10-Q 1 form10q93005.txt FORM 10-Q SEPT. 30, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2005 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 1-7265 AMBASE CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-2962743 (State of incorporation) (I.R.S. Employer Identification No.) 100 PUTNAM GREEN, 3RD FLOOR GREENWICH, CONNECTICUT 06830 (Address of principal executive offices) (Zip Code) (203) 532-2000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- ------- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES NO X ------- ------- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO X ------- ------- At November 10, 2005, there were 46,233,519 shares outstanding of the registrant's common stock, $0.01 par value per share. AmBase Corporation Quarterly Report on Form 10-Q September 30, 2005

TABLE OF CONTENTS Page ------ PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited).....................................................................1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................13 Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................16 Item 4. Controls and Procedures.............................................................................17 PART II - OTHER INFORMATION Item 1. Legal Proceedings...................................................................................18 Item 6. Exhibits............................................................................................18 Signatures ....................................................................................................19

PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS AMBASE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (in thousands, except for share amounts)

September 30, December 31, 2005 2004 ======== ========= Assets: Cash and cash equivalents......................................................... $ 9,003 $10,124 Investment securities: Held to maturity (market value $33,246 and $8,586, respectively).............. 33,245 8,590 Available for sale, carried at fair value .................................... 1,841 2,112 -------- -------- Total investment securities....................................................... 35,086 10,702 -------- -------- Accounts receivable............................................................... - 1 Real estate owned: Land............................................................................ 554 6,954 Buildings and improvements...................................................... 1,900 12,810 -------- -------- 2,454 19,764 Less: accumulated depreciation................................................. (219) (763) -------- -------- Real estate owned, net............................................................ 2,235 19,001 Other assets...................................................................... 73 1,032 -------- -------- Total assets...................................................................... $ 46,397 $ 40,860 ======== ======== Liabilities and Stockholders' Equity: Liabilities: Accounts payable and accrued liabilities.......................................... $ 1,294 $ 1,495 Supplemental retirement plan...................................................... 13,159 11,594 Other liabilities................................................................. 40 2,197 -------- -------- Total liabilities................................................................. 14,493 15,286 -------- -------- Commitments and contingencies (Note 3)............................................ Stockholders' equity: Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued and 46,233,519 outstanding)......................................................... 464 464 Paid-in capital................................................................... 547,956 547,956 Accumulated other comprehensive income............................................ (368) (375) Accumulated deficit............................................................... (515,463) (521,786) Treasury stock, at cost - 176,488 shares.......................................... (685) (685) -------- -------- Total stockholders' equity........................................................ 31,904 25,574 -------- -------- Total liabilities and stockholders' equity........................................ $ 46,397 $ 40,860 ======== ========

The accompanying notes are an integral part of these consolidated financial statements. AMBASE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations Third Quarter and Nine Months Ended September 30 (Unaudited) (in thousands, except per share data)

Third Quarter Nine Months 2005 2004 2005 2004 Revenues: ==== ==== ==== ==== Rental income....................................... $ 41 $ 49 $ 127 $ 139 Operating expenses: Compensation and benefits........................... 1,098 1,021 3,373 3,130 Professional and outside services................... 423 206 1,537 478 Property operating and maintenance ................. 29 31 99 79 Depreciation ...................................... 13 13 38 38 Insurance........................................... 17 17 61 70 Other operating .................................... 41 34 127 125 ---------- ---------- --------- ---------- 1,621 1,322 5,235 3,920 ---------- ---------- --------- ---------- Operating loss ..................................... (1,580) (1,273) (5,108) (3,781) ---------- ---------- --------- ---------- Interest income..................................... 333 142 604 380 Realized gains on sales of investment securities.... - 123 20 459 ---------- ---------- --------- ---------- Loss from continuing operations before income taxes................................... (1,247) (1,008) (4,484) (2,942) Income tax expense.................................. (180) (30) (240) (90) ---------- ---------- --------- ---------- Loss from continuing operations..................... (1,427) (1,038) (4,724) (3,032) ---------- ---------- --------- ---------- Income from operation of discontinued property...... 63 344 749 994 Gain on disposition................................. 10,298 - 10,298 - ---------- ---------- ---------- ---------- Income from discontinued operations................. 10,361 344 11,047 994 ---------- ---------- ---------- ---------- Net income (loss)................................... $8,934 $ (694) $ 6,323 $(2,038) ========== ========== ========== ========== Per share data: Basic: Loss from continuing operations..................... $(0.03) $(0.02) $ (0.10) $ (0.06) Income from discontinued operations................. 0.22 0.01 0.24 0.02 ---------- ---------- ---------- ---------- Net income (loss) attributable to common stockholders................................... $ 0.19 $(0.01) $ 0.14 $ (0.04) ========== ========== ========== ========== Assuming dilution: Loss from continuing operations..................... $(0.03) $(0.02) $ (0.10) $ (0.06) Income from discontinued operations................. 0.22 0.01 0.24 0.02 ---------- ---------- ---------- ---------- Net income (loss) attributable to common stockholders................................... $ 0.19 $(0.01) $ 0.14 $ (0.04) ========== ========== ========== ========== Weighted average common shares outstanding: Basic............................................... 46,234 46,234 46,234 46,222 ========== ========== ========== ========== Diluted............................................. 46,234 46,234 46,234 46,222 ========== ========== ========== ==========

The accompanying notes are an integral part of these consolidated financial statements. AMBASE CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) Third Quarter and Nine Months Ended September 30 (Unaudited) (in thousands)

Third Quarter Nine Months 2005 2004 2005 2004 ====== ===== ===== ===== Net income (loss)..................................................... $ 8,934 $ (694) $ 6,323 $(2,038) Unrealized holding gains on investment securities available for sale............................................... 81 90 12 157 ------- ------- ------- ------- Comprehensive income (loss)........................................... $ 9,015 $ (604) $ 6,335 $(1,881) ======= ======= ======= =======

The accompanying notes are an integral part of these consolidated financial statements. AMBASE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months Ended September 30 (Unaudited) (in thousands)

2005 2004 ==== ==== Cash flows from operating activities: Loss from continuing operations.................................................... $(4,724) $(3,032) Adjustments to reconcile loss from continuing to net cash used by continuing operations: Depreciation and amortization.................................................. 38 38 Accretion of discount - investment securities.................................. (326) (77) Realized gains on investment securities available for sale.................... (20) (459) Changes in other assets and liabilities: Accounts receivable............................................................ 1 20 Other assets................................................................... 402 (30) Accounts payable and accrued liabilities....................................... (201) (107) Other liabilities.............................................................. (287) 1,268 Other, net......................................................................... 3 - -------- -------- Net cash used by continuing operating activities................................... (5,114) (2,379) -------- -------- Income from discontinuing operations............................................... 11,047 994 Adjustments to reconcile income from discontinued operations to net cash provided (used) by discontinued operations: Gain from sale of discontinued operations...................................... (10,298) - Depreciation and amortization related to discontinued operations............... 140 210 Changes in other assets and liabilities related to discontinued operations: Other assets and other liabilities............................................. (305) (115) -------- -------- Net cash provided by discontinued operations....................................... 584 1,089 -------- -------- Net cash used by operating activities.............................................. (4,530) (1,290) -------- -------- Cash flows from investing activities: Maturities of investment securities - held to maturity............................. 61,466 25,894 Purchases of investment securities - held to maturity.............................. (85,795) (17,040) Purchases of investment securities - available for sale............................ (252) (17,426) Sales of investment securities - available for sale................................ 548 16,583 Proceeds from sale of real estate owned............................................ 27,442 - -------- -------- Net cash provided by investing activities.......................................... 3,409 8,011 -------- -------- Cash flows from financing activities: Stock options exercised............................................................ - 17 -------- -------- Net cash provided by financing activities.......................................... - 17 -------- -------- Net increase (decrease) in cash and cash equivalents............................... (1,121) 6,738 Cash and cash equivalents at beginning of period................................... 10,124 2,785 -------- -------- Cash and cash equivalents at end of period......................................... $ 9,003 $ 9,523 ======== ========= Supplemental cash flow disclosures: Income taxes paid.................................................................. $ 107 $ 121 ======== =========

The accompanying notes are an integral part of these consolidated financial statements. AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 1 - Organization The accompanying consolidated financial statements of AmBase Corporation and its wholly-owned subsidiaries (the "Company") are unaudited and subject to year-end adjustments. All material intercompany transactions and balances have been eliminated. In the opinion of management, the interim financial statements reflect all adjustments, consisting only of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of the Company's financial position and results of operations. Results for interim periods are not necessarily indicative of results for the full year. Certain reclassifications have been made to the prior year consolidated financial statements to conform with the current year presentation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions, that it deems reasonable, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates and assumptions. The unaudited interim financial statements presented herein should be read in conjunction with the Company's consolidated financial statements filed in its Annual Report on Form 10-K for the year ended December 31, 2004. The Company's assets currently consist primarily of cash and cash equivalents, investment securities, and real estate owned. The Company's main source of operating revenue is rental income earned on real estate owned. The Company also earns non-operating revenue principally consisting of investment earnings on investment securities and cash equivalents. The Company continues to evaluate a number of possible acquisitions, and is engaged in the management of its assets and liabilities, including the contingent assets, as described in Part II - Item 1. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all sources for contributions to settlements. In July 2005, the Company completed the sale of its 38,000 square foot office building at Two Soundview Drive in Greenwich, Connecticut ("Two Soundview"). Accordingly, the results of operations of Two Soundview have been retroactively reclassified as discontinued operations in the accompanying Consolidated Statement of Operations for the periods presented in accordance with Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). See note 7 herein for further information. The Company's management expects that operating cash needs for the remainder of 2005 will be met principally by the receipt of non-operating revenue consisting of investment earnings on investment securities and cash equivalents, rental income received, and the Company's current financial resources. Note 2 - Recent Accounting Pronouncements In October 2004, the Financial Accounting Standards Board issued SFAS No. 123R (revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires companies to categorize share-based payments as either liability or equity awards. For liability awards, companies will remeasure the award at fair value at each balance sheet date until the award is settled. Equity classified awards are measured at the fair value and are not remeasured. SFAS 123R will be effective for annual periods beginning January 1, 2006. Awards issued, modified, or settled after the effective date will be measured and recorded in accordance with SFAS 123R. The Company believes that the implementation of this standard will not have a material effect on the Company's consolidated financial position or results of operations. AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 3 - Legal Proceedings The information contained in Item 8 - Note 10 in AmBase's Annual Report on Form 10-K for the year ended December 31, 2004, is incorporated by reference herein and the defined terms set forth below have the same meaning ascribed to them in that report. There have been no material developments in such legal proceedings, except as set forth below. The Company is or has been a party in a number of lawsuits or proceedings, including the following: Supervisory Goodwill Litigation. In May and June of 2005, the Government provided the Company with access to Carteret's documents and documents relating to the management of the receivership. The Company selected approximately 3 million pages of documents to be imaged at the Government's expense. On September 15, 2005, a status conference was held before Judge Smith. The Government indicated that it would complete production of all the images of the selected materials by the end of September 2005. As of October 21, 2005, the Government has represented that it has produced all responsive materials; however, the Company is still in the process of reviewing the completeness of the production. Additionally, at the status conference, all parties agreed that the schedule previously set forth by the Court's May 23, 2005 order should be changed in one respect: the Company will be given 75 days from the completion of the document production to complete discovery. In all other respects, the schedule set forth by the May 23, 2005 order will remain in effect. The Court issued an order on September 26, 2005 memorializing this agreement. The Court scheduled a status conference for January 11, 2006. Assuming the Government has produced all responsive materials as of October 21, 2005, fact discovery is scheduled to be completed in January 2006. No assurance can be given regarding the ultimate outcome of the litigation. The Court of Claims decisions in the Company's case, as well as other decisions in Winstar-related cases, are publicly available and may be relevant to the Company's Supervisory Goodwill claims, but are not necessarily indicative of the ultimate outcome of the Company's actions. Litigation with SDG, Inc. In September 2000, the Company filed a lawsuit in the United States District Court for the District of Connecticut (Case No. 3:00CV1694 (DJS)) (the "Court") against SDG, Inc. ("SDG") and certain of its officers and directors to pursue various claims against such parties, including, but not limited to, the claims that SDG failed to honor a binding contract which granted the Company the right to act as the exclusive investment banking/financial advisor to SDG, and its subsidiaries and affiliates. SDG filed various counterclaims. On August 3, 2005, the Court issued its decision denying all the Company's claims and the defendants' counterclaims. The Company filed a Notice of Appeal on September 6, 2005 and continues to review its options. The Company will continue to monitor the status of SDG and its subsidiary, AMDG, Inc. No assurances can be given regarding the ultimate outcome of this litigation. Note 4 - Cash and Cash Equivalents Highly liquid investments, consisting principally of funds held in short-term money market accounts with original maturities of less than three months, are classified as cash equivalents. AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 5 - Investment Securities Investment securities - held to maturity consist of U.S. Treasury Bills with original maturities of one year or less and are carried at amortized cost based upon the Company's intent and ability to hold these investments to maturity. Investment securities - available for sale, consist of investments in equity securities held for an indefinite period and are carried at fair value with net unrealized gains and losses recorded directly in a separate component of stockholders' equity. Investment securities consist of the following:

September 30, 2005 December 31, 2004 ========================================== ===================================== Cost or Cost or Carrying Amortized Fair Carrying Amortized Fair (in thousands) Value Cost Value Value Cost Value ====== ========= ======= ======== ========= ====== Held to Maturity: U.S. Treasury Bills...... $ 33,245 $ 33,245 $ 33,246 $ 8,590 $ 8,590 $ 8,586 Available for Sale: Equity Securities........ 1,841 1,798 1,841 2,112 2,075 2,112 ----------- ---------- ---------- ---------- ----------- --------- $ 35,086 $ 35,043 $ 35,087 $ 10,702 $ 10,665 $10,698 =========== ========== ========== ========== =========== =========

The gross unrealized gains (losses) on investment securities, at September 30, 2005 and December 31, 2004 consist of the following:

(in thousands) 2005 2004 ======= ====== Held to Maturity: Gross unrealized gain (losses).................................................... $ 1 $ (4) ======= ====== Available for Sale: Gross unrealized gains............................................................ $ 51 $ 41 ======= ====== Gross unrealized losses........................................................... $ (8) $ (4) ======= ======

AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements The realized gain on the sales of investment securities available for sale for the third quarter and nine months ended September 30, 2005 and 2004, are as follows:

Third Quarter Nine Months (in thousands) 2005 2004 2005 2004 ====== ====== ====== ====== Net sale proceeds................................................... $ - $8,310 $ 548 $16,583 Cost basis.......................................................... - (8,187) (528) (16,124) ------ ------ ------ ------- Realized gains...................................................... $ - $ 123 $ 20 $ 459 ====== ====== ====== =======

During the nine months ended September 30, 2004, the Company purchased and sold a $7 million U.S. Treasury Note resulting in a gain of $89,000 which is included in realized gains on investment securities in the Consolidated Statement of Operations. During the third quarter ended September 30, 2004, the Company purchased and sold an $8.0 million U.S. Treasury Note, resulting in a gain of $24,000 which is included in realized gains on investment securities in the Consolidated Statement of Operations for the third quarter and nine months ended September 30, 2004. Note 6 - Real Estate Owned As of September 30, 2005, the Company owns one commercial office building in Greenwich, Connecticut that contains approximately 14,500 square feet. The Company utilizes a small portion of the office space for its executive offices, with the remaining square footage available for lease to unaffiliated third parties. Depreciation expense is recorded on a straight-line basis over 39 years. The building and improvements are carried at cost, net of accumulated depreciation of $219,000 at September 30, 2005. At December 31, 2004, building and improvements are net of $763,000 of accumulated depreciation, which includes $582,000 of accumulated depreciation for Two Soundview, which was sold in July 2005, as further discussed in note 7 herein. The Company earns rental income under operating leases with tenants. Minimum lease rentals are recognized on a straight-line basis over the terms of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable and is included in other assets on the Consolidated Balance Sheets. Revenue from tenant reimbursement of common area maintenance, utilities and other operating expenses are recognized pursuant to the tenant's lease when earned and due from tenants. Included in property operating and maintenance are expenses for common area maintenance, utilities, real estate taxes and other reimbursable operating expenses, which have not been reduced by amounts reimbursable by tenants pursuant to applicable lease agreements. See note 7 herein for information regarding the Company's sale of Two Soundview in July 2005. AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 7 - Discontinued Operations In May 2005, the Company entered into an agreement to sell Two Soundview, originally purchased in December 2002, to Ceruzzi Holdings, LLC, an unaffiliated third party. In July 2005, the Company completed the sale of Two Soundview. The sale price was $28,000,000 less normal real estate closing adjustments. As a result of the sale of Two Soundview, the results of operations of Two Soundview have been designated as discontinued operations, and the Consolidated Statements of Operations for the periods presented herein have been retroactively reclassified to report the income from discontinued operations separately from the results of continuing operations by excluding the operating revenues and expenses of discontinued operations from the respective statement captions, in accordance with SFAS 144. A gain from the sale, of $10,298,000, is reflected in the Company's financial statements for the third quarter and nine month periods ending September 30, 2005. Net gain on sale of real estate is as follows:

(in thousands) Gross sales price............................................................. $28,000 Less: Transactions costs..................................................... (558) --------- Net cash proceeds............................................................. 27,442 Less: Real estate carrying value (net of accumulated depreciation of $722,000).. (16,588) Other assets.............................................................. (556) --------- Net gain on sale of real estate............................................... $10,298 =========

Transaction costs above include broker commissions, transfer taxes, and legal and other fees. Other assets above includes $519,000 of deferred rental revenue resulting from the recognition of rental revenue on a straight-line basis over the terms of tenant leases versus contractual lease payment terms, and $37,000 of real estate commissions previously capitalized. At December 31, 2004, other liabilities in the Consolidated Balance Sheet include $305,000 of tenant security deposits relating to Two Soundview. Income from discontinued operations, as summarized below, for the third quarter and nine months periods ended September 30, 2005, reflects the results of operations of Two Soundview and the net gain realized upon disposition. Income from discontinued operations is as follows:

Third Quarter Nine Months (in thousands) 2005 2004 2005 2004 Revenues: ====== ====== ====== ====== Rental income............................................. $ 98 $ 512 $ 1,158 $ 1,513 Operating expenses: Professional and outside services......................... 2 7 25 27 Property operating and maintenance........................ 30 86 231 265 Depreciation.............................................. - 70 140 210 Insurance................................................. 2 4 11 13 Other operating........................................... 1 1 2 4 -------- ------- ------- ------- 35 168 409 519 -------- ------- ------- ------- Income from operation of discontinued property............ 63 344 749 994 Gain on disposition....................................... 10,298 - 10,298 - -------- ------- ------- ------- Income from discontinued operations....................... $ 10,361 $ 344 $11,047 $ 994 ========= ======= ======= =======

AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements No adjustment for income taxes has been reflected in the income from discontinued operations presented above as the Company has sufficient regular net operating loss ("NOL") carryforwards and alternative minimum tax carryforwards to offset the gain. However, the ultimate utilization of such NOL's before their expiration is uncertain. Accordingly, the Company has reflected a full valuation allowance on such tax assets and has not reflected any net tax benefit. Note 8 - Income Taxes The Company and its 100% owned domestic subsidiaries file a consolidated federal income tax return. The Company recognizes both the current and deferred tax consequences of all transactions that have been recognized in the financial statements, calculated based on the provisions of enacted tax laws, including the tax rates in effect for current and future years. Net deferred tax assets are recognized immediately when a more likely than not criterion is met; that is, greater than 50% probability exists that the tax benefits will actually be realized sometime in the future. The Company has calculated a net deferred tax asset of $31 million and $34 million as of September 30, 2005 and December 31, 2004, respectively, arising primarily from net operating loss ("NOL") carryforwards, alternative minimum tax ("AMT") credits (not including the anticipated tax effects of NOL's expected to be generated from the Company's tax basis in Carteret Savings Bank, F.A. and subsidiaries ("Carteret"), resulting from the election decision, as more fully described below). At the present time, management has no basis to conclude that realization is more likely than not and a valuation allowance has been recorded against net deferred tax assets. As a result of the Office of Thrift Supervision's December 4, 1992 placement of Carteret in receivership, under the management of the Resolution Trust Corporation ("RTC")/Federal Deposit Insurance Corporation ("FDIC"), and then proposed Treasury Reg. ss.1.597-4(g), the Company had previously filed its 1992 and subsequent federal income tax returns with Carteret disaffiliated from the Company's consolidated federal income tax return. Based upon the impact of Treasury Reg. ss.1.597-4(g), which was issued in final form on December 20, 1995, a continuing review of the Company's tax basis in Carteret, and the impact of prior year tax return adjustments on the Company's 1992 federal income tax return as filed, the Company decided not to make an election pursuant to final Treasury Reg. ss.1.597-4(g) to disaffiliate Carteret from the Company's consolidated federal income tax return effective as of December 4, 1992 (the "Election Decision"). The Company has made numerous requests to the RTC/FDIC for tax information pertaining to Carteret and the resulting successor institution, Carteret Federal Savings Bank ("Carteret FSB"); however, all of the information still has not been received. Based on the Company's Election Decision, as described above, and the receipt of some of the requested information from the RTC/FDIC, the Company has amended its 1992 consolidated federal income tax return to include the federal income tax effects of Carteret and Carteret FSB (the "1992 Amended Return"). The Company is still in the process of amending its consolidated federal income tax returns for 1993 and subsequent years. The Company anticipates that, as a result of filing a consolidated federal income tax return with Carteret FSB, a total of approximately $170 million of tax NOL carryforwards will be generated from the Company's tax basis in Carteret/Carteret FSB as tax losses are incurred by Carteret FSB of which $158 million are still available for future use. Based on the Company's filing of the 1992 Amended Return, approximately $56 million of NOL carryforwards are generated for tax year 1992 which expire in 2007, with the remaining approximately $102 million of NOL carryforwards to be generated, expiring no earlier than 2008. These NOL carryforwards would be available to offset future taxable income, in addition to the NOL carryforwards as further detailed below. The Company can give no assurances with regard to the 1992 Amended Return, or amended returns for subsequent years, or the final amount or expiration of NOL carryforwards ultimately generated from the Company's tax basis in Carteret. In March 2000, the Company filed several carryback claims and amendments to previously filed carryback claims with the IRS (the "Carryback Claims") seeking refunds from the IRS of alternative minimum tax and other federal income taxes paid by the Company in prior years plus applicable IRS interest, based on the filing of the 1992 Amended Return. In April 2003, IRS examiners issued a letter to the Company proposing to disallow the Carryback Claims. The Company sought administrative review of the letter by protesting to the Appeals Division of the IRS. In February 2005, IRS Appeals Officials completed their review of the Carryback Claims, and disallowed them. The Company is currently considering whether to file suit for the tax refunds it seeks, plus interest, with respect to the Carryback Claims. Even if the Company files suit, the Company can give no assurances as to the final amounts of refunds, if any, or when they might be received. AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Based upon the Company's federal income tax returns as filed from 1993 to 2004 (subject to IRS audit adjustments), and excluding, the NOL carryforwards generated from the Company's tax basis in Carteret/Carteret FSB, as noted above, and excluding NOL's expected to be utilized in connection with the sale of Two Soundview, at September 30, 2005 the Company has NOL carryforwards aggregating approximately $36 million, available to reduce future federal taxable income which expire if unused beginning in 2008. The Company's federal income tax returns for years subsequent to 1992 have not been reviewed by the IRS. The utilization of certain carryforwards is subject to limitations under U.S. federal income tax laws. In addition, the Company has approximately $21 million of AMT credit carryforwards ("AMT Credits"), which are not subject to expiration. Based on the filing of the Carryback Claims, as further discussed above, the Company is seeking to realize approximately $8 million of the $21 million of AMT Credits. The Company expects to utilize NOL carryforwards and of AMT NOL carryforwards as available to offset taxable income generated from the sale of Two Soundview as discussed in note 7 herein. Note 9 - Comprehensive Income (Loss) Comprehensive income (loss) is composed of net income (loss) and other comprehensive income (loss) which includes the change in unrealized gains (losses) on investment securities available for sale and recognition of additional minimum pension liability, as follows:

Third Quarter Ended Nine Months Ended (in thousands) September 30, 2005 September 30, 2005 ============================================== ======================================= Unrealized Minimum Accumulated Unrealized Minimum Accumulated Gains (Losses) Pension Other Gains on Pension Other Investment Liability Comprehensive Investment Liability Comprehensive Securities Adjustment Income Securities Adjustment Income ========= ========= ============= ========== ========== ============= Balance beginning of period.... $ (37) $ (412) $ (449) $ 37 $ (412) $ (375) Reclassification adjustment for gains realized in net loss... - - - (5) - (5) Change during the period....... 81 - 81 12 - 12 -------- -------- ------------ ---------- ---------- ------------- Balance end of period.......... $ 44 $ (412) $ (368) $ 44 $ (412) $ (368) ======== ======== ============= ========== ========== =============

(in thousands) Third Quarter Ended Nine Months Ended September 30, 2004 September 30, 2004 ================================= =============================== Unrealized Accumulated Unrealized Accumulated Gains (Losses) Other Gains (Losses) Other on Investment Comprehensive on Investment Comprehensive Securities Income Securities Income =========== =========== =========== =========== Balance beginning of period................... $ 146 $ 146 $ 84 $ 84 Reclassification adjustment for gains realized in net loss.................. (91) (91) (43) (43) Change during the period....................... 181 181 195 195 ----------- ------------ ----------- ----------- Balance end of period.......................... $ 236 $ 236 $ 236 $ 236 =========== ============ =========== ===========

AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 10 - Stock Based Compensation The Company has adopted the disclosure requirements of Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("Statement 123"), but continues to account for stock compensation using APB Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25"), making pro forma disclosures of net income (loss) and earnings per share as if the fair value based method had been applied. No compensation expense, attributable to stock incentive plans, has been charged to earnings. The Black-Scholes option pricing model was used to estimate the fair value of the options at date of grant based on various factors including dividend yield, stock price volatility, interest rates, and expected life of options. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, and given the changes in the price per share of the Company's Common Stock, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. If the Company had elected to recognize compensation cost for stock options based on the fair value at date of grant for stock options, consistent with the method prescribed by Statement 123, net loss and net loss per share would have been changed to the pro forma amounts indicated below.

Third Quarter Ended Nine Months Ended ------------------------------------- --------------------------------- September 30, September 30, September 30, September 30, (in thousands, except per share data) 2005 2004 2005 2004 ============ ============ ============ ============= Loss from continuing operations, as reported....... $ (1,427) $ (1,038) $ (4,724) $ (3,032) Income from discontinued operations, as reported 10,361 344 11,047 994 --------- ------------ ------------ ------------- Net income (loss), as reported..................... 8,934 (694) 6,323 (2,038) Pro forma adjustments: Deduct: pro forma stock based compensation expense for stock options pursuant to Statement 123........ (31) (19) (94) (59) --------- ------------ ------------ ------------- Net income (loss), pro forma....................... $ 8,903 $ (713) $ 6,229 $ (2,097) Per share data: ========= ============ ============ ============= Basic: Loss from continuing operations, as reported....... $ (0.03) $ (0.02) $ (0.10) $ (0.06) Income from discontinued operations, as reported... 0.22 0.01 0.24 0.02 --------- ------------ ------------ ------------- Net income (loss), as reported..................... $ 0.19 $ (0.01) $ 0.14 $ (0.04) ========= ============ ============ ============= Net income (loss), pro forma....................... $ 0.19 $ (0.01) $ 0.14 $ (0.04) ========= ============ ============ ============= Assuming dilution: Loss from continuing operations, as reported....... $ (0.03) $ (0.02) $ (0.10) $ (0.06) Income from discontinued operations, as reported... 0.22 0.01 0.24 0.02 --------- ------------ ------------ ------------- Net income (loss), as reported..................... $ 0.19 $ (0.01) $ 0.14 $ (0.04) ========= ============ ============ ============= Net income (loss), pro forma....................... $ 0.19 $ (0.01) $ 0.14 $ (0.04) ========= ============ ============ =============

AMBASE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Options to purchase 1,440,000 shares of common stock for the third quarter and nine months ended September 30, 2005, and 1,290,000 shares of common stock for the third quarter and nine months ended September 30, 2004, were excluded from the computation of diluted earnings per share because these options were antidilutive. Note 11 - Pension and Savings Plans The Company sponsors a non-qualified supplemental retirement plan ("Supplemental Plan") under which only one current executive officer of the Company is a participant. The cost of the Supplemental Plan is actuarially determined and is accrued but not funded. Pension expense for the Supplemental Plan was as follows:

Third Quarter Ended Nine Months Ended ------------------------------- ------------------------------ September 30, September 30, September 30, September 30, (in thousands) 2005 2004 2005 2004 ============ ============ ============ ============= Service cost of current period..................... $ 258 $ 230 $ 773 $ 690 Interest cost on projected benefit obligation...... 192 172 576 516 Amortization of unrecognized losses................ 72 39 216 117 ------------ ------------ ------------ ------------- $ 522 $ 441 $ 1,565 $ 1,323 ============ ============ ============ =============

The Company sponsors the AmBase 401(k) Savings Plan (the "Savings Plan"), which is a "Section 401(k) Plan" within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"). The Savings Plan permits eligible employees to make contributions of up to 15% of compensation, which are matched by the Company at a percentage determined annually. The employer match is currently 100% of the employee's compensation eligible for 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. The Company's matching contributions to the Savings Plan, charged to expense, were $2,000 and $50,000 for the third quarter and nine months ended September 30, 2005, respectively and $2,000 and $45,000 for the third quarter and nine months ended September 30, 2004 respectively. All contributions are subject to maximum limitations contained in the Code. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS From time to time, the Company may publish "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 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. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company cautions readers that a variety of factors could cause the Company's actual results to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. These risks and uncertainties, many of which are beyond the Company's control, include, but are not limited to: (i) transaction volume in the securities markets; (ii) the volatility of the securities markets; (iii) fluctuations in interest rates; (iv) changes in occupancy rates or real estate values; (v) changes in regulatory requirements which could affect the cost of doing business; (vi) general economic conditions; (vii) changes in the rate of inflation and the related impact on the securities markets; (viii) changes in federal and state tax laws; and (ix) risks arising from unfavorable decisions in our current material litigation matters, or unfavorable decisions in other supervisory goodwill cases. The Company does not undertake any obligation to update or revise any forward-looking statements whether as a result of future events, new information or otherwise. Management's Discussion and Analysis of Financial Condition and Results of Operations, which follows, should be read in conjunction with the consolidated financial statements and related notes, which are contained in Part I - Item 1, herein and the Company's Annual Report on Form 10-K for the year ended December 31, 2004. As a result of the sale of the Company's 38,000 square foot office building at Two Soundview Drive in Greenwich, CT ("Two Soundview") in July 2005, the results of operations of Two Soundview have been designated as discontinued operations, and the Consolidated Statements of Operations for the periods presented herein have been retroactively reclassified to report the income from discontinued operations separately from the results of continuing operations by excluding the operating revenues and expenses of discontinued operations from the respective statement captions. See Part I - Item 1 - note 7 for additional information concerning the sale of Two Soundview in July 2005. LIQUIDITY AND CAPITAL RESOURCES The Company's assets at September 30, 2005, aggregated $46,397,000 consisting principally of cash and cash equivalents of $9,003,000, investment securities of $35,086,000 and real estate owned of $2,235,000. At September 30, 2005, the Company's liabilities aggregated $14,493,000. Total stockholders equity was $31,904,000. The liability for the supplemental retirement plan (the "Supplemental Plan"), which is accrued but not funded, increased to $13,159,000 at September 30, 2005 from $11,594,000 at December 31, 2004. The Supplemental Plan liability reflects the actuarially determined accrued pension costs in accordance with GAAP. The increased liability is the result of additional accrued service vesting, interest cost on the liability and utilization of an updated mortality table. The Supplemental Plan liability is further affected by changes in discount rates and experience which could be different from that assumed. See Part I - Item 1, note 11 for a further discussion of the Supplemental Plan. The Personnel Committee of the Company had been reviewing the Supplemental Plan and the Company's related liability. In connection with this review, the Personnel Committee had been considering various options, including whether or not to terminate and/or curtail the Supplemental Plan during 2005, which would require Mr. Bianco's approval as a Supplemental Plan participant. Unless further information and analysis can be obtain before year end 2005, the Personnel Committee has decided it will not terminate and payout the Supplemental Plan in 2005. Mr. Bianco (the Company's Chairman, President and Chief Executive Officer, and the former President and Chief Executive Officer of Carteret Savings Bank, FA), is the only current employee of the Company who participates in the Supplemental Plan and his Supplemental Plan benefits are fully vested. For purposes of computing accrued benefits under the Supplemental Plan, Mr. Bianco had 14.42 years of credited service as of September 30, 2005, and his accrual percentage under the Supplemental Plan is 4% in effect from the time of his initial employment with the Company. Under the current Supplemental Plan, Mr. Bianco, at his option, is entitled to receive his Supplemental Plan benefits in either an annuity or a lump-sum at retirement. The Personnel Committee has not indicated to the Board of Directors whether or not it anticipates continuing future service accruals for Mr. Bianco under the Supplemental Plan after his current employment contract expires on May 31, 2007. In accordance with the Internal Revenue Code Section 409A ("IRC 409A"), Mr. Bianco will have to make a Supplemental Plan benefit election before December 31, 2006, in accordance with IRC 409A as to the form of benefit he will elect to receive, i.e. lump-sum or annuity payments, at the end of his current employment contract in May 2007. Based on the actuarially determined, accrued pension costs in accordance with GAAP, the Company expects to continue recognizing an expense for the Supplemental Plan and the Supplemental Plan liability is expected to increase through May 31, 2007, (Mr. Bianco's current contract expiration date) and possibly beyond, depending on: (i) Mr. Bianco's benefit election of a lump-sum or an annuity; and/or (ii) if Mr. Bianco's employment contract is extended beyond May 31, 2007, and/or if additional accruals under the Supplemental Plan are provided; and/or (iii) when or if the Supplemental Plan is terminated and/or paid out in a lump-sum. The potential termination, curtailment and/or lump sum payment of the Supplemental Plan is not reflected in the financial statements presented herein, as such transaction has not been approved by the Company's Personnel Committee or the Company's Board of Directors. The Personnel Committee is continuing to review the Supplemental Plan including the impact of IRC 409A on the Supplemental Plan and the flexibility or restrictions of IRC 409A on the Supplemental Plan, and will continue to consider and review the amendments required to be made to the Supplemental Plan during 2006 pursuant to IRC 409A. It is, however; unlikely that the Company would be able to pay the Supplemental Plan without mutual agreement after 2005, due to the restrictions of IRC 409A. For the nine months ended September 30, 2005, cash of $5,114,000 was used by continuing operations, including the payment of prior year accruals and operating expenses, partially offset by the receipt of rental income, interest income and investment earnings. The cash needs of the Company for the first nine months of 2005 were satisfied by the receipt of rental income, interest income received on investment securities and cash equivalents, and to a lesser extent the Company's current financial resources. Management believes that the Company's cash resources are sufficient to continue operations for 2005. During July 2005, the Company received $27,442,000 of net cash proceeds from the sale of Two Soundview as further discussed in Part I - Item 1 - note 7. The proceeds were reinvested in treasury bills and are included in investment securities, held to maturity in the Consolidated Balance Sheet at September 30, 2005, included in Part I - Item 1 herein. In March 2005, the Company paid $1,867,000 of previously incurred legal fees and other expenses relating to the Company's defense of a withholding obligation issue with the Internal Revenue Service ("IRS") which was successfully concluded in October 2001. The Company had previously accrued these costs which were reflected in other liabilities in prior period financial statements. For the nine months ended September 30, 2004, cash of $2,379,000 was used by continuing operations, including the payment of prior year accruals and operating expenses partially offset by the receipt of rental income, interest income, and investment earnings. The Company continues to evaluate a number of possible acquisitions and is engaged in the management of its assets and liabilities, including the contingent assets. Discussions and negotiations are ongoing with respect to certain of these matters. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all sources for contributions to settlements. For a discussion of lawsuits and proceedings, including the Supervisory Goodwill litigation see Part II - Item 1 - Legal Proceedings. As of September 30, 2005, the Company owns one commercial office buildings in Greenwich, Connecticut. The building is approximately 14,500 square feet and is available for lease to unaffiliated third parties with approximately 3,500 square feet utilized by the Company for its executive offices. See Part I - Item 1 - note 7 for further information concerning the sale of the Company's 38,000 square foot building in July 2005. A gain from the sale, of approximately $10 million, is reflected in the Company's financial statements for the third quarter and nine month periods ending September 30, 2005. The Company made no purchases of common stock pursuant to its common stock repurchase plan during the first nine months of 2005. There are no material commitments for capital expenditures as of September 30, 2005. Inflation has had no material impact on the business and operations of the Company. Results of Operations for the Third Quarter and Nine Months ended September 30, 2005 vs. The Third Quarter and Nine Months Ended September 30, 2004 CONTINUING OPERATIONS The Company's main source of operating revenue is rental income earned on real estate owned. The Company also earns non-operating revenue consisting principally of investment earnings on investment securities and cash equivalents. The Company's management expects that operating cash needs for the remainder of 2005 will be met principally by the receipt of non-operating revenue consisting of interest income earned on investment securities and cash equivalents, the Company's current financial resources, and rental income on real estate owned. For the third quarter and nine months ended September 30, 2005, the Company earned rental income from real estate owned of $41,000 and $127,000, respectively, as compared to $49,000 and $139,000 for the third quarter and nine months ended September 30, 2004, respectively. Compensation and benefits expenses increased to $1,098,000 in the third quarter and $3,373,000 in the nine months ended September 30, 2005, respectively, compared with $1,021,000 and $3,130,000 in respective 2004 periods. The increases were principally the result of a higher level of benefits costs and accruals. Included in compensation and benefits is an accrual for the Supplemental Retirement Plan of $522,000 and $1,565,000 for the third quarter and nine month period ended September 30, 2005, respectively, compared to $441,000 and $1,323,000, respectively, for the same 2004 periods. Professional and outside services expenses increased to $423,000 and $1,537,000 in the third quarter and nine months ended September 30, 2005, compared to $206,000 and $478,000 in the respective 2004 periods. The increases in the 2005 third quarter and nine month periods as compared to the respective 2004 periods is principally due to increased legal fees relating to supervisory goodwill litigation proceeding during 2005 and, to a lesser extent, other corporate professional fees. Property operating and maintenance expenses were $29,000 and $99,000 for the third quarter and nine months ended September 30, 2005, respectively, compared to $31,000 and $79,000 in the respective 2004 periods. The increased expenses in 2005 nine month period compared to the same 2004 period is generally due to increased cost of building repairs and maintenance. Property operating and maintenance expenses have not been reduced by tenant reimbursements. Interest income in the third quarter and nine months ended September 30, 2005, increased to $333,000 and $604,000, respectively, from $142,000 and $380,000, in the respective 2004 periods. The increase is due to an increased yield on the investments, classified as investments available for sale and an increase in the aggregate amount of cash equivalents and investment securities invested as a result of the cash proceeds received in connection with the sale of real estate owned in July 2005, as further discussed in Part I - Item 1 - note 7. No investment securities available for sale were sold in the third quarter ended September 30, 2005. For the nine months ended September 30, 2005, realized gains on sales of investment securities available for sale were $20,000. For the third quarter and nine months ended September 30, 2004, realized gains on investment securities available for sale were $123,000 and $459,000, respectively. The income tax provisions of $180,000 and $240,000 for the third quarter and nine months ended September 30, 2005, respectively, are attributable to a provision for federal alternative minimum tax of $150,000 for the third quarter and nine months periods and $30,000 and $90,000, respectively, attributable to state taxes. The income tax provisions of $30,000 and $90,000 the third quarter and nine months ended September 30, 2004, respectively, are primarily attributable to a provision for a minimum tax on capital to the state of Connecticut. Income taxes applicable to operating income (loss) are generally determined by applying the estimated effective annual income tax rates to pretax income (loss) for the year-to-date interim period. Income taxes applicable to unusual or infrequently occurring items are provided in the period in which such items occur. DISCONTINUED OPERATIONS As discussed in Part I - Item 1 note 7, in July 2005, the Company completed the sale of Two Soundview. The sale price was $28,000,000 less normal real estate closing adjustments. A gain from the sale of $10,298,000 is reflected in the Company's financial statements for the third quarter and nine month periods ending September 30, 2005. Income from discontinued operations before gain on disposition was $63,000 and $749,000 for the third quarter and nine months ended September 30, 2005, respectively, which reflects the results of operations for Two Soundview for the respective periods to July 15, 2005 (date of sale). For the comparable 2004 periods, income from discontinued operations was $344,000 and $994,000, respectively. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company holds short-term investments as a source of liquidity. The Company's interest rate sensitive investments with maturity dates of less than one year consist of the following:

September 30, 2005 December 31, 2004 ================== ================= Carrying Fair Carrying Fair Value Value Value Value in thousands) -------- ----- -------- ----- U.S. Treasury Bills......................... $ 33,245 $ 33,246 $ 8,590 $ 8,586 ======== ======== ======== ======== Weighted average interest rate.............. 3.35% 1.71% ======== ========

The Company's current policy is to minimize the interest rate risk of its short-term investments by investing in U.S. Treasury Bills with maturities of less than one year. There were no significant changes in market exposures or the manner in which interest rate risk is managed during the period. The Company's portfolio of equity securities has exposure to equity price risk. Equity price risk is defined as the potential loss in fair value resulting from an adverse change in prices. The equity securities are primarily in the form of preferred stock in utility companies. The equity securities are held for an indefinite period and are carried at fair value with net unrealized gains and losses recorded directly in a separate component of stockholder's equity. The table below summarizes the Company's equity price risk and shows the effect of a hypothetical 20% increase and 20% decrease in market price as of the dates indicated below. The selected hypothetical changes are for illustrative purposes only and are not necessarily indicative of the best or worse case scenarios.

(In thousands) September 30, December 31, 2005 2004 Equity Securities Available for Sale: ============ ============ Fair value........................................................ $ 1,841 $ 2,112 ============ ============ Hypothetical fair value at a 20% increase in market price......... $ 2,209 $ 2,534 ============ ============ Hypothetical fair value at a 20% decrease in market price......... $ 1,473 $ 1,690 =========== ============

Item 4. CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of September 30, 2005. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no significant changes in the Company's internal controls or other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation. STOCKHOLDER INQUIRIES Stockholder inquiries, including requests for the following: (i) change of address; (ii) replacement of lost stock certificates; (iii) Common Stock name registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on Form 10-K; (vi) proxy material; and (vii) information regarding stock holdings, should be directed to: American Stock Transfer and Trust Company 59 Maiden Lane New York, NY 10038 Attention: Shareholder Services (800) 937-5449 or (718) 921-8200 Ext. 6820 Copies of Quarterly reports on Form 10-Q, Annual Reports on Form 10-K and Proxy Statements can also be obtained directly from the Company free of charge by sending a request to the Company by mail as follows: AmBase Corporation 100 Putnam Green, 3rd Floor Greenwich, CT 06830 Attn: Shareholder Services In addition, the Company's public reports, including Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Proxy Statements, can be obtained through the Securities and Exchange Commission EDGAR Database over the Internet at www.sec.gov. Materials filed with the SEC may also be read or copied by visiting the SEC's Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. RECENT DEVELOPMENTS On November 9, 2005, an amendment to the Company's existing Shareholder's Rights Plan was executed between the Company and its transfer agent, as Rights Agent, to extend the expiration date of the Shareholder Rights Plan to February 10, 2011 from February 10, 2006. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS For a discussion of the Company's legal proceedings, including a discussion of the Company's Supervisory Goodwill litigation, see Part I - Item 1 - Note 3 - Legal Proceedings. Item 5. OTHER INFORMATION On November 9, 2005, an amendment to the Company's existing Shareholder Rights Plan was executed between the Company and its transfer agent as Rights Agent, to extend the expiration date of the Shareholder Rights Plan to February 10, 2011 from February 10, 2006. Item 6. EXHIBITS 4. Amendment to Shareholder Rights Plan between the Company and American Stock Transfer and Trust Company dated November 9, 2005. Exhibit 31.1 Rule 13a-14(a) Certification of Chief Executive Officer Exhibit 31.2 Rule 13a-14(a) Certification of Chief Financial Officer Exhibit 32.1 Section 1350 Certification of Chief Executive Officer Exhibit 32.2 Section 1350 Certification of Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMBASE CORPORATION /s/ John P. Ferrara ------------------------------------------------------ By JOHN P. FERRARA Vice President, Chief Financial Officer and Controller (Duly Authorized Officer and Principal Financial and Accounting Officer) Date: November 14, 2005