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, 2007

                                  or

   [   ]  Transition Report Pursuant to Section 13 or 15(d) of the
                   Securities Exchange Act of 1934

                    Commission file number 1-7265


                          AMBASE CORPORATION


       (Exact name of registrant as specified in its charter)

       Delaware                                       95-2962743
(State of incorporation)                  (I.R.S. Employer Identification No.)

                     100 PUTNAM GREEN, 3RD FLOOR
                    GREENWICH, CONNECTICUT 06830

         (Address of principal executive offices)     (Zip Code)

                           (203) 532-2000

       (Registrant's telephone number, including area code)


     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days.

YES     X        NO
     -------       -------

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

Large Accelerated Filer       Accelerated Filer      Non-Accelerated Filer 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  2, 2007,  there were  44,464,864  shares  outstanding  of the
registrant's common stock, $0.01 par value per share.

<PAGE>



AmBase Corporation

Quarterly Report on Form 10-Q
September 30, 2007
<TABLE>
<CAPTION>
<S>                                                                                                          <C>

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.................................................16

Item 3.      Quantitative and Qualitative Disclosures About Market Risk..........................................19

Item 4T.     Controls and Procedures.............................................................................20

PART II - OTHER INFORMATION

Item 1.      Legal Proceedings...................................................................................21

Item 1A.     Risk Factors........................................................................................21

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.........................................21

Item 3.      Defaults Upon Senior Securities.....................................................................21

Item 4.      Submission of Matters to a Vote of Security Holders.................................................22

Item 5.      Other Information...................................................................................22

Item 6.      Exhibits............................................................................................22

Signatures   ....................................................................................................23
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)
<S>                                                                               <C>                 <C>
(in thousands, except for share and per share amounts)
                                                                                  September 30,       December 31,
                                                                                           2007               2006
                                                                                       ========          =========
Assets:
Cash and cash equivalents.........................................................    $   3,204         $    2,601
Investment securities:
    Held to maturity (market value $17,057 and $34,625, respectively).............       17,041             34,623
    Available for sale, carried at fair value ....................................            -              1,417
                                                                                       --------           --------
Total investment securities.......................................................       17,041             36,040
                                                                                       --------           --------
Real estate owned:
  Land............................................................................          554                554
  Buildings and improvements......................................................        1,900              1,900
                                                                                       --------           --------
                                                                                          2,454              2,454
Accumulated depreciation..........................................................         (321)              (283)
                                                                                       --------           --------
Real estate owned, net............................................................        2,133              2,171
Other assets......................................................................           68              1,336
                                                                                       --------           --------
Total assets......................................................................   $   22,446         $   42,148
                                                                                       ========           ========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities..........................................   $      896         $    1,171
Supplemental retirement plan......................................................            -             16,282
Other liabilities.................................................................           21                 28
                                                                                       --------           --------
Total liabilities.................................................................          917             17,481
                                                                                       --------           --------
Commitments and contingencies (Note 3)............................................

Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued and
   44,679,373 outstanding in 2007 and 44,968,519 outstanding in 2006).............          464                464
Paid-in capital...................................................................      548,044            548,044
Accumulated other comprehensive income (loss).....................................            -               (336)
Accumulated deficit...............................................................     (525,457)          (522,121)
Treasury stock, at cost - 1,730,634 and 1,441,488 shares, respectively............       (1,522)            (1,384)
                                                                                       --------           --------
Total stockholders' equity........................................................       21,529             24,667
                                                                                       --------           --------
Total liabilities and stockholders' equity........................................   $   22,446         $   42,148
                                                                                       ========           ========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                Third Quarter and Nine Months Ended September 30
                                   (Unaudited)
                      (in thousands, except per share data)
<S>                                                                    <C>            <C>            <C>          <C>
                                                                         Third Quarter                  Nine Months
                                                                       2007           2006           2007         2006
Revenues:                                                              ====           ====           ====         ====
Rental income.....................................................   $      -       $       2    $       -   $      92

Operating expenses:
Compensation and benefits.........................................        535           1,058        2,783       3,742
Professional and outside services.................................        244             553        1,617       2,274
Property operating and maintenance................................         35              28           87          89
Depreciation  ....................................................         12              13           38          38
Insurance.........................................................         17              17           61          62
Other operating...................................................         15              55          113         161
                                                                     --------       ---------   ----------   ---------
                                                                          858           1,724        4,699       6,366
                                                                     --------       ---------   ----------   ---------
Operating loss....................................................       (858)         (1,722)      (4,699)     (6,274)
                                                                     --------       ---------   ----------   ---------
Interest income...................................................        244             491        1,103       1,368
Realized gains on sales of investment securities..................         26               -          310           -
Other expense, claims settlement..................................          -          (1,100)           -      (1,100)
Other income, insurance recovery..................................          -             400            -         400
Other income......................................................          -               -            -          72
                                                                     --------       ---------   ----------   ---------
Loss before income taxes..........................................       (588)         (1,931)      (3,286)     (5,534)
Income tax expense................................................          -             (33)         (50)        (99)
                                                                     --------       ---------   ----------   ---------
Net loss..........................................................   $   (588)      $  (1,964)   $  (3,336)  $  (5,633)
                                                                     ========       =========   ==========   =========
Net loss per common share:
Net loss - basic..................................................   $  (0.01)      $   (0.04)   $   (0.07)  $   (0.12)
                                                                     ========       =========   ==========   =========
Net loss - assuming dilution......................................   $  (0.01)      $   (0.04)   $   (0.07)  $   (0.12)
                                                                     ========       =========   ==========   =========
Weighted average common shares outstanding:
Basic.............................................................     44,703          45,168       44,845      45,419
                                                                     ========       =========   ==========   =========
Diluted...........................................................     44,703          45,168       44,845      45,419
                                                                     ========       =========   ==========   =========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Comprehensive Income (Loss)
                Third Quarter and Nine Months Ended September 30
                                   (Unaudited)
                                 (in thousands)
<S>                                                                    <C>        <C>              <C>        <C>
                                                                           Third Quarter                Nine Months
                                                                           2007      2006            2007       2006
                                                                          =====      =====          =====       =====

Net loss............................................................   $  (588)  $ (1,964)         $ (3,336)  $ (5,633)

Amortization of minimum pension liability adjustment................         -        284               474        568

Reclassification adjustment for gains realized in net loss..........       (27)         -              (138)         -

Unrealized holding gains (losses) on investment securities
     available for sale.............................................         -         90                 -          7
                                                                       --------- --------        ----------   --------
Comprehensive loss...................................................  $  (615)  $ (1,590)       $   (3,000)  $ (5,058)
                                                                       ========= ========        ==========   ========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                         Nine Months Ended September 30
                                   (Unaudited)
                                 (in thousands)
<S>                                                                                   <C>           <C>
                                                                                         2007          2006
Cash flows from operating activities:                                                 ==========    ===========
Net loss........................................................................      $  (3,336)    $   (5,633)
Adjustments to reconcile net loss to net cash used by
       operations:
    Depreciation and amortization...............................................             38             38
    Accretion of discount - investment securities...............................            (34)           (31)
     Realized gains on sales of investment securities...........................           (310)             -
    Stock-based compensation expense............................................              -             66
    Amortization of minimum pension liability adjustment........................            474            568
Changes in other assets and liabilities:
    Accrued interest receivable.................................................             57           (270)
    Other assets................................................................          1,178           (420)
    Accounts payable and accrued liabilities....................................           (275)           553
    Supplemental retirement plan and other liabilities..........................            387          1,448
    Payment of Supplemental Plan lump-sum benefit...............................        (16,676)             -
    Other, net..................................................................             (2)             1
                                                                                      ---------     -----------
Net cash used by operating activities...........................................        (18,499)        (3,680)
                                                                                      ---------     -----------
Cash flows from investing activities:
Maturities of investment securities - held to maturity..........................         49,433         86,576
Purchases of investment securities - held to maturity...........................        (31,782)       (83,740)
Sales of investment securities - available for sale.............................          1,620              -
Purchases of investment securities - available for sale.........................            (31)             -
                                                                                      ---------     -----------
Net cash provided by investing activities.......................................         19,240          2,836
                                                                                      ---------     -----------
Cash flows from financing activities:
Common stock repurchased........................................................           (138)          (632)
                                                                                      ---------     -----------
Net cash used by financing activities...........................................           (138)          (632)
                                                                                      ---------     -----------
Net increase (decrease) in cash and cash equivalents............................            603         (1,476)
Cash and cash equivalents at beginning of period................................          2,601          2,852
                                                                                      ---------     -----------
Cash and cash equivalents at end of period......................................      $   3,204      $   1,376
                                                                                      =========     ===========
Supplemental cash flow disclosures:
Income taxes paid...............................................................      $      83      $     537
                                                                                      =========      ==========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
                       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
consolidated   financial  statements.   Results  for  interim  periods  are  not
necessarily  indicative of results for the full year. The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted  in the  United  States  of  America  ("GAAP")  for  interim  financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X. The  preparation of financial  statements in conformity  with GAAP requires
management to make estimates and  assumptions,  that it deems  reasonable,  that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from such estimates and  assumptions.  The unaudited
interim financial statements presented herein 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, 2006.

     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents,  investment  securities,  and real estate owned.  The Company earns
non-operating   revenue   principally   consisting  of  investment  earnings  on
investment securities and cash equivalents.  The Company continues to evaluate a
number of possible acquisitions,  and is engaged in the management of its assets
and  liabilities,  including the  contingent  assets  associated  with its legal
claims, as described in Part II - Item 1. From time to time, the Company and its
subsidiaries may be named as a defendant in various lawsuits or proceedings. The
Company intends to  aggressively  contest all litigation and  contingencies,  as
well as pursue all sources for contributions to settlements.

     The Company's  management  believes that  operating cash needs for the next
twelve months will be met  principally by the receipt of investment  earnings on
investment securities and cash equivalents,  and the Company's current financial
resources.

     See Note 10 herein for  information  regarding the  Company's  Supplemental
Retirement  Plan  (the   "Supplemental   Plan")  lump-sum  benefit  payment  and
Supplemental  Plan   termination.   In  accordance  with  an  amendment  to  the
Supplemental  Plan, as previously  adopted in March 2006,  the liability for the
Supplemental  Plan was fully satisfied on May 31, 2007, by the lump-sum  benefit
payment of $16,676,115  (to Mr. Bianco,  the Company's  Chairman,  President and
Chief Executive  Officer),  and immediately  thereafter,  the Supplemental  Plan
automatically terminated.  The lump-sum Supplemental Plan benefit payment to Mr.
Bianco was paid from the Company's available financial resources.  As of June 1,
2007,  no further  Supplemental  Plan expense will be recognized by the Company,
which was  previously  included  as a component  of  compensation  and  benefits
expense.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

Note 2 - Recent Accounting Pronouncements

     In September 2006, the Financial  Accounting Standard Board ("FASB") issued
SFAS No. 157, "Fair Value Measurements"  ("SFAS157").  SFAS No. 157 defines fair
values, establishes a framework for measuring fair value and expands disclosures
about fair value  measurements.  SFAS No. 157 is  effective  for the  Company in
2008. The Company is currently  evaluating the potential impact of adopting SFAS
No. 157.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial  Assets and  Financial  Liabilities  - including  an Amendment of FASB
Statement  No.  115"  ("SFAS159").  SFAS No.  159  permits  entities  to measure
eligible  financial assets,  financial  liabilities and certain other assets and
liabilities at fair value on an  instrument-by-instrument  basis. The fair value
measurement  election is irrevocable  once made and  subsequent  changes in fair
value must be recorded in earnings. The effect of adoption will be reported as a
cumulative-effect  adjustment to beginning retained  earnings.  The Company will
adopt SFAS No. 159 in 2008 and is currently evaluating if it will elect the fair
value option for any of its eligible financial instruments and other items.

     Effective  January 1, 2007,  the Company  adopted the Financial  Accounting
Standards Board ("FASB")  Interpretation  No. 48, "Accounting for Uncertainty in
Income Taxes," an interpretation  of FASB Statement 109,  "Accounting for Income
Taxes" ("FIN 48").  FIN 48 applies to all "tax  positions"  accounted  for under
FASB Statement No. 109. FIN 48 refers to "tax positions" as positions taken in a
previously  filed tax return or  positions  expected to be taken in a future tax
return that are reflected in measuring current or deferred income tax assets and
liabilities  reported  in  the  financial  statements.   FIN  48  clarifies  the
accounting for income taxes by prescribing a minimum recognition threshold a tax
position  is  required  to  meet  before  being   recognized  in  the  financial
statements.  FIN  48  also  provides  guidance  on  derecognition,  measurement,
classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosure and transition. The adoption of FIN 48 had no effect on the Company's
consolidated financial statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 158, "Employer's  Accounting for Defined Benefit Pension and Other
Postretirement  Plans,  an  Amendment  of SFAS No. 87, 88, 106 and 132R"  ("SFAS
158").  SFAS 158  requires an  employer to (i)  recognize  in its  statement  of
financial position an asset for a plan's over funded status or a liability for a
plan's under funded  status;  (ii) measure a plan's  assets and its  obligations
that  determine  its funded status as of the end of the  employer's  fiscal year
(with limited exceptions); and (iii) recognize changes in the funded status of a
defined  benefit  postretirement  plan in the year in which the  changes  occur.
Those changes will be reported in comprehensive income of a business entity. The
requirement  to recognize the funded status of a benefit plan and the disclosure
requirements  are  effective  as of the  end of the  fiscal  year  ending  after
December 15, 2006, for entities with publicly traded equity  securities,  and at
the end of the fiscal year ending after June 15, 2007,  for all other  entities.
The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end  statement of financial position is effective for
fiscal years ending after December 15, 2008. In accordance with the Supplemental
Plan Amendment,  as previously adopted,  the liability for the Supplemental Plan
was  fully  satisfied  on May 31,  2007,  by the  lump-sum  benefit  payment  of
$16,676,115  (to  Mr.  Bianco,  the  Company's  Chairman,  President  and  Chief
Executive   Officer),   and  immediately   thereafter,   the  Supplemental  Plan
automatically terminated.  The lump-sum Supplemental Plan benefit payment to Mr.
Bianco was paid from the Company's available financial resources.  After May 31,
2007, no further  Supplemental Plan expense was required to be recognized by the
Company. Accordingly,  because of the termination of the Supplemental Plan we do
not  believe  the  adoption  of SFAS  158 will  have a  material  effect  on the
Company's  consolidated  financial  statements.  See Note 10 herein for  further
information.

<PAGE>
                       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, 2006,  is  incorporated  by reference
herein and the defined  terms set forth below have the same meaning  ascribed to
them in that  report.  There have been no  material  developments  in such legal
proceedings, except as set forth below.

     The Company is or has been a party in a number of lawsuits or  proceedings,
including the following:

     Supervisory  Goodwill  Litigation.  On April 13,  2007,  Senior Judge Smith
("Judge  Smith") of the United  States  Court of Federal  Claims  (the "Court of
Federal Claims" or the "Court") issued an order scheduling pre-trial,  and trial
deadlines  and dates,  including  scheduling a trial to commence on February 11,
2008.

     In  accordance  with  the  Court's  scheduling  in May  2007,  the  Company
submitted its expert report. The Government deposed the Company's expert in June
2007. In July 2007, the Government identified its damages experts, and submitted
its expert  reports in  September  2007.  The Company  deposed the  Government's
experts in October 2007.

     The Court order stated that pursuant to the status conference held on April
12, 2007, the Court  scheduled oral argument for November 2007 at the U.S. Court
of Federal Claims,  to decide whether the trial schedule below can be avoided by
summary judgment.  The parties submitted their respective  positions with regard
to summary judgment, in writing, on November 7, 2007.

     The Court  scheduled  pre-trial and trial  deadlines and dates according to
the following schedule:  December 7, 2007 - Parties exchange exhibit and witness
lists;  December 21, 2007 - Plaintiffs  and FDIC-R file Appendix A  submissions;
January 21, 2008 - Defendant  files Appendix A submissions;  February 11, 2008 -
Trial to commence.

     The Court further scheduled a pretrial conference to be held on January 30,
2008, in U.S. Court of Federal Claims.

     Both the Court of Federal  Claims and the Court of appeals  for the Federal
Circuit have issued numerous  decisions in cases that involve claims against the
United  States  based upon its breach of its  contracts  with  savings  and loan
institutions  through its 1989 enactment of FIRREA.  In particular,  the Federal
Circuit  has issued  decisions  rejecting  Takings  Clause  claims  advanced  by
shareholders of failed thrifts. Castle v. United States, 301F.3d 1328 (Fed. Cir.
2002; Bailey v. United States,  341F.3d 1342 (Fed. Cir. 2003). In June 2004, the
United States Supreme Court denied the petition for certiorari  filed by Bailey.
The Court of Federal  Claims  opinions in the  Company's  case, as well as other
decisions  in  Winstar-related  cases  are  publicly  available  on the Court of
Federal   Claims  web  site  at   www.uscfc.uscourts.gov.   Decisions  in  other
Winstar-related  cases may be relevant  to the  Company's  Supervisory  Goodwill
claims,  but are not  necessarily  indicative  of the  ultimate  outcome  of the
Company's actions. The Company can give no assurances regarding the commencement
date of a trial or the ultimate outcome of the 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.


<PAGE>
                       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  over three months 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 at December 31, 2006, consisted
of  investments  in equity  securities  held for an  indefinite  period and were
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:
<TABLE>
<S>                          <C>            <C>            <C>               <C>             <C>           <C>
                                      September 30, 2007                                 December 31, 2006
                             ======================================          =======================================
                                               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........  $  17,041        $ 17,041    $  17,057          $  18,187       $ 18,187      $  18,196
U.S. Treasury Note.........          -               -            -             16,436         16,436         16,429
                             ---------        --------    ---------          ---------       --------      ---------
                                17,041          17,041       17,057             34,623         34,623         34,625
                             ---------        --------    ---------          ---------       --------      ---------
Available for Sale:
Equity Securities..........          -               -            -              1,417          1,279          1,417
                             ---------        --------    ---------          ---------       --------      ----------
                             $  17,041       $  17,041    $  17,057          $  36,040       $ 35,902      $  36,042
                             =========       =========    =========          =========       ========      ==========
</TABLE>
     The gross unrealized gains (losses) on investment securities,  at the dates
indicated below consist of the following:
<TABLE>
<S>                                                                                      <C>             <C>
                                                                                         September 30,   December 31,
(in thousands)                                                                                   2007            2006
                                                                                         ============    ============
Held to Maturity:.
Gross unrealized gains.................................................................. $       16      $      9
                                                                                         ============    ============
Gross unrealized losses................................................................. $        -      $     (7)
                                                                                         ============    ============
Available for Sale:
Gross unrealized gains.................................................................. $        -      $    138
                                                                                         ============    ============
Gross unrealized losses................................................................. $        -      $      -
                                                                                         ============    ============
</TABLE>

     Realized  gains on the sales of  investment  securities  available for sale
follow:
<TABLE>
<S>                                                                                    <C>                 <C>
                                                                                       Third Quarter       Nine Months
(in thousands)                                                                              2007              2007
                                                                                         =======            =======

Net sale proceeds...................................................................... $    276           $  1,620
Less:  Cost basis......................................................................      250              1,310
                                                                                        --------           ---------
Realized gains......................................................................... $     26           $    310
                                                                                        ========           =========
</TABLE>
     No investment  securities  were sold during the third quarter or nine month
periods ended September 30, 2006.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

Note 6 - Property Owned

     As of September 30, 2007, the Company owns one commercial  office  building
in Greenwich,  Connecticut that contains  approximately  14,500 square feet. The
Company utilizes  approximately 3,500 square feet for its executive offices; the
remaining space is currently  unoccupied and available for lease to unaffiliated
third parties.

     Although the portion of the  building not being  utilized by the Company is
currently  unoccupied and available for lease, based on the Company's  analysis,
including but not limited to current market rents in the area,  leasing  values,
and comparable  property sales,  the Company believes the property's fair market
value exceeds the property's current carrying value; and, therefore the carrying
value of the property as of September 30, 2007, has not been impaired.

     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 $321,000 and  $283,000,  at September 30, 2007 and December 31,
2006, respectively.

     Rental  income  for  the  nine  months  ended   September  30,  2006,   was
attributable  to  operating  leases with  tenants.  Minimum  lease  rentals were
recognized on a straight-line basis over the terms of the leases. The cumulative
difference between lease revenue  recognized under the straight-line  method and
the  contractual  lease  payment  terms,  if any, was recorded as deferred  rent
receivable or payable and was included in other assets or other  liabilities  on
the   Consolidated   Balance   Sheets,   as  applicable.   Revenue  from  tenant
reimbursement of common area maintenance, utilities and other operating expenses
were recognized pursuant to the tenant lease agreements when earned and due from
tenants.

     Property  operating and maintenance  expenses for common area  maintenance,
utilities,  real estate taxes and other reimbursable operating expenses were not
reduced  by  amounts  reimbursable  by  tenants  pursuant  to  applicable  lease
agreements.

Note 7 - Income Taxes

     The Company and its 100% owned  domestic  subsidiaries  file a consolidated
federal income tax return.  The Company recognizes both the current and deferred
tax consequences of all transactions  that have been recognized in the financial
statements,  calculated  based on the provisions of enacted tax laws,  including
the tax rates in effect for current and future  years.  Net  deferred tax assets
are  recognized  immediately  when a more likely than not criterion is met; that
is, greater than 50%  probability  exists that the tax benefits will actually be
realized  sometime in the future.  The Company has calculated a net deferred tax
asset of $32 million and $31 million as of  September  30, 2007 and December 31,
2006,   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).  A  valuation
allowance  has  been  established  for the  entire  net  deferred  tax  asset as
management,  at the current time,  has no basis to conclude that  realization is
more likely than not.

     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.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     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.

     Based upon the Company's  federal  income tax returns as filed from 1993 to
2006  (subject  to IRS  audit  adjustments),  excluding  the  NOL  carryforwards
utilized  in  2005,  and  excluding  the NOL  carryforwards  generated  from the
Company's  tax basis in  Carteret/Carteret  FSB, as noted above at September 30,
2007, the Company has NOL carryforwards  aggregating  approximately $33 million,
available  to  reduce  future  federal  taxable  income  which  expire if unused
beginning in 2009. 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.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

Note 8 - Comprehensive Income (Loss)

     Components of other accumulated comprehensive income (loss) follow:
<TABLE>
<S>                            <C>          <C>            <C>               <C>         <C>            <C>

                                            Third Quarter Ended                         Nine Months Ended
(in thousands)                               September 30, 2007                         September 30, 2007
                               ============================================= =========================================
                               Minimum      Unrealized     Accumulated       Minimum     Unrealized     Accumulated
                               Pension      Gains (Losses) Other             Pension     Gains (Losses) Other
                               Liability    on Investment  Comprehensive     Liability   on Investments Comprehensive
                               Adjustment   Securities     Income (Loss)     Adjustment  Securities     Income (Loss)
                               ==========   ============   =============     ==========  =============  =============
Balance beginning of period....$       -    $        27    $       27        $    (474)  $        138   $       (336)

Reclassification adjustment for
  gains realized in net loss...        -            (27)          (27)               -           (211)          (211)

Change during the period.......        -              -             -              474             73            547
                               ---------    ------------   -------------     ----------  -------------  -------------
Balance end of period..........$       -    $         -    $        -        $       -   $          -   $          -
                               =========    ============   =============     ==========  ============   =============


                                             Third Quarter Ended                         Nine Months Ended
(in thousands)                               September 30, 2006                         September 30, 2006
                               ============================================= =========================================
                               Minimum      Unrealized     Accumulated       Minimum     Unrealized     Accumulated
                               Pension      Gains (Losses) Other             Pension     Gains (Losses) Other
                               Liability    on Investment  Comprehensive     Liability   on Investment  Comprehensive
                               Adjustment   Securities     Income (Loss)     Adjustment  Securities     Income (Loss)
                               ==========   ============   =============     ==========  =============  =============
Balance beginning of period....$ (1,042)    $      (152)   $   (1,194)       $  (1,326)  $        (69)  $     (1,395)
Change during the period.......     284              90           374              568              7            575
                               ----------   ------------   -------------     ----------  -------------  -------------
Balance end of period..........$   (758)    $       (62)   $     (820)       $    (758)  $        (62)  $       (820)
                               ==========   ============   =============     ==========  =============  =============
</TABLE>



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

Note 9 - Stock-Based Compensation

     Under the  Company's  1993  Stock  Incentive  Plan (the "1993  Plan"),  the
Company may grant to officers and employees of the Company and its subsidiaries,
stock options ("Options"),  stock appreciation rights ("SARs"), restricted stock
awards ("Restricted Stock"), merit awards ("Merit Awards") and performance share
awards ("Performance  Shares"),  through May 28, 2008. An aggregate of 5,000,000
shares of the  Company's  Common Stock are reserved for issuance  under the 1993
Plan (upon the exercise of Options and Stock Appreciation Rights, upon awards of
Restricted  Stock  and  Performance  Shares);  however,  of  such  shares,  only
2,500,000 shares in the aggregate shall be available for issuance for Restricted
Stock  Awards and Merit  Awards.  Such shares shall be  authorized  but unissued
shares of Common Stock.  As of September 30, 2007,  there were 4,124,000  shares
available  for future stock option  grants.  Options may be granted as incentive
stock options  ("ISOs")  intended to qualify for  favorable tax treatment  under
Federal tax law or as nonqualified stock options ("NQSOs").  SARs may be granted
with  respect to any Options  granted  under the 1993 Plan and may be  exercised
only when the underlying Option is exercisable.  The 1993 Plan requires that the
exercise  price of all  Options  and SARs be equal to or  greater  than the fair
market value of the Company's  Common Stock on the date of grant of that Option.
The term of any ISO or  related  SAR  cannot  exceed  ten years from the date of
grant,  and the term of any NQSO cannot  exceed ten years and one month from the
date of  grant.  Subject  to the  terms  of the  1993  Plan  and any  additional
restrictions  imposed  at the  time  of  grant,  Options  and any  related  SARs
ordinarily will become exercisable  commencing one year after the date of grant.
Options granted  generally have a ten year  contractual  life and generally have
vesting  terms of two years from the date of grant.  In the case of a "Change of
Control" of the Company (as defined in the 1993 Plan),  Options granted pursuant
to the 1993 Plan may become fully exercisable as to all optioned shares from and
after the date of such Change in Control in the  discretion  of the Committee or
as  may  otherwise  be  provided  in  the  grantee's  Option  agreement.  Death,
retirement, or absence for disability will not result in the cancellation of any
Options.

     Effective  January 1, 2006, the Company adopted the fair value  recognition
provisions  of SFAS 123R,  using the modified  prospective  application  method.
Under this method,  stock-based  compensation  expense for the nine months ended
September 30, 2007 and September 30, 2006, includes compensation expense for all
stock-based  compensation  awards  granted  prior to,  but not yet  vested as of
January 1, 2006, based on the grant date fair value estimated in accordance with
the original provisions of SFAS 123.  Stock-based  compensation  expense for all
stock-based compensation awards granted after January 1, 2006, for which vesting
is based  solely on  employment  service,  will be based on the grant  date fair
value  estimated in accordance  with the  provisions  of SFAS 123R.  The Company
recognizes these compensation costs for only those shares expected to vest, on a
straight-line  basis over the requisite  service  period of the award,  which is
generally the option vesting term of two years.

     No stock based  compensation  expense was recorded in the nine months ended
September 30, 2007, as all previously granted  outstanding  options vested as of
January 2, 2007.  No stock option  awards have been granted  since January 2005.
The Company recorded stock based compensation  expense of $22,000 and $66,000 in
the third  quarter and nine  months  ended  September  30,  2006,  respectively,
relating to  unvested  stock  options.  Compensation  expense  relating to stock
options  is  recorded  as a  reduction  to  additional  paid in  capital  in the
statement of stockholders' equity.

     The fair  value of each  option  award was  estimated  on the date of grant
using the  Black-Scholes-Merton  option valuation model  ("Black-Scholes")  that
uses  the  assumptions   noted  in  the  table  that  follows  below.   Expected
volatilities  are based on historical  volatility of the  Company's  stock.  The
Company  uses  historical  data  to  estimate  option   exercises  and  employee
terminations within the valuation model. The expected term of options granted is
estimated based on the contractual lives of option grants, option vesting period
and historical  data and represents the period of time that options  granted are
expected to be outstanding.  The risk-free  interest rate for periods within the
contractual  life of the  option  is based on the U.S.  Treasury  bond  yield in
effect at the time of  grant.  No  adjustments  were made in 2007 or 2006 to the
input assumptions for the calculation of the fair value of stock options granted
in prior years.

     The  Black-Scholes  option  valuation  model  requires  the input of highly
subjective assumptions, including the expected life of the stock-based award and
stock price volatility. The assumptions noted herein represent management's best
estimates,   but  these  estimates   involve  inherent   uncertainties  and  the
application of management  judgment.  As a result, if other assumptions had been
used,  recorded  stock-based  compensation  expense  could have been  materially
different  from the recorded  amounts.  In addition,  the Company is required to
estimate  the  expected  forfeiture  rate and only  recognize  expense for those
shares expected to vest. If the actual  forfeiture rate is materially  different
from the  previous  estimate,  the  share-based  compensation  expense  could be
materially different.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     The Company believes that the use of the Black-Scholes model meets the fair
value  measurement   objectives  of  SFAS  123R  and  reflects  all  substantive
characteristics  of the instruments  being valued. No stock options were granted
during the year to date period ending September 30, 2007 or September 30, 2006.


     The following  table reports  stock option  activity  during the nine month
period ended September 30, 2007:
<TABLE>
<S>                                                <C>             <C>       <C>
                                                                                Weighted
                                                                   Weighted     Average
                                                                   Average      Remaining
                                                   Number of       Exercise    Contractual
                                                    Shares          Price    Life (in years)
                                                   ---------       --------  ---------------
         Outstanding at January 1, 2007......      1,240,000        $1.01
         Expired.............................       (364,000)        1.19
                                                   ---------        ====
         Outstanding at September 30, 2007...        876,000        $0.93           5.73
                                                   =========        =====           ====
         Exercisable at September 30, 2007...        876,000        $0.93           5.73
                                                   =========        =====           ====
</TABLE>

     At September 30, 2007, the exercise price of stock options  outstanding and
exercisable was greater than the market price of the Company's stock; therefore,
no intrinsic value for stock options is reflected above.

     The  following  table  presents  information   regarding  non-vested  share
activity during the nine month period ended September 30, 2007:
<TABLE>
<S>                                                <C>                  <C>
                                                                        Weighted
                                                                         Average
                                                   Number of            Grant-Date
                                                    Shares              Fair Value
                                                   ---------           -------------
         Non-vested at January 1, 2007.......        204,000             $0.47
         Vested during period................       (204,000)             0.47
                                                   ---------           =============
         Non-vested at September 30, 2007....              -                 -
                                                   =========           =============
</TABLE>

     The total fair value of shares  vested  during the nine month  period ended
September  30,  2007  and   September  30,  2006,   was  $96,000  and  $133,000,
respectively.  As of September 30, 2007, there was no unrecognized  compensation
costs relating to non-vested  share-based  compensation  arrangements  for stock
options granted under the 1993 Plan.

     Options to  purchase  876,000  shares of common  stock for the nine  months
ended  September  30, 2007,  and  1,240,000  shares of common stock for the nine
months ended  September 30, 2006,  were excluded from the computation of diluted
earnings per share because these options were antidilutive.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

Note 10 - Pension and Savings Plans

     The  Company   previously   sponsored  a  non  tax-qualified   supplemental
retirement  plan,  initially  adopted by the Company in 1985, and as amended and
restated  (the  "Supplemental  Plan"),  under which only one  current  executive
officer of the Company was the sole  participant.  The cost of the  Supplemental
Plan was accrued but not funded.

     In  accordance  with an amendment to the  Supplemental  Plan, as previously
adopted  in March  2006,  the  liability  for the  Supplemental  Plan was  fully
satisfied on May 31, 2007, by the lump-sum  benefit  payment of $16,676,115  (to
Mr. Bianco, the Company's Chairman,  President and Chief Executive Officer), and
immediately  thereafter,  the Supplemental Plan  automatically  terminated.  The
lump-sum  Supplemental  Plan  benefit  payment  to Mr.  Bianco was paid from the
Company's  available  financial  resources.  After  May  31,  2007,  no  further
Supplemental  Plan expense was  required to be  recognized  by the Company.  The
Supplemental Plan liability was $16,282,000 at December 31, 2006.

     The  Personnel  Committee  of the Board of  Directors  of the Company  (the
"Personnel  Committee")  had reviewed the  Supplemental  Plan and the  Company's
related  liability,  including  the  desirability  of continuing to maintain and
administer the  Supplemental  Plan, the untying of Mr. Bianco's  employment with
the Company from the timing of his  Supplemental  Plan benefit  payment(s),  the
Company's overall financial position, and the desirability of continued accruals
under  the  Supplemental  Plan  after Mr.  Bianco's  prior  employment  contract
expiration  on May 31,  2007.  In  connection  with this review,  the  Personnel
Committee  considered  various  options,  including  whether or not to terminate
and/or  curtail the  Supplemental  Plan.  Mr.  Bianco (the  Company's  Chairman,
President  and Chief  Executive  Officer,  and the  former  President  and Chief
Executive  Officer of Carteret  Savings Bank, FA), was the only current employee
of the Company who  participated in the  Supplemental  Plan and his Supplemental
Plan benefit was fully  vested.  For purposes of computing  his accrued  benefit
under the Supplemental  Plan, Mr. Bianco had 14.67 years of credited services as
of December 31, 2005 and 16.08 years of credited service as of May 31, 2007. His
accrual  percentage under the Supplemental  Plan was 4%, in effect from the time
of his  initial  employment  with  the  Company,  and  in  accordance  with  the
Supplemental  Plan  (prior  to  the  amendment  described  below),  he  had  the
entitlement to receive his Supplemental  Plan benefit in either a lump-sum or an
annuity upon termination of his employment with the Company.

     During March 2006, the Company entered into a new employment agreement with
Mr. Bianco to extend his employment  with the Company for an additional five (5)
years beyond May 31, 2007, until May 31, 2012 (the "2007 Employment Agreement").
As part of the 2007 Employment  Agreement terms: (i) Mr. Bianco's annual rate of
base salary will not increase  from his current  rate of base salary  during the
first three years of the 2007  Employment  Agreement (the amount of Mr. Bianco's
base salary for the fourth and fifth years of the 2007 Employment Agreement term
to be determined by the Personnel Committee, in its sole discretion, although in
no event less than $625,000 per annum); (ii) Mr. Bianco's service accruals under
the  Supplemental  Plan will cease as of May 31, 2007;  (iii) Mr. Bianco's Final
Average  Earnings (as defined in the Supplemental  Plan) for  Supplemental  Plan
benefit calculation  purposes,  was capped as of December 31, 2004; and (iv) Mr.
Bianco's annual bonus  opportunity  will no longer be linked to recovery efforts
in connection with the Company's  Supervisory Goodwill  litigation.  Instead, on
May 31, 2007, Mr. Bianco received a lump-sum  payment of his  Supplemental  Plan
benefit of  $16,676,115,  which  amount was  calculated  on the basis of a 5.75%
discount rate, a "RP-2000" projected to 2004 mortality table, and 16.08 years of
credited service, and the Company and Mr. Bianco agreed to a long term incentive
bonus formula,  at varying  percentages  ranging from 5% to 10%, or more,  based
upon recoveries  received by the Company for its investment in Carteret  Savings
Bank,  through  litigation or otherwise  (including  the  Company's  Supervisory
Goodwill litigation).

     Based  on  the  2007   Employment   Agreement  and  the  amendment  of  the
Supplemental Plan as previously  adopted in March 2006, each as described above,
the Company  revised the  calculation  of the  Supplemental  Plan  liability  to
reflect  a  5.75%  discount  rate as of  April  1,  2006,  as set  forth  in the
agreements.  The  Supplemental  Plan  liability  was  increased by an expense of
$394,000 in the five month  period  ended May 31,  2007,  to reflect the May 31,
2007 lump-sum  payment amount of $16,676,115,  utilizing the 5.75% discount rate
factor.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     An  additional  Supplemental  Plan  expense of $474,000 was recorded in the
nine month period ended  September 30, 2007, to amortize the  Supplemental  Plan
minimum pension liability adjustment.  The minimum pension liability adjustment,
which was included as a component of  stockholders'  equity  within  accumulated
other comprehensive loss in the Company's consolidated financial statements, was
$1,326,000 as of March 31, 2006, and was amortized on a straight line basis over
the  14-month  period  ending May 31, 2007 as an  additional  Supplemental  Plan
expense of $284,000 per quarter. This resulted in an aggregate Supplemental Plan
expense of $868,000  for the nine month  period ended  September  30, 2007.  The
amortization of the additional  minimum  pension  liability in the 2007 and 2006
periods,  although  recorded  as a  component  of  compensation  expense  in the
Company's consolidated statement of operations,  did not result in a decrease in
total  stockholders'  equity, as its recognition  resulted in an increase in one
component and a  corresponding  decrease in another  component of  stockholders'
equity. See Part I - Item 1 - Note 8, herein for further information.

     In connection with the  Supplemental  Plan lump-sum  benefit  payment,  the
Company  paid  approximately  $242,000 of  employer  Medicare  taxes,  which are
included as a component of  compensation  and benefits  expense in the Company's
Consolidated Statement of Operations for the third quarter and nine month period
ended September 30, 2007.

     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 amount the employee elects to defer.  Employee  contributions to the
Savings Plan are invested at the employee's  discretion,  in various  investment
funds. The Company's  matching  contributions are invested in the same manner as
the compensation reduction  contributions.  The Company's matching contributions
to the Savings Plan,  charged to expense,  were $4,000 and $57,000 for the third
quarter  and nine months  ended  September  30,  2007,  respectively  and $0 and
$55,000  for the  third  quarter  and nine  months  ended  September  30,  2006,
respectively.  All contributions are subject to maximum limitations contained in
the Code.

Note 11 - Common Stock Repurchase Plan

     In January 2002, the Company  announced a common stock repurchase plan (the
"Repurchase  Plan") which allows for the  repurchase by the Company for up to 10
million shares of its common stock in the open market.

     The Repurchase Plan is conditioned upon favorable  business  conditions and
acceptable prices for the common stock.  Purchases under the Repurchase Plan may
be made,  from  time to time,  in the  open  market,  through  block  trades  or
otherwise.  Depending on market  conditions and other factors,  purchases may be
commenced or suspended any time or from time to time without prior notice.

     A summary of the shares  repurchased  pursuant to the Repurchase Plan is as
follows:
<TABLE>
<S>                                          <C>        <C>             <C>                     <C>
                                                           Average
                                                        Price Paid
                                               Total     per Share            Total Number
                                           Number of    (including        Shares Purchased               Maximum Number
                                              Shares        broker     as Part of Publicly       Shares that may yet be
                                           Purchased   commission)         Announced Plans     Purchased under the Plan
                                     --------------- -------------  -----------------------  ---------------------------------
Beginning balance January 1, 2007.........                                     1,315,000               8,685,000

January 1, 2007 - January 31, 2007........         -           -               1,315,000               8,685,000
February 1, 2007 - February 28, 2007......         -           -               1,315,000               8,685,000
March 1, 2007 - March 31, 2007............         -           -               1,315,000               8,685,000
April 1, 2007 - April 30, 2007............   110,000       $0.48               1,425,000               8,575,000
May 1, 2007 - May 31, 2007................         -           -               1,425,000               8,575,000
June 1, 2007 - June 30, 2007..............   100,000       $0.48               1,525,000               8,475,000
July 1, 2007 - July 31, 2007..............    50,000       $0.47               1,575,000               8,425,000
August 1, 2007 - August 31, 2007..........    26,844       $0.44               1,601,844               8,398,156
September 1, 2007 - September 30, 2007....     2,302       $0.47               1,604,146               8,395,854
                                            --------
Total Jan. 1, 2007 - Sept. 30, 2007......    289,146
                                            ========
</TABLE>


<PAGE>
     Item 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

     This quarterly report may contain  "forward-looking  statements" within the
meaning of Section 27A of the  Securities  Act of 1933,  as amended (the "Act"),
and  Section  21E of the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange  Act"),  or  make  oral  statements  that  constitute  forward-looking
statements.   AmBase  Corporation  ("AmBase"  or  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
Private  Securities  Litigation  Reform Act of 1995  provides a safe  harbor for
forward-looking  statements.  In order  to  comply  with  the  terms of the safe
harbor,  the Company  cautions readers that a variety of factors could cause the
Company's  actual results to differ  materially from the anticipated  results or
other expectations expressed in the Company's forward-looking statements.  These
risks  and  uncertainties,  many of which  are  beyond  the  Company's  control,
include,  but are not  limited  to:  (i)  transaction  volume in the  securities
markets;  (ii) the volatility of the securities  markets;  (iii) fluctuations in
interest rates; (iv) risks inherent in the real estate business,  including, but
not  limited to tenant  defaults,  changes  in  occupancy  rates or real  estate
values;  (v) changes in regulatory  requirements  which could affect the cost of
doing business;  (vi) general economic conditions;  (vii) changes in the rate of
inflation and the related  impact on the securities  markets;  (viii) changes in
federal and state tax laws; and (ix) risks arising from unfavorable decisions in
our current  material  litigation  matters,  or  unfavorable  decisions in other
supervisory goodwill cases. These are not the only risks that we face. There may
be  additional  risks  that we do not  presently  know  of or that we  currently
believe  are  immaterial  which  could also impair our  business  and  financial
position.

     Undue reliance  should not be placed on these  forward-looking  statements,
which are  applicable  only as of the date  hereof.  The Company  undertakes  no
obligation  to revise or update  these  forward-looking  statements  to  reflect
events or circumstances that arise after the date of this quarterly report or to
reflect  the  occurrence  of  unanticipated  events.  Accordingly,  there  is no
assurance that the Company's expectations will be realized.

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations,  which follows,  should be read in conjunction with the consolidated
financial  statements and related notes, which are contained in Part I - Item 1,
herein and the Company's  Annual Report on Form 10-K for the year ended December
31, 2006.

BUSINESS OVERVIEW

     AmBase is a holding company which, through a wholly-owned subsidiary,  owns
a commercial office building in Greenwich,  Connecticut.  The Company previously
owned an insurance company and a savings bank.

     In February  1991,  the  Company  sold its  ownership  interest in The Home
Insurance  Company and its subsidiaries.  On December 4, 1992,  Carteret Savings
Bank,  FA  ("Carteret")  was  placed  in  receivership  by the  Office of Thrift
Supervision ("OTS").

     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents,  investment  securities,  and real estate owned.  The Company earns
non-operating   revenue   principally   consisting  of  investment  earnings  on
investment securities and cash equivalents.  The Company continues to evaluate a
number of possible  acquisitions  and is engaged in the management of its assets
and  liabilities,  including the  contingent  assets  associated  with its legal
claims,  as described in Part I - Item 1. From time to time, the Company and its
subsidiaries may be named as a defendant in various lawsuits or proceedings. The
Company intends to  aggressively  contest all litigation and  contingencies,  as
well as pursue all sources for contributions to settlements.




<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  assets  at  September  30,  2007,  aggregated   $22,446,000
consisting  principally of cash and cash  equivalents of $3,204,000,  investment
securities of $17,041,000 and real estate owned of $2,133,000.  At September 30,
2007, the Company's liabilities  aggregated $917,000.  Total stockholders equity
was $21,529,000.

     The  Company   previously   sponsored  a  non  tax-qualified   supplemental
retirement  plan,  initially  adopted by the Company in 1985, and as amended and
restated  (the  "Supplemental  Plan"),  under which only one  current  executive
officer of the Company was the sole  participant.  The cost of the  Supplemental
Plan was previously accrued but not funded.

     In  accordance  with an amendment to the  Supplemental  Plan, as previously
adopted  in March  2006,  the  liability  for the  Supplemental  Plan was  fully
satisfied on May 31, 2007, by the lump-sum  benefit  payment of $16,676,115  (to
Mr. Bianco, the Company's Chairman,  President and Chief Executive Officer), and
immediately  thereafter,  the Supplemental Plan  automatically  terminated.  The
lump-sum  Supplemental  Plan  benefit  payment  to Mr.  Bianco was paid from the
Company's  available  financial  resources.  After  May  31,  2007,  no  further
Supplemental  Plan expense was  required to be  recognized  by the Company.  See
Results of Operations below for further  information  regarding the Supplemental
Plan expense.  For a further discussion of the Supplemental Plan termination and
Mr.  Bianco's 2007  Employment  Agreement,  see Part I - Item 1 - Note 10 to the
Company's consolidated financial statements.

     The Supplemental Plan lump-sum benefit payment decreased the Company's cash
equivalents and investment  securities by approximately  $16.7 million as of May
2007,  which is expected  to result in a  significant  decrease in the  interest
income earned by the Company  beginning in June 2007.  See Item 3 - Quantitative
and  Qualitative  Disclosure  about Market Risk for  information  concerning the
Company's weighted average interest rate yield on investment securities.

     For the nine months ended  September 30, 2007, cash of $18,499,000 was used
by operations,  primarily due to the payment of the  Supplemental  Plan lump-sum
benefit  payment of $16,676,115,  as further  discussed  above,  and to a lesser
extent the payment of prior year  accruals  and  operating  expenses,  partially
offset by the receipt of interest income and investment earnings. The cash needs
of the Company for the first nine months of 2007 were satisfied by the Company's
financial  resources  and the  receipt  of  investment  earnings  on  investment
securities and cash equivalents.  Management believes that the Company's capital
resources are sufficient to continue operations for the next twelve months.

     For the nine months ended  September 30, 2006,  cash of $3,680,000 was used
by  operations,  including  the  payment of prior year  accruals  and  operating
expenses partially offset by the receipt of rental income,  interest income, and
investment earnings.

     The Company continues to evaluate a number of possible  acquisitions and is
engaged  in  the  management  of  its  assets  and  liabilities,  including  the
contingent assets associated with its legal claims. Discussions and negotiations
are ongoing with  respect to certain of these  matters.  The Company  intends to
aggressively  contest all  litigation and  contingencies,  as well as pursue all
sources for  contributions  to  settlements.  For a  discussion  of lawsuits and
proceedings, including the Supervisory Goodwill litigation see Part I - Item 1 -
Note 3.

     As of September 30, 2007, the Company owns one commercial  office  building
in Greenwich,  Connecticut.  The building is  approximately  14,500 square feet;
approximately  3,500  square feet is  utilized by the Company for its  executive
offices; the remaining space is currently unoccupied and available for lease.

     Although the portion of the  building not being  utilized by the Company is
currently  unoccupied and available for lease,  based on the Company's  analysis
including but not limited to current market rents in the area,  leasing  values,
and comparable  property sales,  the Company believes the property's fair market
value exceeds the property's current carrying value; and, therefore the carrying
value of the property as of September 30, 2007, has not been impaired.

     There are no material  commitments for capital expenditures as of September
30, 2007. Inflation has had no material impact on the business and operations of
the Company.

     Pursuant to the Company's  common stock  repurchase  plan (the  "Repurchase
Plan"), during nine months ended September 30, 2007, the Company repurchased for
approximately  $138,000  an  aggregate  of 289,146  shares of common  stock from
unaffiliated  parties  at  various  prices.  See  Part I - Item 1 - Note  11 for
further details with regard to the Repurchase Plan.



<PAGE>
     Results of Operations for the Third Quarter and Nine Months ended September
30, 2007 vs. the Third Quarter and Nine Months ended September 30, 2006

     The Company currently earns non-operating revenue consisting principally of
investment earnings on investment securities and cash equivalents. The Company's
management believes that operating cash needs for the next twelve months will be
met principally by the receipt of investment  earnings on investment  securities
and  cash  equivalents  and  the  Company's  current  financial  resources.  The
Company's main source of revenue in 2006 was non-operating revenue consisting of
investment  earnings and to a lesser  extent rental income earned on real estate
owned.

     No rental  income from real estate  owned was earned for the third  quarter
and nine months ended  September 30, 2007, as compared to $2,000 and $92,000 for
the third  quarter and nine months  ended  September  30,  2006.  The  decreased
amounts in the 2007 periods, compared to the 2006 periods, are due to unoccupied
office space currently available for lease, versus partial occupancy in the same
2006 periods.

     Compensation  and benefits  decreased to $535,000 in the third  quarter and
$2,783,000 in the nine months ended September 30, 2007, compared with $1,058,000
and $3,742,000 in respective 2006 periods.  The decreases are primarily due to a
decrease in the  Supplemental  Plan expense in the third  quarter and nine month
periods  ended  September  30,  2007,  as a  result  of  the  Supplemental  Plan
termination  as of May 31,  2007,  versus  the  same  2006  periods  as  further
described below.

     The Supplemental Plan expense was $0 and $868,000 for the third quarter and
nine months ended  September  30, 2007,  respectively,  compared to $513,000 and
$2,023,000  for the third  quarter and nine months  ended  September  30,  2006,
respectively.  As a result of the  termination of the  Supplemental  Plan, as of
June 1, 2007,  no further  Supplemental  Plan expense will be  recognized by the
Company.

     The Supplemental Plan expense reflects  recognition of an expense of $0 and
$394,000 for the third quarter and nine month periods ended  September 30, 2007,
respectively recorded to increase the Supplemental Plan liability to the present
value of the May 31, 2007 lump-sum  payment amount of  $16,676,115,  utilizing a
5.75% discount rate factor based on the 2007  Employment  Agreement  between the
Company and Mr. Bianco and the amendment of the Supplemental Plan.

     An  additional  Supplemental  Plan  expense of  $474,000 in the nine months
ended  September  30, 2007,  and $284,000 and $568,000 for the third quarter and
nine month  periods  ended  September  30,  2006,  respectively  was recorded to
amortize the Supplemental Plan minimum pension liability adjustment. The minimum
pension liability adjustment, which was included as a component of stockholders'
equity within accumulated other comprehensive loss in the Company's consolidated
financial statements,  was $1,326,000 as of March 31, 2006, and was amortized on
a straight line basis over the 14-month  period from April 1, 2006,  through May
31, 2007,  as an additional  Supplemental  Plan expense of $284,000 per quarter.
The  amortization of the additional  minimum  pension  liability in the 2007 and
2006 periods,  although  recorded as a component of compensation  expense in the
Company's consolidated statement of operations,  did not result in a decrease in
total  stockholders'  equity,  as its recognition  results in an increase in one
component and a  corresponding  decrease in another  component of  stockholders'
equity. In connection with the Supplemental  Plan lump-sum benefit payment,  the
Company  paid  approximately  $242,000 of  employer  Medicare  taxes,  which are
included as a component of  compensation  and benefits  expense in the Company's
Consolidated  Statement of Operations for the nine month period ended  September
30,  2007.  See Part I - Item 1 - Notes 8 and 10 to the  Company's  consolidated
financial statements for further information.

     No stock based  compensation  expense was recorded in the nine months ended
September 30, 2007, as all previously granted  outstanding  options vested as of
January 2, 2007.  No stock option  awards have been granted  since January 2005.
During the third quarter and nine months ended  September 30, 2006,  the Company
recorded $22,000 and $66,000,  respectively, of compensation expense relating to
stock options in accordance  with SFAS 123R. For further  information  regarding
the  Company's  Stock-Based  Compensation,  see  Part I - Item 1 - Note 9 to the
Company's consolidated financial statements.

     Professional and outside  services  decreased to $244,000 and $1,617,000 in
the third quarter and nine months ended September 30, 2007, compared to $553,000
and  $2,274,000 in the respective  2006 periods.  The decrease in the 2007 third
quarter and nine month  periods as compared to the  respective  2006  periods is
principally the result of a lower level of legal and professional  fees relating
to the  Supervisory  Goodwill  litigation in 2007 versus 2006.  The  Supervisory
Goodwill  litigation  expenses for the 2007 periods include expenses relating to
the preparation of the Company's expert report on damages and depositions of the
Company's  and the  Government's  expert  witnesses.  The  Supervisory  Goodwill
litigation expenses in the 2006 periods included expenses incurred in connection
with discovery and preparation for the Show Cause hearing.



<PAGE>
     Interest  income in the third  quarter and nine months ended  September 30,
2007,  decreased to $244,000 and  $1,103,000,  respectively,  from  $491,000 and
$1,368,000 in the respective 2006 periods.  The decrease is principally due to a
lower level of cash  equivalents and  investments  securities as a result of the
Supplemental Plan lump-sum benefit payment to Mr. Bianco.  The payment decreased
the Company's cash equivalents and investment  securities by approximately $16.7
million,  resulting in a decrease in the interest  income  earned by the Company
beginning in June 2007. See Item 3 -  Quantitative  and  Qualitative  Disclosure
about Market Risk for  information  concerning  the Company's  weighted  average
interest rate yield on investment securities as of September 30, 2007.

     For the third quarter and nine months ended  September  30, 2007,  realized
gains on sales of  investment  securities  available  for sale were  $26,000 and
$310,000, respectively. No investment securities available for sale were sold in
the third quarter and nine months ended September 30, 2006.

     The income tax  provisions  of $50,000 for the nine months ended  September
30,  2007,  and  $33,000 and  $66,000  the third  quarter and nine months  ended
September 30, 2006, 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.

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:
<TABLE>
<S>                                                <C>             <C>          <C>              <C>
                                                     September 30, 2007            December 31, 2006
                                                   ======================       =========================
                                                   Carrying          Fair       Carrying             Fair
                                                      Value         Value          Value            Value
(in thousands)                                     --------         -----       --------           ------

U.S. Treasury Bills and Notes...............       $ 17,041        $ 17,057     $ 34,623         $ 34,625
                                                   ========        ========     ========         ========
Weighted average interest rate..............           4.77%                        4.65%
                                                   ========                     ========
</TABLE>

     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  at December 31, 2006,  had
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 were primarily in the form of preferred  stock in utility  companies.
The equity  securities  were held for an  indefinite  period and were carried at
fair value with net unrealized gains and losses recorded  directly in a separate
component of stockholder's equity.



<PAGE>
     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.
<TABLE>
<S>                                                                    <C>            <C>
(In thousands)                                                         September 30,  December 31,
                                                                          2007            2006
Equity Securities Available for Sale:                                  ============   ============

Fair value........................................................               -          $1,417
                                                                       ============   ============
Hypothetical fair value at a 20% increase in market price.........               -          $1,700
                                                                       ============   ============
Hypothetical fair value at a 20% decrease in market price.........               -          $1,134
                                                                       ============   ============
</TABLE>

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
<TABLE>
<S>                                         <C>       <C>            <C>              <C>             <C>
(in thousands)                                                        Payment Due By Period
                                            ===================================================================

                                                      Less Than         One to         Three to        More than
                                            Total      One Year      Three Years      Five Years      Five Years
                                            -----     ---------      -----------      ----------      -----------

Operating leases.....................     $     1     $       1      $         -      $        -      $         -
                                          --------    ---------      -----------      ----------      -----------
Total obligations....................     $     1     $       1      $         -      $        -      $         -
                                          ========    =========      ===========      ==========      ===========
</TABLE>

Item 4T.  CONTROLS AND PROCEDURES

     Our  disclosure  controls  and  procedures  include our  controls and other
procedures to ensure that information required to be disclosed in this and other
reports under the  Securities  Exchange Act of 1934,  as amended the  ("Exchange
Act"),  is accumulated and  communicated to our management,  including our Chief
Executive  Officer  and  Chief  Financial  Officer  to  allow  timely  decisions
regarding  required  disclosure and to ensure that such information is recorded,
processed, summarized and reported within the time periods.

     Our Chief Executive  Officer and Chief Financial  Officer have conducted an
evaluation of our  disclosure  controls and procedures as of September 30, 2007.
Based upon this  evaluation,  our Chief  Executive  Officer and Chief  Financial
Officer have concluded  that our disclosure  controls and procedures (as defined
in Rule  13a-15(e)  and  15d-15(e)  promulgated  under  the  Exchange  Act)  are
effective to ensure that the  information  required to be disclosed by us in the
reports we file under the Exchange Act is recorded,  processed,  summarized  and
reported  with  adequate   timeliness  and  accumulated   and   communicated  to
management,  including the principal executive and principal financial officers,
as appropriate, to allow timely decisions regarding disclosure.

     There have been no changes  during the most  recent  fiscal  quarter in our
internal  control  over  financial  reporting as defined in Rule  13a-15(f)  and
15d-15(f) of the Exchange Act that have materially  affected,  or are reasonably
likely to materially affect our internal control over financial reporting.


<PAGE>
STOCKHOLDER INQUIRIES

     Stockholder inquiries,  including requests for the following: (i) change of
address;  (ii) replacement of lost stock  certificates;  (iii) Common Stock name
registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on
Form 10-K; (vi) proxy material;  and (vii) information regarding stock holdings,
should be directed to:

         American Stock Transfer and Trust Company
         59 Maiden Lane
         New York, NY  10038
         Attention:  Shareholder Services
         (800) 937-5449 or (718) 921-8200 Ext. 6820

     As the Company does not maintain a website,  copies of Quarterly reports on
Form 10-Q, Annual Reports on Form 10-K and Proxy Statements can also be obtained
directly  from the Company free of charge by sending a request to the Company by
mail as follows:

         AmBase Corporation
         100 Putnam Green, 3rd Floor
         Greenwich, CT  06830
         Attn:  Shareholder Services

     The Company is subject to the informational  requirements of the Securities
Exchange Act of 1934 (the "Exchange  Act").  Accordingly,  the Company's  public
reports,  including  Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K
and Proxy  Statements,  can be obtained  through  the  Securities  and  Exchange
Commission ("SEC") EDGAR Database available on the SEC's website at www.sec.gov.
Materials  filed with the SEC may also be read or copied by  visiting  the SEC's
Public Reference Room, 100 F Street,  NE, Washington,  DC 20549.  Information on
the  operation  of  the  Public  Reference  Room  may  be  obtained  by  calling
1-800-SEC-0330.

PART II - OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

     For a discussion of the Company's legal proceedings, including a discussion
of the Company's Supervisory Goodwill litigation, see Part I - Item 1 - Note 3 -
Legal Proceedings.

Item 1A.  RISK FACTORS

     There have been no material changes from risk factors previously  disclosed
in the Company's Annual Report on Form 10-K for the year ended December 31, 2006
in response to Item 1A to Part I of Form 10-K.

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None.


<PAGE>
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

Item 5.  OTHER INFORMATION

None.

Item 6.  EXHIBITS

      Exhibit 31.1 Rule 13a-14(a) Certification of Chief Executive Officer
      Exhibit 31.2 Rule 13a-14(a) Certification of Chief Financial Officer
      Exhibit 32.1 Section 1350 Certification of Chief Executive Officer
      Exhibit 32.2 Section 1350 Certification of Chief Financial Officer



<PAGE>
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 13, 2007