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, 2001


           [  ]  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 06830-6027


             (Address of principal executive offices)     (Zip Code)

                                 (203) 532-2000

                 (Registrant's telephone number, including area code)


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

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


At September 30, 2001, there were 46,208,519 shares of registrant's common
stock, $0.01 par value per share, outstanding, excluding 126,488 treasury
shares.


<PAGE>

AmBase Corporation

Quarterly Report on Form 10-Q
September 30, 2001
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET FOR
PARTS I and II                                                                                                 Page
                                                                                                             ------
<S>          <C>                                                                                                <C>

PART I - FINANCIAL INFORMATION

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

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

Item 3.      Quantitative and Qualitative Disclosures About Market Risk..........................................10

PART II - OTHER INFORMATION

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

Item 2.      Changes in Securities and Use of Proceeds...........................................................12

Item 3.      Defaults Upon Senior Securities.....................................................................12

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

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

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

</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                       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
                                                        2001             2000              2001             2000
                                                        ====             ====              ====             ====

Operating expenses:

Compensation and benefits...................      $      762      $       876       $     2,472      $     2,699
Professional and outside services...........             290              223               681            1,582
Insurance...................................              23               12                51               49
Occupancy...................................              33               23               100               69
Other operating.............................              64               37               142              115
                                                    --------         --------          --------         --------
                                                       1,172            1,171             3,446            4,514
                                                    --------         --------          --------         --------
Operating loss..............................          (1,172)          (1,171)           (3,446)          (4,514)
                                                    --------         --------          --------         --------
Interest income.............................             432              766             1,745            2,024
Reversal of withholding obligation reserve..               -                -            66,388                -
Other income................................              67               50               166            8,408
                                                    --------         --------          --------         --------
Income (loss) before income taxes...........            (673)            (355)           64,853            5,918
Income tax expense..........................             (44)             (44)             (154)            (154)
                                                    --------         --------          --------         --------

Net income (loss)...........................     $      (717)     $      (399)      $    64,699      $     5,764
                                                       =====            =====             =====            =====
Earnings per common share:

Net income (loss)  - basic..................     $     (0.02)     $     (0.01)      $      1.40      $      0.12
Net income (loss)  - assuming dilution......           (0.02)           (0.01)             1.40             0.12
                                                       =====            =====             =====            =====

Average shares outstanding..................          46,209            46,209           46,209           46,202
                                                       =====            =====             =====            =====
</TABLE>

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

<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                                 <C>                <C>

                                                                                  September 30,        December 31
                                                                                           2001               2000
                                                                                    (unaudited)
                                                                                       ========          =========
Assets
Cash and cash equivalents.........................................................   $    1,456         $    4,844
Investment securities - held to maturity (market
   value $45,619 and $46,595, respectively).......................................       45,523             46,547
Investment in SDG, Inc. at cost...................................................        1,250              1,250
Other assets......................................................................        2,856                461
                                                                                       --------           --------

Total assets......................................................................   $   51,085         $   53,102
                                                                                          =====              =====
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities..........................................   $    1,224        $     1,889
Supplemental retirement plan......................................................        6,520              6,033
Postretirement welfare benefits...................................................          966              1,053
Other liabilities.................................................................          101                 90
Litigation and contingency reserves...............................................        1,672              1,746
Withholding obligation reserve....................................................           --             66,388
                                                                                       --------           --------
Total liabilities.................................................................       10,483             77,199
                                                                                       --------           --------
Commitments and contingencies.....................................................           --                 --
                                                                                       --------           --------
Stockholders' equity:
Common stock......................................................................          463                463
Paid-in capital...................................................................      547,940            547,940
Accumulated deficit...............................................................     (507,154)          (571,853)
Treasury stock....................................................................         (647)              (647)
                                                                                       --------           --------
Total stockholders' equity........................................................       40,602            (24,097)
                                                                                       --------           --------

Total liabilities and stockholders' equity........................................   $   51,085         $   53,102
                                                                                         ======             ======

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

<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                         Nine Months Ended September 30
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                                   <C>                 <C>
                                                                                           2001               2000
                                                                                           ====               ====
Cash flows from operating activities:
Net income........................................................................    $  64,699           $  5,764
Adjustments to reconcile net income to net cash provided (used) by operations:
Other assets......................................................................           (8)                38
Accounts payable and accrued liabilities..........................................         (664)              (273)
Reversal of withholding obligation reserve........................................      (66,388)                --
Litigation and contingency reserves uses..........................................          (74)              (353)
Other liabilities.................................................................          411                256
Accretion of discount - investment securities.....................................       (1,702)            (1,981)
Other, net........................................................................           37                 14
                                                                                       --------           --------
Net cash provided (used) by operating activities..................................       (3,689)             3,465
                                                                                       --------           --------
Cash flows from investing activities:
Maturities of investment securities - held to maturity............................       60,295             74,965
Purchases of investment securities - held to maturity.............................      (57,569)           (80,643)
Fixed assets purchase.............................................................       (2,434)                -
Other, net........................................................................            9                 -
                                                                                       --------           --------
Net cash provided (used) by investing activities..................................          301             (5,678)
                                                                                       --------           --------
Cash flows from financing activities:
Stock options exercised...........................................................           --                153
                                                                                       --------           --------
Net cash provided by financing activities.........................................           --                153
                                                                                       --------           --------
Net decrease in cash and cash equivalents.........................................       (3,388)            (2,060)
Cash and cash equivalents at beginning of period..................................        4,844              2,646
                                                                                       --------           --------
Cash and cash equivalents at end of period........................................    $   1,456            $   586
                                                                                          =====              =====
Supplemental cash flow disclosures:
Income taxes paid.................................................................    $     177            $    75
                                                                                          =====              =====
</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
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  generally  accepted  accounting   principles   ("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 Company  continues  to evaluate a number of  possible  acquisitions,  and is
engaged in the management of its remaining assets and liabilities, including the
contingent  and  alleged  liabilities,  as  described  in Part II - Item 1.  The
Company  intends to aggressively  contest all pending and threatened  litigation
and governmental proceedings, as well as pursue all sources for contributions to
settlements.  The unaudited interim financial statements presented herein should
be read in  conjunction  with the Company's  consolidated  financial  statements
filed in its Annual Report on Form 10-K for the year ended December 31, 2000.

The  Company's  main  source of  non-operating  revenue  is  interest  earned on
investment  securities  and cash  equivalents  and  rental  income on the leased
portion of the building owned by the Company.  The Company's  management expects
that operating  cash needs for the remainder of 2001 will be met  principally by
the Company's  current  financial  resources,  and the receipt of  non-operating
revenue  consisting  of  interest  income  on  investment  securities  and  cash
equivalents and rental income.

Note 2 - Legal Proceedings

The Company  has  certain  alleged  liabilities  and is a  defendant  in certain
lawsuits.  The  accompanying  consolidated  financial  statements do not include
adjustments  that might  result  from an ultimate  unfavorable  outcome of these
uncertainties.  Although the basis for the  calculation  of the  litigation  and
contingency  reserves are  regularly  reviewed by the Company's  management  and
outside legal counsel,  the assessment of these reserves includes an exercise of
judgment and is a matter of opinion.  At September 30, 2001,  the litigation and
contingency  reserves were $1,672,000.  For a discussion of alleged  liabilities
and lawsuits, see Part II - Item 1.

In  connection  with the  liquidation  of City  Investing  Company  ("City") the
Company,  among others,  contractually  assumed certain tax liabilities of City,
which, prior to September 1985, owned all the outstanding shares of common stock
of the Company.  Other liabilities were assumed by, among others, City Investing
Company Liquidating Trust (the "Trust").  For all periods through 1992, the only
issue that had remained in dispute with the Internal Revenue Service ("IRS") was
with respect to  withholding  taxes in connection  with a  Netherlands  Antilles
finance  subsidiary of City ("Withholding  Obligation").  In May 2001 the United
States Tax Court ("Tax Court") ruled in favor of City, holding that City was not
liable  for the  payment  of the  withholding  taxes.  The  attorneys  in the NV
Withholding  Obligation  case have  informed  the Company that the IRS had until
September  24, 2001 to file a Notice of Intention to Appeal,  and no such notice
was filed;  therefore,  in accordance with Section 7481 of the Internal  Revenue
Code,  the Tax  Court's  decision  is  final.  See  Part I - Item 2 -  Financial
Condition for further information.

The Company's management, after consultation, with its accounting, tax and legal
advisors reversed its Withholding  Obligation  reserve of $66,388,000 during the
quarter ended June 30, 2001. This decision was based upon (i) an analysis of the
favorable ruling in the Tax Court, (ii) the Company's case pending in the United
States  District  Court for the Southern  District of New York against the Trust
(the "City Trust NY Action")  (for  further  information  see Part II - Item 1 -
Legal  Proceedings,  AmBase  Corporation v. City Investing  Company  Liquidating
Trust et al.  and the  Company's  Annual  Report on Form 10-K for the year ended
December 31, 2000) and (iii) the  $9,500,000,  (plus  interest),  escrow account
which was part of the Company's June 2000 settlement agreement with SF Holdings,
as further  discussed in the  Company's  Annual Report on Form 10-K for the year
ended December 31, 2000.

<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

For a further discussion with regard to the Withholding  Obligation  proceeding,
see  Item 2 -  Financial  Condition  and  Part II - Item 1 - Legal  Proceedings,
Dispute with Internal Revenue Service over Withholding Obligations  (Netherlands
Antilles).

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

Note 3 - Cash and Cash Equivalents

Highly liquid investments, consisting principally of funds held in short-term
money market accounts, are classified as cash equivalents.

Note 4 - 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 - held to maturity at September 30, 2001 and December 31,
2000 consist of the following:
<TABLE>
<CAPTION>
                                      September 30, 2001                                  December 31, 2000
                              =====================================           =====================================
<S>                         <C>             <C>           <C>               <C>             <C>            <C>

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


U.S. Treasury Bills          $  45,523       $  45,523     $  45,619         $  46,547       $ 46,547      $  46,595
                               =======         =======        ======            ======         ======         ======
</TABLE>

The gross  unrealized  gains on investment  securities were $96,000 at September
30, 2001 and $48,000 at December 31, 2000.

Other investment securities consist of convertible preferred and/or common stock
in AMDG, Inc., which were purchased through private  placements,  are classified
as other  assets,  and are  carried at cost  which  approximates  market  value;
$350,000 at September 30, 2001 and December 31, 2000.

<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

Note 5 - 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, unless a greater than 50% probability  exists that the tax benefits will not
actually be realized  sometime in the future.  The Company has  calculated a net
deferred  tax asset of $27 million as of  September  30, 2001 and  December  31,
2000,  arising  primarily  from  net  operating  loss   carryforwards/carrybacks
("NOL"), alternative minimum tax ("AMT") credits and the excess of book over tax
reserves (not  including  the  anticipated  tax effects of NOL's  expected to be
generated  from the  Company's  tax basis in Carteret  Savings  Bank,  F.A.  and
subsidiaries  ("Carteret"),  resulting from the election decision, as more fully
described below). A valuation  allowance has been established for the entire net
deferred tax asset, as management, at the current time, has no basis to conclude
that realization is more likely than not.

As a result of the Office of Thrift Supervision's  December 4, 1992 placement of
Carteret  in  receivership,   under  the  management  of  the  Resolution  Trust
Corporation ("RTC")/Federal Deposit Insurance Corporation ("FDIC"), and 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 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's will be generated  from the Company's  tax basis in  Carteret/Carteret
FSB of which $158  million  are still  available  for future  use.  Based on the
Company's filing of its amended 1992  consolidated  federal income tax return to
include  the  federal  income tax  effects of  Carteret  FSB (the "1992  Amended
Return"),  approximately  $56 million of NOL's are  generated  for tax year 1992
which expire in 2007, with the remaining approximate $102 million of NOL's to be
generated,  based on  Carteret  FSB tax losses,  expiring no earlier  than 2008.
These NOL's would be available to offset future taxable  income,  in addition to
the NOL's as further detailed below.

Based upon the Company's  federal  income tax returns as filed from 1993 to 2000
(subject to IRS audit  adjustments),  and excluding the NOL's generated from the
Company's tax basis in  Carteret/Carteret  FSB, as noted above, at September 30,
2001 the Company has NOL's aggregating  approximately $20 million,  available to
reduce future federal  taxable income which expire if unused  beginning in 2009.
The Company's  federal income tax returns for years  subsequent to 1992 have not
been reviewed by the IRS.

The  utilization of NOL's are subject to limitations  under U.S.  federal income
tax laws. In addition,  the Company has  approximately $21 million of AMT credit
carry forwards ("AMT Credits"), which are not subject to expiration.

The  Company has filed  several  carryback  claims with the IRS (the  "Carryback
Claims"),  seeking refunds from the IRS of alternative minimum and other federal
income taxes paid by the Company in prior years plus  applicable  IRS  interest.
The Carryback  Claims are currently  being  reviewed by the IRS. The Company can
give no assurances  that the Carryback  Claims will be allowed by IRS, the final
amount of the refunds, if any, or when they might be received.

<PAGE>

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

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  which follows,  should be read in conjunction with the consolidated
financial statements and related notes, which are contained in Item 1, herein.

FINANCIAL CONDITION

The Company's  assets at September 30, 2001  aggregated  $51,085,000  consisting
principally of cash and cash equivalents of $1,456,000 and investment securities
of  $45,523,000.  At September 30, 2001,  the Company's  liabilities,  including
reserves for contingent and alleged liabilities,  described in Part II - Item 1,
aggregated $10,483,000. Total stockholders equity was $40,602,000.

In  connection  with the  liquidation  of City  Investing  Company  ("City") the
Company,  among others,  contractually  assumed certain tax liabilities of City,
which, prior to September 1985, owned all the outstanding shares of Common Stock
of the Company.  Other liabilities were assumed by, among others, City Investing
Company Liquidating Trust (the "Trust").  For all periods through 1992, the only
issue that had remained in dispute between City and the Internal Revenue Service
("IRS")  was with  respect  to  withholding  obligations  in  connection  with a
Netherlands  Antilles finance subsidiary of City (the "Withholding  Issue"). The
IRS had contended that the  withholding of tax on interest  payments were due by
City in connection with City's  Netherlands  Antilles finance subsidiary for the
years 1979 through 1985 (the "Withholding  Obligation").  In May 2001 the United
States Tax Court (the "Tax Court")ruled in favor of City,  holding that City was
not  liable  for  the  payment  of  withholding  taxes.  The  attorneys  in  the
Withholding  Obligation  case have  informed  the Company that the IRS had until
September  24, 2001 to file a Notice of Intention to Appeal,  and no such notice
was filed;  therefore,  in accordance with Section 7481 of the Internal  Revenue
Code,  the Tax  Court's  decision  is  final.  See  Part I - Item 2 -  Financial
Condition for further information.

The Company's management, after consultation, with its accounting, tax and legal
advisors reversed its Withholding  Obligation  reserve of $66,388,000 during the
quarter  ended June 30, 2001 which was recorded as other income in the Company's
Consolidated  Statement  of  Operations.  This  decision  was based  upon (i) an
analysis  of the  favorable  ruling in the Tax Court,  (ii) the  Company's  case
pending in the United  States  District  Court for the Southern  District of New
York against the Trust (the "City Trust NY Action") (for further information see
Part II - Item 1 - Legal  Proceedings,  AmBase  Corporation  v.  City  Investing
Company  Liquidating  Trust et al. and the Company's  Annual Report on Form 10-K
for the year ended December 31, 2000) and (iii) the $9,500,000, (plus interest),
escrow  account which was part of the Company's June 2000  settlement  agreement
with SF Holdings,  as further  discussed in the Company's  Annual Report on Form
10-K for the year ended December 31, 2000.

For a further discussion, see Part II - Item 1 - Legal Proceedings, Dispute with
Internal Revenue Service over Withholding Obligations (Netherlands Antilles).

At September 30, 2001, the litigation and contingency reserves were $1,672,000.
For a discussion of alleged liabilities, lawsuits and governmental proceedings,
see Part II - Item 1.

<PAGE>

The Company  has  certain  alleged  liabilities  and is a  defendant  in certain
lawsuits. Based upon an assessment of these proceedings the Company believes the
ultimate  outcome of the proceedings  will not have a material adverse effect on
its financial condition and results of operations. The accompanying consolidated
financial  statements  do not  include  adjustments  that might  result  from an
ultimate unfavorable outcome of these uncertainties.  Although the basis for the
calculation of the litigation and contingency reserves are regularly reviewed by
the Company's  management  and outside legal  counsel,  the  assessment of these
reserves  includes an exercise of  judgment,  and is a matter of opinion.  For a
discussion of alleged liabilities and lawsuits see Part II - Item 1.

For the nine months ended  September 30, 2001,  cash of  $3,689,000  was used by
operations, including the payment of prior year accruals and operating expenses,
partially  offset by the  receipt  of  interest  income.  The cash  needs of the
Company for the first nine months of 2001 were principally satisfied by interest
income received on investment securities and cash equivalents, and the Company's
current  financial  resources.  Management  believes  that  the  Company's  cash
resources are sufficient to continue operations for 2001.

For the nine months ended September 30, 2000, cash of $3,465,000 was provided by
operations,  as a result of amounts  received in  connection  with the Company's
litigation  settlement  with SF  Holdings,  and the receipt of interest  income,
partially offset by the payment of prior year accruals and operating expenses.

The  Company  continues  to evaluate a number of  possible  acquisitions  and is
engaged in the management of its remaining assets and liabilities, including the
contingent and alleged liabilities,  as described above.  Extensive  discussions
and  negotiations  are ongoing  with  respect to certain of these  matters.  The
Company  intends to aggressively  contest all pending and threatened  litigation
and governmental proceedings,  as well as pursue all sources of contributions to
settlements.

In April 2001 the Company through a wholly-owned  subsidiary  purchased a 14,000
square feet office  building in Greenwich,  CT for  approximately  $2.4 million.
Approximately 2,100 square feet is used by the Company for its executive offices
with the remaining  square footage leased to unaffiliated  third parties.  There
are no material  commitments for capital  expenditures as of September 30, 2001.
Inflation  has had no material  impact on the  business  and  operations  of the
Company.

<PAGE>

Results of Operations

Summarized financial information of the Company for the third quarter and nine
months ended September 30 is as follows:
<TABLE>
<CAPTION>
                                                            Third Quarter                       Nine Months
                                                        2001             2000              2001             2000
                                                        ====             ====              ====             ====
Operating expenses:
<S>                                              <C>              <C>               <C>              <C>
Compensation and benefits...................     $       762      $       876       $     2,472      $     2,699
Professional and outside services...........             290              223               681            1,582
Insurance...................................              23               12                51               49
Occupancy...................................              33               23               100               69
Other operating.............................              64               37               142              115
                                                    --------         --------          --------         --------
                                                       1,172            1,171             3,446            4,514
                                                    --------         --------          --------         --------
Operating loss..............................          (1,172)          (1,171)           (3,446)          (4,514)
                                                    --------         --------          --------         --------
Interest income.............................             432              766             1,745            2,024
Reversal of withholding obligation reserve..               -                -            66,388                -
Other income................................              67               50               166            8,408
                                                    --------         --------          --------         --------
Income (loss) before income taxes...........            (673)            (355)           64,853            5,918
Income tax expense..........................             (44)             (44)             (154)            (154)
                                                    --------         --------          --------         --------
Net income (loss) ..........................     $      (717)     $      (399)      $    64,699      $     5,764
                                                       =====            =====             =====            =====
</TABLE>

The Company's main source of non-operating  revenue is interest income earned on
investment  securities and cash equivalents.  The Company's  management  expects
that operating  cash needs for the remainder of 2001 will be met  principally by
the  Company's  current  financial  resources  and the receipt of  non-operating
revenue  consisting of interest income earned on investment  securities and cash
equivalents.

The  Company  recorded a net loss of  $717,000  or $0.02 per share for the third
quarter ended  September 30, 2001. For the nine month period ended September 30,
2001 the Company recorded net income of $64,699,000 or $1.40 per share. The nine
month  period  ended  September  30, 2001  includes  non-recurring  other income
representing  the  reversal  of the  Withholding  Obligation  reserve as further
discussed in Financial Condition, above. Excluding this other income the Company
would  have  reported  a net  loss of  $1,689,000,  for the  nine  months  ended
September 30, 2001.

The  Company  recorded a net loss of  $399,000  or $0.01 per share for the third
quarter ended  September 30, 2000. For the nine months ended  September 30, 2000
the Company recorded net income of $5,764,000 or $0.12 per share. The nine month
period ended September 30, 2000 includes $8,250,000 of other income representing
net proceeds  received in connection  with the Company's  litigation  settlement
with SF Holdings.  Excluding this other income the Company would have reported a
net loss of $2,486,000 for the nine months ended September 30, 2000.

Compensation  and benefits  decreased to $762,000  and  $2,472,000  in the third
quarter and nine months ended  September 30, 2001,  respectively,  compared with
$876,000 and  $2,699,000  in the  respective  2000  periods.  The  decreases are
primarily due to a decrease in employment  levels and a related  decrease in the
accrual for 2001 incentive compensation, which is not guaranteed, as compared to
prior year accruals.

Professional  and outside  services  expenses were $290,000 in the third quarter
ended  September 30, 2001,  and $681,000 in the nine months ended  September 30,
2001,  compared to $223,000 and $1,582,000 in the respective  2000 periods.  The
decreased  amounts for the nine month period in 2001 compared with the year 2000
period is due to a decrease in Supervisory  Goodwill  litigation  expenses which
were incurred in the year 2000 periods.

<PAGE>

Occupancy  expenses  increased to $33,000 and $100,000 in the third  quarter and
nine months ended  September  30, 2001,  respectively  compared with $23,000 and
$69,000 in the respective  2000 periods  principally  due to the costs of office
relocation and costs relating to building ownership. Occupancy expenses have not
been reduced by tenant  reimbursements  or rental  income which is included with
other income in the Consolidated Statement of Operations.

Interest  income in the third  quarter and nine months ended  September 30, 2001
decreased to $432,000 and $1,745,000 respectively,  from $766,000 and $2,024,000
in the respective 2000 periods.  The decreases were  attributable to a decreased
yield on investments held in 2001 compared with 2000.

Other income of $67,000 and $166,000 for the third quarter and nine months ended
September 30, 2001 respectively,  is attributable to rental income earned by the
Company during the period of building ownership and the continued  collection of
a receivable previously considered uncollectible.  Other income of $8,408,000 in
the  nine  months  ended   September  30,  2000,   respectively  is  principally
attributable  to $8,250,000 of net proceeds  received in June 2000,  relating to
the SF Holdings  litigation  settlement  as noted above.  The  additional  other
income in the 2000 periods is due to the  continued  collection  of a receivable
previously considered uncollectible.

As further  discussed in Financial  Condition  above the nine month period ended
September  30,  2001  includes  a  $66,388,000  Withholding  Obligation  reserve
reversal  which is reflected as other  income in the  Consolidated  Statement of
Operations.

The income tax  provisions of $44,000 and $154,000 in the third quarter and nine
months  ended  September  30, 2001 and  September  30, 2000,  respectively,  are
primarily attributable to provisions for state taxes. 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.

<PAGE>

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company holds short-term investments as a source of liquidity. The Company's
interest rate sensitive  investments at September 30, 2001 and December 31, 2000
with maturity dates of less than one year consist of the following:
<TABLE>
<CAPTION>

                                                              2001                          2000
                                                   ==========================      ======================
                                                   Carrying            Fair        Carrying          Fair
                                                     Value            Value        Value            Value
(in thousands)                                     ----------        -------       --------        ------
<S>                                                <C>              <C>            <C>           <C>


U.S. Treasury Bills.........................       $ 45,523         $ 45,619       $ 46,547      $ 46,595
                                                   ========          =======        =======       =======

Weighted average interest rate..............          3.40%                           5.80%
                                                    =======                          ======
</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.

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

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.

<PAGE>

Part II - OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

The information  contained in Item 8 - Note 11 in AmBase's Annual Report on Form
10-K for the year ended December 31, 2000 and in AmBase's  Quarterly  Reports on
Form 10-Q for the quarterly  periods ending March 31, 2001 and June 30, 2001 are
incorporated by reference  herein and the defined terms set forth below have the
same  meaning  ascribed  to them in those  reports.  There have been no material
developments in such legal proceedings, except as set forth below.

(a)  The  Company  is or  has  been a  defendant  in a  number  of  lawsuits  or
proceedings.

Marshall Manley v. AmBase  Corporation.  The Court has fixed November 5, 2001 as
the date for the new  trial.  Manley  seeks  reimbursement  of  certain  alleged
payments he made to the Trustee in the bankruptcy proceedings of the law firm of
Finley, Kumble, Wagner, Heine,  Underberg,  Manley & Casey of approximately $2.4
million plus interest  arguing that he served at such firm at the request of the
Company.

Dispute with Internal Revenue Service over Withholding Obligations  (Netherlands
Antilles).

On May 24, 2001 the Tax Court ruled in favor of City,  holding  that City is not
liable for the payment of withholding  taxes on interest  payments in connection
with City's  Netherlands  Antilles finance subsidiary for the years 1979 through
1985.

The attorneys in the NV  Withholding  Obligation  Case have informed the Company
that the IRS had  until  September  24,  2001 to file a Notice of  Intention  to
Appeal, and no such notice was filed; therefore, in accordance with Section 7481
of the Internal Revenue Code, the Tax Court's decision is final.

The  actions  described  above are in various  stages.  Although  the  Company's
management believes it is unlikely,  if the aggregate of any such judgments were
to exceed the resources  available,  these matters could have a material adverse
effect on the Company's  financial  condition and results of operations.  Due to
the nature of these  proceedings,  the  Company  and its  counsel  are unable to
express any opinion as to their probable outcome.

(b)    Other

AmBase  Corporation v. City Investing  Company  Liquidating  Trust, et al. - New
York Court Action.  On October 26, 2001, a pre-trial  conference was held before
Judge  Stanton,  during which he authorized  the Company to supplement its prior
opposition to the pending motion to dismiss.  Those  supplemental  memoranda and
affidavits  are to be filed no later than  November  26, 2001.  Thereafter,  the
Trust shall have an  opportunity to reply.  No assurance can be given  regarding
the ultimate outcome of this litigation.

Item 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS

Does not apply.

Item 3.       DEFAULTS UPON SENIOR SECURITIES

Does not apply.

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

Does not apply.

Item 5.       OTHER INFORMATION

Does not apply.

Item 6.       EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

      None

(b)   Form 8-K

         Registrant filed one Current Report on Form 8-K prior on the filing of
         this Form 10-Q for the quarter ended September 30, 2001 as follows:

                Date                           Event Reported
              August 27, 2001        Correction to Internal Revenue Service
                                     Notice of Intention to Appeal Date
<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



By    JOHN P. FERRARA
      Vice President, Chief Financial Officer and Controller
      (Principal Financial and
      Accounting Officer)

Date:  November 14, 2001