreement and the related accrued interest payable conversion to a note payable, see Part II – Item 8 – Note 10 and Note 12 to the Company’s consolidated financial statements.
Loan(s) payable – related party – Mr. R.A. Bianco was $3,600,000 as of December 31, 2025, compared to $1,500,000 as of December 31, 2024, relating to loan(s) made to the Company from Mr. R.A. Bianco, for working capital. In January 2024 through March 2024, the Company and Mr. R.A. Bianco entered into additional agreements pursuant to which Mr. R.A. Bianco made additional loans to the Company aggregating $350,000, for use as working capital. In April 2024, with funds received from the Equity Offering, the Company repaid Mr. R.A. Bianco the full amount of the loan(s) payable outstanding at that time aggregating $3,548,000 plus accrued interest. As of December 31, 2025, Mr. R.A. Bianco made additional loans to the Company aggregating $3,600,000, for use as working capital. In January 2026, Mr. R.A. Bianco made an additional loan to the Company aggregating $100,000. In February 2026, Mr. R.A. Bianco made an additional loan to the Company aggregating $300,000. For additional information regarding the RAB note(s) payable and its March 2026 conversion into a litigation funding agreement and the related accrued interest payable conversion to a note payable, see Part II – Item 8 – Note 11 and Note 12 to the Company’s consolidated financial statements.
There are no material commitments for capital expenditures as of December 31, 2025. Inflation has had no material impact on the business and operations of the Company.
RESULTS OF OPERATIONS
The Company recorded a net loss of $4,560,000 or $0.05 per share for the year ended December 31, 2025. For the year ended December 31, 2024, the Company recorded a net loss of $6,620,000 or $0.09 per share.
Compensation and benefits decreased to $1,323,000 in 2025 from $1,367,000 in 2024. The decrease in 2025 as compared to 2024 is primarily due to a decrease in compensation related expenses in 2025 versus 2024.
Professional and outside services expenses decreased to $2,796,000 in 2025 from $4,898,000 in 2024. The decrease in 2025 as compared to 2024 is principally the result of a lower level of legal and professional fees incurred in 2025 in connection with the Company’s legal proceedings relating to the Company’s investment in the 111 West 57 th Property. For additional information regarding the Company’s investment in the 111 West 57 th Property and the legal proceedings related thereto, see Part II – Item 8 – Note 3 and Note 8 to the Company’s consolidated financial statements.
Property operating and maintenance expenses were $27,000 in 2025 and $18,000 in 2024. The increase in the 2025 period is due to a higher annual cost of services in 2025 compared to 2024.
Insurance expenses decreased to $107,000 in 2025, compared with $120,000 in 2024. The decrease is primarily due to a decrease in certain policy coverages in 2025 versus 2024.
Other operating expenses decreased to $68,000 in 2025 compared with $114,000 in 2024 due to a general lower level of expenses in 2025 versus 2024.
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the “Appropriations Act”) extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year. The Company qualified for the employee retention credit for qualified wages for tax periods ending March 31, 2021, June 30, 2021, and September 30, 2021, and filed a cash refund claim. In April 2025, the Company received the refund claimed and recorded the employee retention credit received as other income of $124,000, in the consolidated statement of operations for the year ended December 31, 2025. For additional information see Part II – Item 8 – Note 7 to the Company’s consolidated financial statements.
Interest income in 2025 decreased to $3,000 compared to $29,000 in 2024. The decreased interest income in 2025 is due to a lower level of cash and cash equivalents in 2025 versus the respective 2024 period which included funds received from the Equity Offering in April 2024 and Company borrowings. For additional information, see Part I – Item 1 – Note 5 to the Company’s consolidated financial statements.
Interest expense was $365,000 and $131,000 in 2025 and 2024, respectively. The interest expense for the 2025 period is attributable to interest expense relating to the loan(s) payable – related party - BARC and loans payable – related party – Mr. R.A. Bianco, and interest expense attributable to a professional firm for outstanding and unpaid professional fees. For additional information, see Part I – Item 1 – Note 10 and Note 11 to the Company’s consolidated financial statements.
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The interest expense for the 2024 period is attributable to interest expense relating to the loan(s) payable – related party - BARC and loans payable – related party – Mr. R.A. Bianco, net of $51,000 of negative interest expense in 2024 attributable to the reversal of interest expense owed to a professional firm for outstanding invoices that did not have to be paid due to the Company fully paying the outstanding amounts due in April 2024. For additional information see Part II – Item 8 – Note 10 and Note 11 to the Company’s consolidated financial statements.
For the year ended December 31, 2025, the Company recorded an income tax expense of $1,000 attributable to a provision for a tax on capital imposed by the state jurisdictions. For additional information see Part II – Item 8 – Note 7 to the Company’s consolidated financial statements.
For the year ended December 31, 2024, the Company recorded an income tax expense of $1,000 attributable to a provision for a tax on capital imposed by the state jurisdictions. For additional information, see Part II – Item 8 – Note 7 to the Company’s consolidated financial statements.
A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes is included in Part II - Item 8 – Note 7 to the Company’s consolidated financial statements. For additional information including a discussion of income tax matters, see Part II – Item 8 – Note 7 to the Company’s consolidated financial statements.
Application of Critical Accounting ESTIMATES
Our consolidated financial statements are based on the selection and application of accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes. Future events and their effects cannot be determined with absolute certainty. The determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to the consolidated financial statements. We believe that the following accounting policies, which are important to our consolidated financial position and consolidated results of operations, require a higher degree of judgment and complexity in their application and represent the critical accounting estimates used in the preparation of our consolidated financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. For a summary of all our accounting policies, including the accounting estimates discussed below, see Part II - Item 8 - Note 2 to the Company’s consolidated financial statements.
Deferred Tax Assets: As of December 31, 2025, and 2024, the Company had deferred tax assets arising primarily from net operating loss carryforwards available to offset taxable income in future periods. A valuation allowance remains on the remaining deferred tax asset amounts relating to the NOL carryforwards as management has no basis to conclude that realization is more likely than not. The valuation allowance was calculated in accordance with current standards, which places primary importance on a company’s cumulative operating results for the current and preceding years. We intend to maintain a valuation allowance for the deferred tax asset amount relating to the NOL carryforwards until sufficient positive evidence exists to support a reversal. See Part II - Item 8 - Note 7 to the Company’s consolidated financial statements .
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Cautionary Statement for Forward-Looking Information
This Annual Report together with other statements and information publicly disseminated by the Company may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or make oral statements that constitute forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. The forward-looking statements may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, anticipated market performance, anticipated litigation results or the timing of pending litigation, and similar matters. When used in this Annual Report, the words “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends” and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. The Company cautions readers that a variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. These risks and uncertainties, many of which are beyond the Company’s control, include, but are not limited to those set forth in “Item 1A, Risk Factors” and elsewhere in this Annual Report and in the Company’s other public filings with the Securities and Exchange Commission including, but not limited to: (i) risks with regard to the ability of the Company to continue as a going ; (ii) assumptions regarding the outcome of legal and/or tax matters, based in whole or in part upon consultation with outside advisors; (iii) risks arising from decisions in tax, legal and/or other proceedings; (iv) transaction volume in the securities markets; (v) the of the securities markets; (vi) fluctuations in interest rates; (vii) risks inherent in the real estate business, including, but not limited to, insurance risks, tenant , risks associated with real estate development activities, changes in occupancy rates or real estate values; (viii) changes in regulatory requirements which could affect the cost of doing business; (ix) general economic conditions; (x) risks with regard to whether or not the Company’s current financial resources will be adequate to fund operations over the next twelve months from financial statement issuance date and/or continue operations; (xi) the availability of funding on terms or at all; (xii) changes in the rate of inflation and the related impact on the securities markets; and (xiii) changes in federal and state tax laws. A dditionally, 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 decisions in tax proceedings; risks regarding changes in, and/or interpretations of federal and state income tax laws; and risk of IRS and/or state tax authority assessment of additional tax plus interest. These are not the only risks that we face. There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also our business and financial position.
Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. The Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this Annual Report or to reflect the occurrence of unanticipated events. Accordingly, there is no assurance that the Company’s expectations will be realized.
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ITEM 8.
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 199)
To the Stockholders and Board of Directors of
AmBase Corporation and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of AmBase Corporation and Subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ CBIZ CPAs P.C.
CPIZ CPAs P.C.
We have served as the Company’s auditor since 2007 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024) .
Hartford, Connecticut
March 30, 2026
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 688 )
To the Stockholders and Board of Directors of
AmBase Corporation and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of AmBase Corporation and Subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations , changes in stockholders’ equity (deficit) and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the 2024 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor from 2007 through 2025.
Hartford, Connecticut
March 24, 2025
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AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Years Ended December 31,
Operating expenses:
Compensation and benefits
Professional and outside services
Property operating and maintenance
Insurance
Other operating
Total operating expenses
Operating income (loss)
Other income
Interest income
Interest expense
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
Net income (loss) per common share - basic
Weighted average common shares outstanding - basic
The accompanying notes are an integral part of these consolidated financial statements.
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AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
Assets:
December 31,
December 31,
Cash and cash equivalents
Other assets
Total assets
Liabilities and Stockholders’ Equity (Deficit):
Liabilities:
Accounts payable and accrued liabilities
Loan(s) payable – related party – BARC Investments LLC
Loan(s) payable – related party – Mr. R.A. Bianco
Total liabilities
Commitments and contingencies (Note 6)
Stockholders’ equity (deficit):
Common stock ($ 0.01 par value, 200,000 authorized in 2025 and 200,000 authorized in 2024, 84,938 issued and 84,938 outstanding in 2025 and 84,938 issued and 84,938 outstanding in 2024)
Additional paid-in capital
Accumulated deficit
Treasury stock, at cost – 2025 - 0 shares; and 2024 - 0 shares
Total stockholders’ equity (deficit)
Total liabilities and stockholders’ equity (deficit)
The accompanying notes are an integral part of these consolidated financial statements.
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AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
Years Ended December 31, 2025 and 2024
(in thousands)
Common
stock
Additional
paid-in
capital
Accumulated
deficit
Treasury
stock
Total
January 1, 2024
Sale of common stock Equity Offering
Net income (loss)
December 31, 2024
Net income (loss)
December 31, 2025
The accompanying notes are an integral part of these consolidated financial statements.
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AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31,
(in thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities
Changes in operating assets and liabilities:
Other assets
Accounts payable and accrued liabilities
Net cash provided (used) by operating activities
Cash flows from financing activities:
Sale of common stock – equity offering
Proceeds from loan(s) payable – related party – BARC Investments LLC
Payoff of loan(s) payable – related party – R. A. Bianco
Proceeds from loan(s) payable – related party – R. A. Bianco
Net cash provided (used) by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental cash flow disclosure:
Income taxes refunded (paid)
Interest expense paid
The accompanying notes are an integral part of these consolidated financial statements.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 – Organization and Going Concern
AmBase Corporation (the “Company” or “AmBase”) is a Delaware corporation that was incorporated in 1975. AmBase is a holding company. At December 31, 2025, the Company’s assets consisted 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 57 th Street in New York, New York (the “111 West 57 th Property”). The Company is engaged in material disputes and litigation with regard to the 111 West 57 th 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 57 th 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 57 th Property and the Company’s legal proceedings relating to the 111 West 57 th Property, including the Company’s challenge to the Strict Foreclosure, see Note 3 and Note 8.
A fundamental principle of the preparation of financial statements in accordance with GAAP is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. In accordance with this requirement, the Company has prepared its accompanying consolidated financial statements assuming the Company will continue as a going concern.
The Company has incurred operating losses and used cash for operating activities for the past several years. The Company has continued to keep operating expenses at a reduced level; however, there can be no assurance that the Company’s current level of operating expenses will not increase or that other uses of cash will not be necessary. The Company believes that based on its current level of operating expenses, its existing cash and cash equivalents may not be sufficient to cover operating cash needs through the twelve month period from the financial statement reporting date. Based on the above factors, management determined there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include adjustments to the carrying value of assets and liabilities, which might be necessary should the Company not continue in operation.
In order to continue as a going concern and fund anticipated future litigation expenses, the Company will need to raise additional capital. The Company continues to explore all possible strategic alternatives to meet is capital needs, including but not limited to, raising additional capital through the sale of equity or debt securities or long-term borrowings, which may include additional borrowings from management and/or affiliates of the Company, financial institutions or other stockholders of the Company, litigation funding agreements from management and/or affiliates of the Company, financial institutions, other stockholders of the Company, or other third parties, or any combination thereof, and seeking recoveries from various sources. The Company intends for any sales of debt or equity securities or any borrowings from any parties to be on market terms to be agreed upon at the time of any transaction. However, there can be no assurance that the Company will be able to raise capital or obtain financing on terms acceptable to the Company, if at all. 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 57 th Property, the adverse developments make it uncertain as to whether any such courses of action will be . Any such efforts are likely to require sustained effort over a period of time and substantial additional capital. to recover all or most of such value would, in all likelihood, have a material 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 .
As noted above, the Company continues to explore all possible strategic alternatives to meet its capital needs. Litigation funding agreements are special types of financing arrangements that generally are structured so that the litigation funder would receive back their initial funding amount first (i.e. before any recovery is received by the Company), plus an additional multiple ranging from 1.0 times to 3.5 times the amount funded (depending on various factors), plus depending on the funder, additional fees, expenses, interest and potentially an additional percentage of the total recovery received. If the Company continues to source capital through one or more litigation funding agreements, there can be no assurance that the Company would be able to secure any such additional litigation funding on acceptable terms or at all.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In order to provide the necessary cash resources to continue operations and continue the litigation related to the 111 West 57th Property, and pay amounts currently owed, on March 2, 2026, the Company entered into litigation funding agreements with Mr. Richard A. Bianco, the Company’s Chairman, President and Chief Executive Officer (“Mr. R.A. Bianco” or “RAB”) and BARC Investments LLC (“BARC”). As part of those litigation funding agreements, the Company shall distribute any consideration it actually receives in connection with the 111 West 57 th legal proceedings in accordance with the terms of the litigation funding agreements which will therefore further reduce the Company’s share of any future litigation proceeds. For additional information, see Note 12.
On April 1, 2024, the Company completed the issuance and sale, of the shares of the Company’s common stock (the “Shares”) in the private placement offering (the “Equity Offering”) on the previously disclosed terms and conditions, including Shares purchased by an institutional investor not affiliated with the Company and Shares purchased by BARC Investments, LLC, an affiliate of the Company owned and controlled by two of the Company’s directors and their sibling. The offer and sale of the Shares in the Equity Offering was completed in reliance on the exemption from registration under Rule 506(c) of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. See Note 5 for additional information.
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”). The Company operates as a single operating segment.
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.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU is effective for the annual periods beginning after December 15, 2024. The Company has adopted ASU 2023-09 and applied the disclosure requirements on a prospective basis for the year-ended December 31, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, “Disaggregation of Income Statement Expenses,” which requires disclosures of certain disaggregated income statement expense captions into specified categories within the footnotes to the financial statements. The requirements of the ASU are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact ASU No. 2024-03 will have on its consolidated financial statements.
Other new accounting pronouncements issued, but not effective until after December 31, 2025, did not and are not expected to have a material impact on the Company’s financial position, results of operations or liquidity.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
N ote 3 – Investment in 111 West 57 th Partners LLC
In June 2013, the Company purchased an equity interest in the 111 West 57 th Property. The Company is engaged in material disputes and litigation with regard to the 111 West 57 th Property. Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the “Strict Foreclosure”, (as defined below and as further discussed herein), the Company recorded an impairment for the full amount of its equity investment in the 111 West 57th Property in 2017.
For additional information regarding the Company’s 111 West 57 th 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 57 th Property and the Company’s legal proceedings relating to the 111 West 57 th Property, including the Company’s challenge to the Strict Foreclosure, see herein below and Note 8.
In June 2013, 111 West 57 th 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 57 th Property. In consideration for making the Investment, Investment LLC was granted a membership interest in 111 West 57 th Partners LLC (“111 West 57 th Partners”), which indirectly acquired the 111 West 57 th 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 57 th Partners utilizing the equity method of accounting. The Joint Venture plans were to redevelop the 111 West 57 th Property into a luxury residential tower and retail project.
Amounts relating to the Company’s initial June 2013 investment in the 111 West 57 th Property follow:
($ in thousands)
Company’s aggregate initial investment
Company’s aggregate initial membership interest %
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 the Company’s Chairman, President and Chief Executive Office, Mr. Richard A. Bianco (“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 57 th 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.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 57 th Property, the Company’s management and its Board of Directors concluded that, given the continuing development risks of the 111 West 57 th 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 57 th 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 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 57 th Partners obtained financing for the 111 West 57 th 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 57 th 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 57 th Property.
In April 2016, the Company initiated a litigation in the New York State Supreme Court for New York County (the “NY Court”), Index No. 652301/2016, (“AmBase v. 111 West 57th Sponsor LLC, et al.”) (the “Sponsor Action”). The defendants in that litigation include 111 West 57th Sponsor LLC, Kevin Maloney, Michael Stern, and various members and affiliates, Liberty Mutual Insurance Company, and Liberty Mutual Fire Insurance Company (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC. For additional information with regard to the Company’s legal proceedings relating to the 111 West 57th Property, see Note 8.
In December 2016, the Sponsor proposed for approval a “proposed budget” (the “Proposed Budget”), which the Sponsor claims reflected an increase in other costs resulting in the need for additional funding in order to complete the project. The Company disputes, among other items, the calculation of the percentage increase of hard costs shown in the Proposed Budget. The Company believes the aggregate projected hard costs in the Proposed Budget exceed a contractually stipulated limit as a percentage of the hard costs set forth in the prior approved budget, thus allowing Investment LLC the option to exercise its equity put right as set forth in the JV Agreement (the “Equity Put Right”). Consequently, subsequent to the Sponsor’s presentation of the Proposed Budget, Investment LLC notified the Sponsor that it was exercising its Equity Put Right pursuant to the JV Agreement. The Sponsor refused to honor the exercise of Investment LLC’s Equity Put Right. The Sponsor claims, among other things, that the conditions precedent were not met because it claims that the increase in aggregate hard costs in the Proposed Budget does not exceed the contractually stipulated limit that would allow the exercise of the Equity Put Right.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 to allow the Sponsor time (while the building continued to be built) to raise the additional financing that Sponsor claimed would be needed to complete the 111 West 57th project. This forbearance period ended on June 29, 2017. Around this date, the Company was advised that Apollo sold a portion of the mezzanine loan—broken off as a junior mezzanine loan—to an affiliate of Spruce Capital Partners LLC (“Spruce”) (the “Junior Mezzanine Loan”).
On June 30, 2017, Spruce declared an event of default under the Junior Mezzanine Loan and demanded immediate payment of the full outstanding balance of the Junior Mezzanine Loan. Spruce then gave notice to the junior mezzanine borrower that it proposed to accept the pledged collateral (including the joint venture members’ collective interest in the property) in full satisfaction of the joint venture’s indebtedness under the Junior Mezzanine Loan (i.e., a “Strict Foreclosure”).
On July 25, 2017, the Company filed a complaint against Spruce and the Sponsor and requested injunctive relief halting the Strict Foreclosure from the New York State Supreme Court for New York County, (the “NY Court”) Index No. 655031/2017, (the “Lender Action”). The defendants in the Lender Action were 111 W57 Mezz Investor, LLC, Spruce Capital Partners LLC, 111 West 57th Sponsor LLC, Michael Z. Stern, and Kevin P. Maloney (collectively, “Defendants”) and nominal defendants 111 West 57th Partners LLC and 111 West 57 th Mezz 1 LLC. The Company has since voluntarily discontinued its claims against Sponsor, Stern, and Maloney, without prejudice to reinstating them in the Lender Action or any other action. For additional information with regard to the Lender Action, see Note 8.
On August 30, 2017, Spruce issued a Notice of Retention of Pledged Collateral in Full Satisfaction of Indebtedness. By purporting to accept the pledged collateral, pursuant to a Strict Foreclosure process, Spruce claims to have completed the retention of the collateral pledged by the junior mezzanine borrower, and therefore, the Company’s interest in the 111 West 57th Property (the “Strict Foreclosure”). Despite ongoing litigation challenging the legitimacy of the actions taken in connection with the Strict Foreclosure, the Company recorded an impairment for the full amount of its equity investment in the 111 West 57 th Property in 2017. Prior to the Strict Foreclosure, the carrying value of the Company’s equity investment in the 111 West 57 th Property represented a substantial portion of the Company’s assets and net equity value.
For additional information regarding the Company’s legal proceedings relating to the 111 West 57 th Property, including the Company’s challenge to the Strict Foreclosure, see Note 8 .
With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is pursuing, and will continue to pursue, other options to realize the Company’s investment value, various legal courses of action to protect its legal rights, recovery of its asset value from various sources of recovery, as well as considering other possible economic strategies, including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57 th 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 57 th 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 57 th Property.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
While the Company’s management is evaluating future courses of action to protect and/or recover the value of the Company’s equity investment in the 111 West 57 th Property, the adverse developments make it uncertain as to whether any such courses of action will be successful. Any such efforts are likely to require sustained effort over a period of time and substantial additional financial resources. Inability to recover all or most of such value would, in all likelihood, have a material adverse effect on the Company’s financial condition and future prospects. The Company can give no assurances with regard to if it will prevail with respect to any of its claims.
Note 4 - Savings Plans
The Company sponsors the AmBase 401(k) Savings Plan (the “Savings Plan”), which is a “Section 401(k) Plan” within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”). The Savings Plan permits eligible employees to make contributions of a percentage of their compensation, which are matched by the Company at a percentage of the employees’ elected deferral. Employee contributions to the Savings Plan are invested at the employee’s discretion in various investment funds. The Company’s matching contributions are invested in the same manner as the compensation reduction contributions. All contributions are subject to the maximum limitations contained in the Code.
The Company’s matching contributions to the Savings Plan, charged to expense, were as follows:
($ in thousands)
Year Ended
December 31,
Year Ended
December 31,
Company matching contributions
Employer match %
Note 5 - Stockholders’ Equity
Authorized common stock consists of the following:
(shares in thousands)
December 31,
December 31,
Par value
Authorized shares
Issued shares
Outstanding shares
Authorized cumulative preferred stock consists of the following:
(shares in thousands)
December 31,
December 31,
Par value
Authorized shares
Issued shares
Outstanding shares
At the Company’s June 4, 2024, Annual Meeting of Stockholders, the Company’s stockholders approved an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock as noted above.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Changes in the outstanding shares of Common Stock of the Company are as follows:
(in thousands)
Year Ended
December 31,
Year Ended
December 31,
Common stock outstanding at beginning of period
Common stock repurchased for treasury
Issuance of common stock
Sale of treasury stock
Common stock outstanding at end of period
Changes in the treasury shares of Common Stock of the Company are as follows:
(in thousands)
Year Ended
December 31,
Year Ended
December 31,
Treasury stock held at beginning of period
Common stock repurchased for treasury
Issuance of treasury stock
Treasury stock held at end of period
As disclosed in the Company’s periodic financial reports, as previously filed with the Securities and Exchange Commission (“SEC”), on February 28, 2024, the Company commenced a private placement offering (the “Equity Offering”) of shares of the Company’s common stock (the “Shares”).
On April 1, 2024, the Company completed the issuance and sale of the Shares in the Equity Offering in accordance with the terms and conditions thereof, including Shares purchased by an institutional investor not affiliated with the Company and Shares purchased by BARC Investments, LLC, an affiliate of the Company owned and controlled by two of the Company’s directors and their sibling. The Shares sold consisted of authorized unissued shares and treasury shares held. The offer and sale of the Shares in the Equity Offering was completed in reliance on the exemption from registration under Rule 506(c) of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. The Equity Offering is more fully described in the Equity Offering documents and disclosed in the Company’s reports as previously filed with the SEC.
Summary information of private placement Equity Offering is as follows:
($ in thousands, except per share data)
Number of Shares purchased by BARC
Number of Shares purchased by others
Total number of Shares offered and purchased
Equity Offering – purchase price per Share
Total proceeds received from the Equity Offering
Common Stock Repurchase Plan
The Company’s common stock repurchase plan (the “Repurchase Plan”) allows for the repurchase by the Company of its common stock in the open market. The Repurchase Plan is conditioned upon favorable business conditions and acceptable prices for the common stock. Purchases under the Repurchase Plan may be made, from time to time, in the open market, through block trades or otherwise. Depending on market conditions and other factors, purchases may be commenced or suspended at any time or from time to time without prior notice. Pursuant to the Repurchase Plan, the Company has repurchased shares of common stock from unaffiliated parties at various dates at market prices at their time of purchase, including broker commissions. Due to the Company’s current financial condition and ongoing litigation proceedings, the Company does not anticipate that it will make any stock purchases pursuant to the Repurchase Plan in the next twelve months.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Information relating to the Repurchase Plan is as follows:
(in thousands )
Year Ended
December 31,
Common shares repurchased to treasury during the period
Aggregate cost of shares repurchased during the period
(in thousands)
December 31,
Total number of common shares authorized for repurchase
Total number of common shares repurchased to date
Total number of shares that may yet be repurchased
Stockholder Rights Plan
On March 27, 2019, the Company’s Board of Directors adopted an amended and restated shareholder rights plan (the “New Rights Plan”) pursuant to which the Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of Common Stock of the Company on April 17, 2019. In connection with the New Rights Plan, the Company entered into an amended and restated rights agreement with American Stock Transfer & Trust Company, LLC, as rights agent (the “New Rights Agreement”).
Under the New Rights Plan, each Right entitles the holder to purchase from the Company one share of the Company’s common stock, par value $ 0.01 per share (the “Common Stock”), at a price equal to 50 % of the then current market value of the Common Stock. The Rights are not exercisable until either a person or group of affiliated persons acquires 25 % or more of the Company’s outstanding Common Stock or upon the commencement or disclosure of an intention to commence a tender offer or exchange offer for 20 % or more of the Common Stock. The Rights are redeemable by the Company at $ 0.01 per Right at any time until the earlier of 10 days following an accumulation of 20 % or more of the Company’s shares by a single acquirer or group, or the occurrence of certain Triggering Events (as defined in the New Rights Agreement). In addition, the Board of Directors may, at its option and in its sole and absolute discretion, at any time after a Triggering Event, mandatorily exchange all or part of the then outstanding and exercisable Rights for consideration per Right consisting of 50 % of the securities that would be issuable at such time upon the exercise of one Right. The Rights Plan also provides certain administrative provisions that require a stockholder to make certain representations regarding its beneficial ownership of Company securities upon exercise or exchange of Rights. The Rights are subject to adjustment to prevent dilution and expire on March 27, 2029.
Note 6 – Commitments and Contingencies
Rent expense was as follows:
($ in thousands)
Year Ended
December 31,
Year Ended
December 31,
Rent expense
Approximate square feet of leased office space
The Company rents on a short-term basis approximately 150 square feet of office space in Coral Springs, Florida, and approximately 200 square feet of office space in Emerson, NJ.
The Company follows the practical expedient method for the accounting of leases and has elected to follow the short-term lease accounting policy election which allows lessees not to recognize right-of-use assets and liabilities for leases with a term of 12 months or less.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 7 - Income Taxes
The components of income tax expense (benefit) are as follows:
(in thousands)
Year Ended
December 31,
Year Ended
December 31,
Federal - current
State - current
Total current
Federal - deferred
State - deferred
Change in valuation allowance
Total deferred
Income tax expense (benefit)
The Company adopted ASU 2023-09 on a prospective bias beginning with year ended December 31, 2025. A reconciliation of the United States federal statutory income tax rate to our effective income tax rate for the year ended December 31, 2025, is presented accordingly as follows.
(in thousands)
Year Ended
December 31, 2025
Income (loss) before income taxes
Tax expense (benefit):
Federal income taxes federal statutory rate
State and local income tax, net of federal income tax effect
Changes in valuation allowance
Federal and state changes
Non-taxable or non-deductible items
Other
Income tax expense (benefit)
For the years ended December 31, 2025, and 2024, the Company paid no cash amounts related to income taxes. All payments made to taxing authorities were for non-income based tax liabilities and are outside the scope of ASC 740. Taxes in New Jersey comprise the majority (greater than 50%) of the tax effect in this category for the year ended December 31, 2025.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (OBBBA), which includes several changes to U.S. federal income tax law, including temporary and permanent extension, of expiring provisions of the Tax Cuts and Jobs Act of 2017. Significant provisions for corporate taxpayers include permanent 100% bonus depreciation for qualified property, immediate expensing of domestic R&D expenditures, and changes to the limitation on business interest expense deductions under Section 163(j). None of these provisions have a material impact on the Company’s 2025 income tax provision.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate and the provision for income taxes for the year ended December 31, 2024, is as follows:
(in thousands)
Year Ended
December 31,
Income (loss) before income taxes
Tax expense (benefit):
Tax at statutory federal rate
State income taxes
Permanent items, tax credits and other adjustments
Change in valuation allowance
Income tax expense (benefit)
A reconciliation of the United States federal statutory rate to the Company’s effective income tax rate for the year ended December 31, 2024 is as follows:
Year Ended
December 31,
Tax at statutory federal rate
State income taxes
Permanent items, tax credits and other adjustments
Change in valuation allowance
Effective income tax rate
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the “Appropriations Act”) extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70 % of qualified wages paid to employees during the 2021 fiscal year. The Company qualified for the employee retention credit for qualified wages for tax periods ending March 31, 2021, June 30, 2021, and September 30, 2021, and filed a cash refund claim. In April 2025, the Company received the refund claimed and recorded the employee retention credit received as other income in the consolidated statement of operations for the year ended December 31, 2025.
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 $ 144 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 $ 243 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 .
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 2022. 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.
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. Moreover, applicable provisions of the Code and IRS regulations permit the IRS to challenge Company tax positions and filed returns or additional taxes for an extended period of time after such returns are filed. The Company can give no assurances as to the final outcome of any IRS review, if any.
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 indicated that either the Company or the government is entitled to seek further relief “if, and when, the facts justify it.”
The Company’s deferred tax asset, arising from NOL carryforwards, is as follows :
(in thousands)
December 31,
December 31,
Deferred tax asset
Valuation allowance
Net deferred tax asset recognized
A full valuation allowance remains on the remaining deferred tax asset amounts, as management has no basis to conclude that realization is more likely than not. Management does not believe that any significant changes in unrecognized income tax benefits are expected to occur over the next year.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 8 - Legal Proceedings
From time to time, the Company and its subsidiaries may be named as a defendant in various lawsuits or proceedings. At the current time except as set forth below, the Company is unaware of any legal proceedings pending against the Company. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all sources for contributions to settlements. However, there can be no assurance that the Company will prevail with respect to any of its claims.
The Company is a party to material legal proceedings as follows:
AmBase Corp., et al. v. 111 West 57 th Sponsor LLC, et al. In April 2016, AmBase and certain of its subsidiaries and affiliates (collectively, the “Plaintiffs”) initiated a litigation in the New York State Supreme Court for New York County (the “NY Court”), Index No. 652301/2016, (“AmBase v. 111 West 57th Sponsor LLC, et al.”) (the “Sponsor Action”). The defendants in that litigation include 111 West 57th Sponsor LLC (the “Sponsor”), Kevin Maloney, Michael Stern, and various members and affiliates, (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 by not to the 2017 of the junior mezzanine loan on the project. AmBase is seeking compensatory , , 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 , 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 wrote to the NY Court suggesting that the opinion contained certain clerical 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 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 the Company’s appeal to the October 2020 Term of the Appellate Division. On April 29, 2021, the Appellate Division affirmed Justice Bransten’s of the on appeal, while the that were not previously 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 had transpired since the Company filed its previous complaint in the Sponsor Action. On June 18, 2018, Defendants removed the complaint to the U.S. District Court for the Southern District of New York (the “Federal Court”), where it was docketed as case number 18-cv-5482-AT.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 added, 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 leave to amend.
On July 29, 2021, Plaintiffs filed their fourth amended complaint. On September 3, 2021, Defendants submitted a motion to dismiss the fourth amended complaint in part, which Plaintiffs opposed. On May 9, 2022, the NY Court issued a Decision and Order on Defendants’ motion to dismiss, allowing some of AmBase’s claims to go forward and dismissing others (“May 9, 2022 Order”). The NY Court declined to dismiss AmBase’s claims that the Defendants breached their contracts with AmBase by permitting transfers or encumbrances upon 111 West 57th Sponsor LLC’s and 111 West 57th Control LLC’s membership interests in connection with third-party financing without seeking or obtaining prior written approval. The Court also to AmBase’s claim that their obligations under the Development Agreement by, among other things, to use “commercially reasonable efforts” to plan, design, develop, construct, and obtain permits for the Property in a timely manner and to devote sufficient time and attention to its obligations under the Development Agreement.
Claims that the NY Court dismissed included AmBase’s claims that Defendants breached their contract with AmBase by making capital contributions to Sponsor from third parties; consenting to the strict foreclosure without obtaining AmBase’s prior written approval in violation of the “Major Decisions” provision; refusing to cooperate and share information with AmBase’s construction consultant; and engaging in fraud and intentional misconduct in violation of Joint Venture Agreement section 8.5. The NY Court also dismissed AmBase’s claim that Defendants made fraudulent misrepresentations or (as duplicative of the of contract ) and other whose was compelled by a prior decision of the First Department, namely, AmBase’s that Sponsor, Stern, and Maloney their fiduciary duties of loyalty; to impose a trust on the insurance fund; and to impose a trust on Stern’s, Maloney’s, JDS’s, PMG’s, and the construction manager’s construction management fees and Stern’s and Maloney’s equity interest in the Project. Finally, the Court AmBase’s current that piercing certain of ’ corporate veils is warranted. On January 18, 2023, the Company filed a notice of appeal appealing the May 9, 2022 Order with regard to all in the Sponsor Action and the appeal on July 10, 2023.
On November 28, 2023, the Appellate Division First Department issued its decision modifying the NY Court’s decision in part and affirming the NY Court’s decision in part. The First Department modified the NY Court’s decision by reinstating Plaintiffs’ breach of contract claim based on Defendants’ refusing to cooperate and share information with AmBase’s construction consultant and one part of Plaintiffs’ fraudulent misrepresentation or omission claim asserted against one of the individual defendants. The First Department otherwise affirmed the NY Court’s decision.
Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company (“Liberty Mutual Defendants”) were named as defendants in the fourth amended complaint. On September 30, 2021, the Liberty Mutual Defendants answered the fourth amended complaint and filed a counterclaim against the Company’s subsidiaries for specific performance of a pledge agreement securing certain insurance policies issued for the Project. Plaintiffs replied to those counterclaims on October 20, 2021. On March 14, 2024, the parties filed a Stipulation of Discontinuance Against Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company whereby all causes of action, counterclaims, and crossclaims by and against the Liberty Mutual Defendants were discontinued without . The Court entered the Stipulation on March 15, 2024.
Matthew Phillips was also named as an individual defendant in the fourth amended complaint. Following the First Department’s reinstatement of one part of Plaintiffs’ fraudulent misrepresentation or omission claim as asserted against Phillips, on March 26, 2024, the parties filed a Stipulation of Discontinuance Against Matthew Phillips whereby Plaintiffs AmBase Corporation and 111 West 57th Investment LLC discontinued their Fifth Claim for Relief for fraudulent misrepresentation or omission only against Phillips, with prejudice.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
On January 30, 2023, Sponsor, Stern, Maloney, and various defendant members and affiliates filed their answer and asserted counterclaims against the Company’s subsidiaries for breach of the Joint Venture Agreement in connection with a proposed refinancing of the Project in 2016. Plaintiffs replied to those counterclaims on February 21, 2023.
On December 13, 2024, Plaintiffs filed the Note of Issue, certifying that discovery is complete (other than specific outstanding disputes before the Court) and that the case is ready for trial. On February 11, 2025, Plaintiffs and Sponsor Defendants served their respective motions for partial summary judgment and on February 21, 2025, filed the motions with the Court. After briefing was completed, the Court heard oral argument on July 28, 2025. On September 9, 2025, the Court issued a decision granting in part, and denying in part, Sponsor Defendants’ motion, and denying Plaintiffs’ motion. The Court granted Sponsor Defendants’ motion in part, dismissing Plaintiffs’ claims that Sponsor Defendants breached their contracts with by permitting transfers of 111 West 57th Sponsor LLC’s and 111 West 57th Control LLC’s membership interests and claim seeking a declaration that Stern, Maloney, and Sponsor were responsible for ’ , on a joint and several basis, under their agreements with . The Court otherwise Sponsor ’ motion. The Court held a pre-trial conference on September 30, 2025, and subsequently scheduled a bench trial to begin on November 30, 2026.
On October 20, 2025, Plaintiffs filed a motion to reargue the equity put right portion of the Court’s September 9, 2025, decision on the motions for summary judgment. On November 18, 2025, Defendants filed their opposition brief. On November 24, 2025, Plaintiffs filed their reply brief. On March 24, 2026, the Court issued a decision denying the Company’s motion to reargue.
On October 20, 2025, Plaintiffs filed notices of appeal appealing the portion of the Court’s September 9, 2025, decision on the motions for summary judgment pertaining to Plaintiffs’ indemnification claims. On October 30, 2025, Defendants filed a notice of cross-appeal. On December 8, 2025, Plaintiffs filed their opening brief. On January 7, 2026, Defendants filed their response brief. On January 16, 2026, Plaintiffs filed their reply brief. The appeal is fully briefed and remains pending before the Appellate Division, First Department. The Appellate Division, First Department has scheduled oral argument for April 1, 2026.
On February 20, 2025, Sponsor Defendants filed a motion for sanctions against Plaintiffs seeking monetary sanctions, negative inferences, the preclusion of Plaintiffs being able to use certain deposition testimony, and fees and costs. On April 2, 2025, Plaintiffs filed their opposition to Sponsor Defendants’ motion. On April 24, 2025, Sponsor Defendants filed their reply. After briefing was completed, the Court heard oral argument on May 21, 2025. On July 16, 2025, the Court issued a decision granting in part, and denying in part, the motion. The Court granted the motion in part, finding that there was spoliation, but deferred any remedy or sanction until trial when the Court could determine whether and to what extent the gaps in the record prejudice Defendants’ ability to their or ’ . The Court also the motion in part, determining that ’ counsel’s conduct concerning a fact witness, Matthew Phillips, did not Rule 4.2 of the Rules of Professional Conduct or reveal jointly privileged information, and to Phillips’ testimony.
For additional information with regard to the Company’s investment in the 111 West 57 th Property, including the foreclosure, see Note 3 .
AmBase Corp., et al. v. Spruce Capital Partners, et al. In July 2017, the Company initiated a second litigation in the NY Court, Index No. 655031/2017, (the “Lender Action”). The defendants in the Lender 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 57 th Mezz 1 LLC. The Company has since voluntarily discontinued its claims against Sponsor, Stern, and Maloney, without prejudice to reinstating them in the Lender Action or any other action.
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 Lender Action to obtain injunctive relief halting the Strict Foreclosure. For additional information on the events leading to this litigation see Note 3 .
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 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 resolved the Company’s appeal from the order denying a preliminary injunction and dismissing its claims. The Appellate Division affirmed the decision below in part and otherwise dismissed the appeal. It noted that the Company should be allowed to move for leave to amend to state claims for damages and/or the imposition of a constructive trust, as the dismissal of the Company’s claims was without prejudice.
On May 3, 2019, the Company’s subsidiary, Investment LLC, entered into a stipulation with Spruce to amend the complaint in the Lender Action to state claims against Spruce for breaches of the Uniform Commercial Code and Pledge Agreement and various torts. The amended complaint sought 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 57 th 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 in part Spruce’s motion to the amended . 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 some of Investment LLC’s . 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 of the covenant of faith and fair dealing and the remaining .
While the appeal was pending, the parties to the Lender Action conducted discovery. On April 13, 2021, Investment LLC moved for leave to file a Second Amended Complaint to (1) bolster its factual allegations against the existing Defendant, (2) add claims against Spruce Capital Partners, Joshua Crane, and Robert Schwartz (“Spruce Defendants”), Arthur Becker and his affiliates (“Atlantic Defendants”), Apollo and its affiliates (“Apollo Defendants”), and AIG and its affiliates (“AIG Defendants”). On September 30, 2021, the Court granted the motion, and Investment LLC filed its Second Amended Complaint on the same day. On November 22, 2021, the various defendants filed separate motions to dismiss the claims against them. On December 13, 2021, Investment LLC filed a combined to the motions. The filed their replies on January 7, 2022.
On May 17, 2022, Plaintiff in the Lender Action filed a motion requesting that the court hold oral argument on the pending motions to dismiss. The court granted the motion and heard argument on July 22, 2022. During argument, counsel for Plaintiff made an oral motion to amend the complaint to add an express allegation that Defendants committed the tort of interference with contractual relations by procuring Sponsor’s breach of the implied covenant of good faith and fair dealing in the JV Agreement. The court called for supplemental briefs on the issue which were filed on August 5, 2022.
On December 15, 2022, the NY Court issued a decision and order granting in part and denying in part the motions to dismiss (“December 15, 2022 Order”). Specifically, the NY Court declined to dismiss Plaintiff’s claims against ACREFI Mortgage Lending, LLC, Apollo Credit Opportunity Fund III AIV I LP, and AGRE Debt 1 – 111 W 57, LLC (“Apollo Lenders”) for breach of the Pledge Agreement in connection with the strict foreclosure. The NY Court dismissed Plaintiff’s claims for tortious interference with contract against the Spruce Defendants, AIG Defendants, and Apollo , and ’s claim for enrichment the Atlantic .
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
On January 3, 2023, the Apollo Lenders filed a notice of appeal to the Appellate Division seeking review of the December 15, 2022 Order. On January 18, 2023, Plaintiff filed notices of appeal and cross-appeal appealing the December 15, 2022, Order with regard to all Defendants. On August 9, 2023, pursuant to mutual agreement with Plaintiff and the AIG Defendants, Plaintiff filed a stipulation to withdraw its appeal against the AIG Defendants. Following briefing and oral argument, the Appellate Division First Department issued its decision on October 5, 2023. The First Department modified the NY Court’s decision to dismiss Plaintiff’s claim against the Apollo Lenders for breach of the Pledge Agreement in connection with the strict foreclosure, and otherwise affirmed the NY Court’s decision. On November 3, 2023, filed motions for leave to appeal the First Department’s decision to the Court of Appeals in both the First Department and the Court of Appeals. On December 19, 2023, the First Department ’s motion for leave to appeal to the Court of Appeals, which ’s claim the Apollo Lenders for of the Pledge Agreement in connection with the strict and ’s the Spruce and Apollo Lenders for tortious with contract. On April 23, 2024, the Court of Appeals ’s motion for leave to appeal to the Court of Appeals, which ’s Apollo Commercial Real Estate Finance, Inc. and Apollo Global Management, Inc. for tortious with contract.
On January 13, 2023, the Apollo Lenders filed their answer and affirmative defenses to the Company’s Second Amended Complaint together with crossclaims against 111 W57th Mezz Investor LLC, Spruce Capital Partners LLC, Joshua Crane, Robert Schwartz, Michael Stern, Kevin Maloney, 111 West 57th Sponsor LLC, 111 West 57th Control LLC, and 111 West 57th Manager LLC (the “Crossclaim Defendants”). The crossclaims were for (1) contribution against all Crossclaim Defendants; (2) indemnification against 111 W57th Mezz Investor LLC, Spruce Capital, Crane, and Schwartz; and (3) a declaratory judgment that 111 W57th Mezz Investor LLC, through Spruce Capital, Crane, and Schwartz, has indemnified the Apollo Lenders against any and all loss that the Apollo Lenders have incurred or may incur in defending against this case. On January 23, 2023, the Apollo Lenders filed a notice of voluntary discontinuance without prejudice, voluntarily their first crossclaim for contribution only as it was brought Stern, Maloney, Sponsor, 111 West 57th Control LLC, and 111 West 57th Manager LLC. On April 30, 2024, the Apollo Lenders filed a motion for an order of of their crossclaims, which the Court granted on June 7, 2024, and which was entered on June 12, 2024.
On July 12, 2024, Plaintiff served a motion for leave to appeal to the Court of Appeals the judgment, to the extent it was final, against Apollo Lenders, Spruce Capital Partners LLC, Joshua Crane, and Robert Schwartz. Also on July 12, 2024, Plaintiff filed a notice of appeal to the First Department of the trial court’s order granting Apollo Lenders’ motion for an order of discontinuance of their crossclaims. On September 26, 2024, Plaintiff voluntarily withdrew its unperfected appeal to the First Department by filing a letter application to the court under 22 N.Y.C.R.R. § 1250.2(b)(1). On February 18, 2025, the Court of Appeals granted Plaintiff’s motion for leave to appeal to the Court of Appeals. On February 28, 2025, Plaintiff filed the Preliminary Appeal Statement with the Court of Appeals. On May 27, 2025, Plaintiff filed the opening brief and record with the Court of Appeals and on August 5, 2025, Defendants filed their response briefs. On August 26, 2025, Plaintiff filed their reply brief with the Court of Appeals. The appeal is fully briefed and remains pending before the Court of Appeals. The Court of Appeals has scheduled oral for April 14, 2026.
On January 30, 2023, Defendant 111 W57 Mezz Investor LLC filed its answer to Plaintiff’s Second Amended Complaint.
On November 15, 2024, Plaintiff filed the Note of Issue, certifying that discovery is complete and that the case is ready for trial. On February 14, 2025, Plaintiff and 111 W57 Mezz Investor LLC served their respective motions for partial summary judgment (Plaintiff) and summary judgment (111 W57 Mezz Investor LLC) and on February 21, 2025, filed the motions with the Court. After briefing was completed, the Court heard oral argument on July 28, 2025. On September 9, 2025, the Court issued a decision denying both motions. The Court held a pre-trial conference on September 30, 2025, and subsequently scheduled a bench trial to begin on November 30, 2026.
On October 21, 2025, 111 W57 Mezz Investor LLC filed a notice of appeal of the Court’s September 9, 2025, decision on the motions for summary judgment. On October 31, 2025, Plaintiff filed a notice of cross-appeal.
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 57 th Property both under the JV Agreement and as part of the Sponsor Action and the Lender Action. For additional information with regard to the Company’s investment in the 111 West 57 th Property and the Company’s recording of an impairment of its equity investment in the 111 West 57 th Property in 2017, see Note 3.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
111 West 57th Investment LLC, et al. v. Kasowitz Benson Torres LLP, et al. , No. 151139/2024 (N.Y. Sup. Ct.). On June 27, 2024, 111 West 57th Investment LLC, derivatively on behalf of 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC, and 111 West 57th Manager Funding LLC, derivatively on behalf of 111 West 57th Manager LLC (collectively, “Plaintiffs”), filed a Complaint against Kasowitz Benson Torres LLP and Douglas B. Heitner (collectively, “Defendants”) in the Supreme Court of the State of New York, County of New York. Plaintiffs’ claims arise out of Defendants’ representation of 111 West 57th Partners LLC, 111 West 57th Mezz 1 LLC, and 111 West 57th Manager LLC in connection with the real estate development project of 111 West 57th Street (the “Project”) and related financing and other transactions, while simultaneously representing persons and entities with interests adverse to and in conflict with 111 West 57th Partners LLC’s, 111 West 57th Mezz 1 LLC’s, and 111 West 57th Manager LLC’s interests (and the interests of other members of these represented entities), including but not limited to: Michael Stern, Kevin Maloney, and various entities owned and/or controlled by them. Specifically, in representing 111 West 57th Partners LLC, 111 West 57th Mezz 1 LLC, and 111 West 57th Manager LLC throughout the of the financing and the raising of capital for the Project, including, without , the New York Uniform Commercial Code “strict ” in 2017 on the Project, acted to the of these clients to their other, longtime clients, resulting in 111 West 57th Partners LLC an extremely asset in the strict . asserted for of fiduciary duty and legal . sought to recover money , paid legal fees, costs, attorneys’ fees, and such other relief as is just and proper (together with interest thereon). On July 2, 2024, voluntarily their , without and without costs, as Douglas B. Heitner. On August 16, 2024, Kasowitz Benson Torres LLP filed a motion to the . On August 30, 2024, the parties filed a Stipulation of Without , whereby (1) agreed to the action without and without costs to the parties, (2) the parties agreed that all statutes of , laches, or other time-related doctrines were tolled, and (3) the parties agreed that could recommence the action at any time and without by refiling a new and . On September 3, 2024, in light of the stipulation of , the court the motion to as moot. For additional information with regard to the Company’s investment in the 111 West 57th Property, see Note 3 .
AmBase Corp. et al. v. 111 West 57th Sponsor LLC et al. , No. 651782/2024 (N.Y. Sup. Ct.). On April 4, 2024, AmBase Corporation, 111 West 57th Manager Funding LLC, and 111 West 57th Investment LLC, on behalf of itself and derivatively on behalf of 111 West 57th Partners LLC and 111 West 57th Mezz 1 LLC (collectively, “Plaintiffs”), filed a Summons with Notice against 111 West 57th Sponsor LLC, 111 West 57th Control LLC, 111 West 57th Developer LLC, Kevin Maloney, Michael Stern, JDS Construction Group LLC, JDS Development LLC, PMG Construction Group LLC, Property Markets Group, Inc., 111 Construction Manager LLC, Manager Member 111W57 LLC, and John and Jane Does 1–10 (collectively, “Defendants”) in the Supreme Court of the State of New York, County of New York. Plaintiffs’ claims arise out of alleged fraudulent transfers by, between, and/or to Defendants before and during the pendency of the underlying litigation AmBase Corp. et al. v. 111 West 57th Sponsor LLC et al. , Index No. 652301/2016. Specifically, despite knowing of contractual agreements, obligations, and/or between and the , following the commencement of the suit by , continued to make transfers and/or incur obligations in of the law, for no consideration or equivalent value, which rendered the transferor(s) (or when they were already ), and rendering the transferor(s) to meet debts as they become due, to pay actual or future creditors, to meet business/transaction obligations as they arise, and/or with the actual intent to , , and/or and other creditors. The with Notice further stated that, upon information and belief, the scheme included the transfer to one or more insider(s) and or their affiliates, principals, and/or agents. The scheme was from , who were not given the to consent or to . that they have and demanded relief of no less than $ 100 million plus ’ own attorneys’ fees and costs, as well as restitution, trust, the of the conveyances, statutory remedies, and such other and further relief as the Court deems proper. On August 16, 2024, filed a Demand for , requesting that serve the in the action upon . On September 13, 2024, the parties filed a Stipulation of Without , whereby (1) agreed to the action without and without costs to the parties, (2) the parties agreed that all statutes of , laches, or other statutory time-related periods or doctrines were tolled, and (3) the parties agreed that could recommence the action at any time and without by filing a and , which could be served on and Nominal by email. For additional information with regard to the Company’s investment in the 111 West 57th Property, see Note 3 .
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
AmBase Corp., et al. v. ACREFI Mortgage Lending LLC, et al. In June 2018, the Company initiated another litigation in the NY Court, Index No. 655031/2017, (the “Apollo Action”). The defendants in the Apollo Action were ACREFI Mortgage Lending, LLC, Apollo Credit Opportunity Fund III AIV I LP, AGRE Debt 1 – 111 W 57, LLC, and Apollo Commercial Real Estate Finance, Inc. (collectively, the “Apollo Defendants”). In the Apollo Action, the Company alleged that the Apollo Defendants aided and abetted the Sponsor, Stern, and Maloney in breaching their fiduciary duties to the Company in connection with the 111 West 57th Property and tortiously interfered with the JV Agreement. The Company was seeking damages as well as punitive damages for tortious interference with the JV Agreement and aiding and abetting the Sponsor’s of their fiduciary duties to the joint venture. The Apollo filed a motion to on August 17, 2018. On October 22, 2019, the NY Court entered an order the Company’s in the Apollo Action in its entirety. On November 8, 2019, the NY Court entered judgment (the “Apollo ”) the Apollo Action in favor of the Apollo . On December 10, 2019, the Company filed a notice of appeal seeking the appeal of the Apollo . On August 7, 2020, the Company its appeal of the Apollo . After Investment LLC filed its motion to amend the in the Lender Action to add 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 were Custom House Risk Advisors, Inc. and Elizabeth Lowe (collectively, the “Custom House Defendants”). In the Custom House Action, the Company alleged 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 sought as well as of profits the Custom House earned from their conduct. On April 10, 2020, the Custom House waived service of process. In an agreement dated July 31, 2020, the Company and the Custom House agreed to certain terms for a settlement and entered into a settlement agreement which requires that the Custom House certain conditions prior to any of the Custom House Action. On December 6, 2021, the Court approved a stipulation the Company’s and agreed to retain jurisdiction to enforce the settlement agreement. For additional information with regard to the Company’s investment in the 111 West 57 th 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 57 th 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 57 th 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 57 th Property. For additional information with regard to the Company’s investment in the 111 West 57 th 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 57 th 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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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 9 – Litigation Funding Agreement - 2017
In 2017, the Company entered into a Litigation Funding Agreement (the “2017 LFA”) with Mr. R.A. Bianco, to provide litigation funding to the Company for litigation costs in connection with the Company’s legal proceedings relating to the Company’s equity investment in the 111 West 57 th Property.
In 2019, after receiving approval from the Special Committee, the Company and Mr. R.A. Bianco entered into an amendment to the 2017 LFA (the “2019 LFA Amendment”). In summary the 2019 LFA Amendment provided for the release of Mr. R.A. Bianco from all further funding obligations under the 2017 LFA and that, in the event the Company receives any litigation proceeds from the 111 West 57 th Litigation, such litigation proceeds shall be distributed as follows:
(i) first, 100 % to the Company in an amount equal $ 7,500,000 ; and
(ii) thereafter, any additional amounts shall be distributed (a) 75 % to the Company and (b) 25 % to Mr. R.A. Bianco.
Note 10 – Loan(s) Payable – Related Party – BARC Investments LLC
The Company and BARC Investments, LLC, (“BARC”) an affiliate of the Company owned and controlled by two of the Company’s directors and their sibling, entered into an agreement(s) for BARC to provide senior loan(s) to the Company for working capital. The loan(s) are due on the earlier of the date the Company receives funds from any source, (excluding funds received by the Company by any litigation funding entity to fund any of the 111 West 57 th legal proceedings), sufficient to pay all amounts due under the loan(s), including all accrued interest thereon, including without limitation, from a settlement of the 111 West 57 th legal proceedings or (b) the date(s) indicated herein.
The Company and BARC further agreed that amounts due pursuant to the loan(s) plus interest can be converted by BARC, at its option, into a litigation funding agreement pari-passu with any litigation funding agreement entered into by the Company with a litigation funding entity.
Information regarding the loan(s) payable - related party - BARC Investments LLC is as follows: ($ in thousands)
Date of loan(s)
Rate
Due Date
December 31,
December 31,
August 2024
August 31, 2027
Information regarding accrued interest expense on the loan(s) payable is as follows:
(in thousands)
December 31,
December 31,
Accrued interest expense
For additional information regarding the Company’s litigation funding efforts, see Note 1. For additional information regarding the Company’s legal proceedings relating to the 111 West 57 th Property, including the Company’s challenge to the Strict Foreclosure, see Note 3 and Note 8. For additional information regarding the March 2026 note(s) payable conversion into a litigation funding agreement and the related accrued interest payable conversion to a note payable see Note 12.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 11 – Loan(s) Payable – Related Party – Mr. R.A. Bianco
The Company and Mr. R.A. Bianco entered into an agreement(s) for Mr. R.A. Bianco to provide senior loan(s) to the Company for working capital. The loan(s) are due on the earlier of the date the Company receives funds from any source, (excluding funds received by the Company by any litigation funding entity to fund any of the 111 West 57 th legal proceedings), sufficient to pay all amounts due under the loan(s), including all accrued interest thereon, including without limitation, from a settlement of the 111 West 57 th legal proceedings or (b) the date(s) indicated herein.
The Company and Mr. R.A. Bianco further agreed that amounts due pursuant to the loan(s) plus interest can be converted by Mr. R.A. Bianco, at his option, into a litigation funding agreement pari-passu with any litigation funding agreement entered into by the Company with a litigation funding entity.
In January 2024 through March 2024, the Company and Mr. R.A. Bianco entered into additional agreements pursuant to which Mr. R.A. Bianco made additional loans to the Company aggregating $ 350,000 , for use as working capital in accordance with the same terms of the loan(s) payable noted herein.
In April 2024, with funds received from the Equity Offering, the Company repaid Mr. R.A. Bianco the full amount of the loan(s) payable aggregating $ 3,198,000 , plus accrued interest. For additional information, see N ote 11.
In September 2024 and December 2024, Mr. R.A. Bianco made an additional loan(s) to the Company, for use as working capital in accordance with the same terms of the loan(s) payable noted herein.
Information regarding the loan(s) payable - related party – R.A. Bianco, entered into September 2024 forward, is as follows: ($ in thousands)
Date of loan(s)
Rate
Due Date
December 31,
December 31,
September 2024
September 30, 2027
December 2024
December 31, 2027
March 2025
March 31, 2028
March 2025
March 31, 2028
May 2025
May 31, 2028
June 2025
June 30, 2028
July 2025
July 31, 2028
September 2025
September 30, 2028
September 2025
September 30, 2028
November 2025
November 30, 2028
December 2025
December 31, 2028
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Information regarding accrued interest expense on the loan(s) payable is as follows:
(in thousands)
December 31,
December 31,
Accrued interest expense
In January 2026, the Company and Mr. R.A. Bianco entered into an additional agreement(s) pursuant to which Mr. R.A. Bianco made additional loan(s) to the Company of $ 100,000 for use as working capital in accordance with the same terms of the loan(s) payable noted herein.
In February 2026, the Company and Mr. R.A. Bianco entered into an additional agreement(s) pursuant to which Mr. R.A. Bianco made additional loan(s) to the Company of $ 300,000 for use as working capital in accordance with the same terms of the loan(s) payable noted herein.
For additional information regarding the Company’s litigation funding effort, see Note 1. For additional information regarding the Company’s legal proceedings relating to the 111 West 57 th Property, including the Company’s challenge to the Strict Foreclosure, see Note 3 and Note 8. For additional information regarding the March 2026 note(s) payable conversion into a litigation funding agreement and the related accrued interest payable conversion to a note payable see Note 12.
Note 12 – Litigation Funding Agreement(s) - 2026
The Company has been considering and evaluating various strategic funding and financing alternatives in order to raise capital. Possible funding alternatives considered have included a variety of sources, including but not limited to litigation funding agreements, offerings of equity or debt securities, loans, or any combination thereof with third parties, existing shareholders of the Company and/or Company management.
In order to provide the necessary cash resources to continue operations and continue the litigation related to the 111 West 57th Property, and pay amounts currently owed, on March 2, 2026, the Company and RAB entered into a litigation funding agreement (the “RAB 2026 LFA”), pursuant to which the Company and RAB have agreed that RAB will provide up to an aggregate initial amount of $ 6,000,000 (plus such additional amounts as may be necessary from time to time and as agreed to by the Company and RAB at such time), (the “Litigation Fund Amount”). Pursuant to the RAB 2026 LFA the promissory notes between RAB and the Company outstanding as of March 2, 2026, in the aggregate principal amount of $ 4,000,000 (the “RAB Promissory Notes”), shall be deemed converted to the RAB 2026 LFA. The accrued but unpaid interest on the RAB Promissory Notes of approximately $ 219,000 stayed outstanding and will continue to accrue interest on the same terms as the RAB Promissory Notes but the maturity date of this indebtedness shall be March 31, 2029 . Additionally, (i) in March 2026, RAB paid the Company $ 1,000,000 to be used to pay a portion of outstanding litigation related expenses and (ii) will pay the Company an additional $ 1,000,000 to be retained and used by the Company for working capital needs and certain other litigation related expenses, including expert witness fees, consulting fees and disbursements incurred by the Company or reasonably anticipated to be incurred by the Company. The date that the entire initial funding amount is received by the Company shall be deemed to be the “Funding Date”.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In consideration for RAB’s commitment to provide the Litigation Fund Amount, the Company shall distribute any and all consideration it actually receives in connection with the 111 West 57 th litigations, including an amount in cash equal to the fair market value of any non-cash consideration received, whether by judgment, award, order, settlement or otherwise, including, without limitation, any damages (punitive or otherwise), penalties, or interest (such amounts, collectively, the “ Litigation Proceeds ”) as follows:
Twenty-five percent ( 25 %) of all Litigation Proceeds that are in excess of $ 7,500,000 (the “ Preliminary Company Preference Amount ”) to RAB, pursuant to the 2017 LFA.
The remaining seventy-five percent ( 75 %) of all Litigation Proceeds that are in excess of the Preliminary Company Preference Amount, plus the Preliminary Company Preference Amount, to RAB and the Company as follows:
If and to the extent the Litigation Proceeds are received after the Funding Date but on or before September 30, 2026: (x) first, to RAB until the aggregate amount received by RAB hereunder equals the sum of the Litigation Fund Amount plus an amount equal to fifty percent ( 50 %) of the aggregate Litigation Fund Amount, and (y) then, the remaining Litigation Proceeds, if any, to the Company; and
If and to the extent the Litigation Proceeds are received after September 30, 2026 but on or before the twelve (12) month anniversary of the Funding Date: (x) first, to RAB until the aggregate amount received by RAB hereunder equals the sum of the Litigation Fund Amount plus one (1) times the aggregate Litigation Fund Amount, and (y) then, the remaining Litigation Proceeds, if any, to the Company.
If and to the extent the Litigation Proceeds are received after the twelve (12) month anniversary of the Funding Date but on or before the twenty four (24) month anniversary of the Funding Date: (x) first, to RAB until the aggregate amount received by RAB hereunder equals the sum of the Litigation Fund Amount plus one and one-half ( 1.5 ) times the aggregate Litigation Fund Amount, and (y) then, the remaining Litigation Proceeds, if any, to the Company.
If and to the extent the Litigation Proceeds are received after the twenty-four (24) month anniversary of the Funding Date: (x) first, to RAB until the aggregate amount received by RAB hereunder equals the sum of the Litigation Fund Amount plus one and eight tenths ( 1.8 ) times the aggregate Litigation Fund Amount, and (y) then, the remaining Litigation Proceeds, if any, to the Company.
The Company also has a note payable to BARC Investments LLC (“BARC”) of $ 2,000,000 plus accrued interest (the “2024 BARC Note”). Pursuant to the 2024 BARC Note, the amounts due BARC, at its option, could be converted into a litigation funding agreement pari-passu with other litigation funding entity(ies). In order to allow the Company to use its existing working capital and the proceeds of the Litigation Fund Amount (as defined in the LFA agreements) to be provided by other Funders to finance the Company’s continued expenses with respect to the Future Recovery Litigation, rather than be required to apply or reserve such working capital and proceeds for repayment of the 2024 BARC Note, in March 2026, BARC exercised its option under the 2024 BARC Note and the Company and BARC have entered into an agreement (the “BARC 2026 LFA”) pursuant to which BARC converted the $ 2,000,000 principal amount of the 2024 BARC Note, (plus such additional amounts as may be necessary from time to time and as agreed to by the Company and BARC at such time), into a right to receive Litigation Proceeds on terms pari-passu with those provided under the RAB 2026 LFA. The accrued but unpaid interest on the 2024 BARC Note of approximately $ 200,000 stayed outstanding and will continue to accrue interest on the same terms as the 2024 BARC Note but the maturity date of this indebtedness shall be March 31, 2029 .
As part of the RAB 2026 LFA and the BARC 2026 LFA, the Company shall distribute any consideration it actually receives in connection with the 111 West 57 th Litigations in accordance with the terms of the RAB 2026 LFA and BARC 2026 LFA. The terms of the RAB 2026 LFA and BARC 2026 LFA will therefore further reduce the Company’s share of any future litigation proceeds.
The RAB 2026 LFA and the BARC 2026 LFA also contain customary representations and warranties and agreements of the parties and customary indemnification rights and obligations of the parties. The foregoing description(s) of the RAB 2026 LFA and the BARC 2026 LFA are qualified entirely by reference to the agreements, a copy of the RAB 2026 LFA and the BARC 2026 LFA were filed as an exhibit to the Company’s previously filed reports with the Securities and Exchange Commission and are incorporated herein by reference.
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AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 13 – Segment Reporting
The Company manages the Company’s business activities on a consolidated basis and operates as a single operating segment. The Company currently has no operations, does not generate operating revenues and the Company’s assets consist of cash and cash equivalents. The Company is engaged in the management of its assets and liabilities. The Company is principally involved with disputes and litigation relating to its interest in the 111 West 57th Property, and is pursuing, and will continue to pursue, options to realize the Company’s investment value, and to protect its legal rights, and recovery of its asset value from various sources of recovery.
The accounting policies of the Company as a single segment are the same as those described in Note 1 – Summary of Significant Accounting Policies. Our CODM is our President and Chief Executive Officer, Richard A. Bianco. The CODM evaluates the Company’s financial needs and legal proceeding results based on the progress of the current legal proceedings in consultation with the Company’s legal counsel to determine how to allocate resources of the Company as a whole, including continuing to pursue recovery in the Company’s legal proceedings. The Company does not have any revenue and the CODM does not review assets in evaluating the results of the business segment; therefore, such information is not presented. The following table provides the operating financial results for the Company, which are the same for the Company on a consolidated basis:
(in thousands)
Years Ended December 31,
Operating expenses:
Compensation and benefits
Professional and outside services
Property operating and maintenance
Insurance
Other operating
Total operating expenses
Operating income (loss)
Other income
Interest income
Interest expense
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
Note 14 - Subsequent Events
The Company has performed a review of events subsequent to the balance sheet dated December 31, 2025, through the report issuance date. Other than as discussed herein, the Company has no events, subsequent to December 31, 2025, and through the date these consolidated financial statements were issued.
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