UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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


                    For the quarterly period ended September 30, 2005

                                       or

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

                           Commission file number 1-7265


                                AMBASE CORPORATION


             (Exact name of registrant as specified in its charter)

             Delaware                                 95-2962743

      (State of incorporation)            (I.R.S. Employer Identification No.)


                           100 PUTNAM GREEN, 3RD FLOOR
                          GREENWICH, CONNECTICUT 06830

              (Address of principal executive offices)     (Zip Code)

                                 (203) 532-2000

              (Registrant's telephone number, including area code)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

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

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

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

At November 10, 2005, there were 46,233,519 shares outstanding of the
registrant's common stock, $0.01 par value per share.



<PAGE>



AmBase Corporation

Quarterly Report on Form 10-Q
September 30, 2005
<TABLE>
<CAPTION>
<S>                                                                                                          <C>

TABLE OF CONTENTS                                                                                             Page
                                                                                                             ------

PART I - FINANCIAL INFORMATION

Item 1.      Financial Statements (unaudited).....................................................................1

Item 2.      Management's Discussion and Analysis of
                   Financial Condition and Results of Operations.................................................13

Item 3.      Quantitative and Qualitative Disclosures About Market Risk..........................................16

Item 4.      Controls and Procedures.............................................................................17

PART II - OTHER INFORMATION

Item 1.      Legal Proceedings...................................................................................18

Item 6.      Exhibits............................................................................................18

Signatures   ....................................................................................................19
</TABLE>








<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS

                       AMBASE CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)
                     (in thousands, except for share amounts)
<TABLE>
<CAPTION>
<S>                                                                               <C>                <C>
                                                                                  September 30,       December 31,
                                                                                           2005               2004
                                                                                       ========          =========
Assets:
Cash and cash equivalents.........................................................    $   9,003            $10,124
Investment securities:
    Held to maturity (market value $33,246 and $8,586, respectively)..............       33,245              8,590
    Available for sale, carried at fair value ....................................        1,841              2,112
                                                                                       --------           --------
Total investment securities.......................................................       35,086             10,702
                                                                                       --------           --------
Accounts receivable...............................................................            -                  1
Real estate owned:
  Land............................................................................          554              6,954
  Buildings and improvements......................................................        1,900             12,810
                                                                                       --------           --------
                                                                                          2,454             19,764
  Less:  accumulated depreciation.................................................         (219)              (763)
                                                                                       --------           --------
Real estate owned, net............................................................        2,235             19,001
Other assets......................................................................           73              1,032
                                                                                       --------           --------
Total assets......................................................................   $   46,397         $   40,860
                                                                                       ========           ========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities..........................................   $    1,294         $    1,495
Supplemental retirement plan......................................................       13,159             11,594
Other liabilities.................................................................           40              2,197
                                                                                       --------           --------
Total liabilities.................................................................       14,493             15,286
                                                                                       --------           --------
Commitments and contingencies (Note 3)............................................

Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued and
  46,233,519 outstanding).........................................................          464                464
Paid-in capital...................................................................      547,956            547,956
Accumulated other comprehensive income............................................         (368)              (375)
Accumulated deficit...............................................................     (515,463)          (521,786)
Treasury stock, at cost - 176,488 shares..........................................         (685)              (685)
                                                                                       --------           --------
Total stockholders' equity........................................................       31,904             25,574
                                                                                       --------           --------

Total liabilities and stockholders' equity........................................   $   46,397         $   40,860
                                                                                       ========           ========
</TABLE>

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


<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                Third Quarter and Nine Months Ended September 30
                                   (Unaudited)
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
<S>                                                    <C>             <C>        <C>           <C>
                                                             Third Quarter              Nine Months
                                                          2005           2004        2005          2004
Revenues:                                                 ====           ====        ====          ====
Rental income.......................................   $    41         $   49     $   127       $   139

Operating expenses:
Compensation and benefits...........................     1,098          1,021       3,373         3,130
Professional and outside services...................       423            206       1,537           478
Property operating and maintenance .................        29             31          99            79
Depreciation  ......................................        13             13          38            38
Insurance...........................................        17             17          61            70
Other operating ....................................        41             34         127           125
                                                     ----------      ----------   ---------     ----------
                                                         1,621          1,322       5,235         3,920
                                                     ----------      ----------   ---------     ----------
Operating loss .....................................    (1,580)        (1,273)     (5,108)       (3,781)
                                                     ----------      ----------   ---------     ----------
Interest income.....................................       333            142         604           380
Realized gains on sales of investment securities....         -            123          20           459
                                                     ----------      ----------   ---------     ----------

Loss from continuing operations before
     income taxes...................................    (1,247)        (1,008)     (4,484)       (2,942)
Income tax expense..................................      (180)           (30)       (240)          (90)
                                                     ----------      ----------   ---------     ----------
Loss from continuing operations.....................    (1,427)        (1,038)     (4,724)       (3,032)
                                                     ----------      ----------   ---------     ----------
Income from operation of discontinued property......        63            344         749           994
Gain on disposition.................................    10,298              -      10,298             -
                                                     ----------      ----------   ----------    ----------
Income from discontinued operations.................    10,361            344      11,047           994
                                                     ----------      ----------   ----------    ----------
Net income (loss)...................................    $8,934         $ (694)    $ 6,323       $(2,038)
                                                     ==========      ==========   ==========    ==========
Per share data:
Basic:
Loss from continuing operations.....................    $(0.03)        $(0.02)    $ (0.10)      $ (0.06)
Income from discontinued operations.................      0.22           0.01        0.24          0.02
                                                     ----------      ----------   ----------    ----------
Net income (loss) attributable to common
     stockholders...................................    $ 0.19         $(0.01)    $  0.14       $ (0.04)
                                                     ==========      ==========   ==========    ==========
Assuming dilution:
Loss from continuing operations.....................    $(0.03)        $(0.02)    $ (0.10)      $ (0.06)
Income from discontinued operations.................      0.22           0.01        0.24          0.02
                                                     ----------      ----------   ----------    ----------
Net income (loss) attributable to common
     stockholders...................................    $ 0.19         $(0.01)    $  0.14       $ (0.04)
                                                     ==========      ==========   ==========    ==========
Weighted average common shares outstanding:
Basic...............................................    46,234         46,234      46,234        46,222
                                                     ==========      ==========   ==========    ==========
Diluted.............................................    46,234         46,234      46,234        46,222
                                                     ==========      ==========   ==========    ==========
</TABLE>


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

<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Comprehensive Income (Loss)
                Third Quarter and Nine Months Ended September 30
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                     <C>         <C>      <C>          <C>
                                                                          Third Quarter          Nine Months
                                                                         2005        2004     2005         2004
                                                                        ======      =====    =====        =====

Net income (loss)..................................................... $ 8,934    $  (694)   $ 6,323      $(2,038)

Unrealized holding gains on investment securities
     available for sale...............................................      81         90         12          157
                                                                       -------    -------    -------      -------

Comprehensive income (loss)........................................... $ 9,015    $  (604)   $ 6,335      $(1,881)
                                                                       =======    =======    =======      =======
</TABLE>

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

<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                         Nine Months Ended September 30
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                                     <C>            <C>
                                                                                          2005          2004
                                                                                          ====          ====
Cash flows from operating activities:
Loss from continuing operations....................................................  $(4,724)       $(3,032)
Adjustments to reconcile loss from continuing to net cash used by continuing
operations:
    Depreciation and amortization..................................................       38             38
    Accretion of discount - investment securities..................................     (326)           (77)
     Realized gains on investment securities available for sale....................      (20)          (459)
Changes in other assets and liabilities:
    Accounts receivable............................................................        1             20
    Other assets...................................................................      402            (30)
    Accounts payable and accrued liabilities.......................................     (201)          (107)
    Other liabilities..............................................................     (287)         1,268
Other, net.........................................................................        3              -
                                                                                     --------        --------
Net cash used by continuing operating activities...................................   (5,114)        (2,379)
                                                                                     --------        --------
Income from discontinuing operations...............................................   11,047            994
Adjustments to reconcile income from discontinued operations to net cash
provided (used) by discontinued operations:
    Gain from sale of discontinued operations......................................  (10,298)             -
    Depreciation and amortization related to discontinued operations...............      140            210
Changes in other assets and liabilities related to discontinued operations:
    Other assets and other liabilities.............................................     (305)           (115)
                                                                                     --------        --------

Net cash provided by discontinued operations.......................................      584          1,089
                                                                                     --------        --------
Net cash used by operating activities..............................................   (4,530)        (1,290)
                                                                                     --------        --------
Cash flows from investing activities:
Maturities of investment securities - held to maturity.............................   61,466         25,894
Purchases of investment securities - held to maturity..............................  (85,795)       (17,040)
Purchases of investment securities - available for sale............................     (252)       (17,426)
Sales of investment securities - available for sale................................      548         16,583
Proceeds from sale of real estate owned............................................   27,442              -
                                                                                     --------        --------
Net cash provided by investing activities..........................................    3,409          8,011
                                                                                     --------        --------
Cash flows from financing activities:
Stock options exercised............................................................        -             17
                                                                                     --------        --------
Net cash provided by financing activities..........................................        -             17
                                                                                     --------        --------
Net increase (decrease) in cash and cash equivalents...............................   (1,121)         6,738
Cash and cash equivalents at beginning of period...................................   10,124          2,785
                                                                                     --------        --------
Cash and cash equivalents at end of period.........................................  $ 9,003        $ 9,523
                                                                                     ========       =========
Supplemental cash flow disclosures:
Income taxes paid..................................................................  $   107        $   121
                                                                                     ========       =========
</TABLE>

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

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

     Note 1 - Organization

     The accompanying  consolidated  financial  statements of AmBase Corporation
and its wholly-owned  subsidiaries  (the "Company") are unaudited and subject to
year-end adjustments.  All material intercompany  transactions and balances have
been eliminated. In the opinion of management,  the interim financial statements
reflect all adjustments,  consisting only of normal recurring adjustments unless
otherwise  disclosed,  necessary for a fair statement of the Company's financial
position  and  results  of  operations.  Results  for  interim  periods  are not
necessarily  indicative of results for the full year. Certain  reclassifications
have been made to the prior year  consolidated  financial  statements to conform
with the current year presentation.  The consolidated  financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP") for interim financial information and with the
instructions  to Form 10-Q and Article 10 of Regulation  S-X. The preparation of
financial statements in conformity with GAAP requires management to make certain
estimates and assumptions,  that it deems  reasonable,  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from such estimates and assumptions.  The unaudited interim financial statements
presented herein should be read in conjunction  with the Company's  consolidated
financial  statements filed in its Annual Report on Form 10-K for the year ended
December 31, 2004.

     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents,  investment  securities,  and real estate owned. The Company's main
source of operating  revenue is rental income  earned on real estate owned.  The
Company also earns non-operating  revenue  principally  consisting of investment
earnings on investment securities and cash equivalents. The Company continues to
evaluate a number of possible acquisitions,  and is engaged in the management of
its assets and  liabilities,  including the contingent  assets,  as described in
Part II - Item 1. The Company intends to aggressively contest all litigation and
contingencies, as well as pursue all sources for contributions to settlements.

     In July 2005,  the  Company  completed  the sale of its 38,000  square foot
office  building  at  Two  Soundview  Drive  in  Greenwich,   Connecticut  ("Two
Soundview").  Accordingly,  the results of operations of Two Soundview have been
retroactively  reclassified  as  discontinued  operations  in  the  accompanying
Consolidated  Statement of  Operations  for the periods  presented in accordance
with Financial  Accounting  Standards Board,  Statement of Financial  Accounting
Standards  No. 144,  "Accounting  for the  Impairment  or Disposal of Long-Lived
Assets" ("SFAS 144"). See note 7 herein for further information.

     The  Company's  management  expects  that  operating  cash  needs  for  the
remainder  of 2005  will be met  principally  by the  receipt  of  non-operating
revenue  consisting of investment  earnings on  investment  securities  and cash
equivalents,  rental  income  received,  and  the  Company's  current  financial
resources.

     Note 2 - Recent Accounting Pronouncements

     In October 2004, the Financial  Accounting  Standards Board issued SFAS No.
123R (revised 2004),  "Share-Based  Payment"  ("SFAS 123R").  SFAS 123R requires
companies  to  categorize  share-based  payments as either  liability  or equity
awards.  For liability awards,  companies will remeasure the award at fair value
at each balance sheet date until the award is settled.  Equity classified awards
are  measured  at the fair  value  and are not  remeasured.  SFAS  123R  will be
effective for annual periods beginning January 1, 2006. Awards issued, modified,
or settled after the effective  date will be measured and recorded in accordance
with SFAS 123R. The Company  believes that the  implementation  of this standard
will not have a material effect on the Company's consolidated financial position
or results of operations.



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

     Note 3 - Legal Proceedings

     The information  contained in Item 8 - Note 10 in AmBase's Annual Report on
Form 10-K for the year ended  December 31, 2004,  is  incorporated  by reference
herein and the defined  terms set forth below have the same meaning  ascribed to
them in that  report.  There have been no  material  developments  in such legal
proceedings, except as set forth below.

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

     Supervisory  Goodwill  Litigation.  In May and June of 2005, the Government
provided the Company with access to Carteret's  documents and documents relating
to the management of the  receivership.  The Company  selected  approximately  3
million  pages  of  documents  to be  imaged  at the  Government's  expense.  On
September  15,  2005,  a status  conference  was held before  Judge  Smith.  The
Government  indicated that it would complete production of all the images of the
selected  materials by the end of September  2005.  As of October 21, 2005,  the
Government  has  represented  that it has  produced  all  responsive  materials;
however,  the Company is still in the process of reviewing the  completeness  of
the production.  Additionally, at the status conference, all parties agreed that
the  schedule  previously  set forth by the Court's May 23, 2005 order should be
changed in one respect: the Company will be given 75 days from the completion of
the  document  production  to complete  discovery.  In all other  respects,  the
schedule  set forth by the May 23, 2005 order will  remain in effect.  The Court
issued an order on September 26, 2005  memorializing  this agreement.  The Court
scheduled a status conference for January 11, 2006.  Assuming the Government has
produced all  responsive  materials as of October 21,  2005,  fact  discovery is
scheduled to be completed in January 2006.  No assurance can be given  regarding
the ultimate outcome of the litigation.

     The Court of  Claims  decisions  in the  Company's  case,  as well as other
decisions in  Winstar-related  cases, are publicly available and may be relevant
to the Company's Supervisory Goodwill claims, but are not necessarily indicative
of the ultimate outcome of the Company's actions.

     Litigation with SDG, Inc. In September 2000, the Company filed a lawsuit in
the United  States  District  Court for the  District of  Connecticut  (Case No.
3:00CV1694  (DJS)) (the "Court")  against SDG,  Inc.  ("SDG") and certain of its
officers and directors to pursue various claims against such parties, including,
but not limited to, the claims that SDG failed to honor a binding contract which
granted   the   Company   the   right  to  act  as  the   exclusive   investment
banking/financial advisor to SDG, and its subsidiaries and affiliates. SDG filed
various counterclaims.  On August 3, 2005, the Court issued its decision denying
all the Company's claims and the defendants' counterclaims.  The Company filed a
Notice of Appeal on September 6, 2005 and  continues to review its options.  The
Company  will  continue to monitor the status of SDG and its  subsidiary,  AMDG,
Inc.  No  assurances  can be  given  regarding  the  ultimate  outcome  of  this
litigation.

     Note 4 - Cash and Cash Equivalents

     Highly  liquid  investments,   consisting  principally  of  funds  held  in
short-term  money market  accounts with  original  maturities of less than three
months, are classified as cash equivalents.



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

     Note 5 - Investment Securities

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

     Investment  securities  - available  for sale,  consist of  investments  in
equity  securities  held for an indefinite  period and are carried at fair value
with net unrealized gains and losses recorded  directly in a separate  component
of stockholders' equity.

     Investment securities consist of the following:
<TABLE>
<CAPTION>
<S>                           <C>            <C>            <C>             <C>          <C>              <C>

                                             September 30, 2005                         December 31, 2004
                             ==========================================     =====================================
                                               Cost or                                     Cost or
                              Carrying       Amortized         Fair         Carrying     Amortized           Fair
(in thousands)                   Value            Cost        Value            Value          Cost          Value
                                ======       =========      =======         ========     =========         ======
Held to Maturity:
U.S. Treasury Bills......     $ 33,245       $ 33,245      $ 33,246         $  8,590     $   8,590        $ 8,586

Available for Sale:
Equity Securities........        1,841          1,798         1,841            2,112         2,075          2,112
                             -----------     ----------    ----------       ----------   -----------      ---------
                             $  35,086       $ 35,043      $ 35,087         $ 10,702     $  10,665        $10,698
                             ===========     ==========    ==========       ==========   ===========      =========
</TABLE>

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

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

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

     The realized gain on the sales of investment  securities available for sale
for the third quarter and nine months ended  September 30, 2005 and 2004, are as
follows:
<TABLE>
<CAPTION>
<S>                                                                   <C>         <C>           <C>           <C>
                                                                         Third Quarter               Nine Months
(in thousands)                                                         2005        2004          2005          2004
                                                                      ======      ======        ======        ======

Net sale proceeds...................................................  $    -      $8,310        $  548        $16,583
Cost basis..........................................................       -      (8,187)         (528)       (16,124)
                                                                      ------      ------        ------        -------
Realized gains......................................................  $    -      $  123        $   20        $   459
                                                                      ======      ======        ======        =======
</TABLE>
     During the nine months ended September 30, 2004, the Company  purchased and
sold a $7 million U.S.  Treasury  Note  resulting in a gain of $89,000  which is
included  in  realized  gains  on  investment  securities  in  the  Consolidated
Statement of Operations.

     During the third quarter ended  September 30, 2004,  the Company  purchased
and sold an $8.0  million  U.S.  Treasury  Note,  resulting in a gain of $24,000
which is included in realized gains on investment securities in the Consolidated
Statement of Operations  for the third  quarter and nine months ended  September
30, 2004.

     Note 6 - Real Estate Owned

     As of September 30, 2005, the Company owns one commercial  office  building
in Greenwich,  Connecticut that contains  approximately  14,500 square feet. The
Company utilizes a small portion of the office space for its executive  offices,
with the remaining  square  footage  available for lease to  unaffiliated  third
parties.

     Depreciation  expense is recorded on a  straight-line  basis over 39 years.
The  building  and   improvements  are  carried  at  cost,  net  of  accumulated
depreciation  of $219,000 at September 30, 2005. At December 31, 2004,  building
and improvements are net of $763,000 of accumulated depreciation, which includes
$582,000 of accumulated  depreciation for Two Soundview,  which was sold in July
2005, as further discussed in note 7 herein.

     The Company  earns  rental  income  under  operating  leases with  tenants.
Minimum lease rentals are recognized on a straight-line  basis over the terms of
the leases.  The cumulative  difference  between lease revenue  recognized under
this method and the contractual lease payment terms is recorded as deferred rent
receivable and is included in other assets on the  Consolidated  Balance Sheets.
Revenue from tenant  reimbursement  of common area  maintenance,  utilities  and
other  operating  expenses are  recognized  pursuant to the tenant's  lease when
earned and due from tenants.

     Included in property operating and maintenance are expenses for common area
maintenance,  utilities,  real  estate  taxes and other  reimbursable  operating
expenses,  which  have not been  reduced  by  amounts  reimbursable  by  tenants
pursuant to applicable lease agreements.

     See note 7 herein  for  information  regarding  the  Company's  sale of Two
Soundview in July 2005.


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

     Note 7 - Discontinued Operations

     In May 2005,  the Company  entered into an agreement to sell Two Soundview,
originally purchased in December 2002, to Ceruzzi Holdings, LLC, an unaffiliated
third party. In July 2005, the Company completed the sale of Two Soundview.  The
sale price was  $28,000,000  less normal real estate closing  adjustments.  As a
result of the sale of Two Soundview,  the results of operations of Two Soundview
have been designated as discontinued operations, and the Consolidated Statements
of  Operations  for  the  periods  presented  herein  have  been   retroactively
reclassified to report the income from discontinued  operations  separately from
the results of continuing  operations  by excluding  the operating  revenues and
expenses of discontinued  operations from the respective statement captions,  in
accordance with SFAS 144. A gain from the sale, of $10,298,000,  is reflected in
the Company's financial  statements for the third quarter and nine month periods
ending September 30, 2005.

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

     Transaction  costs above include broker  commissions,  transfer taxes,  and
legal and other fees.  Other assets above includes  $519,000 of deferred  rental
revenue  resulting from the  recognition  of rental  revenue on a  straight-line
basis over the terms of tenant leases versus  contractual  lease payment  terms,
and $37,000 of real estate commissions previously  capitalized.  At December 31,
2004, other  liabilities in the  Consolidated  Balance Sheet include $305,000 of
tenant security deposits relating to Two Soundview.

     Income from  discontinued  operations,  as summarized  below, for the third
quarter and nine months periods ended  September 30, 2005,  reflects the results
of operations of Two Soundview and the net gain realized upon disposition.

     Income from  discontinued  operations  is as follows:
<TABLE>
<CAPTION>
<S>                                                            <C>              <C>              <C>        <C>

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

     No  adjustment  for income  taxes has been  reflected  in the  income  from
discontinued  operations  presented above as the Company has sufficient  regular
net  operating  loss  ("NOL")   carryforwards   and   alternative   minimum  tax
carryforwards  to offset the gain.  However,  the ultimate  utilization  of such
NOL's  before  their  expiration  is  uncertain.  Accordingly,  the  Company has
reflected a full  valuation  allowance on such tax assets and has not  reflected
any net tax benefit.

     Note 8 - Income Taxes

     The Company and its 100% owned  domestic  subsidiaries  file a consolidated
federal income tax return.  The Company recognizes both the current and deferred
tax consequences of all transactions  that have been recognized in the financial
statements,  calculated  based on the provisions of enacted tax laws,  including
the tax rates in effect for current and future  years.  Net  deferred tax assets
are  recognized  immediately  when a more likely than not criterion is met; that
is, greater than 50%  probability  exists that the tax benefits will actually be
realized  sometime in the future.  The Company has calculated a net deferred tax
asset of $31 million and $34 million as of  September  30, 2005 and December 31,
2004,   respectively,   arising   primarily  from  net  operating  loss  ("NOL")
carryforwards,  alternative  minimum  tax ("AMT")  credits  (not  including  the
anticipated tax effects of NOL's expected to be generated from the Company's tax
basis in Carteret  Savings Bank, F.A. and subsidiaries  ("Carteret"),  resulting
from the election decision, as more fully described below). At the present time,
management has no basis to conclude that realization is more likely than not and
a valuation allowance has been recorded against net deferred tax assets.

     As a  result  of the  Office  of  Thrift  Supervision's  December  4,  1992
placement of Carteret in  receivership,  under the  management of the Resolution
Trust Corporation  ("RTC")/Federal  Deposit Insurance Corporation ("FDIC"),  and
then proposed Treasury Reg. ss.1.597-4(g),  the Company had previously filed its
1992 and subsequent federal income tax returns with Carteret  disaffiliated from
the Company's  consolidated  federal income tax return. Based upon the impact of
Treasury  Reg.  ss.1.597-4(g),  which was issued in final form on  December  20,
1995, a continuing review of the Company's tax basis in Carteret, and the impact
of prior year tax return  adjustments  on the Company's  1992 federal income tax
return as filed,  the Company decided not to make an election  pursuant to final
Treasury  Reg.   ss.1.597-4(g)  to  disaffiliate  Carteret  from  the  Company's
consolidated  federal  income tax return  effective  as of December 4, 1992 (the
"Election Decision").

     The Company has made numerous  requests to the RTC/FDIC for tax information
pertaining to Carteret and the resulting successor institution, Carteret Federal
Savings Bank ("Carteret  FSB");  however,  all of the information  still has not
been received. Based on the Company's Election Decision, as described above, and
the receipt of some of the requested information from the RTC/FDIC,  the Company
has  amended  its 1992  consolidated  federal  income tax return to include  the
federal  income tax  effects of Carteret  and  Carteret  FSB (the "1992  Amended
Return").  The  Company is still in the  process of  amending  its  consolidated
federal income tax returns for 1993 and subsequent years.

     The Company anticipates that, as a result of filing a consolidated  federal
income tax return with  Carteret FSB, a total of  approximately  $170 million of
tax NOL  carryforwards  will be  generated  from  the  Company's  tax  basis  in
Carteret/Carteret  FSB as tax losses are  incurred by Carteret FSB of which $158
million are still available for future use. Based on the Company's filing of the
1992  Amended  Return,  approximately  $56  million  of  NOL  carryforwards  are
generated  for  tax  year  1992  which  expire  in  2007,   with  the  remaining
approximately  $102 million of NOL  carryforwards  to be generated,  expiring no
earlier than 2008. These NOL  carryforwards  would be available to offset future
taxable income,  in addition to the NOL carryforwards as further detailed below.
The Company can give no assurances  with regard to the 1992 Amended  Return,  or
amended  returns for subsequent  years, or the final amount or expiration of NOL
carryforwards ultimately generated from the Company's tax basis in Carteret.

     In March 2000, the Company filed several carryback claims and amendments to
previously filed carryback claims with the IRS (the "Carryback  Claims") seeking
refunds from the IRS of  alternative  minimum tax and other federal income taxes
paid by the Company in prior years plus  applicable  IRS interest,  based on the
filing of the 1992 Amended Return.  In April 2003, IRS examiners issued a letter
to the Company  proposing to disallow the Carryback  Claims.  The Company sought
administrative review of the letter by protesting to the Appeals Division of the
IRS. In February  2005,  IRS Appeals  Officials  completed  their  review of the
Carryback  Claims,  and disallowed  them.  The Company is currently  considering
whether to file suit for the tax refunds it seeks,  plus interest,  with respect
to the Carryback Claims. Even if the Company files suit, the Company can give no
assurances  as to the final  amounts of  refunds,  if any, or when they might be
received.


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

     Based upon the Company's  federal  income tax returns as filed from 1993 to
2004 (subject to IRS audit  adjustments),  and excluding,  the NOL carryforwards
generated from the Company's tax basis in Carteret/Carteret FSB, as noted above,
and excluding  NOL's expected to be utilized in connection  with the sale of Two
Soundview,  at September 30, 2005 the Company has NOL carryforwards  aggregating
approximately  $36 million,  available to reduce future  federal  taxable income
which  expire if unused  beginning in 2008.  The  Company's  federal  income tax
returns for years subsequent to 1992 have not been reviewed by the IRS.

     The utilization of certain  carryforwards  is subject to limitations  under
U.S.  federal income tax laws. In addition,  the Company has  approximately  $21
million of AMT credit  carryforwards  ("AMT Credits"),  which are not subject to
expiration.  Based on the filing of the Carryback  Claims,  as further discussed
above,  the  Company is seeking to realize  approximately  $8 million of the $21
million of AMT Credits.

     The  Company  expects  to  utilize  NOL   carryforwards   and  of  AMT  NOL
carryforwards  as available to offset taxable income  generated from the sale of
Two Soundview as discussed in note 7 herein.

     Note 9 - Comprehensive Income (Loss)

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

                                            Third Quarter Ended                          Nine Months Ended
(in thousands)                              September 30, 2005                           September 30, 2005
                             ==============================================  =======================================
                                 Unrealized         Minimum     Accumulated  Unrealized    Minimum     Accumulated
                             Gains (Losses)         Pension           Other    Gains on    Pension           Other
                                 Investment       Liability   Comprehensive  Investment  Liability   Comprehensive
                                 Securities      Adjustment          Income  Securities Adjustment          Income
                                  =========       =========   =============  ========== ==========   =============
Balance beginning of period....   $    (37)       $   (412)   $       (449)  $      37  $    (412)   $       (375)

Reclassification adjustment for
  gains realized in net loss...          -               -               -          (5)         -              (5)

Change during the period.......         81               -              81          12          -               12
                                  --------        --------    ------------   ---------- ----------   -------------
Balance end of period..........   $     44        $   (412)   $       (368)  $      44  $    (412)   $     (368)
                                  ========        ========   =============   ========== ==========   =============
</TABLE>
<TABLE>
<CAPTION>
<S>                                           <C>                  <C>             <C>               <C>
(in thousands)                                      Third Quarter Ended                   Nine Months Ended
                                                     September 30, 2004                   September 30, 2004
                                              =================================    ===============================
                                                  Unrealized         Accumulated       Unrealized      Accumulated
                                              Gains (Losses)               Other   Gains (Losses)            Other
                                               on Investment       Comprehensive    on Investment    Comprehensive
                                                  Securities              Income       Securities           Income
                                                 ===========         ===========      ===========      ===========
Balance beginning of period...................   $      146          $      146       $       84       $       84

Reclassification adjustment for gains
        realized in net loss..................          (91)                (91)             (43)             (43)

Change during the period.......................         181                 181              195              195
                                                 -----------        ------------      -----------      -----------
Balance end of period..........................  $      236         $       236       $      236       $     236
                                                 ===========        ============      ===========      ===========
</TABLE>
<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     Note 10 - Stock Based Compensation

     The Company has adopted the disclosure requirements of Financial Accounting
Standards  Board,   Statement  of  Financial   Accounting   Standards  No.  123,
"Accounting for Stock-Based  Compensation"  ("Statement  123"), but continues to
account  for stock  compensation  using APB Opinion  25,  "Accounting  for Stock
Issued to  Employees"  ("APB 25"),  making pro forma  disclosures  of net income
(loss)  and  earnings  per  share as if the fair  value  based  method  had been
applied.  No compensation  expense,  attributable to stock incentive  plans, has
been charged to earnings.

     The Black-Scholes  option pricing model was used to estimate the fair value
of the  options at date of grant  based on various  factors  including  dividend
yield, stock price volatility, interest rates, and expected life of options.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded options,  which have no vesting restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate,  and
given the  changes  in the price per share of the  Company's  Common  Stock,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the options' vesting period. If the Company
had elected to recognize  compensation  cost for stock options based on the fair
value at date of grant for stock options,  consistent with the method prescribed
by Statement 123, net loss and net loss per share would have been changed to the
pro forma amounts indicated below.
<TABLE>
<CAPTION>
<S>                                                  <C>                     <C>              <C>                 <C>
                                                              Third Quarter Ended                      Nine Months Ended
                                                     -------------------------------------    ---------------------------------
                                                     September 30,           September 30,    September 30,       September 30,
(in thousands, except per share data)                        2005                    2004             2005                 2004
                                                     ============            ============     ============        =============
Loss from continuing operations, as reported.......     $ (1,427)            $   (1,038)       $   (4,724)        $   (3,032)
Income from discontinued operations, as reported          10,361                    344            11,047                994
                                                        ---------            ------------     ------------        -------------
Net income (loss), as reported.....................        8,934                   (694)            6,323             (2,038)
Pro forma adjustments:
Deduct: pro forma stock based compensation expense for
    stock options pursuant to Statement 123........          (31)                   (19)              (94)               (59)
                                                        ---------            ------------     ------------        -------------
Net income (loss), pro forma.......................     $  8,903             $     (713)       $    6,229         $   (2,097)
Per share data:                                         =========            ============     ============        =============
Basic:
Loss from continuing operations, as reported.......     $  (0.03)            $    (0.02)       $    (0.10)        $   (0.06)
Income from discontinued operations, as reported...         0.22                   0.01              0.24              0.02
                                                        ---------            ------------     ------------        -------------
Net income (loss), as reported.....................     $   0.19             $    (0.01)       $     0.14         $   (0.04)
                                                        =========            ============     ============        =============
Net income (loss), pro forma.......................     $   0.19             $    (0.01)       $     0.14         $   (0.04)
                                                        =========            ============     ============        =============
Assuming dilution:
Loss from continuing operations, as reported.......     $  (0.03)            $    (0.02)       $    (0.10)        $   (0.06)
Income from discontinued operations, as reported...         0.22                   0.01              0.24              0.02
                                                        ---------            ------------     ------------        -------------
Net income (loss), as reported.....................     $   0.19             $    (0.01)       $     0.14         $   (0.04)
                                                        =========            ============     ============        =============
Net income (loss), pro forma.......................     $   0.19             $    (0.01)       $     0.14         $   (0.04)
                                                        =========            ============     ============        =============
</TABLE>
<PAGE>
                        AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     Options to purchase  1,440,000 shares of common stock for the third quarter
and nine months ended  September 30, 2005, and 1,290,000  shares of common stock
for the third quarter and nine months ended  September  30, 2004,  were excluded
from the  computation  of diluted  earnings per share because these options were
antidilutive.

     Note 11 - Pension and Savings Plans

     The  Company   sponsors  a  non-qualified   supplemental   retirement  plan
("Supplemental  Plan")  under  which only one current  executive  officer of the
Company  is a  participant.  The cost of the  Supplemental  Plan is  actuarially
determined and is accrued but not funded.

Pension expense for the Supplemental Plan was as follows:
<TABLE>
<CAPTION>
<S>                                                   <C>               <C>             <C>              <C>
                                                           Third Quarter Ended               Nine Months Ended
                                                      -------------------------------   ------------------------------
                                                      September 30,     September 30,   September 30,    September 30,
(in thousands)                                                2005              2004            2005             2004
                                                      ============      ============    ============     =============
Service cost of current period.....................   $        258      $       230     $        773     $         690
Interest cost on projected benefit obligation......            192              172              576               516
Amortization of unrecognized losses................             72               39              216               117
                                                      ------------      ------------    ------------     -------------
                                                      $        522      $       441     $      1,565     $       1,323
                                                      ============      ============    ============     =============
</TABLE>
     The Company  sponsors the AmBase 401(k) Savings Plan (the "Savings  Plan"),
which is a "Section 401(k) Plan" within the meaning of the Internal Revenue Code
of 1986, as amended (the "Code"). The Savings Plan permits eligible employees to
make  contributions  of up to 15% of  compensation,  which  are  matched  by the
Company at a percentage  determined  annually.  The employer  match is currently
100%  of  the   employee's   compensation   eligible  for   deferral.   Employee
contributions to the Savings Plan are invested at the employee's discretion,  in
various investment funds. The Company's  matching  contributions are invested in
the same  manner as the  compensation  reduction  contributions.  The  Company's
matching  contributions to the Savings Plan, charged to expense, were $2,000 and
$50,000  for the  third  quarter  and nine  months  ended  September  30,  2005,
respectively  and $2,000 and $45,000 for the third quarter and nine months ended
September  30,  2004  respectively.  All  contributions  are  subject to maximum
limitations contained in the Code.

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

     From time to time,  the Company may  publish  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Act"), and Section 21E of the Securities  Exchange Act of 1934, as amended (the
"Exchange  Act"),  or  make  oral  statements  that  constitute  forward-looking
statements.  The  forward-looking  statements  may  relate  to such  matters  as
anticipated  financial  performance,   future  revenues  or  earnings,  business
prospects,  projected  ventures,  anticipated  market  performance,  anticipated
litigation results or the timing of pending litigation, and similar matters. The
Private  Securities  Litigation  Reform Act of 1995  provides a safe  harbor for
forward-looking  statements.  In order  to  comply  with  the  terms of the safe
harbor,  the Company  cautions readers that a variety of factors could cause the
Company's  actual results to differ  materially from the anticipated  results or
other expectations expressed in the Company's forward-looking statements.  These
risks  and  uncertainties,  many of which  are  beyond  the  Company's  control,
include,  but are not  limited  to:  (i)  transaction  volume in the  securities
markets;  (ii) the volatility of the securities  markets;  (iii) fluctuations in
interest  rates;  (iv) changes in  occupancy  rates or real estate  values;  (v)
changes  in  regulatory  requirements  which  could  affect  the  cost of  doing
business;  (vi)  general  economic  conditions;  (vii)  changes  in the  rate of
inflation and the related  impact on the securities  markets;  (viii) changes in
federal and state tax laws; and (ix) risks arising from unfavorable decisions in
our current  material  litigation  matters,  or  unfavorable  decisions in other
supervisory  goodwill  cases.  The Company does not undertake any  obligation to
update or revise any  forward-looking  statements  whether as a result of future
events, new information or otherwise.


<PAGE>
     Management's  Discussion and Analysis of Financial Condition and Results of
Operations,  which follows,  should be read in conjunction with the consolidated
financial  statements and related notes, which are contained in Part I - Item 1,
herein and the Company's  Annual Report on Form 10-K for the year ended December
31, 2004.  As a result of the sale of the  Company's  38,000  square foot office
building at Two Soundview Drive in Greenwich, CT ("Two Soundview") in July 2005,
the results of operations of Two Soundview have been  designated as discontinued
operations,  and the  Consolidated  Statements  of  Operations  for the  periods
presented herein have been retroactively  reclassified to report the income from
discontinued  operations separately from the results of continuing operations by
excluding the operating  revenues and expenses of  discontinued  operations from
the respective  statement captions.  See Part I - Item 1 - note 7 for additional
information concerning the sale of Two Soundview in July 2005.

     LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  assets  at  September  30,  2005,  aggregated   $46,397,000
consisting  principally of cash and cash  equivalents of $9,003,000,  investment
securities of $35,086,000 and real estate owned of $2,235,000.  At September 30,
2005,  the Company's  liabilities  aggregated  $14,493,000.  Total  stockholders
equity was $31,904,000.

     The  liability  for the  supplemental  retirement  plan (the  "Supplemental
Plan"),  which is accrued but not funded,  increased to $13,159,000 at September
30, 2005 from $11,594,000 at December 31, 2004. The Supplemental  Plan liability
reflects the  actuarially  determined  accrued  pension costs in accordance with
GAAP.  The  increased  liability  is the result of  additional  accrued  service
vesting,  interest cost on the liability and utilization of an updated mortality
table.  The  Supplemental  Plan  liability  is  further  affected  by changes in
discount  rates and experience  which could be different from that assumed.  See
Part I - Item 1, note 11 for a further  discussion of the Supplemental Plan.

     The Personnel  Committee of the Company had been reviewing the Supplemental
Plan and the Company's related  liability.  In connection with this review,  the
Personnel Committee had been considering  various options,  including whether or
not to terminate and/or curtail the  Supplemental  Plan during 2005, which would
require Mr. Bianco's approval as a Supplemental Plan participant. Unless further
information  and  analysis  can be obtain  before year end 2005,  the  Personnel
Committee has decided it will not terminate and payout the Supplemental  Plan in
2005. Mr. Bianco (the Company's Chairman, President and Chief Executive Officer,
and the former  President and Chief Executive  Officer of Carteret Savings Bank,
FA),  is the only  current  employee  of the  Company  who  participates  in the
Supplemental  Plan and his  Supplemental  Plan  benefits are fully  vested.  For
purposes of computing  accrued benefits under the Supplemental  Plan, Mr. Bianco
had 14.42 years of credited  service as of September  30, 2005,  and his accrual
percentage  under the  Supplemental  Plan is 4% in  effect  from the time of his
initial  employment with the Company.  Under the current  Supplemental Plan, Mr.
Bianco,  at his option, is entitled to receive his Supplemental Plan benefits in
either an annuity or a lump-sum at retirement.

     The Personnel Committee has not indicated to the Board of Directors whether
or not it anticipates  continuing  future service  accruals for Mr. Bianco under
the Supplemental Plan after his current  employment  contract expires on May 31,
2007.  In accordance  with the Internal  Revenue Code Section 409A ("IRC 409A"),
Mr.  Bianco  will  have to make a  Supplemental  Plan  benefit  election  before
December 31, 2006, in accordance with IRC 409A as to the form of benefit he will
elect to receive,  i.e. lump-sum or annuity payments,  at the end of his current
employment  contract in May 2007. Based on the actuarially  determined,  accrued
pension  costs  in  accordance  with  GAAP,  the  Company  expects  to  continue
recognizing  an expense  for the  Supplemental  Plan and the  Supplemental  Plan
liability is expected to increase  through May 31, 2007, (Mr.  Bianco's  current
contract  expiration date) and possibly  beyond,  depending on: (i) Mr. Bianco's
benefit  election  of a lump-sum  or an  annuity;  and/or  (ii) if Mr.  Bianco's
employment  contract  is  extended  beyond May 31,  2007,  and/or if  additional
accruals under the Supplemental  Plan are provided;  and/or (iii) when or if the
Supplemental Plan is terminated and/or paid out in a lump-sum.

     The  potential  termination,  curtailment  and/or  lump sum  payment of the
Supplemental Plan is not reflected in the financial statements presented herein,
as such transaction has not been approved by the Company's  Personnel  Committee
or the Company's Board of Directors.

     The  Personnel  Committee is  continuing  to review the  Supplemental  Plan
including the impact of IRC 409A on the Supplemental Plan and the flexibility or
restrictions of IRC 409A on the Supplemental Plan, and will continue to consider
and review the amendments  required to be made to the  Supplemental  Plan during
2006  pursuant to IRC 409A. It is,  however;  unlikely that the Company would be
able to pay the Supplemental Plan without mutual agreement after 2005, due
to the restrictions of IRC 409A.
<PAGE>
     For the nine months ended  September 30, 2005,  cash of $5,114,000 was used
by  continuing  operations,  including  the payment of prior year  accruals  and
operating expenses,  partially offset by the receipt of rental income,  interest
income and investment earnings. The cash needs of the Company for the first nine
months of 2005 were satisfied by the receipt of rental income,  interest  income
received on investment  securities and cash equivalents,  and to a lesser extent
the  Company's  current  financial  resources.   Management  believes  that  the
Company's cash resources are sufficient to continue  operations for 2005. During
July 2005, the Company  received  $27,442,000 of net cash proceeds from the sale
of Two Soundview as further  discussed in Part I - Item 1 - note 7. The proceeds
were  reinvested in treasury  bills and are included in  investment  securities,
held to  maturity in the  Consolidated  Balance  Sheet at  September  30,  2005,
included in Part I - Item 1 herein.

     In March 2005,  the Company paid  $1,867,000 of previously  incurred  legal
fees and other  expenses  relating  to the  Company's  defense of a  withholding
obligation   issue  with  the  Internal   Revenue   Service  ("IRS")  which  was
successfully concluded in October 2001. The Company had previously accrued these
costs  which were  reflected  in other  liabilities  in prior  period  financial
statements.

     For the nine months ended  September 30, 2004,  cash of $2,379,000 was used
by  continuing  operations,  including  the payment of prior year  accruals  and
operating  expenses  partially offset by the receipt of rental income,  interest
income, and investment earnings.

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

     As of September 30, 2005, the Company owns one commercial  office buildings
in Greenwich,  Connecticut. The building is approximately 14,500 square feet and
is available for lease to unaffiliated  third parties with  approximately  3,500
square feet utilized by the Company for its executive offices.

     See Part I - Item 1 - note 7 for further information concerning the sale of
the Company's 38,000 square foot building in July 2005. A gain from the sale, of
approximately $10 million,  is reflected in the Company's  financial  statements
for the third quarter and nine month periods ending September 30, 2005.

     The Company made no purchases of common stock  pursuant to its common stock
repurchase  plan  during the first nine  months of 2005.  There are no  material
commitments for capital expenditures as of September 30, 2005. Inflation has had
no material impact on the business and operations of the Company.

     Results of Operations for the Third Quarter and Nine Months ended September
30, 2005 vs. The Third Quarter and Nine Months Ended September 30, 2004

     CONTINUING OPERATIONS

     The Company's  main source of operating  revenue is rental income earned on
real estate  owned.  The Company  also earns  non-operating  revenue  consisting
principally   of  investment   earnings  on  investment   securities   and  cash
equivalents.  The Company's management expects that operating cash needs for the
remainder  of 2005  will be met  principally  by the  receipt  of  non-operating
revenue  consisting of interest income earned on investment  securities and cash
equivalents,  the Company's  current financial  resources,  and rental income on
real estate owned.

     For the third quarter and nine months ended September 30, 2005, the Company
earned   rental   income  from  real  estate  owned  of  $41,000  and  $127,000,
respectively, as compared to $49,000 and $139,000 for the third quarter and nine
months ended September 30, 2004, respectively.

     Compensation  and benefits  expenses  increased to  $1,098,000 in the third
quarter  and   $3,373,000   in  the  nine  months  ended   September  30,  2005,
respectively,  compared  with  $1,021,000  and  $3,130,000  in  respective  2004
periods. The increases were principally the result of a higher level of benefits
costs and accruals.  Included in compensation and benefits is an accrual for the
Supplemental  Retirement  Plan of $522,000 and  $1,565,000 for the third quarter
and nine month  period  ended  September  30,  2005,  respectively,  compared to
$441,000 and $1,323,000, respectively, for the same 2004 periods.

     Professional  and outside  services  expenses  increased  to  $423,000  and
$1,537,000  in the third  quarter  and nine months  ended  September  30,  2005,
compared to $206,000 and $478,000 in the respective 2004 periods.  The increases
in the 2005 third quarter and nine month  periods as compared to the  respective
2004 periods is principally  due to increased legal fees relating to supervisory
goodwill  litigation  proceeding  during  2005 and,  to a lesser  extent,  other
corporate professional fees.

     Property  operating and  maintenance  expenses were $29,000 and $99,000 for
the third  quarter and nine  months  ended  September  30,  2005,  respectively,
compared to $31,000 and $79,000 in the  respective  2004 periods.  The increased
expenses in 2005 nine month period compared to the same 2004 period is generally
due to increased cost of building  repairs and maintenance.  Property  operating
and maintenance expenses have not been reduced by tenant reimbursements.

     Interest  income in the third  quarter and nine months ended  September 30,
2005,  increased  to $333,000  and  $604,000,  respectively,  from  $142,000 and
$380,000,  in the respective  2004 periods.  The increase is due to an increased
yield on the  investments,  classified as investments  available for sale and an
increase in the aggregate amount of cash  equivalents and investment  securities
invested as a result of the cash proceeds  received in connection  with the sale
of real estate  owned in July 2005,  as further  discussed  in Part I - Item 1 -
note 7.

     No investment  securities available for sale were sold in the third quarter
ended September 30, 2005. For the nine months ended September 30, 2005, realized
gains on sales of investment securities available for sale were $20,000. For the
third  quarter and nine months  ended  September  30,  2004,  realized  gains on
investment   securities   available   for  sale  were   $123,000  and  $459,000,
respectively.

<PAGE>
     The income tax  provisions  of $180,000 and $240,000 for the third  quarter
and nine months ended September 30, 2005,  respectively,  are  attributable to a
provision for federal  alternative minimum tax of $150,000 for the third quarter
and nine months periods and $30,000 and $90,000,  respectively,  attributable to
state taxes.  The income tax provisions of $30,000 and $90,000 the third quarter
and  nine  months  ended  September  30,  2004,   respectively,   are  primarily
attributable  to a  provision  for a  minimum  tax on  capital  to the  state of
Connecticut.  Income taxes  applicable to operating  income (loss) are generally
determined by applying the estimated effective annual income tax rates to pretax
income (loss) for the  year-to-date  interim period.  Income taxes applicable to
unusual or infrequently occurring items are provided in the period in which such
items occur.

     DISCONTINUED OPERATIONS

     As discussed in Part I - Item 1 note 7, in July 2005, the Company completed
the sale of Two  Soundview.  The sale price was  $28,000,000  less  normal  real
estate closing adjustments.  A gain from the sale of $10,298,000 is reflected in
the Company's financial  statements for the third quarter and nine month periods
ending September 30, 2005.

     Income from discontinued  operations before gain on disposition was $63,000
and $749,000 for the third  quarter and nine months  ended  September  30, 2005,
respectively, which reflects the results of operations for Two Soundview for the
respective  periods to July 15,  2005 (date of sale).  For the  comparable  2004
periods,   income  from  discontinued  operations  was  $344,000  and  $994,000,
respectively.

     Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company holds  short-term  investments  as a source of  liquidity.  The
Company's  interest rate sensitive  investments with maturity dates of less than
one year consist of the following:
<TABLE>
<CAPTION>
<S>                                                <C>          <C>         <C>         <C>

                                                   September 30, 2005       December 31, 2004
                                                   ==================       =================
                                                   Carrying      Fair       Carrying     Fair
                                                      Value     Value          Value    Value
in thousands)                                      --------     -----       --------    -----

U.S. Treasury Bills.........................       $ 33,245    $ 33,246     $  8,590   $  8,586
                                                   ========    ========     ========   ========

Weighted average interest rate..............          3.35%                    1.71%
                                                   ========                 ========
</TABLE>

     The Company's  current  policy is to minimize the interest rate risk of its
short-term  investments by investing in U.S.  Treasury Bills with  maturities of
less than one year. There were no significant changes in market exposures or the
manner in which interest rate risk is managed during the period.

     The Company's  portfolio of equity  securities has exposure to equity price
risk. Equity price risk is defined as the potential loss in fair value resulting
from an adverse  change in prices.  The equity  securities  are primarily in the
form of preferred stock in utility companies. The equity securities are held for
an indefinite period and are carried at fair value with net unrealized gains and
losses recorded directly in a separate component of stockholder's equity.

     The table below  summarizes  the Company's  equity price risk and shows the
effect of a hypothetical 20% increase and 20% decrease in market price as of the
dates indicated  below. The selected  hypothetical  changes are for illustrative
purposes  only and are not  necessarily  indicative  of the  best or worse  case
scenarios.
<TABLE>
<CAPTION>
<S>                                                                    <C>                <C>

(In thousands)                                                         September 30,      December 31,
                                                                            2005             2004
Equity Securities Available for Sale:                                  ============       ============
Fair value........................................................     $     1,841        $      2,112
                                                                       ============       ============
Hypothetical fair value at a 20% increase in market price.........     $     2,209        $      2,534
                                                                       ============       ============
Hypothetical fair value at a 20% decrease in market price.........     $     1,473        $      1,690
                                                                       ===========        ============
</TABLE>
<PAGE>
     Item 4. CONTROLS AND PROCEDURES

     The Company maintains  disclosure controls and procedures that are designed
to ensure that  information  required to be disclosed in the Company's  Exchange
Act reports is recorded,  processed,  summarized  and  reported  within the time
periods  specified in the SEC's rules and forms,  and that such  information  is
accumulated and  communicated to the Company's  management,  including its Chief
Executive Officer and Chief Financial Officer,  as appropriate,  to allow timely
decisions  regarding required  disclosure based on the definition of "disclosure
controls and  procedures"  in Rule  13a-15(e).  In designing and  evaluating the
disclosure controls and procedures,  management recognized that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable assurance of achieving the desired control objectives, and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship of possible controls and procedures.

     The Company  carried out an evaluation,  under the supervision and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive   Officer  and  the  Company's   Chief  Financial   Officer,   of  the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures as of September 30, 2005.  Based on the foregoing,  the Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective.

     There have been no significant  changes in the Company's  internal controls
or  other  factors  that  could  significantly   affect  the  internal  controls
subsequent to the date the Company completed its evaluation.

     STOCKHOLDER INQUIRIES

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

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

     Copies of Quarterly  reports on Form 10-Q,  Annual Reports on Form 10-K and
Proxy  Statements can also be obtained  directly from the Company free of charge
by sending a request to the Company by mail as follows:

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

     In addition,  the Company's public reports,  including Quarterly Reports on
Form 10-Q,  Annual  Reports on Form 10-K and Proxy  Statements,  can be obtained
through the Securities and Exchange  Commission EDGAR Database over the Internet
at  www.sec.gov.  Materials  filed  with the SEC may also be read or  copied  by
visiting the SEC's Public Reference Room, 450 Fifth Street, NW,  Washington,  DC
20549. Information on the operation of the Public Reference Room may be obtained
by calling 1-800-SEC-0330.

     RECENT DEVELOPMENTS

     On November 9, 2005, an amendment to the Company's  existing  Shareholder's
Rights Plan was executed  between the Company and its transfer  agent, as Rights
Agent, to extend the expiration date of the Shareholder  Rights Plan to February
10, 2011 from February 10, 2006.


<PAGE>
     PART II - OTHER INFORMATION

     Item 1. LEGAL PROCEEDINGS

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

     Item 5. OTHER INFORMATION

     On November 9, 2005,  an amendment to the  Company's  existing  Shareholder
Rights Plan was executed  between the Company and its  transfer  agent as Rights
Agent, to extend the expiration date of the Shareholder  Rights Plan to February
10, 2011 from February 10, 2006.

     Item 6. EXHIBITS

     4.  Amendment to  Shareholder  Rights Plan between the Company and American
Stock Transfer and Trust Company dated November 9, 2005.

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






<PAGE>


SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


AMBASE CORPORATION



      /s/  John P. Ferrara
      ------------------------------------------------------
By    JOHN P. FERRARA
      Vice President, Chief Financial Officer and Controller
      (Duly Authorized Officer and Principal Financial and
      Accounting Officer)


Date:  November 14, 2005