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 June 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
     -------         -------------


     At  August  9,  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
June 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..........................................15

Item 4.      Controls and Procedures.............................................................................16

PART II - OTHER INFORMATION

Item 1.      Legal Proceedings...................................................................................17

Item 4.      Submission of Matters to a Vote of Security Holders.................................................18

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

Signatures   ....................................................................................................19
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

                       AMBASE CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                       (in thousands, except for share amounts)
<TABLE>
<CAPTION>
<S>                                                                                   <C>             <C>
                                                                                       June 30,       December 31,
                                                                                           2005               2004
                                                                                     (unaudited)
                                                                                       ========          =========
Assets:
Cash and cash equivalents.........................................................    $   6,751            $10,124
Investment securities:
    Held to maturity (market value $8,690 and $8,586, respectively)...............        8,690              8,590
    Available for sale, carried at fair value ....................................        1,761              2,112
                                                                                       --------           --------
Total investment securities.......................................................       10,451             10,702
                                                                                       --------           --------
Accounts receivable...............................................................            4                  1
Real estate owned:
  Land............................................................................          554              6,954
  Buildings and improvements......................................................        1,900             12,810
                                                                                       --------           --------
                                                                                          2,454             19,764
  Less:  accumulated depreciation.................................................         (207)              (763)
                                                                                       --------           --------
Real estate owned, net............................................................        2,247             19,001
Real estate held for sale, net (see notes 6 and 7)................................       16,588                  -
Other assets......................................................................          654              1,032
                                                                                       --------           --------
Total assets......................................................................   $   36,695         $   40,860
                                                                                       ========           ========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities..........................................   $      821         $    1,495
Supplemental retirement plan......................................................       12,637             11,594
Other liabilities.................................................................          348              2,197
                                                                                       --------           --------
Total liabilities.................................................................        13,806            15,286
                                                                                       --------           --------
Commitments and contingencies.....................................................            -                  -
                                                                                       --------           --------
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............................................         (449)              (375)
Accumulated deficit...............................................................     (524,397)          (521,786)
Treasury stock, at cost - 176,488 shares..........................................         (685)              (685)
                                                                                       --------           --------
Total stockholders' equity........................................................       22,889             25,574
                                                                                       --------           --------

Total liabilities and stockholders' equity........................................   $   36,695         $   40,860
                                                                                       ========           ========
</TABLE>

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

<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                   Second Quarter and Six Months Ended June 30
                                   (Unaudited)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
<S>                                                                    <C>            <C>               <C>           <C>

                                                                         Second Quarter                     Six Months
                                                                       2005           2004              2005          2004
                                                                       ====           ====              ====          ====

Revenues:
Rental income...............................................        $    43         $   48            $   86         $  90

Operating expenses:
Compensation and benefits...................................          1,105          1,026             2,275          2,109
Professional and outside services...........................            661            172             1,114            272
Property operating and maintenance .........................             42             21                70             48
Depreciation  ..............................................             12             12                25             25
Insurance...................................................             28             34                44             53
Other operating ............................................             36             46                86             91
                                                                    ----------      ---------         ---------      ---------
                                                                      1,884          1,311             3,614          2,598
                                                                    ----------      ---------         ---------      ---------
Operating loss .............................................         (1,841)        (1,263)           (3,528)        (2,508)
                                                                    ----------      ---------         ---------      ---------
Interest income.............................................            146            123               271            238
Realized gains on sales of investment securities............              -            229                20            336
                                                                    ----------      ---------         ---------      ---------
Loss from continuing operations before
     income taxes...........................................         (1,695)          (911)           (3,237)        (1,934)
Income tax expense..........................................            (30)           (30)              (60)           (60)
                                                                    ----------      ---------         ---------      ---------
Loss from continuing operations.............................         (1,725)          (941)           (3,297)        (1,994)
                                                                    ----------      ---------         ---------      ---------
Income from discontinued operations (see notes 6 and 7).....            345            327               686            650
                                                                    ----------      ---------         ---------      ---------
Net loss....................................................        $(1,380)         $(614)          $(2,611)       $(1,344)
                                                                    ==========      =========         =========      =========
Per share data:

Basic:
Loss from continuing operations.............................        $ (0.04)        $(0.02)          $ (0.07)       $ (0.04)
Income from discontinued operations.........................           0.01           0.01              0.01           0.01
                                                                    ---------       ---------         ---------     ----------
Net loss....................................................        $ (0.03)        $(0.01)          $ (0.06)       $ (0.03)
                                                                    =========       =========         =========     ==========
Assuming dilution:
Loss from continuing operations.............................        $ (0.04)        $(0.02)          $ (0.07)       $ (0.04)
Income from discontinued operations.........................           0.01           0.01              0.01           0.01
                                                                    ---------       ---------         ---------     ----------
Net loss....................................................        $ (0.03)        $(0.01)          $ (0.06)       $ (0.03)
                                                                    =========       =========         =========     ==========
Weighted average common shares outstanding:

Basic.......................................................         46,234         46,234            46,234         46,217
                                                                    =========       =========         =========     ==========
Diluted...................................................           46,234         46,234            46,234         46,217
                                                                    =========       =========         =========     ==========
</TABLE>

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

<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
              Consolidated Statement of Comprehensive Income (Loss)
                   Second Quarter and Six Months Ended June 30
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                       <C>         <C>      <C>          <C>
                                                                         Second Quarter            Six Months
                                                                          2005        2004     2005         2004
                                                                          ======      =====    =====        =====

Net loss..............................................................  $(1,380)   $  (614)   $(2,611)    $(1,344)

Unrealized holding gains (losses) on investment securities
     available for sale...............................................      108          8        (74)         62
                                                                        --------   --------   --------    ---------
Comprehensive loss....................................................  $(1,272)   $  (606)   $(2,685)    $(1,282)
                                                                        =======    ========   ========    =========
</TABLE>

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

                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                            Six Months Ended June 30
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
<S>                                                                                        <C>           <C>

                                                                                           2005          2004
                                                                                           ====          ====
Cash flows from operating activities:
Net loss.......................................................................          $(2,611)       $(1,344)
Adjustments to reconcile net loss to net cash used by operations:
    Depreciation and amortization..............................................              166            165
    Accretion of discount - investment securities..............................              (83)           (51)
     Realized gains on investment securities available for sale................              (20)          (336)
Changes in other assets and liabilities:
    Accounts receivable........................................................               (3)            (1)
    Other assets...............................................................              378           (171)
    Accounts payable and accrued liabilities...................................             (674)          (500)
    Other liabilities..........................................................             (806)           828
Other, net.....................................................................                2             (1)
                                                                                         --------        ---------
Net cash used by operating activities..........................................           (3,651)        (1,411)
                                                                                         --------        ---------
Cash flows from investing activities:
Maturities of investment securities - held to maturity.........................           17,283         17,353
Purchases of investment securities - held to maturity..........................          (17,301)        (8,499)
Purchases of investment securities - available for sale........................             (252)       (17,224)
Sales of investment securities - available for sale............................              548          8,273
                                                                                         --------        ---------
Net cash provided (used) by investing activities...............................              278            (97)
                                                                                         --------        ---------
Cash flows from financing activities:
Stock options exercised........................................................                -             17
                                                                                         --------        ---------
Net cash provided by financing activities......................................                -             17
                                                                                         --------        ---------
Net decrease in cash and cash equivalents......................................           (3,373)        (1,491)
Cash and cash equivalents at beginning of period...............................           10,124          2,785
                                                                                         --------        ---------
Cash and cash equivalents at end of period.....................................           $6,751         $1,294
                                                                                         ========        =========
Supplemental cash flow disclosures:
Income taxes paid..............................................................           $   87         $   86
                                                                                        ===========      =========
</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").  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.

     See notes 6 and 7 below for a discussion of the Company's sale of a portion
of the real estate owned,  which has been  reclassified  as real estate held for
sale in the accompanying Consolidated Balance Sheet as of June 30, 2005, and the
results of  operations  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").

     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.

Note 3 - Legal Proceedings

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

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>

                                             June 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......     $ 8,690        $ 8,690        $  8,690          $   8,590       $  8,590      $   8,586

Available for Sale:
Equity Securities.........      1,761          1,798           1,761              2,112          2,075          2,112
                             ---------       ---------      ---------         -----------     ----------    -----------
                             $ 10,451        $10,488        $ 10,451          $  10,702       $ 10,665      $  10,698
                             =========       =========      =========         ===========     ==========    ===========
</TABLE>

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

(in thousands)                                                                       2005        2004
                                                                                     =====       =====
Held to Maturity:
Gross unrealized losses.......................................................       $   -       $ (4)
                                                                                     ======      ======
Available for Sale:
Gross unrealized gains........................................................       $  18       $ 41
                                                                                     ======      ======

Gross unrealized losses.......................................................       $ (55)      $ (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 second quarter and six months ended June 30, 2005 and June 30, 2004, are
as follows:
<TABLE>
<CAPTION>
<S>                                                                   <C>         <C>          <C>          <C>

                                                                         Second Quarter              Six Months
(in thousands)                                                         2005        2004          2005         2004
                                                                      =======     =====        ======       ======

Net sale proceeds...................................................  $    -     $   836      $    548      $ 8,273
Cost basis..........................................................       -        (607)         (528)      (7,937)
                                                                      -------    --------     --------      --------
Realized gains......................................................  $     -    $   229      $     20      $   336
                                                                      =======    ========     ========      ========
</TABLE>

     During the six months ended June 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.

Note 6 - Real Estate Owned

     As of June 30, 2005, the Company owned two commercial  office  buildings in
Greenwich, Connecticut that contain 14,500 and 38,000 square feet, respectively.
The Company  utilizes a small portion of the office space in the first  building
for its executive offices, with the remaining square footage available for lease
to unaffiliated third parties.

     The  buildings and  improvements  are carried at cost,  net of  accumulated
depreciation  of $207,000  and  $763,000 at June 30, 2005 and December 31, 2004,
respectively.  Depreciation expense is recorded on a straight-line basis over 39
years.  Tenant  security  deposits of $305,000 at June 30, 2005 and December 31,
2004, are included in other liabilities.

     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.

     As further  discussed in note 7 herein,  in May 2005,  the Company  entered
into an  agreement  to sell  its  38,000  square  foot  office  building  at Two
Soundview  Drive  in  Greenwich,   Connecticut  ("Two  Soundview"),   originally
purchased in December  2002, to Ceruzzi  Holdings,  LLC, an  unaffiliated  third
party.  As of June 30, 2005,  the net carrying  value of Two  Soundview has been
reclassified as real estate held for sale in the Company's  Consolidated Balance
Sheet.  In accordance  with the  classification  of Two Soundview as real estate
held for sale,  the  results of  operations  relating to Two  Soundview  for the
periods  presented herein have been  retroactively  reclassified to discontinued
operations in accordance with SFAS 144.

     In July 2005,  the Company  completed the sale of Two  Soundview.  The sale
price was $28 million less normal real estate closing  adjustments.  A gain from
the sale,  of  approximately  $10 million,  will be  reflected in the  Company's
financial statements for the quarterly period ending September 30, 2005.


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

Note 7 - Real Estate Held for Sale, Net

     As more fully  discussed in note 6, the net carrying value of Two Soundview
has been  reclassified as real estate held for sale as of June 30, 2005, and the
results of  operations  for Two Soundview  for the periods  presented  have been
retroactively reclassified as discontinued operations. In July 2005, the Company
completed the sale of Two Soundview.  A gain from the sale, of approximately $10
million,  will  be  reflected  in the  Company's  financial  statements  for the
quarterly period ending September 30, 2005.

     The net carrying value of real estate held for sale is as follows:
<TABLE>
<CAPTION>
<S>                                                                  <C>
(in thousands)                                                       June 30, 2005
                                                                     =============

Land..........................................................         $   6,400
Building and improvements.....................................            10,910
                                                                       ---------
                                                                          17,310
Less:  accumulated depreciation...............................              (722)
                                                                       ---------
Carrying value, net...........................................         $  16,588
                                                                       =========
</TABLE>
     Included in the  Consolidated  Balance  Sheet at June 30,  2005,  are other
assets and other liabilities relating to real estate held for sale. Other assets
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  $38,000  of  real  estate  commissions
previously  capitalized.   Other  liabilities  includes  $305,000  of  security
deposits held on behalf of tenants.

Income from discontinued operations is as follows:
<TABLE>
<CAPTION>
<S>                                                              <C>             <C>             <C>           <C>
                                                                   Second Quarter                     Six Months
                                                                 2005            2004            2005          2004
                                                                 ====            ====            ====          ====
(in thousands)

Revenues:
Rental income.................................................  $ 530         $  508          $  1,060       $ 1,001

Operating expenses:
Professional and outside services.............................     11             12                22            20
Property operating and maintenance ...........................     98             93               201           179
Depreciation..................................................     70             70               140           140
Insurance.....................................................      5              5                 9             9
Other operating...............................................      1              1                 2             3
                                                                ------        -------         ---------      ---------
Operating expenses............................................    185            181               374           351
                                                                ------        -------         ---------      ----------
Income from discontinued operations...........................  $ 345         $  327          $    686       $   650
                                                                ======        ======          =========      ==========
</TABLE>

     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.  The Company  generated  NOL's in all periods
presented,  however,  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.



<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

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 $36 million and $34 million as of June 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.

     Based upon the Company's  federal  income tax returns as filed from 1993 to
2003 (subject to IRS audit  adjustments),  and  excluding the NOL  carryforwards
generated from the Company's tax basis in Carteret/Carteret FSB, as noted above,
at June 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.


<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


     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   approximately   $10  million  of  NOL
carryforwards  and $10  million  of AMT NOL  carryforwards  to fully  offset any
taxable income  generated from the sale of Two Soundview as discussed in notes 6
and 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>
                                          Second Quarter Ended                         Six Months Ended
(in thousands)                               June 30, 2005                              June 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....$    (145)      $   (412)    $     (557)      $      37      $    (412)   $     (375)

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

Change during the period.......      108              -            108             (69)             -           (69)
                               ---------       ---------    -----------      -----------    -----------  ------------
Balance end of period..........$     (37)      $   (412)    $     (449)      $     (37)     $    (412)   $     (449)
                               =========       =========    ===========      ===========    ===========  ===========
</TABLE>

<TABLE>
<CAPTION>
<S>                                         <C>             <C>                <C>              <C>
(in thousands)                                   Second Quarter Ended                Six Months Ended
                                                     June 30, 2004                     June 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............     $       138     $       138        $          84    $          84

Reclassification adjustment for gains
        realized in net loss...........             (52)            (52)                 (71)             (71)

Change during the period...............              60              60                  133              133
                                            -----------     -----------        -------------    -------------
Balance end of period..................     $       146     $       146        $         146    $         146
                                            ===========     ===========        =============    =============
</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>
                                                             Second Quarter Ended              Six Months Ended
                                                          --------------------------    ------------------------------
                                                          June 30,          June 30,    June 30,         June 30,
(in thousands, except per share data)                         2005              2004        2005             2004
                                                          ========          ========    ========         ========
Loss from continuing operations, as reported......        $ (1,725)         $  (941)    $ (3,297)        $ (1,994)
Income from discontinued operations, as reported..             345              327          686              650
                                                          --------          --------    ---------        ---------
Net loss, as reported.............................          (1,380)            (614)      (2,611)          (1,344)

Pro forma adjustments:
Deduct: pro forma stock based compensation expense for
  stock options pursuant to Statement 123.........             (32)             (20)         (63)             (39)
                                                          --------          --------    ---------        ---------
Net loss, pro forma...............................        $ (1,412)         $  (634)    $ (2,674)        $ (1,383)
                                                          ========          ========    =========        =========
Per share data:
Basic:
Loss from continuing operations, as reported......        $  (0.04)         $ (0.02)    $  (0.07)        $  (0.04)
Income from discontinued operations, as reported..            0.01             0.01         0.01             0.01
                                                          --------          --------    ---------        ---------
Net loss, as reported.............................        $  (0.03)         $ (0.01)    $  (0.06)        $  (0.03)
                                                          ========          ========    =========        =========
Net loss, pro forma..............................         $  (0.03)         $ (0.01)    $  (0.06)        $(0.03)
                                                          ========          ========    =========        =========
Assuming dilution:
Loss from continuing operations, as reported......        $  (0.04)         $ (0.02)    $  (0.07)        $  (0.04)
Income from discontinued operations, as reported..            0.01             0.01         0.01             0.01
                                                          --------          -------     ---------        ---------
Net loss, as reported.............................        $  (0.03)         $ (0.01)    $  (0.06)        $  (0.03)
                                                          ========          =======     =========        =========
Net loss, pro forma...............................        $  (0.03)         $ (0.01)    $  (0.06)        $  (0.03)
                                                          ========          =======     =========        =========
</TABLE>

     Options to purchase 1,440,000 shares of common stock for the second quarter
and six months ended June 30, 2005, and 1,290,000 shares of common stock for the
second  quarter  and six months  ended June 30,  2004,  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 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>

                                                                       Second Quarter Ended                  Six Months Ended
                                                                     -------------------------         --------------------------
                                                                     June 30,          June 30,        June 30,          June 30,
(in thousands)                                                           2005              2004            2005              2004
                                                                     ========          ========        ========          ========
Service cost of current period................................       $    258          $    230        $    515          $    460
Interest cost on projected benefit obligation.................            192               172             384               344
Amortization of unrecognized losses...........................             72                39             144                79
                                                                     --------          --------        --------          --------
                                                                     $    522          $    441        $  1,043          $    883
                                                                     ========          ========        ========          ========
</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 $3,000 and
$48,000 for the second quarter and six months ended June 30, 2005,  respectively
and $3,000 and $43,000 for the second quarter and six months ended June 30, 2004
respectively.  All contributions are subject to maximum limitations contained in
the Code.


<PAGE>
     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  value;  (v)
changes  in  regulatory  requirements  which  could  affect  the  cost of  doing
business;  (vi)  general  economic  conditions;  (vii)  changes  in the  rate of
inflation and the related  impact on the securities  markets;  (viii) changes in
federal and state tax laws; and (ix) risks arising from unfavorable decisions in
our current  material  litigation  matters,  or  unfavorable  decisions in other
supervisory  goodwill  cases.  The Company does not undertake any  obligation to
update or revise any  forward-looking  statements  whether as a result of future
events, new information or otherwise.

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations,  which follows,  should be read in conjunction with the consolidated
financial  statements and related notes, which are contained in Part I - Item 1,
herein.  As a result of the previously  announced  sale of the Company's  38,000
square  foot office  building  at Two  Soundview  Drive in  Greenwich,  CT ("Two
Soundview"),  the net carrying value of Two Soundview has been  reclassified  as
real estate held for sale in the accompanying  Consolidated  Balance Sheet as of
June  30,  2005  and  Consolidated  Statements  of  Operations  for the  periods
presented  have been  retroactively  reclassified  to  report  the  income  from
discontinued  operations  separately from the results of continuing  operations.
See Part I - Item 1 - notes 6 and 7 for  additional  information  concerning the
sale of Two Soundview in July 2005.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company's assets at June 30, 2005,  aggregated  $36,695,000  consisting
principally of cash and cash equivalents of $6,751,000, investment securities of
$10,451,000  and  real  estate  owned of  $18,835,000.  At June  30,  2005,  the
Company's  liabilities  aggregated  $13,806,000.  Total stockholders  equity was
$22,889,000.

     The  liability  for the  supplemental  retirement  plan (the  "Supplemental
Plan"),  which is accrued but not funded,  increased to  $12,637,000 at June 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.

     At June 30, 2005, the Company's accrual for its Supplemental Plan was $12.6
million.  The  Personnel  Committee of the Company is  continuing  to review the
Supplemental Plan and the Company's related  liability.  In connection with this
review, the Company is considering various options, including termination and/or
curtailment of the Supplemental  Plan. If the Supplemental  Plan was terminated,
curtailed  and/or paid out in a lump sum during  2005,  the Company may increase
its accrual for the Supplemental Plan by a one-time charge of approximately $3.0
million,  subject to the accounting rules relevant to the  transaction,  thereby
increasing  the  Company's   Supplemental  Plan  liability  and  decreasing  the
Company's  stockholder's equity. The potential  termination,  curtailment and/or
lump  sum  payment  of the  Supplemental  Plan  has not  been  reflected  in the
financial statements presented herein, as such transaction is still under review
and has not been  approved.  If the  transaction  was  completed,  the aggregate
accrual for the Supplemental Plan would be approximately $15.6 million.

     For the six months  ended June 30,  2005,  cash of  $3,651,000  was used by
operations, including the payment of prior year accruals and operating expenses,
partially offset by the receipt of rental income, interest income and investment
earnings.  The cash needs of the  Company  for the first six 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.
<PAGE>
     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 six months  ended June 30,  2004,  cash of  $1,411,000  was used by
operations,  including the payment of prior year accruals and operating expenses
partially  offset  by  the  receipt  of  rental  income,  interest  income,  and
investment earnings.

     The Company continues to evaluate a number of possible  acquisitions and is
engaged  in  the  management  of  its  assets  and  liabilities,  including  the
contingent  assets.  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 June 30, 2005, the Company owned two commercial  office  buildings in
Greenwich,  Connecticut. One 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.  The second
building,  approximately 38,000 square feet, was sold in July 2005. See Part I -
Item 1 -  notes  6 and 7 for  further  information  concerning  the  sale of the
Company's 38,000 square foot building in July 2005.

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

     Results of Operations  for the Second Quarter and Six Months ended June 30,
2005 vs. the Second Quarter and Six Months Ended June 30, 2004

     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 second  quarter  and six months  ended June 30,  2005,  the Company
earned   rental   income  from  real  estate   owned  of  $43,000  and  $86,000,
respectively,  as compared to $48,000 and $90,000 for the second quarter and six
months ended June 30, 2004, respectively.

     Compensation and benefits increased to $1,105,000 in the second quarter and
$2,275,000  in the six months ended June 30, 2005,  respectively,  compared with
$1,026,000  and  $2,109,000 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 $1,043,000 for the second quarter and six month
period ended June 30,  2005,  respectively,  compared to $441,000 and  $883,000,
respectively, for the same 2004 periods.

     Professional and outside  services  increased to $661,000 and $1,114,000 in
the second quarter and six months ended June 30, 2005,  compared to $172,000 and
$272,000  in the  respective  2004  periods.  The  increases  in the 2005 second
quarter  and six month  periods as compared to the  respective  2004  periods is
principally  due to increased  legal fees relating to the  Supervisory  Goodwill
litigation  proceeding  during 2005 and,  to a lesser  extent,  other  corporate
professional fees.

     Property  operating and  maintenance  expenses were $42,000 and $70,000 for
the second quarter and six months ended June 30, 2005, respectively, compared to
$21,000 and $48,000 in the respective  2004 periods.  The increased  expenses in
2005  compared  to the 2004  periods  are  generally  due to  increased  cost of
building repairs and maintenance.  Property  operating and maintenance  expenses
have not been reduced by tenant reimbursements.
<PAGE>
     Interest  income in the second  quarter and six months ended June 30, 2005,
increased to $146,000 and $271,000, respectively, from $123,000 and $238,000, in
the respective  2004 periods.  The increase is  principally  due to an increased
yield on the investments, classified as investments available for sale.

     No investment securities available for sale were sold in the second quarter
ended June 30, 2005.  For the six months ended June 30, 2005,  realized gains on
sales of investment  securities  available for sale were $20,000. For the second
quarter  and six  months  ended  June 30,  2004,  realized  gains on  investment
securities available for sale were $229,000 and $336,000, respectively.

     The income tax provisions of $30,000 and $60,000 for the second quarter and
six months ended June 30, 2005, respectively, and $30,000 and $60,000 the second
quarter  and six  months  ended  June  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 notes 6 and 7, in July 2005,  the Company
completed the sale of Two Soundview.  The sale price was $28 million less normal
real estate  closing  adjustments.  A gain from the sale, of  approximately  $10
million,  will  be  reflected  in the  Company's  financial  statements  for the
quarterly period ending September 30, 2005.

     Income from discontinued  operations increased to $345,000 and $686,000 for
the second  quarter and six months  ended June 30, 2005,  respectively  compared
with $327,000 and $650,000 for the  comparable  2004 periods,  principally  as a
result of increased rental income earned in the 2005 periods.

     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 at June 30, 2005 and December 31,
2004 with maturity dates of less than one year consist of the following:
<TABLE>
<CAPTION>
<S>                                                <C>         <C>                  <C>         <C>

                                                         2005                              2004
                                                   =================                =================
                                                   Carrying     Fair                Carrying     Fair
                                                      Value    Value                   Value    Value
(in thousands)                                     --------    -----                --------    -----

U.S. Treasury Bills.........................       $  8,690   $ 8,690               $  8,590   $ 8,586
                                                   ========   =======               ========   =======

Weighted average interest rate..............           2.67%                            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.



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

(in thousands)                                                          June 30,       December 31,
                                                                            2005               2004
Equity Securities Available for Sale:                                   ========       ============

Fair value ......................................................       $  1,761       $      2,112
                                                                        ========       ============
Hypothetical fair value at a 20% increase in market price........       $  2,113       $      2,534
                                                                        ========       ============
Hypothetical fair value at a 20% decrease in market price........       $  1,409       $      1,690
                                                                        ========       ============
</TABLE>

     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 June 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
<PAGE>
     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.

     PART II - OTHER INFORMATION

     Item 1. 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 April  2005,  Judge Smith heard oral
argument  on the  United  States  Department  of  Justice  and the FDIC  motions
requesting  that Judge Smith  certify for  immediate  appeal his ruling that the
Company is entitled to  challenge  the  validity  of the  receivership  deficit.
Because Judge Smith's  ruling on the  receivership  deficit issue is not a final
order,  both Judge Smith and the Court of Appeals for the Federal  Circuit would
have to agree to an appeal of that issue at this time.  Following the April 2005
oral  argument,  Judge  Smith  entered  an  order,  on April 25,  2005,  staying
resolution of the motions to certify an interlocutory appeal pending the holding
of a "show cause"  hearing.  Judge Smith indicated at the oral argument that the
purpose  of the show cause  hearing  was to allow the  Company  to  outline  the
evidence  and  arguments  it was  prepared  to offer in order to  challenge  the
validity and size of the receivership deficit.  Judge Smith directed the parties
to  attempt  to reach  agreement  regarding  a schedule  for the  completion  of
discovery on receivership  deficit issues, and he directed the parties to submit
to the Court such an agreed proposed discovery schedule,  or, if the parties are
unable to reach agreement,  separate proposed schedules for discovery,  in early
May 2005.  Judge Smith further  encouraged the parties to discuss the procedures
and  schedule  for the show  cause  hearing,  and to  provide  the Court  with a
proposed order on such matters.

     In  accordance  with the  Court's  direction,  the  parties  agreed  upon a
schedule for the  completion of fact discovery and procedures for the show cause
proceeding.  In accordance with the parties'  agreement,  Judge Smith entered an
order on May 23, 2005,  providing that fact discovery would be completed  within
45 days of the completion of document production by the Government.  The May 23,
2005 order further  provides that (i) 45 days after the close of discovery,  the
Company is to file a statement of issues  summarizing  the respects in which the
receivership  books allegedly  overstate or misstate the  receivership  deficit;
(ii) 45 days after the filing of the Company's  statement of issues,  the United
States and the FDIC are to file responses; and (iii) 15 days after the filing of
such  responses,  the  Company  is to file a reply.  In the  event  the  Company
determines that it will rely upon expert  testimony  regarding the  receivership
issue,  the May 23, 2005 order provides for a schedule  governing the submission
of expert reports or affidavits by the parties and  depositions of such experts.
Finally,  the May 23, 2005 order schedules a telephonic  status conference to be
held on  September  15,  2005 to  discuss  the status of the case.  Because  the
Government  has not yet completed the  production of documents  requested by the
Company in discovery, it is not yet known when either fact discovery or briefing
on the show  cause  proceeding  will be  completed.  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 is
presently reviewing 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.

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

     At the Company's annual meeting of stockholders on May 20, 2005, a vote was
taken for the  election  of two  Directors  of the  Company to hold office for a
three year term and until their  successors  shall have been duly  elected.  The
aggregate  number of shares of Common  Stock voted in person or by proxy for the
nominees were as follows:
<TABLE>
<CAPTION>
<S>                                          <C>                      <C>

    Nominee                                     For                   Withheld
================                             ==========               =========
Richard A. Bianco                            32,664,939               3,592,106

John B. Costello                             32,667,212               3,489,833
</TABLE>

     There were no broker  non-votes.  The terms of directors Robert E. Long and
Michael L. Quinn continued after the meeting.

     A vote  was  also  taken on the  proposal  to  ratify  the  appointment  of
PricewaterhouseCoopers  LLP as the  independent  accountants for the Company for
the year ending  December 31, 2005.  The  aggregate  numbers of shares of Common
Stock voted in person or by proxy were as follows:
<TABLE>
<CAPTION>
<S>                         <C>                            <C>

    For                      Against                        Abstain
==========                  =========                      =========
34,225,846                   301,440                       1,729,759
</TABLE>

     There were no broker non-votes.

     The  foregoing   proposals  are  described  more  fully  in  the  Company's
definitive proxy statement, filed with the Securities and Exchange Commission on
April 1, 2005  pursuant  to  Section  14(a) of the  Securities  Act of 1934,  as
amended, and the rules and regulations promulgated thereunder.

     Item 6. EXHIBITS

     Exhibit 31.1 Rule 13a-14(a) Certification of Chief Executive Officer

     Exhibit 31.2 Rule 13a-14(a) Certification of Chief Financial Officer

     Exhibit 32.1 Section 1350 Certification of Chief Executive Officer

     Exhibit 32.2 Section 1350 Certification of Chief Financial Officer


<PAGE>


SIGNATURES

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


AMBASE CORPORATION


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


Date:  August 12, 2005