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, 2008

                                       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, a non-accelerated  filer, or a smaller reporting company.
See the  definitions of "large  accelerated  filer",  "accelerated  filer",  and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer __ Accelerated Filer __ Non-Accelerated Filer X
Smaller Reporting Company __                                        ----

     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 October  31,  2008,  there were  43,432,464  shares  outstanding  of the
registrant's common stock, $0.01 par value per share.



<PAGE>
<TABLE>
<CAPTION>
AmBase Corporation

Quarterly Report on Form 10-Q
September 30, 2008
<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.................................................15

Item 3.      Quantitative and Qualitative Disclosures About Market Risk..........................................18

Item 4T.     Controls and Procedures.............................................................................18

PART II - OTHER INFORMATION

Item 1.      Legal Proceedings...................................................................................19

Item 1A.     Risk Factors........................................................................................19

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.........................................20

Item 3.      Defaults Upon Senior Securities.....................................................................20

Item 4.      Submission of Matters to a Vote of Security Holders.................................................20

Item 5.      Other Information...................................................................................20

Item 6.      Exhibits............................................................................................20

Signatures   ....................................................................................................20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS

                       AMBASE CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)
              (in thousands, except for share and per share amounts)
<S>                                                                                         <C>                <C>
                                                                                  September 30,       December 31,
                                                                                           2008               2007
                                                                                       ========          =========
Assets:
Cash and cash equivalents.........................................................     $  3,079           $  2,894
Investment securities:
    Held to maturity (market value $11,802 and $16,329, respectively).............       11,779             16,313
                                                                                       --------           --------
Total investment securities.......................................................       11,779             16,313
                                                                                       --------           --------
Real estate owned:
  Land............................................................................          554                554
  Buildings and improvements......................................................        1,900              1,900
                                                                                       --------           --------
                                                                                          2,454              2,454
  Less:  accumulated depreciation.................................................         (373)              (334)
                                                                                       --------           --------
Real estate owned, net............................................................        2,081              2,120
Other assets......................................................................           96                232
                                                                                       --------           --------
Total assets......................................................................     $ 17,035           $ 21,559
                                                                                       ========           ========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities..........................................     $    660           $    962
Other liabilities.................................................................           11                 19
                                                                                       --------           --------
Total liabilities.................................................................          671                981
                                                                                       --------           --------
Commitments and contingencies (Note 3)............................................            -                  -

Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued and
   43,496,364 outstanding in 2008 and 43,858,664 outstanding in 2007).............          464                464
Paid-in capital...................................................................      548,044            548,044
Accumulated deficit...............................................................     (530,123)          (526,057)
Treasury stock, at cost - 2,913,643 and 2,551,343 shares, respectively............       (2,021)            (1,873)
                                                                                       --------           --------
Total stockholders' equity........................................................       16,364             20,578
                                                                                       --------           --------
Total liabilities and stockholders' equity........................................     $ 17,035           $ 21,559
                                                                                       ========           ========
</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
                                                                       2008           2007           2008          2007
                                                                       ====           ====           ====          ====
Operating expenses:
Compensation and benefits.........................................    $   425       $     535    $   1,374     $  2,783
Professional and outside services.................................        176             244        2,949        1,617
Property operating and maintenance................................         25              35           73           87
Depreciation  ....................................................         13              12           39           38
Insurance.........................................................         16              17           60           61
Other operating...................................................         44              15          136          113
                                                                     --------       ---------    ---------     ---------
                                                                          699             858        4,631        4,699
                                                                     --------       ---------    ---------     --------
Operating loss....................................................       (699)           (858)      (4,631)      (4,699)
                                                                     --------       ---------    ---------     --------
Interest income...................................................         71             244          318        1,103
Realized gains on sales of investment securities..................          -              26            -          310
Other income......................................................          -               -          247            -
                                                                      -------       ---------    ---------     --------
Loss before income taxes..........................................       (628)           (588)      (4,066)      (3,286)
Income tax expense................................................          -               -            -          (50)
                                                                      -------       ---------    ---------     --------
Net loss..........................................................    $  (628)      $    (588)   $  (4,066)    $ (3,336)
                                                                      =======       =========    =========     =======
Net loss per common share:
Net loss - basic..................................................    $ (0.01)      $   (0.01)   $   (0.09)    $  (0.07)
                                                                      =======       =========    =========     ========
Net loss - assuming dilution......................................    $ (0.01)      $   (0.01)   $   (0.09)    $  (0.07)
                                                                      =======       =========    =========     ========
Weighted average common shares outstanding:
Basic.............................................................     43,566          44,703       43,635       44,845
                                                                      =======       =========    =========     ========
Diluted...........................................................     43,566          44,703       43,635       44,845
                                                                      =======       =========    =========     ========
</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
                                                                           2008      2007            2008       2007
                                                                           =====     =====           ====       =====

Net loss............................................................     $ (628)   $  (588)        $ (4,066)  $ (3,336)

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

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

                                                                         ------    -------         --------   --------
Comprehensive loss...................................................    $ (628)   $  (615)        $ (4,066)  $ (3,000)
                                                                         ======    =======         ========   ========
</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>
                                                                                           2008          2007
Cash flows from operating activities:                                                      ====          ====
Net loss........................................................................      $  (4,066)     $  (3,336)
Adjustments to reconcile net loss to net cash used by
       operations:
    Depreciation and amortization...............................................             39             38
    Accretion of discount - investment securities...............................              -            (34)
     Realized gains on sales of investment securities...........................              -           (310)
    Amortization of minimum pension liability adjustment........................              -            474
Changes in other assets and liabilities:
    Accrued interest receivable in investment securities........................             59             57
    Other assets................................................................            136          1,178
    Accounts payable and accrued liabilities....................................           (302)          (275)
    Other liabilities...........................................................             (8)           387
    Payment of Supplemental Plan lump-sum benefit...............................              -        (16,676)
    Other.......................................................................              -             (2)
                                                                                      ---------      ----------
Net cash used by operating activities...........................................         (4,142)       (18,499)
                                                                                      ---------      ----------
Cash flows from investing activities:
Maturities of investment securities - held to maturity..........................         25,338         49,433
Purchases of investment securities - held to maturity...........................        (20,863)       (31,782)
Sales of investment securities - available for sale.............................              -          1,620
Purchases of investment securities - available for sale.........................              -            (31)
                                                                                      ---------      ----------
Net cash provided by investing activities.......................................          4,475         19,240
                                                                                      ---------      ----------
Cash flows from financing activities:
Common stock repurchased........................................................           (148)          (138)
                                                                                      ---------      ----------
Net cash used by financing activities...........................................           (148)          (138)
                                                                                      ---------      ----------
Net change in cash and cash equivalents.........................................            185            603
Cash and cash equivalents at beginning of period................................          2,894          2,601
                                                                                      ---------      ----------
Cash and cash equivalents at end of period......................................      $   3,079      $   3,204
                                                                                      =========      =========
Supplemental cash flow disclosures:
Income taxes paid...............................................................      $       1      $      83
                                                                                      =========      =========
</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  presentation  of  the  Company's
financial  position,  results of operations and cash flows.  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 are
condensed  and 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, 2007.

     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents, investment securities, and real estate owned. The Company currently
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.  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.  For a  discussion  of lawsuits and
proceedings, including the Supervisory Goodwill litigation see Part I - Item 1 -
Note 3.

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

     Note 2 - Recent Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 157,  "Fair Value  Measurements"  ("SFAS  157").  SFAS 157 defines fair
values,  establishes  a  framework  for  measuring  fair  value  of  assets  and
liabilities,  and  expands  disclosure  requirements  regarding  the fair  value
measurement.  SFAS 157 does not expand the use of fair value measurements.  This
statement,  as issued,  is effective for financial  statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years.  FASB Staff  Position (FSP) FAS No. 157-2 was issued in February 2008 and
deferred the effective date of SFAS 157 for nonfinancial  assets and liabilities
to fiscal years beginning after November 2008. As such, the Company adopted SFAS
157 as of January 1, 2008 for financial  assets and liabilities  only. There was
no significant effect on the Company's financial statements. As of September 30,
2008, the Company's financial assets include held to maturity  investments.  The
Company  determines  fair  value for such  investments,  based on quoted  market
prices in active  markets (i.e.  Level 1 as defined under SFAS 157). The Company
is continuing to carry such  investments at amortized cost. The Company does not
believe that the adoption of SFAS 157 to  non-financial  assets and  liabilities
will significantly effect its financial statements.

     In February  2007,  the FASB issued  SFAS 159,  "The Fair Value  Option for
Financial  Assets and Liabilities - including an amendment of FASB Statement No.
115" ("SFAS 159").  SFAS 159 expands the use of fair value  accounting  but does
not affect existing  standards which require assets or liabilities to be carried
at fair value.  The objective of SFAS 159 is to improve  financial  reporting by
providing  companies  with the  opportunity  to mitigate  volatility in reported
earnings caused by measuring related assets and liabilities  differently without
having to apply complex hedge accounting  provisions.  Under SFAS 159, a company
may elect to use fair  value to measure  eligible  items at  specified  election
dates and report  unrealized  gains and losses on items for which the fair value
option has been elected in earnings at each subsequent  reporting date. Eligible
items include,  but are not limited to, accounts  receivable,  accounts payable,
and issued debt. If elected,  SFAS 159 is effective  for fiscal years  beginning
after  November 15, 2007.  The Company has not elected to measure any additional
assets or liabilities at fair value that are not already  measured at fair value
under existing standards.

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

     In December  2007,  the FASB issued SFAS No. 141 (revised  2007,  "Business
Combinations"   ("SFAS  141(R)").   SFAS  141(R)   establishes   principles  and
requirements  for how an  acquirer  recognizes  and  measures  in its  financial
statements the  identifiable  assets  acquired,  the  liabilities  assumed,  any
non-controlling  interest in the acquiree and the goodwill acquired. SFAS 141(R)
also establishes disclosure  requirements to enable the evaluation of the nature
and financial effects of the business combination.  SFAS 141(R) is effective for
fiscal years  beginning  after  December  15,  2008.  The Company will apply the
provisions of SFAS 141(R) to any acquisition after January 1, 2009.

     In  December  2007,  the  FASB  issued  SFAS  No.  160,   "Accounting   for
Noncontrolling Interests" ("SFAS 160"). SFAS 160 clarifies the classification of
noncontrolling   interests  in   consolidated   balance   sheets  and  reporting
transactions   between  the  reporting  entity  and  holders  of  noncontrolling
interests. Under this statement,  noncontrolling interests are considered equity
and  reported  as  an  element  of  consolidated  equity.  Further,  net  income
encompasses all consolidated  subsidiaries with disclosure of the attribution of
net income between  controlling and  noncontrolling  interests.  SFAS No. 160 is
effective  prospectively  for fiscal years  beginning  after  December 15, 2008.
Currently,  there  are no  noncontrolling  interests  in  any  of the  Company's
subsidiaries.

     Note 3 - Legal Proceedings

     The  information  contained  in  Item 8 - Note 10 in the  Company's  Annual
Report on Form 10-K for the year ended  December 31, 2007,  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 - Pursuant to the Court's post-trial  scheduling
order as revised,  on July 1, 2008, the Company filed its  post-trial  brief and
proposed  findings of fact. The FDIC also filed its post-trial  brief on July 1,
2008.  In  September  2008,  the DOJ filed  its  post-trial  brief and  proposed
findings of fact. In October 2008, the Company filed its post-trial  reply brief
and the FDIC filed its  post-trial  reply  brief in  November  2008.  Post-trial
briefing is currently scheduled to be concluded in 2008. The Court has currently
scheduled a presentation of closing  arguments for January 27, 2009. The Company
believes  any  decision  rendered  by  Judge  Smith on  damages,  as well as his
decision  relating to his  authority  to review and consider the validity of the
alleged  receivership  deficit,  will likely be  appealed  to the U.S.  Court of
Appeals for the Federal Circuit.

     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. See e.g., Castle v. United States, 301 F.3d 1328
(Fed.  Cir. 2002);  Bailey v. United States,  341 F. 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  decisions and certain  filings in
the Company's  case, as well as other  decisions in Winstar  related cases,  are
publicly    available   on   the   Court   of   Federal    Claims   website   at
www.cofc.uscourts.gov. In addition, decisions in Winstar related cases that have
been issued by the U.S.  Court of  Appeals,  the court that hears  appeals  from
decisions  by the  Court of  Claims,  may be found on that  court's  website  at
www.cafc.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 ultimate outcome of the litigation.

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

     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.

     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
(which includes accrued  interest),  based upon the Company's intent and ability
to hold these investments to maturity.

     Investment securities consist of the following:

<TABLE>
<CAPTION>
                                             September 30, 2008                           December 31, 2007
                             ======================================           ======================================
<S>                           <C>            <C>              <C>            <C>            <C>             <C>
                                               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........  $  11,779       $  11,779    $  11,802          $  16,313      $  16,313      $  16,329
                             =========       =========    =========          =========      =========      =========
</TABLE>

     The gross unrealized gains (losses) on investment securities,  at September
30, 2008 and December 31, 2007 consist of the  following:
<TABLE>
<CAPTION>
<S>                                                                                            <C>           <C>
(in  thousands)                                                                                  2008         2007
                                                                                               =======       =======
Held to Maturity:.
Gross unrealized gains..................................................................     $      23       $    17
                                                                                             =========       =======

Gross unrealized losses.................................................................     $       -       $    (1)
                                                                                             =========       =======
</TABLE>

Realized gains on the sales of investment securities available for sale for the
third quarter and nine months ended September 30 follow:
<TABLE>
<CAPTION>
<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, 2008.

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

Note 6 - Property Owned

     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.

     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, 2008, has not been impaired.

     Depreciation  expense for buildings is calculated on a straight-line  basis
over 39 years. Tenant improvements,  if any, would typically be depreciated over
the lesser of the remaining life of the tenants'  lease or the estimated  useful
lives of the improvements.

     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 $39 million as of
September  30, 2008 and $32 million as of December 31, 2007,  arising  primarily
from net operating loss ("NOL")  carryforwards,  alternative minimum tax ("AMT")
credits  (not  including  the  anticipated  tax  effects of NOL's which could 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.

     There were no  unrecognized  tax benefits at December 31, 2007 or September
30, 2008.  Further,  no significant  changes in unrecognized income tax benefits
are currently  expected to occur over the next year.  Interest and/or  penalties
related to  underpayments  of income taxes, if applicable,  would be included in
interest  expense  and  operating  expenses,   respectively.   The  accompanying
financial  statements  do not include any amounts for any such  interest  and/or
penalties.  The Company's federal income tax returns for the years subsequent to
1992 have not been  reviewed by the Internal  Revenue  Service  ("IRS") or state
authorities and the Company has not been notified of any potential tax audits by
any federal,  state or local tax authorities.  As such, the Company believes the
statute of limitations  for federal and state purposes are generally  closed for
tax years prior to 2004.

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

     Based upon the Company's  federal  income tax returns as filed from 1993 to
2007 (subject to IRS audit adjustments),  excluding all effects of the inclusion
of  Carteret/Carteret  FSB from December 4, 1992 forward as noted herein,  as of
September 30, 2008, the Company has NOL carryforwards  aggregating approximately
$53 million,  available to reduce future federal  taxable income which expire if
unused beginning in 2009.

     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 defined and further
discussed below,  the Company is seeking to realize  approximately $8 million of
the $21 million of AMT Credits.

     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.  The Company believes, as a result of remaining consolidated with
Carteret FSB for federal  income tax return  purposes,  that the  Company's  tax
basis in  Carteret/Carteret  FSB can be converted into NOL's,  as tax losses are
incurred,  which  could be  available  to  carryforward/carryback  into  various
federal  income tax return  years.  However;  since all of the  Carteret FSB tax
information  has not been  received,  the  Company is unable to  determine  with
certainty,  the  amount of or the years in which  any  NOL's may  ultimately  be
generated; if the NOL carryforwards/carrybacks will be utilized in prior federal
income  tax  return  years;  or the  final  expiration  dates  of any of the NOL
carryforwards/carrybacks ultimately generated.

     Based on information  received to date, and prior to the recognition of the
1992 tax losses  reflected  on the  Company's  1992 amended  federal  income tax
return,  as further  described below, the Company  estimated that as of December
1992  it  initially  had a  remaining  tax  basis  in  Carteret/Carteret  FSB of
approximately $158 million.

     Based on the Company's Election Decision,  described above, and the receipt
of some of the requested information from the RTC/FDIC,  the Company amended its
1992  consolidated  federal  income tax return to include the federal income tax
effects of Carteret and Carteret FSB, (the "1992  Amended  Return").  As part of
the 1992  Amended  Return,  approximately  $56  million,  (of the  initial  $158
million),  of  Carteret/Carteret  FSB tax basis is expected to be converted into
NOL carryforwards,  (as tax losses are incurred), in tax year 1992 and will have
expired in 2007, unless they are absorbed in earlier years based on inclusion of
certain items in the consolidated  group. The Company is still in the process of
reviewing its  consolidated  federal  income tax returns for 1993 and subsequent
years.

     The  Carteret/Carteret  FSB  tax  basis,  of  approximately  $102  million,
remaining after  recognition of the 1992 Amended  Return,  may be converted into
NOL   carryforwards/carrybacks   as  additional   tax  losses  are  incurred  by
Carteret/Carteret  FSB and may be carried  back or carried  forward to other tax
years;  utilized in other tax years; or could begin to expire in 2008 based upon
the year any NOL's are ultimately generated.  The Company can give no assurances
with regard to the 1992 Amended Return,  subsequent  year returns,  or the final
amount or expiration of NOL  carryforwards/carrybacks  ultimately generated,  if
any, from the Company's tax basis in Carteret/Carteret FSB.

     Any  NOL's   ultimately   generated   from  the   Company's  tax  basis  in
Carteret/Carteret FSB, would be in addition to the NOL  carryforwards/carrybacks
generated based on the Company's federal income tax returns as previously filed,
as further detailed above.

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

     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. On April 29, 2008, the Company filed suit
against  the  United  States  in the U.S.  District  Court for the  District  of
Connecticut  for the tax refunds it seeks,  plus  interest,  with respect to the
Carryback  Claims.  On July 1, 2008,  the United  States filed its answer to the
Company's  complaint,  denying the allegations  set forth in the complaint.  The
Company can give no assurances  as to the final  amounts of refunds,  if any, or
when they might be received as a result of this tax refund suit.

     The FDIC has previously  filed a federal income tax return for Carteret FSB
for 1995 (as well as other years),  which  indicates that Carteret FSB allegedly
could owe a 1995 federal  income tax liability of $32 million,  which  including
interest and penalty thereon,  could be in excess of $110 million.  The FDIC has
stated to the United States Court of Federal Claims ("Court of Claims") that the
tax amounts are only estimates and are highly  contingent.  Based on proceedings
in other  Supervisory  Goodwill  cases,  it is possible  that the IRS may try to
collect the alleged  Carteret  FSB federal  income  taxes from the  Carteret FSB
receivership.

     The Company  believes the Carteret FSB federal  income tax returns filed by
the FDIC were  improperly  filed and are neither  accurate nor valid. As part of
the Supervisory  Goodwill legal proceedings,  the Company presented to the Court
of Claims  various  arguments to support the position that no federal income tax
would be owed as a result of the Carteret FSB  receivership  operations  for tax
year 1995,  or any other tax year;  however,  the  Department of Justice and the
FDIC have  stated to the Court of Claims  that they do not  believe the Court of
Claims has jurisdiction  over that issue. The Supervisory  Goodwill  proceedings
remain pending in the Court of Claims.

     Based on the  information  received to date,  if the correct  Carteret  FSB
federal  income tax results were included with the  Company's  originally  filed
federal income tax returns, the Company,  based upon consultation with its legal
and tax advisors,  believes that no additional material federal income tax would
be owed by the Company for tax year 1995 (or any other tax year),  although this
can not be assured based on the information  currently available.  This analysis
included  among other items,  a review of the  Carteret  FSB federal  income tax
returns as prepared by the FDIC and the correction of errors originally reported
therein, the proper application of federal NOL carryforwards and carrybacks, and
the adherence to provisions  contained in the Internal Revenue Code, as amended.
The Company;  however,  can give no assurances of the final amounts,  if any, of
federal income taxes owed by the Carteret FSB  receivership or by the Company as
a result of the Carteret FSB receivership operations.

     The Company is  continuing  to attempt to resolve  these matters as part of
the  Supervisory  Goodwill  legal  process and is also  continuing to review the
Carteret FSB federal income tax returns and the results of their  inclusion with
the Company's  federal  income tax returns as previously  filed.  The Company is
also pursuing the Carryback Claims, as further described above, which could have
an impact  on the  analysis  of the  prior  year tax  information.  For  further
information on the Supervisory Goodwill legal proceedings, see Note 3 herein.

     The  discussion of the Carteret FSB federal  income tax results is intended
to provide  details as to the potential  inter-relationship  of the Carteret FSB
federal income tax returns with the Company's  federal income tax positions.  It
is not a reflection of any federal  income tax liability of the Company  arising
from the Carteret receivership operations.

     In June 2008, the Company recorded other income of $247,000 attributable to
an IRS interest  refund,  consented to by the IRS in June 2008,  and received by
the Company in July 2008.  The refund  resulted  from the  Company's  pursuit of
interest  refund claims for several  prior tax years under a tax code  provision
which allowed for the retroactive recovery of the interest  differential where a
taxpayer had a tax  underpayment  (subject to higher interest payment rates) for
one tax year and a  simultaneous  tax  overpayment  (subject  to lower  interest
refund rates) for another tax year.

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

     Note 8 - Comprehensive Income (Loss)

     Comprehensive income (loss) is composed of net loss and other comprehensive
income  (loss)  which  includes  the  change in  unrealized  gains  (losses)  on
investment  securities  available for sale and recognition  and  amortization of
additional minimum pension liability, as follows:
<TABLE>
<CAPTION>
<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..........$       -      $      -       $    -       $      -       $    -          $     -
                               ==========   =============  =============== =========   =============  =============
</TABLE>

     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,  2018.  In 2008,  the Board of
Directors and the Company's  stockholders approved an amendment to the 1993 Plan
to extend the termination date for the period during which awards may be granted
under  the 1993  Plan for an  additional  10 years to May 28,  2018 from 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, 2008,  there were 4,134,000 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 of
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.

     No stock based  compensation  expense was recorded in the third quarter and
nine months ended  September 30, 2008 and September 30, 2007, as all  previously
granted  options  vested as of January 2, 2007. No stock option awards have been
granted since January 2005. Compensation expense relating to stock options would
be recorded in the  Consolidated  Statement of Operations  with a  corresponding
increase to paid in capital.


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

     The fair value of option  awards are  estimated  on the date of grant using
the  Black-Scholes-Merton  option  valuation model  ("Black-Scholes")  that uses
certain assumptions at the time of valuation. 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 to the input  assumptions for the calculation of
the fair  value of stock  options  granted  in 2005 from the pro  forma  amounts
previously presented in the Company's prior period financial statements.

     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  utilized  were  management's  best
estimates,   but  these  estimates   involve  inherent   uncertainties  and  the
application of management's judgment. As a result, if other assumptions had been
used, our recorded  stock-based  compensation expense could have been materially
different  from the amounts  previously  recorded.  In addition,  the Company is
required to estimate the expected forfeiture rate and only recognize expense for
those  shares  expected to vest.  If our actual  forfeiture  rate is  materially
different  from our  estimate,  the  share-based  compensation  expense could be
materially  different.  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.

     The following  table reports  stock option  activity  during the nine month
period ended September 30, 2008:
<TABLE>
<CAPTION>
<S>                                                <C>          <C>          <C>
                                                                                Weighted
                                                                 Weighted       Average
                                                                 Average        Remaining
                                                    Number of    Exercise      Contractual
                                                     Shares        Price      Life (in years)
                                                   ----------   -----------  -----------------
         Outstanding at January 1, 2008......        876,000       $0.93
         Expired.............................        (10,000)       3.65
                                                   ----------      =====
         Outstanding at September 30, 2008...        866,000       $0.90           5.04
                                                   ==========      =====           ====
         Exercisable at September 30, 2008...        866,000       $0.90           5.04
                                                   ==========      =====           ====
</TABLE>
     At September 30, 2008, 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 included herein.

     There  were no  outstanding  option  shares  vesting  during the nine month
period ended  September  30, 2008.  The total fair value of shares vested during
the nine month period ended September 30, 2007, was $96,000. As of September 30,
2008,  there  was  no  unamortized   compensation  cost  related  to  non-vested
share-based  compensation  arrangements for stock options granted under the 1993
Plan.

     Options to  purchase  866,000  shares of common  stock for the nine  months
ended September 30, 2008, and 876,000 shares of common stock for the nine months
ended September 30, 2007, 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 was paid from the Company's available
financial resources.  There was no Supplemental Plan expense for the nine months
ended  September  30,  2008,  compared  to $868,000  for the nine  months  ended
September 30, 2007. 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.  See the  Company's  Annual  Report  on Form  10-K for the  year  ended
December 31, 2007, Item 8 - Note 7 for further information.

     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 $11,000 and $68,000 for the third
quarter and nine months ended  September 30, 2008,  respectively  and $4,000 and
$57,000  for the  third  quarter  and nine  months  ended  September  30,  2007,
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 of 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.
<TABLE>
<CAPTION>
<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, 2008.........                                     2,424,855               7,575,145

January 1, 2008 - January 31, 2008........   189,100        $0.43              2,613,955               7,386,045
February 1, 2008 - February 28, 2008......         -         -                 2,613,955               7,386,045
March 1, 2008 - March 31, 2008............         -         -                 2,613,955               7,386,045
April 1, 2008 - April 30, 2008............    70,400         0.38              2,684,355               7,315,645
May 1, 2008 - May 31, 2008................         -         -                 2,684,355               7,315,645
June 1, 2008 - June 30, 2008..............         -         -                 2,684,355               7,315,645
July 1, 2008 - July 31, 2008..............         -         -                 2,684,355               7,315,645
August 1, 2008 - August 31, 2008..........    50,000         0.41              2,734,355               7,265,645
September 1, 2008 - September 30, 2008....    52,800         0.38              2,787,155               7,212,845
                                           ---------
Total....................................    362,300
                                           =========
</TABLE>
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     FORWARD LOOKING STATEMENTS

     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. 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  Quarterly  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, 2007.



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

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.  Discussions  and  negotiations  are ongoing  with respect to certain of
these matters.  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.  For a  discussion  of lawsuits and
proceedings, including the Supervisory Goodwill litigation see Part I - Item 1 -
Note 3.

     LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  assets  at  September  30,  2008,  aggregated   $17,035,000
consisting  principally of cash and cash  equivalents of $3,079,000,  investment
securities of $11,779,000 and real estate owned of $2,081,000.  At September 30,
2008, the Company's liabilities  aggregated $671,000.  Total stockholders equity
was $16,364,000.

     For the nine months ended  September 30, 2008,  cash of $4,142,000 was used
by operations,  primarily due to the payment of legal  expenses  relating to the
Supervisory  Goodwill  trial 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 nine
months ended  September  30, 2008 were  satisfied  by the receipt of  investment
earnings  received  on  investment  securities  and  cash  equivalents  and  the
Company's  financial  resources.  Management  believes that the Company's liquid
assets are sufficient to continue operations for the next twelve months.

     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, 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.

     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.  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.
For a discussion of lawsuits and proceedings, including the Supervisory Goodwill
litigation see Part I - Item 1 - Note 3.

     As of September 30, 2008, 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, 2008, has not been impaired.


<PAGE>
     There are no material  commitments for capital expenditures as of September
30, 2008. 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 the nine months ended September 30, 2008, the Company repurchased
for  approximately  $148,000 an aggregate of 362,300 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.

     Results of Operations for the Third Quarter and Nine months ended September
30, 2008 vs. the Third Quarter and Nine months ended September 30, 2007

     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 2008 was non-operating revenue consisting of
investment earnings.

     No rental  income  from real  estate  owned was earned for the 2008 or 2007
periods.

     Compensation and benefits decreased to $425,000 and $1,374,000 in the third
quarter and nine months ended  September 30, 2008,  respectively,  compared with
$535,000  and  $2,783,000  in the  respective  2007  periods.  The  decrease  is
primarily  due to no  Supplemental  Plan  expense in the nine month period ended
September 30, 2008, as a result of the  Supplemental  Plan termination as of May
31,  2007,  versus the same 2007 period as further  described  below and a lower
level of incentive  compensation  accruals in the 2008  periods  versus the same
2007 periods.

     There was no Supplemental  Plan expense for the nine months ended September
30, 2008,  compared to $868,000 for the nine months ended September 30, 2007. 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 for the nine months ended September 30, 2007,
reflects  recognition  of an  expense  of  $394,000  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,  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 period,
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.

     No stock based  compensation  expense was recorded in the nine months ended
September 30, 2008 or 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.

     Professional  and outside  services  increased  to  $2,949,000  in the nine
months ended  September 30, 2008,  compared to $1,617,000 in the respective 2007
period. The increase in the 2008 nine month period as compared to the respective
2007  period  is  principally  the  result  of  a  higher  level  of  legal  and
professional fees relating to the Supervisory Goodwill litigation in 2008 versus
2007.  The  Supervisory  Goodwill  litigation  expenses  for the 2008 nine month
period include expenses relating to the preparation for the trial,  actual trial
expenses,  including  damage experts and post trial brief  preparation  incurred
during the nine months of 2008. The Supervisory  Goodwill litigation expenses in
the 2007 period  included  expenses  incurred in connection  with  discovery and
preparation  of expert  reports and  deposition of the Company's and  government
witnesses.

     Professional  and  outside  services  expenses in the third  quarter  ended
September 30, 2008 decreased to $176,000  versus $244,000 in the respective 2007
period. The decrease is due to the timing of Supervisory Goodwill legal expenses
incurrred  in the last half of 2007 versus the first half of 2008,  due to costs
incurred for the Supervisory Goodwill trial which commenced in February 2008.


<PAGE>
     Interest  income in the third  quarter and nine months ended  September 30,
2008,  decreased  to $71,000  and  $318,000,  respectively,  from  $244,000  and
$1,103,000 in the respective 2007 periods.  The decrease is principally due to a
lower level of cash  equivalents  and  investment  securities as a result of the
Supplemental  Plan  lump-sum  benefit  payment  to Mr.  Bianco in May 2007.  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. The decreased  interest income is
also due to a decreased investment yield in the nine months ending September 30,
2008,  compared with the respective 2007 period.  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, 2008.

     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, 2008.

     Other income of $247,000 in the nine months ended  September  30, 2008,  is
attributable to an Internal Revenue Service ("IRS") interest refund consented to
by the IRS in June 2008 and received by the Company in July 2008. The IRS refund
resulted from the Company's  pursuit of interest refund claims for several prior
tax years under a tax code provision which allowed for the retroactive  recovery
of the interest differential where a taxpayer had a tax underpayment (subject to
higher  interest  payment  rates)  for  one  tax  year  and a  simultaneous  tax
overpayment (subject to lower interest refund rates) for another tax year.

     The Company  recognized  no income tax  provision for the third quarter and
nine months  ended  September  30, 2008,  as compared  with $50,000 for the nine
months  ended  September  30,  2007.  The  income  tax  provision  is  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.

     TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
<TABLE>
<CAPTION>

(in thousands)                                                          Payment Due By Period
                                                ================================================================
<S>                                             <C>       <C>          <C>            <C>             <C>
                                                          Less Than        One to        Three to      More than
                                                 Total     One Year      Three Years    Five Years     Five Years
                                                -------   ----------   -------------  -------------   -----------
Operating leases............................    $    32   $       13     $       19     $       -     $        -
                                                -------   ----------   -------------  -------------   -----------
Total obligations...........................    $    32   $       13     $       19     $       -     $         -
                                                =======   ==========   =============  ==============  ===========
</TABLE>

<PAGE>
     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>
<CAPTION>
<S>                                                   <C>           <C>         <C>         <C>
                                                      September 30, 2008        December 31, 2007
                                                      ===================       =================
                                                      Carrying       Fair       Carrying     Fair
                                                       Value        Value        Value      Value
(in thousands)                                        --------      -----       --------    -----

U.S. Treasury Bills and Notes...............          $ 11,779     $ 11,802     $ 16,313    $16,329
                                                      ========     ========     ========    =======

Weighted average interest rate..............              1.88%                     4.77%
                                                      ========                  ========
</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 held no portfolio of equity securities as of September 30, 2008
or December 31, 2007.

     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  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, 2008.
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.

     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 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, 2007
in response to Item 1A to Part I of Form 10-K.


<PAGE>
     Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

     Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

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 12, 2008