FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


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


                 For the quarterly period ended June 30, 1997

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

                         Commission file number 1-7265


                              AMBASE CORPORATION


            (Exact name of registrant as specified in its charter)


                                   DELAWARE

                           (State of incorporation)
                                  95-2962743

                     (I.R.S. Employer Identification No.)
              GREENWICH OFFICE PARK, BUILDING 2, 51 WEAVER STREET
                      GREENWICH, CONNECTICUT 06831-5155

            (Address of principal executive offices)     (Zip Code)

                                (203) 532-2000

             (Registrant's telephone number, including area code)




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

YES     X        NO

At June 30, 1997 there were  44,533,519  shares of  registrant's  common  stock,
$0.01 par value per share, outstanding, excluding 126,488 treasury shares.


<PAGE>



AMBASE CORPORATION

QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1997

CROSS REFERENCE SHEET FOR
PARTS I AND II                                                            PAGE
==============================================================================

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements................................................1

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.................................7

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings..................................................11

Item 2.  Changes in Securities..............................................11

Item 3.  Defaults Upon Senior Securities....................................11

Item 4.  Submission of Matters to a Vote of Security Holders................12

Item 5.  Other Information..................................................12

Item 6.  Exhibits and Reports on Form 8-K...................................12










<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      AMBASE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  SECOND QUARTER AND SIX MONTHS ENDED JUNE 30
                                  (UNAUDITED)



==============================================================================
                                      Second Quarter            Six Months
(in thousands,
except per share data)               1997         1996        1997        1996
==============================================================================

OPERATING EXPENSES:
Compensation and benefits        $    476    $     394     $   992     $   810
Professional and outside services     131          152         192         268
Insurance                              36           53          71         106
Occupancy                              21           22          43          41
Other operating                        43           43          81          78
------------------------------------------------------------------------------
                                      707          664       1,379       1,303
------------------------------------------------------------------------------
Operating loss                       (707)        (664)     (1,379)     (1,303)
------------------------------------------------------------------------------
Interest income                       663          655       1,352       1,258
Other income - litigation and
   contingency reserves reversal        -        8,000           -       8,000
Realized loss on sale of investment
   securities - available for sale      -         (182)          -        (182)
Other income                            -           20           -          20
------------------------------------------------------------------------------
Income (loss) from continuing
   operations before income taxes     (44)       7,829         (27)      7,793
Income tax benefit (expense)          (70)         (74)        335       7,486
------------------------------------------------------------------------------
Income (loss) from continuing
   operations                        (114)       7,755         308      15,279
Income from discontinued investment
   management operations,
   net of income taxes                  -           18           -          36
------------------------------------------------------------------------------

NET INCOME (LOSS)                $   (114)   $   7,773     $   308     $15,315
==============================================================================

PER SHARE DATA:
Income (loss) from continuing
   operations                    $      -    $    0.17     $  0.01     $  0.34
Income from discontinued 
   investment management
   operations, net of income
   taxes                                -            -           -           -
------------------------------------------------------------------------------

NET INCOME (LOSS)                $      -    $    0.17     $  0.01     $  0.34
==============================================================================

AVERAGE SHARES OUTSTANDING         44,534       44,534      44,534      44,534
==============================================================================

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                     - 1 -

<PAGE>



                      AMBASE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS



==============================================================================
                                                   June 30,        December 31,
                                                      1997                1996
(in thousands)                                  (unaudited)
==============================================================================

ASSETS
Cash and cash equivalents (includes
   $65 in 1996 of restricted cash)               $   5,003         $     5,591
Investment securities - held to maturity
   (market value $46,551 and $47,261)               46,553              47,259
Receivable from Home Holdings, Inc.                 12,911              13,186
Other assets                                           220                 193
------------------------------------------------------------------------------

TOTAL ASSETS                                     $  64,687         $    66,229
==============================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued liabilities         $     190         $     1,428
Supplemental retirement plan                         4,775               4,724
Postretirement welfare benefits                      1,463               1,527
Other liabilities                                      327                 605
Litigation and contingency reserves                  2,633               2,954
Income tax reserves                                 79,088              79,088
------------------------------------------------------------------------------
Total liabilities                                   88,476              90,326
------------------------------------------------------------------------------
Commitments and contingencies                            -                   -
------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock                                           447                 447
Paid-in capital                                    547,712             547,712
Accumulated deficit                               (571,301)           (571,609)
Treasury stock                                        (647)               (647)
------------------------------------------------------------------------------
Total stockholders' equity                         (23,789)            (24,097)
------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $  64,687         $    66,229
==============================================================================

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                     - 2 -

<PAGE>



                      AMBASE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           SIX MONTHS ENDED JUNE 30



==============================================================================

(in thousands)                                               1997         1996
==============================================================================

CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations                         $   308     $ 15,279
Adjustments to reconcile income from
   continuing  operations to net cash
   provided (used) by continuing operations:
Other assets                                                   (2)          (9)
Accounts payable and accrued liabilities                   (1,238)        (502)
Litigation and contingency reserves uses                     (321)      (1,087)
Litigation and contingency reserves reversal                    -       (8,000)
Income tax reserves, net                                        -       (9,600)
Income tax refund - 1977                                        -        7,613
Other liabilities                                            (278)      (1,388)
Interest income - investment securities                    (1,236)      (1,168)
Realized loss on sale of investment securities
   - available for sale                                         -          182
Other, net                                                    (13)        (143)
------------------------------------------------------------------------------
Net cash provided (used) by operating
   activities of continuing operations                     (2,780)       1,177
------------------------------------------------------------------------------
Net cash provided by discontinued investment
   management operations                                        -            2
------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of investment securities
   - held to maturity                                       5,450       22,580
Purchases of investment securities
   - held to maturity                                      (3,508)     (29,495)
Proceeds from Home Holdings, Inc. receivable                  275        3,763
Proceeds from sales of investment securities
   -available for sale                                          -           31
Other, net                                                    (25)           -
------------------------------------------------------------------------------
Net cash provided (used) by investing activities            2,192       (3,121)
------------------------------------------------------------------------------
Net decrease in cash and cash equivalents                    (588)      (1,942)
Cash and cash equivalents at beginning of period            5,591        7,752
------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                $ 5,003     $  5,810
==============================================================================

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                     - 3 -

<PAGE>
                      AMBASE CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

The accompanying  consolidated  financial  statements of AmBase  Corporation and
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 of normal recurring adjustments, necessary for a fair presentation of
the Company's financial position and results of operations.  Results for interim
periods are not  necessarily  indicative  of results for the full year.  Certain
reclassifications  have been made to the 1996 consolidated  financial statements
to  conform  with the 1997  presentation.  The  financial  statements  have been
prepared in accordance with generally accepted accounting  principles  ("GAAP").
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 accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  Substantial  contingent and
alleged  liabilities  exist  against the Company  through  certain  lawsuits and
governmental proceedings,  see Part II - Item I. These factors raise substantial
doubt about the Company's ability to continue as a going concern.  The financial
statements  do not  include  adjustments  to the  carrying  value of assets  and
liabilities  which  might be  necessary  should  the  Company  not  continue  in
operation.  In order to  continue on a long-term  basis,  the Company  must both
resolve its  contingent and alleged  liabilities by prevailing  upon or settling
these claims for less than the amounts claimed and generate profits by acquiring
existing  operations and/or by developing new operations.  The Company continues
to evaluate a number of possible acquisitions,  and is engaged in the management
of its remaining  assets and  liabilities,  including the contingent and alleged
tax and  litigation  liabilities,  as described in Part II - Item 1. The Company
intends to  aggressively  contest  all  pending and  threatened  litigation  and
proceedings, as well as pursue all sources for contributions to settlements. 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, 1996.

The Company's main source of non-operating  revenue is interest income earned on
investment  securities and cash equivalents.  The Company's  management  expects
that operating  cash needs for the remainder of 1997 will be met  principally by
the Company's  current  financial  resources,  and the receipt of  non-operating
revenue consisting of interest income received on investment securities and cash
equivalents.

NOTE 2 - LEGAL PROCEEDINGS

The  Company  has  significant  alleged tax  liabilities  and is a defendant  in
certain  lawsuits and  governmental  proceedings,  the ultimate outcome of which
could have a material  adverse effect on its financial  condition and results of
operations.  Because  of the  nature  of the  contingent  and  alleged  tax  and
litigation  liabilities  described  in  Part  II -  Item  1,  and  the  inherent
difficulty  in  predicting  the  outcome  of  the  litigation  and  governmental
proceedings,  management  is unable to predict  whether the  Company's  recorded
reserves  will be adequate or its  resources  sufficient to satisfy its ultimate
obligations.  The accompanying  consolidated financial statements do not include
any  adjustments  that might  result  from the  outcome of these  uncertainties.
Although  the  basis  for the  calculation  of the  litigation  and  contingency
reserves  and  income tax  reserves  are  regularly  reviewed  by the  Company's
management and outside legal counsel,  the assessment of these reserves includes
an exercise  of  judgment  and is a matter of  opinion.  At June 30,  1997,  the
litigation and contingency reserves were $2,633,000. For a discussion of alleged
tax liabilities, lawsuits and governmental proceedings, see Part II - Item 1.

In  addition  to the  litigation  and  contingency  reserves,  the Company has a
reserve  for  income  taxes of  $79,088,000  at June  30,  1997.  For a  further
discussion,  see Part II - Item 1 - Legal  Proceedings,  Disputes  with Internal
Revenue Service, Withholding Taxes (Netherlands Antilles) and Fresh Start.

See  Part II - Item 1 -  Legal  Proceedings,  for a  discussion  of  Supervisory
Goodwill Litigation.

During the second  quarter of 1996,  the  Company  reduced  its  litigation  and
contingencies  reserves by  $8,000,000  and recorded such amount as other income
during the second  quarter  and six month  periods  ended  June 30,  1996.  This
reduction was recorded based upon the Company's  determination,  due to a number
of factors,  that there was a reduced  probability of incurring  costs to defend
and/or settle  potential  litigation with respect to Carteret Savings Bank, F.A.
("Carteret"),  see the  Company's  Annual Report on Form 10-K for the year ended
December 31, 1996, Item 3, for a further discussion.

                                    - 4 -
<PAGE>
                      AMBASE CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 3 - DISCONTINUED INVESTMENT MANAGEMENT OPERATIONS

On October 4, 1996,  the Company  sold its entire  interest in  Augustine  Asset
Management,  Inc. ("Augustine") to Augustine,  for $500,000 in cash. The Company
had acquired a 51% ownership  interest in Augustine for $200,000 on November 10,
1993.  The  Company's  ownership  percentage  later  increased  to  66%  due  to
Augustine's repurchase of outstanding shares from other shareholders.

Accordingly,  as of  September  30,  1996,  the  operations  of  Augustine  were
designated  as  discontinued  operations,  and the  consolidated  statements  of
operations for the periods presented herein were  retroactively  reclassified to
report the income from  discontinued  operations  separately from the results of
continuing  operations  by  excluding  the  operating  revenues  and expenses of
discontinued  operations from the respective  statement captions.  The amount of
income  taxes  allocated to  discontinued  operations  reflects the  incremental
effect on income taxes that resulted from such operations.

Summarized   unaudited   information   relating  to  income   from   Augustine's
discontinued  operations  for the second  quarter and six months  ended June 30,
1996 is as follows:
==============================================================================
                                                            Second         Six
(in thousands)                                             Quarter      Months
==============================================================================

Investment management fee revenue                           $  159      $  305
Operating expenses                                            (115)       (223)
Interest income                                                  -           1
Minority interest                                               (9)        (18)
------------------------------------------------------------------------------
Income from discontinued operations before taxes                35          65
Income tax expense                                             (17)        (29)
------------------------------------------------------------------------------

INCOME FROM DISCONTINUED OPERATIONS THROUGH JUNE 30, 1996   $   18      $   36
==============================================================================

Investment  management fee revenue  includes  $46,000 and $93,000 for the second
quarter and six months ended June 30, 1996, respectively, from related parties.

NOTE 4 - CASH AND CASH EQUIVALENTS

Highly liquid  investments,  consisting  principally of funds held in short-term
money market accounts, are classified as cash equivalents.  Included in cash and
cash equivalents at December 31, 1996 is $65,000 of funds held in escrow,  which
were applied to the  satisfaction of certain  liabilities and were classified as
restricted.



                                    - 5 -

<PAGE>


                      AMBASE CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


NOTE 5 - INVESTMENT SECURITIES

Investment  securities - held to maturity  consist of U.S.  Treasury  Bills with
original  maturities of one year or less and which are carried at amortized cost
based upon the  Company's  intent  and  ability  to hold  these  investments  to
maturity.

Investment securities - held to maturity, at June 30 and December 31, consist of
the following:
==============================================================================
                            1997                              1996
               -----------------------------    ------------------------------

                           Cost or                           Cost or
               Carrying  Amortized      Fair    Carrying   Amortized      Fair
(in thousands)    Value       Cost     Value       Value        Cost     Value
==============================================================================

U.S. Treasury
   Bills        $46,553    $46,553   $46,551     $47,259     $47,259   $47,261
==============================================================================

The gross unrealized gains and losses on investment  securities,  at June 30 and
December 31, consist of the following:
==============================================================================

(in thousands)                                                  1997      1996
==============================================================================

Held to Maturity:
Gross unrealized gains (losses)                              $    (2)  $     2
==============================================================================

NOTE 6 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Additional  information regarding cash flow for the second quarter ended June 30
is as follows:
==============================================================================
(in thousands)                                                  1997      1996
==============================================================================
Cash received (paid) during the period:
Income taxes refunded (paid), net                            $   300   $ 5,475
==============================================================================

Income taxes  refunded,  net in 1997,  include  $475,000 of taxes  refunded as a
result of an  overpayment  to the  Internal  Revenue  Service  ("IRS")  for 1988
through 1991 tax years.  Income taxes refunded,  net in 1996, include a 1977 tax
refund of $7,613,000 and $1,987,000 of payments to the IRS,  principally for the
1985 through 1991 tax years.

NOTE 7 - INCOME TAXES

The Company and its 100% owned domestic subsidiaries file a consolidated federal
income tax return.  The Company  accounts  for income taxes in  accordance  with
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes" ("Statement 109"). Statement 109 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.  Statement  109  requires
that net deferred tax assets be recognized  immediately  when a more likely than
not criterion is met; that is, unless a greater than 50% probability exists that
the tax  benefits  will  actually  be realized  sometime  in the  future.  Under
Statement  109,  the  Company has  calculated  a net  deferred  tax asset of $33
million,  as of June 30, 1997 and December 31, 1996,  arising primarily from net
operating loss ("NOL")  carryforwards,  the excess of book over tax reserves and
alternative  minimum tax credits (not  including the tax effects of $170 million
of NOL's resulting from the Carteret  Savings Bank, F.A.  ("Carteret")  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.



                                    - 6 -

<PAGE>

As a result of the OTS's December 4, 1992 placement of Carteret in receivership,
under the management of the Resolution Trust Corporation ("RTC")/Federal Deposit
Insurance Corporation ("FDIC"),  and proposed Treasury Reg.  ss.1.597-4(g),  the
Company had  previously  filed its 1992 through 1995 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 during  1996, 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 has 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").

Based on the Company not making the election  decision,  as described above, the
Company will amend its 1992 through 1995 consolidated federal income tax returns
to  include  the  federal  income  tax  effects of  Carteret  and the  resulting
successor  institution,  Carteret  Federal  Savings  Bank.  The Company does not
believe a material increase in the Company's tax liabilities will result.

As a result of filing  consolidated  with Carteret,  the Company expects to have
available  approximately  $170  million of tax NOL  carryforwards,  expiring  no
earlier than 2007, available to offset future taxable income, in addition to the
$29,319,000 of NOL carryforwards as noted in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, Item 8 - Note 10.

During the first  quarter of 1997,  the Company  received a $475,000  income tax
refund,  as a result  of an  overpayment  to the IRS for 1988  through  1991 tax
years.  This amount was recognized as an income tax benefit in the first quarter
ended March 31, 1997.  During the first quarter of 1996, the Company  received a
1977  income tax refund of  $7,613,000,  which was  recognized  as an income tax
benefit,  based on management's  review of the overall tax liability position of
the Company.  During the first six months of 1996, $1,987,000 of payments to the
IRS were charged against income tax reserves,  principally representing payments
for previously agreed to issues relating to the 1985 through 1991 tax years.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

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 Item 1, herein.
On  October  4,  1996,  the  Company  sold its  entire  interest  in  Augustine.
Accordingly,  the operations of Augustine have been reclassified as discontinued
investment  management  operations in the  accompanying  consolidated  financial
statements.

FINANCIAL CONDITION

The  Company's  assets  at June  30,  1997  aggregated  $64,687,000,  consisting
principally of cash and cash equivalents of $5,003,000, investment securities of
$46,553,000  and a  $12,911,000  receivable  from  Home  Holdings,  Inc.  ("Home
Holdings").  During the first six months of 1997,  proceeds of $275,000 from the
Home Holdings  receivable were collected.  The Company  considers the receivable
from Home  Holdings  to be fully  collectible;  accordingly,  no  allowance  for
doubtful  accounts is  provided.  The  Company  will  continue  to monitor  Home
Holdings' status. For further information on the Company's  receivable from Home
Holdings,  see the  Company's  Annual  Report  on Form  10-K for the year  ended
December 31, 1996,  Item 8-Note 4. At June 30, 1997, the Company's  liabilities,
including reserves for contingent and alleged liabilities,  as further described
in Part II - Item 1, exceeded total recorded assets by $23,789,000.

The Company  contractually assumed the tax liabilities of City Investing Company
("City"),  which,  prior to September 1985, owned all the outstanding  shares of
Common Stock of the Company. The Company also contractually  assumed certain tax
liabilities of The Home and its  subsidiaries  from September 1985 through 1989.
For all periods  through 1992, the IRS and the Company do not agree with respect
to only two issues,  withholding taxes in connection with a Netherlands Antilles
finance  subsidiary of City,  and "Fresh Start" (an insurance  industry  issue).
During the first quarter of 1996, the Company  received a 1977 income tax refund
of $7,613,000; as a result, City no longer remains open for refunds. This amount
was  recognized  as an income tax benefit in the first  quarter  ended March 31,
1996, based on management's  review of the overall tax liability position of the
Company.

During the first six months of 1996,  in connection  with the  completion by the
IRS of the Company's  1985 to 1991 federal  income tax audits  (excluding  Fresh
Start), the Company made payments to the IRS totaling $1,987,000.  These amounts
were  previously  reserved for and recorded to the income tax reserves  account.
During the first  quarter of 1997,  $475,000 of income taxes were  refunded as a
result of an overpayment to the IRS for 1988 through 1991 tax years. This amount
was recorded as an income tax benefit in the first quarter of 1997.  The federal
income tax adjustments from the 1985 to 1991 audits  (excluding Fresh Start) did
not result in additional payments of state or local income taxes. New York State
has completed their examination of the Company's income tax returns through 1989
and is currently reviewing the Company's

                                    - 7 -

<PAGE>

income tax returns for tax years 1990 to 1992.  The IRS has  recently  completed
its  review  of the  Company's  federal  income  tax  return  for  1992  with no
adjustments.  The Company's  federal income tax returns for years  subsequent to
1992 have not been reviewed by the IRS.

With respect to the  Withholding  Taxes issue,  in connection with a Netherlands
Antilles finance subsidiary of City, on May 11, 1995, the IRS issued a Notice of
Deficiency for withholding taxes on interest payments for the years 1979 through
1985.  In the Notice of  Deficiency,  the IRS contends  that City's wholly owned
Netherlands  Antilles finance subsidiary should be disregarded for tax purposes.
The Company vigorously contested the IRS's position in accordance with the IRS's
internal  appeals  procedures.  In January 1992, the National  Office of the IRS
issued technical advice  supporting the auditing  agent's  position.  In October
1992, the Company  appealed this technical  advice to the National  Office.  The
National Office advised the Company that it expected to issue  technical  advice
supporting the auditing agent's position,  whereupon the Company advised the IRS
that it was withdrawing its technical advice request.

On June 30, 1995,  the Company  filed a petition in the United  States Tax Court
("Tax Court")  contesting the Notice of Deficiency.  The IRS filed its answer on
August 23, 1995. The Company filed a motion for summary judgment in its favor on
February 13, 1996. On April 17, 1996, the IRS filed a Notice of Objection to the
Company's motion for summary judgment. The Tax Court requested,  and the Company
filed,  on July 3, 1996, a reply to the IRS's Notice of Objection.  On September
19, 1996,  the Court denied the Company's  motion for summary  judgment  without
prejudice.  Based on the Tax Court's examination of the record and the status of
the discovery process, the Tax Court concluded that summary adjudication at this
time was inappropriate. The Tax Court directed the parties to engage in full and
complete  discovery as expeditiously as possible.  A trial was held in this case
on March 24, 1997, after which the Judge asked the IRS and the Company to submit
post-trial briefs. The Company's lawyers are presently  preparing the briefs. If
the IRS were to prevail on this issue, the Company would be liable for taxes and
interest in excess of the Company's financial resources.

In a case dealing with a similar  withholding tax issue,  the Tax Court ruled in
favor of the taxpayer,  Northern Indiana Public Service Co. ("Northern Indiana")
in November 1995. The Tax Court rejected the IRS's contention that interest paid
to Northern  Indiana's  foreign  subsidiary  were  subject to United  States tax
withholding. The IRS appealed this decision (Northern Indiana Public Service Co.
v. Commissioner) to the United States Court of Appeals for the 7th Circuit.  The
United States Court of Appeals for the 7th Circuit  ("Appeals  Court")  recently
affirmed  the Tax Court's  ruling in favor of  Northern  Indiana.  Although  the
Appeals Court  decision in the Northern  Indiana case could be beneficial to the
Company's case, it is not  necessarily  indicative of the ultimate result of the
final  settlement of the Netherlands  Antilles issue between the Company and the
IRS.

Based on an evaluation of the IRS's contention,  counsel has advised the Company
that, although the outcome in litigation can by no means be assured, the Company
has a very strong case and should prevail. Notwithstanding counsel's opinion and
the Appeals  Court ruling in the Northern  Indiana  case,  it is not possible at
this time to determine the final disposition of this issue, when the issues will
be resolved,  or their final financial effect. A final disposition of this issue
in the Company's  favor would have a material,  positive effect on the Company's
Consolidated Statement of Operations and Financial Condition.

With respect to the "Fresh  Start"  issue,  on March 13,  1996, the IRS issued a
Notice of  Deficiency  to the  Company,  with respect to taxes owed for the year
1987.  The Company has disputed the Notice of Deficiency and has claimed that it
is entitled to "Fresh Start"  transition  relief under certain insurance company
tax  provisions  of the Tax Reform Act of 1986.  If the IRS is  successful,  the
amount of the  deficiency  would be material.  The Company  believes that it has
meaningful  defenses.  On June 7, 1996,  the Company  filed a petition  with the
United  States Tax Court for  redetermination  of the tax, and on July 23, 1996,
the IRS filed its answer.  The IRS and the Company are  presently  engaged in an
informal discovery process,  customary in Tax Court. See Part II - Item 1, Legal
Proceedings,  Withholding  Taxes  (Netherlands  Antilles)  and  Fresh  Start for
additional details. See Results of Operations below, for a further discussion of
taxes.

At June 30, 1997, the litigation and contingency reserves were $2,633,000. For a
discussion of alleged tax liabilities,  lawsuits and  governmental  proceedings,
see Part II - Item 1.

In  addition  to the  litigation  and  contingency  reserves,  the Company has a
reserve  for  income  taxes of  $79,088,000  at June  30,  1997.  For a  further
discussion,  see Part II - Item 1 - Legal  Proceedings,  Disputes  with Internal
Revenue Service, Withholding Taxes (Netherlands Antilles) and Fresh Start.



                                    - 8 -

<PAGE>



The Company has  significant  alleged tax  liabilities  and is a defendant  in a
number of lawsuits and  proceedings,  the ultimate outcome of which could have a
material  adverse  effect on its financial  condition and results of operations.
Because of the nature of the contingent and alleged liabilities and the inherent
difficulty  in  predicting  the  outcome  of  the  litigation  and  governmental
proceedings,  management  is unable to predict  whether the  Company's  recorded
reserves  will be adequate or its  resources  sufficient to satisfy its ultimate
obligations.  The accompanying  consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties. For a
discussion of alleged tax liabilities,  lawsuits and  governmental  proceedings,
see Part II - Item 1. Although the basis for the  calculation  of the litigation
and contingency  reserves and the income tax reserves are regularly  reviewed by
the Company's  management  and outside legal  counsel,  the  assessment of these
reserves includes an exercise of judgment, and is a matter of opinion.

The cash needs of the Company for the first six months of 1997 were  principally
satisfied  by  interest  income  received  on  investment  securities  and  cash
equivalents,  a $475,000 income tax refund,  and the Company's current financial
resources.  Management believes that the Company's cash resources are sufficient
to continue operations for 1997.

For  the six  months  ended  June  30,  1997,  cash of  $2,780,000  was  used by
continuing  operations,  including the payment of prior year  accruals,  and the
payment of operating expenses partially offset by interest income and a $475,000
tax refund.  For the six months  ended June 30,  1996,  cash of  $1,177,000  was
provided by operating  activities,  including  the receipt of a 1977 tax refund,
the receipt of interest income  partially offset by payments charged against the
litigation and contingency reserves and the payment of operating expenses.

The  Company  continues  to evaluate a number of  possible  acquisitions  and is
engaged in the management of its remaining assets and liabilities, including the
contingent and alleged tax and litigation liabilities, as described in Part II -
Item 1.  Extensive  discussions  and  negotiations  are ongoing  with respect to
certain of these  matters.  The  Company  intends to  aggressively  contest  all
pending and  threatened  litigation  and  governmental  proceedings,  as well as
pursuing all sources of contributions to settlements.  In order to continue on a
long-term  basis,  the  Company  must both  resolve its  contingent  and alleged
liabilities  by  prevailing  upon or  settling  these  claims  for less than the
amounts claimed and generate profits by acquiring existing  operations and/or by
developing new operations.

There were no material commitments for capital expenditures as of June 30, 1997.

RESULTS OF OPERATIONS - CONTINUING OPERATIONS

Summarized  financial  information for the continuing  operations of the Company
for the second quarter and six months ended June 30 is as follows:
==============================================================================
                                        Second Quarter          Six Months
(in thousands)                         1997        1996      1997         1996
==============================================================================

Operating expenses:
Compensation and benefits           $   476     $   394   $   992     $    810
Professional and outside services       131         152       192          268
Insurance                                36          53        71          106
Occupancy                                21          22        43           41
Other operating                          43          43        81           78
------------------------------------------------------------------------------
                                        707         664     1,379        1,303
------------------------------------------------------------------------------
Operating loss                         (707)       (664)   (1,379)      (1,303)
------------------------------------------------------------------------------
Interest income                         663         655     1,352        1,258
Other income - litigation and
   contingency reserves reversal          -       8,000         -        8,000
Realized loss on sale of investment
   securities - available for sale        -        (182)        -         (182)
Other income                              -          20         -           20
------------------------------------------------------------------------------
Income (loss) from continuing
   operations before income taxes       (44)      7,829       (27)       7,793
Income tax benefit (expense)            (70)        (74)      335        7,486
------------------------------------------------------------------------------

INCOME (LOSS) FROM CONTINUING
   OPERATIONS                       $  (114)    $ 7,755   $   308     $ 15,279
==============================================================================



                                    - 9 -

<PAGE>



The Company's main source of non-operating  revenue is interest income earned on
investment  securities and cash equivalents.  The Company's  management  expects
that operating  cash needs for the remainder of 1997 will be met  principally by
the  Company's  current  financial  resources  and the receipt of  non-operating
revenue  consisting of interest income earned on investment  securities and cash
equivalents.

The Company recorded a loss from continuing  operations of $114,000 and recorded
income from continuing operations of $308,000, or $0.01 per share, in the second
quarter and six month  periods ended June 30, 1997,  respectively.  The 1997 six
month period  includes a $475,000  income tax benefit,  as further  described in
Financial  Condition,  above.  Excluding  the $475,000  income tax benefit,  the
Company would have reported a loss from continuing operations of $167,000 in the
six month period ended June 30, 1997.  In the 1996 second  quarter and six month
periods the Company recorded income from continuing operations of $7,755,000, or
$0.17 per share, and $15,279,000,  or $0.34 per share, respectively.  As further
described in Financial  Condition,  above, the 1996 second quarter and six month
period  include other income of  $8,000,000,  resulting  from a reduction in the
litigation and contingency  reserves,  and the 1996 six month period includes an
additional  income tax  benefit of  $7,613,000.  Excluding  these  non-recurring
items,  the Company  would have  reported a loss from  continuing  operations of
$245,000,  or $0.01 per share,  and $334,000,  or $0.01 per share, in the second
quarter and six month periods ended June 30, 1996, respectively.

The Company  recorded a loss from continuing  operations  before income taxes of
$44,000 and $27,000 in the second  quarter and six month  periods ended June 30,
1997,  respectively.  For the second quarter and six month period ended June 30,
1996 the Company recorded income from continuing  operations before income taxes
of  $7,829,000  and  $7,793,000,  respectively,  which  includes  an  $8,000,000
reduction in the litigation and contingencies  reserves, as further described in
Financial Condition, above.

Compensation  and  benefits  increased  to $476,000  and  $992,000 in the second
quarter and six month periods ended June 30, 1997,  respectively,  compared with
$394,000 and $810,000 for the comparable  1996 period.  The increase in the 1997
periods  is due to the  hiring by the  Company  of an  employee  who  previously
provided services as an independent consultant.

Professional  and outside  services  decreased  to $131,000  and $192,000 in the
second  quarter and six month periods ended June 30, 1997,  compared to $152,000
and $268,000 in the  respective  1996  periods.  This decrease was primarily the
result of the  hiring by the  Company of an  employee  who  previously  provided
services as an independent consultant, as noted above.

Insurance  expenses in the second  quarter and six month  periods ended June 30,
1997,  as compared with the same 1996  periods,  decreased  due to  management's
continued renegotiation of insurance programs.

Interest income in the second quarter and six month periods of 1997 increased to
$663,000 and  $1,352,000,  respectively,  from  $655,000 and  $1,258,000  in the
respective 1996 period.

The income tax provision of $70,000 in the second quarter ended June 30, 1997 is
primarily attributable to a provision for state taxes. The income tax benefit of
$335,000  in the six month  period  ended  June 30,  1997 is  attributable  to a
$475,000 income tax refund, as further described in Financial Condition,  above,
and a provision  for state taxes of $140,000.  During the first quarter of 1996,
the  Company  received  a 1977  income  tax  refund  of  $7,613,000,  which  was
recognized  as an income tax benefit in the first  quarter ended March 31, 1996,
based on  management's  review of the  overall  tax  liability  position  of the
Company,  as further  described  in  Financial  Condition,  above.  In addition,
included in the income tax benefit for the second  quarter and six month periods
ended June 30,  1996,  respectively,  is a state tax  provision  of $74,000  and
$127,000.  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.

STOCKHOLDER INQUIRIES

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

      AMERICAN STOCK TRANSFER AND TRUST COMPANY
      40 Wall Street, 46th Floor
      New York, NY  10005
      Attention:  Shareholder Services
      (800) 937-5449 OR (718) 921-8200


                                    - 10 -

<PAGE>



PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The information  contained in Item 8 - Note 12 in AmBase's Annual Report on Form
10-K for the year ended  December 31, 1996 and in AmBase's  Quarterly  Report on
Form 10-Q for the  quarterly  period  ended March 31, 1997 are  incorporated  by
reference  herein and the defined  terms set forth  below have the same  meaning
ascribed to them in those Report.  There have been no material  developments  in
such legal proceedings, except as set forth below.

(a) The  Company  is  a  defendant  in  a  number  of  lawsuits  or proceedings,
    including, but not limited to, the following:

Angel, et al. v. AmBase Corp.  All claims  in this action  have  been settled or
dismissed.  Therefore, this action is concluded.

Disputes with Internal Revenue Service.

   (1) Withholding Taxes (Netherlands  Antilles).  A trial was held in this case
       on March 24, 1997, after which the Judge asked the IRS and the Company to
       submit post trial briefs.  The Company's lawyers are presently  preparing
       the  briefs.  In the case of  Northern  Indiana  Public  Service  Co.  v.
       Commissioner,  the United  States  Court of Appeals  for the 7th  Circuit
       ("Appeals  Court")  recently  affirmed the Tax Court's ruling in favor of
       Northern  Indiana.  Although the Appeals  Court  decision in the Northern
       Indiana  case  could  be  beneficial  to the  Company's  case,  it is not
       necessarily  indicative of the ultimate result of the final settlement of
       the Netherlands Antilles issue between the Company and the IRS.

   (2) Fresh Start.  On  April 24, 1997, the United  States Court of Appeals for
       the Third Circuit issued its opinion in Atlantic  Mutual Insurance Co. v.
       Commissioner,  concluding  that  the  IRS  regulation  defining  "reserve
       strengthening" is  valid.  Although  this  decision  is  not  controlling
       precedent in the Company's case (which would be appealable  to the Second
       Circuit),  Atlantic  Mutual  is  the  first  Court  of  Appeals  decision
       upholding the government's position  on this  issue.  This decision is in
       conflict  with  the  decision  of  the Eighth Circuit Court of Appeals in
       Western National Mutual Ins. Co. v. Commissioner (8th  Cir. 1995).  It is
       possible  that  Atlantic   Mutual  may  seek  Supreme  Court  review.  No
       assurances  can   be  given  concerning  the  outcome  of  the  Company's
       litigation on this issue.

The actions against the Company, including those identified in (a) above, are in
various  stages.  Nevertheless,  the allegations and claims are material and, if
successful,  could result in substantial  judgments against the Company.  To the
extent  the  aggregate  of any  such  judgments  were to  exceed  the  resources
available,  these matters could have a material  adverse effect on the Company's
financial  condition  and  results  of  operations.  Due to the  nature of these
proceedings, the Company and its counsel are unable to express any opinion as to
their probable outcome.

ITEM 2.  CHANGES IN SECURITIES

Does not apply.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Does not apply.



                                    - 11 -

<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the  Annual  Meeting  of  Stockholders  held on May 1,  1997,  the  following
proposals were voted upon:

The  following  persons were  nominated to be elected as director,  as set forth
below:

                                          NUMBER OF SHARES
                                       FOR              WITHHELD

Robert E. Long                      38,175,623           414,818

There were no broker non-votes.

Stockholders approved the appointment of Price Waterhouse LLP as the independent
accountants  of the Company for the year ending  December 31,  1997.  The shares
were voted as follows:  38,238,510  shares for and 262,796 against,  with 89,135
shares abstaining. There were no broker non-votes.

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

    None

(b) Form 8-K

    None




                                  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








By:    JOHN P. FERRARA
       Vice President, Chief Financial Officer,
       Treasurer and Controller
       (PRINCIPAL FINANCIAL AND
       ACCOUNTING OFFICER)

Date:  July 24, 1997


                                    - 12 -

<PAGE>




                                  EXHIBIT INDEX



Exhibit
  No.                 Description
-------               -----------

  27                  Financial Data Schedule











                                      -13-