<PAGE>



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

                                    FORM 10-K

                FOR ANNUAL AND TRANSITION REPORTS PURSUANT
        TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the fiscal year ended December 31, 2004
                              OR
|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ________ to ________


                         Commission file number 1-07265

                               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, CT 06830-6027
                    (Address of principal executive offices)

              Registrant's telephone number, including area code:
                                   (203) 532-2000

             Securities registered pursuant to Section 12(g) of the Act:

                               Title of each class

                         Common Stock ($0.01 par value)

                         Rights to Purchase Common Stock

     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 if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. X

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2).
Yes_____ No X

     At February 28, 2005, there were 46,233,519  shares of registrant's  Common
Stock  outstanding.  At June 30, 2004 the aggregate market value of registrant's
voting securities  (consisting of its Common Stock) held by nonaffiliates of the
registrant, based on the average bid and asking price on such date of the Common
Stock of $0.61 per share,  was  approximately  $22  million.  The  Common  Stock
constitutes registrant's only outstanding class of security.

     Portions of the registrant's definitive Proxy Statement for its 2005 Annual
Meeting of Stockholders,  which Proxy Statement  registrant intends to file with
the Securities  and Exchange  Commission not later than 120 days after the close
of its  fiscal  year,  is  incorporated  by  reference  with  respect to certain
information contained therein, in Part III of this Annual Report.

     The Exhibit Index is located in Part IV, Item 15, Page 35


<PAGE>


     AmBase Corporation

     Annual Report on Form 10-K December 31, 2004
<TABLE>
<CAPTION>

TABLE OF CONTENTS                                                                                              Page
----------------------------------------------                                                               ------
<S>           <C>                                                                                            <C>

PART I

Item 1.       Business............................................................................................1

Item 2.       Properties..........................................................................................2

Item 3.       Legal Proceedings...................................................................................2

Item 4.       Submission of Matters to a Vote of Security Holders.................................................2

              Executive Officers of the Registrant................................................................2

PART II

Item 5.       Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
                Equity Securities.................................................................................3

Item 6.       Selected Financial Data.............................................................................3

Item 7.       Management's Discussion and Analysis of Financial Condition and Results of Operations...............4

Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.........................................10

Item 8.       Financial Statements and Supplementary Data........................................................11

Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............33

Item 9A.      Controls and Procedures............................................................................33

Item 9B.      Other Information..................................................................................33

PART III

Item 10.      Directors and Executive Officers of the Registrant.................................................33

Item 11.      Executive Compensation.............................................................................33

Item 12.      Security Ownership of Certain Beneficial Owners & Management.......................................34

Item 13.      Certain Relationships and Related Transactions.....................................................34

Item 14.      Principal Accountant Fees and Services.............................................................34

PART IV

Item 15.      Exhibits and Financial Statement Schedules.........................................................35


</TABLE>
<PAGE>
     PART I

     ITEM 1. BUSINESS

     AmBase  Corporation  (the "Company" or "AmBase") is a Delaware  corporation
that was incorporated in 1975 by City Investing  Company  ("City").  AmBase is a
holding  company that,  through a wholly owned  subsidiary,  owns two commercial
office buildings in Greenwich,  Connecticut that are managed and operated by the
Company.  One building is approximately  14,500 square feet and is substantially
leased to  unaffiliated  third  parties  with  approximately  3,500  square feet
utilized  by the  Company  for its  executive  offices.  The other  building  is
approximately 38,000 square feet and is leased to unaffiliated third parties.

     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  received from real estate owned.
The Company also earns non-operating revenue principally  consisting of interest
income  earned  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 8 -  Notes 9 and 10 to the  Company's  consolidated
financial statements. The Company intends to aggressively contest all litigation
and  contingencies,   as  well  as  pursue  all  sources  for  contributions  to
settlements. The Company had 5 employees at December 31, 2004.

     Background

     City  originally  incorporated  AmBase as the holding  company for The Home
Insurance Company,  and its affiliated property and casualty insurance companies
("The  Home").  In 1985,  City,  which owned all the  outstanding  shares of the
Common Stock of the Company,  distributed the Company's  shares to City's common
stockholders. The Home was sold in February 1991.

     In August 1988, the Company acquired Carteret Bancorp Inc. Carteret Bancorp
Inc.,  through its principal wholly owned subsidiary,  Carteret Savings Bank, FA
("Carteret"),  was  principally  engaged in retail  and  consumer  banking,  and
mortgage banking including mortgage  servicing.  On December 4, 1992, the Office
of  Thrift  Supervision  ("OTS")  placed  Carteret  in  receivership  under  the
management of the Resolution  Trust  Corporation  ("RTC") and a new institution,
Carteret  Federal Savings Bank, was established to assume the assets and certain
liabilities  of Carteret.  Following  the seizure of  Carteret,  the Company was
deregistered as a savings and loan holding company by the OTS,  although the OTS
retains jurisdiction for any regulatory violations prior to deregistration.  See
Part II - Item 8 - Note 10 to the Company's  consolidated  financial  statements
for a discussion of Supervisory Goodwill litigation relating to Carteret.

     In December  1997, the Company  formed a new wholly owned  subsidiary,  SDG
Financial Corp. ("SDG Financial"),  to pursue merchant banking  activities.  SDG
Financial  purchased an equity interest in SDG, Inc. ("SDG") and was granted the
exclusive right to act as the investment  banking/financial advisor to SDG, Inc.
and  all  of  its  subsidiaries  and  affiliates.  The  Company  also  purchased
convertible  preferred and common stock in AMDG, Inc. ("AMDG"), a majority owned
subsidiary of SDG. SDG and AMDG are development stage pharmaceutical  companies.
In 2002 the Company  recorded a write down of its  investments  in SDG and AMDG,
see Part II - Item 7 - Results of Operations, for further information.

     STOCKHOLDER INQUIRIES

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

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



<PAGE>


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

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

     In addition,  the Company's public reports,  including Quarterly Reports on
Form 10-Q,  Annual  Reports on Form 10-K and Proxy  Statements,  can be obtained
through the Securities and Exchange  Commission  ("SEC") EDGAR Database over the
World Wide Web 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.

     ITEM 2. PROPERTIES

     The Company owns two commercial office buildings in Greenwich, Connecticut.
One building is approximately  14,500 square feet and is substantially leased to
unaffiliated third parties with approximately  3,500 square feet utilized by the
Company for its executive offices.  The second building is approximately  38,000
square feet and is leased to unaffiliated third parties.

     ITEM 3. LEGAL PROCEEDINGS

     For  a  discussion  of  the  Company's  legal  proceedings,  including  the
Company's Supervisory Goodwill litigation, see Part II - Item 8 - Note 10 to the
Company's consolidated financial statements.

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

     None.

     Executive Officers of the Registrant

     Each  executive  officer  is  elected  to  serve in the  executive  officer
capacity set forth opposite his respective name until the next Annual Meeting of
Stockholders.  The Company is not aware of any family relationships  between any
of the executive officers or directors of the Company.

     Set forth below is a list of executive  officers of the Company at December
31, 2004:
<TABLE>
<CAPTION>
<S>                                     <C>                            <C>
Name                                    Age                            Title
====                                    ===                            ==========
Richard A. Bianco                        57                            Chairman, President and
                                                                       Chief Executive Officer


John P. Ferrara                          43                            Vice President, Chief Financial Officer
                                                                       and Controller
</TABLE>

     Mr. Bianco was elected a director of the Company in January  1991,  and has
served as President and Chief  Executive  Officer of the Company since May 1991.
On January 26, 1993,  Mr. Bianco was elected  Chairman of the Board of Directors
of the Company. He served as Chairman,  President and Chief Executive Officer of
Carteret, then a subsidiary of the Company, from May 1991 to December 1992.

     Mr. Ferrara was elected to the position of Vice President,  Chief Financial
Officer and Controller of the Company in December 1995, having previously served
as Acting Chief  Financial  Officer,  Treasurer and Assistant Vice President and
Controller  since January 1995; as Assistant Vice President and Controller  from
January  1992 to  January  1995;  and as  Manager of  Financial  Reporting  from
December 1988 to January 1992.


<PAGE>


     PART II

     ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES

     The Common Stock of the Company  trades  through one or more market makers,
with  quotations  made available in the "pink sheets"  published by the National
Quotation Bureau, Inc. ("Pink Sheets"),  under the symbol ABCP. The sales prices
per share for the  Company's  Common Stock  represent  the range of the reported
high and low bid  quotations as indicated in the Pink Sheets or as  communicated
orally to the Company by market makers.  Such prices reflect interdealer prices,
without  retail  mark-up,  markdown  or  commission,  and  may  not  necessarily
represent actual transactions.
<TABLE>
<CAPTION>
<S>                                            <C>                                        <C>

                                                       2004                                        2003
                                               ======================                     =======================
                                               High               Low                     High                Low
                                               ====               ===                     ====                ===
First Quarter.......................       $    0.83          $   0.62                 $    0.90          $   0.70
Second Quarter......................            0.80              0.60                      0.90              0.71
Third Quarter.......................            0.99              0.55                      1.11              0.68
Fourth Quarter......................            1.00              0.77                      0.85              0.64
</TABLE>

     As of February 28, 2005, there were approximately  15,000 beneficial owners
of the  Company's  Common  Stock.  No  dividends  were  declared  or paid on the
Company's  Common Stock in 2004 or 2003.  The Company does not intend to declare
or pay dividends in the foreseeable future.

     For information concerning the Company's stockholder rights plan and common
stock  repurchase  plan,  see  Part  II -  Item  8 -  Note  5 to  the  Company's
consolidated financial statements.


     ITEM 6. SELECTED FINANCIAL DATA

     The  selected  financial  data  should  be read  in  conjunction  with  the
Company's consolidated financial statements included in Part II - Item 8 of this
Form 10-K.
<TABLE>
<CAPTION>

                                               Years ended December 31
                                          ==================================
<S>                                     <C>    <C>    <C>      <C>      <C>

(in thousands, except per  share  data)
                                        2004   2003   2002(a)  2001(b)   2000
                                        ====   ====   ======   =======   ====
Operating  revenue....................$2,229  $2,578  $  477   $  179    $  -
Interest income.......................   505     334     705    2,099    2,795
Net income (loss).....................(3,351) (3,559) (5,133)  62,110    5,174
                                      ======  =======  ======  ======    =====
Net income(loss)per common share
Basic.................................$(0.07) $(0.08) $(0.11)  $ 1.34    $0.11
Assuming dilution..................... (0.07)  (0.08)  (0.11)    1.34     0.11
                                       ======  ======  ======  ======    =====
Dividends  ...........................     -       -       -        -        -
                                       ======  ======  ======  ======    ======
Total assets.........................$40,860  $41,668 $43,656 $50,445   $53,102
Total stockholders' equity  (deficit) 25,574   29,367  32,902  38,013   (24,097)
                                      ======   ======  ======  ======    ======
</TABLE>

     (a) Net loss in 2002  includes a $1,600,000  charge to reflect a write down
of the Company's  investments in SDG and AMDG. See Part II - Item 7 - Results of
Operations, for further information.

     (b) Net  income  in 2001  includes  a  $66,388,000  withholding  obligation
reserve  reversal  which  was  reflected  as other  income  in the  Consolidated
Statement of Operations.


<PAGE>


     ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  should  be read  in  conjunction  with  the  consolidated  financial
statements and related notes, which are contained in Part II - Item 8, herein.

     Financial Condition and Liquidity

     The  Company's  assets  at  December  31,  2004,  aggregated   $40,860,000,
consisting  principally of cash and cash equivalents of $10,124,000,  investment
securities of $10,702,000 and real estate owned of $19,001,000.  At December 31,
2004,  the Company's  liabilities  aggregated  $15,286,000.  Total  stockholders
equity was $25,574,000.

     The  liability  for the  supplemental  retirement  plan (the"  Supplemental
Plan"),  which is accrued but not funded,  increased to  $11,594,000 at December
31, 2004 from $9,292,000 at December 31, 2003. The  Supplemental  Plan liability
reflects the  actuarially  determined  Accrued  Pension Costs in accordance with
accounting  principles  generally  accepted  in the  United  States  of  America
("GAAP"). The increased liability is the result of an additional year of accrued
service,  interest  cost on the  liability,  and the  recognition  of a  minimum
pension  liability  adjustment  as a result of the use 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.

     The  Company  expects  to pay  approximately  $1.8  million  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  expects  to pay  this
outstanding balance shortly.  The Company had previously accrued $1.3 million of
the costs which were reflected in other  liabilities  in prior period  financial
statements;  an  additional  $0.5 million was recorded as an expense in December
2004.  The Company is currently  exploring all legal options to seek recovery of
this amount the Company paid, plus other related costs.

     For the year  ended  December  31,  2004,  cash of  $1,896,000  was used by
operations, including the payment of operating expenses and prior year accruals,
partially offset by the receipt of rental income, interest income and investment
earnings.  The cash needs of the Company for 2004 were principally  satisfied by
rental income and investment earnings received on investment securities and cash
equivalents  and  to  a  lesser  extent,  the  Company's  financial   resources.
Management believes that the Company's cash resources are sufficient to continue
operations for 2005.

     For the year  ended  December  31,  2003,  cash of  $2,158,000  was used by
operations, including the payment of operating expenses and prior year accruals,
partially offset by the receipt of rental income, interest income and investment
earnings.  The cash needs of the Company for 2003 were principally  satisfied by
rental income and interest  income  received on investment  securities  and cash
equivalents and to a lesser extent, the Company's financial resources.

     For the year  ended  December  31,  2002,  cash of  $5,936,000  was used by
operations, including the payment of operating expenses and prior year accruals,
partially  offset by the  receipt  of  interest  income.  The cash  needs of the
Company  for 2002 were  principally  satisfied  by interest  income  received on
investment  securities and cash equivalents,  the Company's  financial resources
and rental income.

     Real estate owned consists of two commercial office buildings in Greenwich,
Connecticut  which the Company owns and manages.  One building is  approximately
14,500 square feet, is substantially  leased to unaffiliated  third parties with
approximately  3,500  square feet  utilized  by the  Company  for its  executive
offices. The other building is approximately 38,000 square feet and is leased to
unaffiliated third parties.



<PAGE>


     The  Company  did not  repurchase  any shares of common  stock  during 2004
pursuant to its common stock repurchase  plan. There are no additional  material
commitments for capital  expenditures as of December 31, 2004. Inflation has had
no material impact on the business and operations of the Company.

     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  a
discussion of the Supervisory Goodwill  litigation,  see Part II - Item 8 - Note
10 to the Company's consolidated financial statements.

     Results of Operations

     Summarized financial  information for the operations of the Company for the
years ended December 31 is as follows:

<TABLE>
<CAPTION>
<S>                                                                        <C>              <C>               <C>
(in thousands)                                                              2004             2003              2002
                                                                           =====            =====             =====
Revenues:
Rental income.................................................         $   2,229        $   2,578         $     477
                                                                        --------         --------          --------
Operating expenses:
Compensation and benefits.....................................             4,150            3,852             3,515
Professional and outside services.............................             1,469            1,476             1,641
Property operating & maintenance..............................               459              491               130
Depreciation .................................................               330              329                74
Insurance.....................................................               107              100                73
Other operating...............................................               197              188               161
                                                                        --------         --------          --------
                                                                           6,712            6,436             5,594
                                                                        --------         --------          --------
Operating loss................................................            (4,483)          (3,858)           (5,117)
                                                                        --------         --------          --------
Interest income...............................................               505              334               705
Realized gains on sales of investment securities
    available for sale .......................................               747               64                 -
Other income..................................................                 -               26               215
Other income - termination of postretirement welfare plans....                 -                -               788
Write down of investments.....................................                 -                -            (1,600)
                                                                        --------         --------          --------
Loss before income taxes......................................            (3,231)          (3,434)           (5,009)
Income tax expense............................................              (120)            (125)             (124)
                                                                        --------         --------          --------
Net loss......................................................          $ (3,351)        $ (3,559)        $  (5,133)
                                                                        ========         ========          =========
</TABLE>

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

     For the year ended  December 31, 2004,  the Company  recorded a net loss of
$3,351,000 or $0.07 per share.

     For the year ended  December 31, 2003,  the Company  recorded a net loss of
$3,559,000 or $0.08 per share.



<PAGE>


     The Company  recorded a net loss of $5,133,000 or $0.11 per share,  for the
year ended December 31, 2002. As further  described below,  2002 results include
non-recurring   other  income  of  $788,000   representing  the  termination  of
postretirement  benefit plans and $215,000 of additional other income.  The year
ended  December 31, 2002 also includes a charge of $1,600,000 to reflect a write
down of the Company's investments in SDG and AMDG, as further described below.

     Rental income was  $2,229,000  in 2004 compared to $2,578,000 in 2003,  and
$477,000  in 2002.  The  decreased  amount of  $2,229,000  in 2004,  compared to
$2,578,000 in 2003, is principally  the result of a decrease in deferred  rental
income in 2004  compared to 2003  relating to rental  revenues  recognized  on a
straight  line  basis  over  the life of a lease  versus  actual  rental  income
received and office vacancies during a portion of 2004. The increased amounts of
$2,578,000  in 2003,  compared to  $477,000  in 2002,  is the result of the 2002
period  only  reflected  one months  rental  income for the 38,000  square  foot
commercial office building purchased in December 2002.

     Compensation and benefits were $4,150,000 in 2004,  $3,852,000 in 2003, and
$3,515,000 in 2002. The increased amount in 2004 compared to 2003 is principally
due to an increase in  supplemental  retirement plan accruals and an increase in
the  salary  and  benefits  costs.  The  increase  in 2003  compared  to 2002 is
primarily due to an increase in supplemental retirement plan accruals.

     Professional and outside services  decreased slightly to $1,469,000 in 2004
from  $1,476,000  in 2003.  The 2004 period  includes an  additional  accrual of
approximately  $0.5  million of fees  relating  to the costs  associated  with a
withholding  obligation  issue with the IRS as further  discussed  in  Financial
Condition and Liquidity, herein. Excluding this additional expense, professional
and outside services would have decreased by $503,000 for the year 2004 compared
with the year  2003  primarily  due to an  overall  decrease  in legal  expenses
incurred  during 2004 as a result of a lower level of legal fees relating to the
Supervisory  Goodwill  litigation and the resolution of legal  proceedings which
were  pending  during  2003.  In 2003,  legal  fees  decreased  by  $165,000  to
$1,476,000,  from  $1,641,000 in 2002 as a result of legal fees incurred in 2002
relating to the Zurich arbitration  proceedings which were not incurred in 2003,
partially  offset by increased legal fees incurred for the Supervisory  Goodwill
litigation as a result of a court decision and  subsequent  court filings during
2003.

     Property operating and maintenance expenses were $459,000 in 2004, $491,000
in 2003, and $130,000 in 2002.  The slight  decrease in 2004 compared to 2003 is
due to decreased  utilities,  security and other maintenance costs. The 2004 and
2003 period includes expenses relating to both of the Company's owned commercial
office buildings for a full year. The 2002 period includes  expenses relating to
a 14,500 square foot building for a full year, plus expenses for a 38,000 square
foot  building  for  December  2002 only.  Property  operating  and  maintenance
expenses have not been reduced by tenant reimbursements.

     Interest  income was  $505,000 in 2004,  $334,000 in 2003,  and $705,000 in
2002.  The  increase in 2004  compared to 2003 is  principally  due to increased
investment  return from higher  yielding  investments  classified as investments
available  for sale.  The  decrease  in 2003  compared to the 2002  period,  was
primarily attributable to a lower average level of investment securities held as
a result of the building  purchased in December 2002, and to a lesser extent,  a
lower yield on cash  equivalents  and investment  securities.  Interest rates on
investments in treasury bills decreased  throughout 2003 compared to 2002. These
decreases were partially  offset by interest  income received on higher yielding
investment  securities  available  for  sale.  During  2003  interest  rates  on
investments  in  treasury  bills  ranged  from  approximately  1.4% down to 0.9%
compared to approximately 1.9% down to 1.2% in 2002.

     During 2004, realized gains on sales of investment securities available for
sale were $747,000  compared to $64,000  during 2003. The increase is the result
of a higher level of investment securities available for sale and realization of
gains on sales due to market appreciation.

     In the year ended  December  31, 2003,  other  income  represents a federal
income tax refund for the tax year 1996.  Other  income of  $215,000  in 2002 is
principally  attributable to the collection on an investment  previously written
off.

     In 2002,  additional  other  income of  $788,000  is the result of the full
termination of the retiree  medical and life insurance  plans in accordance with
generally accepted  accounting  principles.  The Company has no future liability
for  any of  these  medical  or  life  insurance  plans.  The  Company  and  its
subsidiaries  do  not  provide   postretirement   welfare  benefits  to  current
employees.


<PAGE>


     Write down of investments in 2002 reflects the Company's  write down of its
investments  in SDG and  AMDG of  $1,250,000  and  $350,000,  respectively.  The
Company  recorded  the write down in  September  2002,  in  connection  with the
ongoing  evaluation of its investments,  and the determination that the value of
its investments in SDG and AMDG had been other than temporarily impaired.  Under
GAAP,  if an  investment  is other than  temporarily  impaired,  the  Company is
required to reflect an adjustment in its Financial Statements.

     Factors   considered  in  the  Company's   decision  to  write  down  these
investments  included,  in part, the general inactive status of SDG's and AMDG's
clinical testing, as well as SDG's and AMDG's current financial  condition.  The
Company  is not  selling  or  disposing  of its  investments  in SDG or AMDG and
remains  hopeful that it will be able to fully realize its investment  value. In
September  2000,  the Company  filed a lawsuit  against  SDG, and certain of its
officers and directors, to pursue claims against the parties,  including but not
limited to SDG's failure to honor a contract which granted the Company the right
to act as the exclusive investment  banking/financial advisor to SDG, and all of
its subsidiaries and affiliates.  See Part II - Item 8, Note 10 to the Company's
consolidated  financial  statements,  for further information.  The Company will
continue to monitor the status of its SDG and AMDG  investments  and  vigorously
pursue recovery of its legal claims. However, there can be no assurance that the
Company  will be able to  recover  all or any  part of its  investment  in these
companies or that its legal actions will be successful.

     The 2004,  2003, and 2002 income tax  provisions of $120,000,  $125,000 and
$124,000, respectively, are principally attributable to state and local taxes.

     A  reconciliation  between income taxes  computed at the statutory  federal
rate and the provision for income taxes is included in Part II - Item 8 - Note 9
to the Company's consolidated financial statements.

     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,  or make oral
statements that constitute  forward-looking  statements.  These  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,  and similar matters.  The
Private  Securities  Litigation  Reform Act of 1995  provides a safe  harbor for
forward-looking  statements.  In order  to  comply  with  the  terms of the safe
harbor,  the Company  cautions readers that a variety of factors could cause the
Company's  actual results to differ  materially from the anticipated  results or
other expectations expressed in the Company's forward-looking statements.  These
risks  and  uncertainties,  many of which  are  beyond  the  Company's  control,
include,  but are not  limited  to:  (i)  transaction  volume in the  securities
markets,  (ii) the volatility of the securities  markets,  (iii) fluctuations in
interest  rates,  (iv) changes in  occupancy  rates or real estate  values,  (v)
changes  in  regulatory  requirements  which  could  affect  the  cost of  doing
business,  (vi)  general  economic  conditions,  (vii)  changes  in the  rate of
inflation and the related  impact on the securities  markets,  (viii) changes in
federal and state tax laws, and (ix) risks arising from unfavorable decisions in
the Company's 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.

     Tabular Disclosure of Contractual Obligations
<TABLE>
<CAPTION>
                                                               Payment Due By Period
                                            ======================================================
<S>                                         <C>              <C>          <C>            <C>              <C>
(in thousand)
                                                             Less Than    One to Three   Three to Five    More than
                                                 Total        One Year        Years          Years        Five Years
                                                -------     -----------   -------------  --------------   ----------

Operating leases................................$   26        $      9    $         17   $           -    $        -
                                                -------       --------    ------------   -------------    ----------

Total obligations.............................. $   26        $      9    $         17   $           -    $        -
                                                =======       ========    ============   =============    ==========
</TABLE>



<PAGE>


     Application of Critical Accounting Policies

     Our  consolidated  financial  statements  are  based on the  selection  and
application of accounting  principles generally accepted in the United States of
America,  which require us to make estimates and assumptions about future events
that  affect  the  amounts   reported  in  our  financial   statements  and  the
accompanying  notes.  Future events and their effects cannot be determined  with
absolute  certainty.  The  determination  of estimates  requires the exercise of
judgment.  Actual  results  could  differ  from  those  estimates,  and any such
differences  may be material to the  financial  statements.  We believe that the
following accounting policies, which are important to our financial position and
results of  operations,  require a higher  degree of judgment and  complexity in
their  application  and represent the critical  accounting  policies used in the
preparation of our financial statements.  If different assumptions or conditions
were to prevail,  the results  could be materially  different  from our reported
results. For a summary of all our accounting policies,  including the accounting
policies discussed below, see Part II - Item 8 - Note 2.

     Supplemental   Retirement  Plan:  Our  supplemental  retirement  plan  (the
"Supplemental  Plan")  accrued  liability and benefit  costs are developed  from
actuarial valuations. Inherent in these valuations are key assumptions including
discount rates, and projected  future  earnings,  which are updated on an annual
basis at the beginning of each year. We are required to consider  current market
conditions,  including  changes in interest rates, in making these  assumptions.
Material changes in our accrued Supplemental Plan liability and annual costs may
occur in the future due to changes in assumptions  or experience  different than
that  assumed.  The  Supplemental  Plan  liability  is not  funded and is net of
unrecognized losses of $2,200,000.

     The key assumptions used in developing the 2004  Supplemental  Plan benefit
costs and accrued  liability were a 5.75%  discount  rate, a "GAM-94"  mortality
table,  a  6.0%  rate  of  compensation   increase,   and  the  amortization  of
unrecognized  losses over the average  remaining  lives of active  participants.
These  assumptions were consistent with prior year  assumptions  except that the
discount  rate was  reduced  by  one-half  of a percent  due to  current  market
conditions and an updated mortality table was utilized.

     Legal  Proceedings:  From time to time the Company and its subsidiaries may
be  named as a  defendant  in  various  lawsuits  or  proceedings.  The  Company
presently is not aware of any pending or threatened  litigation which could have
a material adverse effect on the  consolidated  financial  statements  presented
herein.  Management  of the Company in  consultation  with outside legal counsel
continually  reviews the likelihood of liability and associated costs of pending
and  threatened  litigation  including  the  basis  for the  calculation  of any
litigation  reserves.  The assessment of these reserves  includes an exercise of
judgment and is a matter of opinion. The Company intends to aggressively contest
all threatened  litigation and contingencies,  as well as pursue all sources for
contributions to settlements.  For a discussion of lawsuits and proceedings, see
Part II - Item 8 - Note 10.

     Income Tax Audits: The Company's federal, state and local tax returns, from
time to time,  may be  audited by the tax  authorities,  which  could  result in
proposed assessments or a change in the net operating loss ("NOL") carryforwards
currently  available.  The  Company's  federal  income tax returns for the years
subsequent to 1992 have not been reviewed by the Internal Revenue  Service.  The
accrued amounts for income taxes reflects  management's  best judgment as to the
amounts payable for all open tax years.

     Deferred Tax Assets:  As of December 31, 2004, the Company had deferred tax
assets arising  primarily from net operating loss  carryforwards and alternative
minimum tax credits  available to offset  taxable  income in future  periods.  A
valuation  allowance has been  established for the entire net deferred tax asset
of $34 million,  as  management,  at the current time,  has no basis to conclude
that realization is more likely than not. The valuation allowance was calculated
in  accordance  with the  provisions  of Financial  Accounting  Standards  Board
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes" ("SFAS 109"), which places primary  importance on a company's  cumulative
operating  results for the current and preceding  years. We intend to maintain a
valuation  allowance for the entire deferred tax asset until sufficient positive
evidence exists to support a reversal. See Part II - Item 8 - Note 9.



<PAGE>

     New  Accounting  Pronouncements  - FASB  Statement No. 123 (revised  2004),
Share-Based Payment - In December 2004, the Financial Accounting Standards Board
("FASB")  released its final revised  standard  entitled  Statement of Financial
Accounting Standards No. 123R,  "Share-Based  Payment" ("SFAS 123R"), which will
significantly  change accounting practice with respect to employee stock options
for both public and non-public companies.

     SFAS 123R requires  that a public  entity  measure the cost of equity based
service  awards based on the  grant-date  fair value of the award (with  limited
exceptions).  That cost  will be  recognized  over the  period  during  which an
employee  is  required  to  provide  service  in  exchange  for the award of the
requisite  service period (usually the vesting period).  No compensation cost is
recognized  for  equity  instruments  for  which  employees  do not  render  the
requisite service.

     A public entity will initially  measure the cost of liability based service
awards  based on its current  fair  value;  the fair value of that award will be
re-measured  subsequently  at each reporting  date through the settlement  date.
Changes in fair value during the requisite  service period will be recognized as
compensation cost over that period.

     The grant-date fair value of employee stock options and similar instruments
will  be  estimated  using   option-pricing   models  adjusted  for  the  unique
characteristics  of those instruments  (unless  observable market prices for the
same or similar instruments are available). If an equity award is modified after
the grant date,  incremental  compensation  cost will be recognized in an amount
equal to the excess of the fair value of the modified  award over the fair value
of the original award immediately before the modification.

     Excess tax benefits will be  recognized  as an addition to paid-in  capital
and cash  retained as a result of those excess tax benefits will be presented in
the statement of cash flows as financing cash inflows. The write-off of deferred
tax assets  relating to  unrealized  tax  benefits  associated  with  recognized
compensation  cost will be  recognized  as income tax expense  unless  there are
excess tax benefits from previous  awards  remaining in paid-in capital to which
it can be offset.

     The  notes  to  financial  statements  of  public  entities  will  disclose
information to assist users of financial information to understand the nature of
share-based  payment  transactions and the effects of those  transactions on the
financial  statements.  SFAS 123R is  effective  for public  entities  as of the
beginning of the first interim or annual reporting period that begins after June
15, 2005.



<PAGE>

     ITEM 7A. 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 December 31, 2004 and 2003,
with maturity dates of less than one year consist of the following:

<TABLE>
<CAPTION>

                                                                          2004                     2003
(in thousands)                                              ==========================  ==========================
<S>                                                         <C>             <C>         <C>              <C>
                                                            Carrying          Fair       Carrying          Fair
                                                               Value         Value         Value           Value
                                                            -----------    -----------  ------------    ----------

U.S. Treasury Bills.........................................$   8,590      $    8,586   $     17,329      $  17,331
                                                            ==========     ===========  ============      =========

Weighted average interest rate..............................     1.71%                          0.94%
                                                            ==========                  ============
</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 year.

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

     The table below  summarizes  the Company's  equity price risk and shows the
effect of a  hypothetical  20% increase and a 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)
                                                                         12/31/2004       12/31/2003
Equity Securities Available for Sale:                                    ==========       ==========

Fair value ...........................................................   $    2,112       $    1,774
                                                                         ==========       ==========
Hypothetical fair value at a 20% increase in market price.............   $    2,534       $    2,129
                                                                         ==========       ==========
Hypothetical fair value at a 20% decrease in market price.............   $    1,690       $    1,419
                                                                         ==========       ==========
</TABLE>







<PAGE>


ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




     To the Board of Directors and Stockholders of AmBase Corporation

     In our opinion,  the consolidated  financial statements listed in the index
appearing under Item 15(a) (1) present  fairly,  in all material  respects,  the
financial  position of AmBase  Corporation and its  subsidiaries at December 31,
2004 and 2003, the results of their  operations and their cash flows for each of
the three  years in the  period  ended  December  31,  2004 in  conformity  with
accounting  principles  generally  accepted in the United States of America.  In
addition,  in our opinion,  the financial statement schedule listed in the index
appearing under Item 15(a) (2) presents fairly,  in all material  respects,  the
information  set  forth  therein  when  read in  conjunction  with  the  related
consolidated  financial  statements.  These  financial  statements and financial
statement  schedule are the  responsibility  of the  Company's  management;  our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial  statement  schedule  based on our audits.  We conducted our audits of
these  statements  in  accordance  with  the  standards  of the  Public  Company
Accounting Oversight Board (United States). These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.




/s/ PricewaterhouseCoopers LLP
New York, New York
March 29, 2005



<PAGE>
<TABLE>
<CAPTION>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                             Years Ended December 31


<S>                                                                         <C>              <C>               <C>

(in thousands, except per share data)                                       2004             2003              2002
                                                                            ====             ====              ====
Revenues:
Rental income                                                           $  2,229        $   2,578           $   477
                                                                        --------         --------          --------

Operating expenses:
Compensation and benefits.....................................             4,150            3,852             3,515
Professional and outside services.............................             1,469            1,476             1,641
Property operating and maintenance ...........................               459              491               130
Depreciation .................................................               330              329                74
Insurance.....................................................               107              100                73
Other operating...............................................               197              188               161
                                                                        --------         --------          --------
                                                                           6,712            6,436             5,594
                                                                        --------         --------          --------
Operating loss................................................            (4,483)          (3,858)           (5,117)
                                                                        --------         --------          --------
Interest income...............................................               505              334               705
Realized gains of the sales of investment
    securities available for sale.............................               747               64                 -
Other income..................................................                 -               26               215
Other income - termination of postretirement welfare plans....                 -                -               788
Write down of investments.....................................                 -                -            (1,600)
                                                                        --------         --------          --------
Loss before income taxes......................................            (3,231)          (3,434)           (5,009)
Income tax expense ...........................................              (120)            (125)             (124)
                                                                        --------         --------          ---------
Net loss......................................................         $  (3,351)       $ (3,559)         $  (5,133)
                                                                       =========        =========         ==========
Net loss per common share:
Basic.........................................................         $   (0.07)       $  (0.08)         $   (0.11)
Assuming dilution ............................................             (0.07)          (0.08)             (0.11)
                                                                       =========        =========         ==========
Weighted average common shares outstanding:
Basic.........................................................            46,225           46,182            46,209
                                                                       =========        =========         =========
Assuming dilution.............................................            46,225           46,182            46,209
                                                                       =========        =========         =========
</TABLE>

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


<PAGE>
<TABLE>
<CAPTION>


                                                     AMBASE CORPORATION AND SUBSIDIARIES
                                                     Consolidated Balance Sheets
                                                             December 31



<S>                                                                                          <C>               <C>
(in thousands, except for share amounts)                                                     2004              2003
                                                                                             ====              ====
Assets:
Cash and cash equivalents.......................................................        $  10,124        $    2,785
Investment securities:
    Held to maturity (market value $8,586 and $17,331, respectively)............            8,590            17,329
    Available for sale, carried at fair value...................................            2,112             1,774
                                                                                        ---------        ----------
Total investment securities.....................................................           10,702            19,103
                                                                                        ---------        ----------
Accounts receivable ............................................................                1                21
Real estate owned:
     Land.......................................................................            6,954             6,954
     Buildings..................................................................           12,810            12,810
                                                                                        ---------        ----------
                                                                                           19,764            19,764
     Less: accumulated depreciation ............................................             (763)             (433)
                                                                                        ---------        ----------
Real estate owned, net..........................................................           19,001            19,331
                                                                                        ---------        ----------
Other assets....................................................................            1,032               428
                                                                                        ---------        ----------
Total assets....................................................................        $  40,860        $   41,668
                                                                                        =========        ==========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities........................................        $   1,495        $    1,376
Supplemental retirement plan....................................................           11,594             9,292
Other liabilities...............................................................            2,197             1,633
                                                                                        ---------        ----------
Total liabilities...............................................................           15,286            12,301
                                                                                        ---------        ----------
Commitments and contingencies...................................................                -                 -
                                                                                        ---------        ----------
Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized,
   46,410,007 and 46,335,007issued, respectively)...............................              464               463
Paid-in capital.................................................................          547,956           547,940
Accumulated other comprehensive income..........................................             (375)               84
Accumulated deficit.............................................................         (521,786)         (518,435)
Treasury stock, at cost - 176,488 shares........................................             (685)             (685)
                                                                                        ---------        ----------
Total stockholders' equity......................................................           25,574            29,367
                                                                                        ---------        ----------
Total liabilities and stockholders' equity......................................        $  40,860        $   41,668
                                                                                        =========        ==========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>



<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
           Consolidated Statements of Changes in Stockholders' Equity





<S>                             <C>          <C>           <C>                    <C>           <C>           <C>

                                                           Accumulated other
(in thousands)                  Common       Paid-in         comprehensive        Accumulated   Treasury
                                stock        capital         income (loss)          deficit       stock       Total
                                =======      ========        =============        ===========   =========     =====
December 31, 2001.............  $   463      $547,940       $          -        $   (509,743)   $    (647)  $38,013
Net loss......................        -             -                  -              (5,133)           -    (5,133)
Other comprehensive
      income .................        -             -                 22                   -            -        22
                                -------      --------       --------------      -------------   ----------  -------

December 31, 2002.............      463       547,940                 22            (514,876)        (647)   32,902
Net loss......................        -             -                                 (3,559)           -    (3,559)
Common stock repurchased              -             -                  -                   -          (38)      (38)
Other comprehensive
      income .................        -             -                 62                   -            -         62
                                ---------    --------       --------------      -------------   ----------  --------
December 31, 2003.............      463       547,940                 84            (518,435)        (685)    29,367

Net loss......................        -             -                                 (3,351)           -     (3,351)
Stock options exercised.......        1            16                  -                   -            -         17
Other comprehensive
      loss ...................        -             -                (459)                 -            -       (459)
                                ---------    --------       --------------      -------------   ----------  ---------
December 31, 2004.............  $   464      $547,956       $        (375)      $   (521,786)   $    (685)  $  25,574
                                =========    ========       ==============      =============   ==========  =========
</TABLE>

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

                       AMBASE CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Comprehensive Income (Loss)
                             Years Ended December 31
                                 (in thousands)
<TABLE>
<CAPTION>
<S>                                                                             <C>             <C>            <C>

                                                                                 2004            2003           2002
                                                                                ======          ======         ======
Net loss ...................................................................   $(3,351)        $ (3,559)      $(5,133)

Minimum pension liability adjustment, net of tax effect of $0...............      (412)               -             -

Unrealized holding gains on investment securities - available for sale, net of
       tax effect of $0.....................................................       (47)              62            22
                                                                               --------        --------       --------

Comprehensive loss..........................................................   $(3,810)        $ (3,497)      $(5,111)
                                                                               ========        ========       ========
</TABLE>

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



<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             Years Ended December 31


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

(in thousands)                                                                       2004             2003           2002
                                                                                     ====             ====           ====
Cash flows from operating activities:
Net loss.................................................................        $ (3,351)       $  (3,559)      $ (5,133)
Adjustments to reconcile net loss to net cash used
     by operating activities:
    Accretion of discount - investment securities........................            (115)            (198)          (631)
    Depreciation and amortization........................................             330              329             74
    Realized gains on investment securities available for sale...........            (747)             (64)             -
     Termination of postretirement welfare plans ........................               -                -           (788)
Changes in other assets and liabilities:
    Accounts receivable .................................................              20               88           (103)
    Write down of investments ...........................................               -                -          1,600
    Other assets.........................................................            (604)            (301)           (85)
    Accounts payable and accrued liabilities.............................             119             (187)        (1,704)
    Other liabilities....................................................           2,454            1,734            813
Other, net...............................................................              (2)               -             21
                                                                                 --------        ---------       --------
Net cash used by operating activities....................................          (1,896)          (2,158)        (5,936)
                                                                                 --------        ---------       --------
Cash flows from investing activities:
Maturities of investment securities - held to maturity...................          25,894           50,001        128,715
Purchases of investment securities - held to maturity....................         (17,040)         (48,873)      (106,111)
Purchases of investment securities - available for sale..................         (17,426)          (1,668)          (599)
Sales of investment securities - available for sale......................          17,790              641              -
Building improvements....................................................               -              (38)             -
Purchase of real estate..................................................               -                -        (17,291)
Other, net...............................................................               -                -             10
                                                                                 --------        ---------       --------
Net cash provided by investing activities................................           9,218               63          4,724
                                                                                 --------        ---------       --------
Cash flows from financing activities:
Stock options exercised..................................................              17                -              -
Common stock repurchased.................................................               -              (38)             -
                                                                                 --------         --------       --------
Net cash provided (used) by financing activities.........................              17              (38)             -
                                                                                 --------         --------       --------
Net increase (decrease) in cash and cash equivalents.....................           7,339           (2,133)        (1,212)
Cash and cash equivalents at beginning of year...........................           2,785            4,918          6,130
                                                                                 --------         --------       --------
Cash and cash equivalents at end of year.................................        $ 10,124        $   2,785     $    4,918
                                                                                 ========        =========     ==========
Supplemental cash flow disclosure:
Income taxes paid........................................................        $    162        $     135     $      156
                                                                                 ========        =========     ==========
</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

     AmBase  Corporation  (the "Company") is a holding company which,  through a
wholly owned  subsidiary,  owns two  commercial  office  buildings in Greenwich,
Connecticut and a 6.3% ownership  interest in SDG, Inc.  ("SDG"),  a development
stage pharmaceutical  company. The Company previously owned an insurance company
and a savings bank.

     In February  1991,  the  Company  sold its  ownership  interest in The Home
Insurance  Company  ("The  Home") and its  subsidiaries.  On  December  4, 1992,
Carteret  Savings Bank, FA ("Carteret") was placed in receivership by the Office
of Thrift Supervision ("OTS").

     The Company's  main source of operating  revenue is rental income earned on
real estate  owned.  The Company also earns  non-operating  revenue  principally
consisting of interest earned 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 Notes 9 and 10.

     Note 2 - Summary of Significant Accounting Policies

     The consolidated financial statements have been prepared in accordance with
accounting  principles  generally  accepted  in the  United  States  of  America
("GAAP").   Certain   reclassifications   have  been  made  to  the  prior  year
consolidated financial statements to conform to the 2004 presentation.

     Use of estimates in the preparation of financial statements:

     The  preparation of financial  statements in conformity  with GAAP requires
management to make estimates and  assumptions,  that it deems  reasonable,  that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from such estimates and assumptions.

     Principles of consolidation:

     The consolidated  financial statements are comprised of the accounts of the
Company  and  its  majority  owned  subsidiaries.   All  material   intercompany
transactions and balances have been eliminated.  The Company continually reviews
its  investments  to  determine  whether a decline in fair value  below the cost
basis is other  than  temporary.  If the  decline  in fair value is judged to be
other than  temporary,  the cost basis of the  security is written  down to fair
market  value and the amount of the write down is included  in the  Consolidated
Statement of Operations.

     Cash and cash equivalents:

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

     Investment securities:

     Securities  that the  Company has both the  positive  intent and ability to
hold to maturity are classified as investment  securities - held to maturity and
are carried at amortized cost. Investment securities - available for sale, which
are those  securities  that may be sold prior to  maturity,  are carried at fair
value, with any net unrealized gains or losses reported in a separate  component
of stockholders' equity, net of taxes.

     Interest and  dividends on  investment  securities  are  recognized  in the
Consolidated  Statement of Operations when earned.  Realized gains and losses on
the sale of investment  securities - available for sale are calculated  using an
average cost basis for determining  the cost basis of the  securities.  The fair
value of publicly  traded  investment  securities  is determined by reference to
current market quotations.





<PAGE>


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


     Income taxes:

     The Company  and its  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, a greater than 50% probability exists that the tax benefits will actually be
realized sometime in the future. At the present time, management has no basis to
conclude that  realization  is more likely than not and a valuation  reserve has
been recorded against net deferred tax assets.

     Earnings per share:

     Basic  earnings  per share  ("EPS")  excludes  dilution  and is computed by
dividing  net income  (loss) by the  weighted  average  number of common  shares
outstanding for the period.  Diluted EPS reflects the potential  dilution of EPS
that could occur if options to issue common stock were exercised.

     Stock-based compensation:

     The Company adopted the disclosure requirements of the Financial Accounting
Standards  Board,   Statement  of  Financial   Accounting   Standards  No.  123,
"Accounting for Stock-Based  Compensation" ("SFAS 123") and 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.  For a further  discussion and a summary of assumptions used, see Note
8.

     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 the  date of grant  for  stock  options,  consistent  with the  method
prescribed by Statement  123, net loss and net loss per share for the year ended
December 31, would have been changed to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
<S>                                                                           <C>                 <C>                <C>

(in thousands, except per share data)                                          2004                2003               2002
                                                                              =====               =====              =====
Net loss:
As reported...........................................................      $ (3,351)           $ (3,559)          $(5,133)
Deduct: pro forma stock based compensation expense for
    stock options pursuant to Statement 123...........................           (79)               (104)             (216)
                                                                            ---------           ---------          --------
Pro forma.............................................................      $ (3,430)           $ (3,663)          $ (5,349)
                                                                            =========           =========          ========
Net loss per common share:
Basic - as reported...................................................      $   (0.07)         $   (0.08)          $  (0.11)
Basic - pro forma.....................................................          (0.07)             (0.08)             (0.11)
Assuming dilution - as reported.......................................          (0.07)             (0.08)             (0.11)
Assuming dilution - pro forma ........................................          (0.07)             (0.08)             (0.11)
                                                                            ==========         ==========          ========
</TABLE>

     Deferred rent receivable and revenue recognition:

     The Company  earns  rental  income  under  operating  leases with  tenants.
Minimum lease rentals are recognized on a  straight-line  basis over the term 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 the balances of $505,000 and $363,000 as of December 31, 2004 and
December 31, 2003, respectively are 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.

<PAGE>



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


     Property operating and maintenance:

     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 lease agreements. Depreciation:

     Depreciation  expense for buildings is calculated on a straight-line  basis
over 39 years. Tenant improvements are typically  depreciated over the remaining
life of the tenants lease.

     New Accounting Pronouncements:

     In  December  2004,  the  Financial  Accounting  Standards  Board  ("FASB")
released its final revised standard entitled  Statement of Financial  Accounting
Standards  No.  123R,   "Share-Based   Payment"   ("SFAS   123R"),   which  will
significantly  change accounting practice with respect to employee stock options
for both public and non-public companies.

     SFAS 123R requires  that a public  entity  measure the cost of equity based
service  awards based on the  grant-date  fair value of the award (with  limited
exceptions).  That cost  will be  recognized  over the  period  during  which an
employee  is  required  to  provide  service  in  exchange  for the award of the
requisite  service period (usually the vesting period).  No compensation cost is
recognized  for  equity  instruments  for  which  employees  do not  render  the
requisite service.

     A public entity will initially  measure the cost of liability based service
awards  based on its current  fair  value;  the fair value of that award will be
re-measured  subsequently  at each reporting  date through the settlement  date.
Changes in fair value during the requisite  service period will be recognized as
compensation cost over that period.

     The grant-date fair value of employee stock options and similar instruments
will  be  estimated  using   option-pricing   models  adjusted  for  the  unique
characteristics  of those instruments  (unless  observable market prices for the
same or similar instruments are available). If an equity award is modified after
the grant date,  incremental  compensation  cost will be recognized in an amount
equal to the excess of the fair value of the modified  award over the fair value
of the original award immediately before the modification.

     Excess tax benefits will be  recognized  as an addition to paid-in  capital
and cash  retained as a result of those excess tax benefits will be presented in
the statement of cash flows as financing cash inflows. The write-off of deferred
tax assets  relating to  unrealized  tax  benefits  associated  with  recognized
compensation  cost will be  recognized  as income tax expense  unless  there are
excess tax benefits from previous  awards  remaining in paid-in capital to which
it can be offset.

     The  notes  to  financial  statements  of  public  entities  will  disclose
information to assist users of financial information to understand the nature of
share-based  payment  transactions and the effects of those  transactions on the
financial  statements.  SFAS 123R is  effective  for public  entities  as of the
beginning of the first interim or annual reporting period that begins after June
15, 2005.

     In July 2001, the FASB issued Statement of Financial  Accounting  Standards
No.  141,  "Business  Combination"  ("SFAS  141")  and  Statement  of  Financial
Accounting  Standards No. 142,  "Goodwill and Other  Intangible  Assets"  ("SFAS
142").  SFAS 141 requires the purchase  method of  accounting to be used for all
business  combinations  initiated after June 30, 2001, and addresses the initial
recognition and measurement of goodwill and other  intangible  assets  acquired.
SFAS 142 requires  that  goodwill  not be amortized  but instead be measured for
impairment. The Company adopted SFAS 141 and SFAS 142 effective July 1, 2001.



<PAGE>


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


     In November 2002, the FASB issued FASB  Interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others"  ("FIN 45").  FIN 45 requires that upon
issuance of a guarantee,  the guarantor  must recognize a liability for the fair
value of the  obligation  it assumes  under  that  guarantee  regardless  if the
guarantor receives separate identifiable consideration.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of  Variable  Interest  Entities"  ("FIN  46").  FIN  46  provides  guidance  on
identifying  entities  for which  control is achieved  through  means other than
through voting rights and how to determine if the entity should be consolidated.
In addition,  FIN 46 requires all enterprises with a significant interest in the
entity to make additional disclosures.

     The adoption of SFAS 123R,  SFAS 141,  SFAS 142, FIN 45 and FIN 46 have not
had a significant  effect,  individually  or in the aggregate,  on the Company's
consolidated financial position or consolidated results of operations.



<PAGE>



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


     Note 3 - 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 at December 31 consist of the following:
<TABLE>
<CAPTION>
<S>                           <C>             <C>                <C>          <C>              <C>                <C>

                                                2004                                             2003
                              ==========================================      =========================================
                                                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.......$  8,590          $ 8,590        $  8,586        $ 17,329          $ 17,329      $  17,331
Available for Sale:
     Equity Securities........   2,112            2,075           2,112           1,774             1,690          1,774
                              --------         --------          --------      --------          --------       --------
                             $  10,702         $  10,665       $ 10,698        $ 19,103          $ 19,019       $ 19,105
                             =========         =========       ==========      ========          ========       ========
</TABLE>

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

(in thousands)                                                                                 2004                2003
                                                                                               ====                ====
Held to Maturity:
Gross unrealized gains (losses).....................................................        $    (4)           $      2
                                                                                               ====                ====
Available for Sale:
Gross unrealized gains..............................................................        $    41            $     84
                                                                                               ====                ====
Gross unrealized losses.............................................................        $    (4)           $      -
                                                                                               ====                ====
</TABLE>

     The realized gain on the sale of investment  securities  available for sale
for the years ended December 31, 2004 and 2003, is as follows:
<TABLE>
<CAPTION>
<S>                                                                                         <C>                <C>

(in thousands)                                                                                 2004                2003
                                                                                               ====                ====
Net sale proceeds...................................................................        $17,790            $    641
Cost basis..........................................................................        (17,043)               (577)
                                                                                            ----------         ---------
Realized gain.......................................................................        $   747            $     64
                                                                                            ==========         =========
</TABLE>

     During the second quarter  ending 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 2004  Consolidated
Statement of Operations.

     During the third quarter ended  September 30, 2004,  the Company  purchased
and sold an $8 million U.S. Treasury Note,  resulting in a gain of $24,000 which
is included in realized gains on investment  securities in the 2004 Consolidated
Statement of Operations.


<PAGE>

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

     In 2002, in connection with the ongoing evaluation of its investments,  the
Company  determined the value of its investments in SDG and AMDG, Inc.  ("AMDG")
had been other than temporarily impaired.  Under GAAP, if an investment is other
than temporarily  impaired,  the Company is required to reflect an adjustment in
its Financial Statements. Accordingly, the Company recorded a write down, during
2002,  of  its   investments  in  SDG  and  AMDG  of  $1,250,000  and  $350,000,
respectively.  See Note 10 - Legal  Proceedings - Litigation  with SDG, Inc. for
further   information.   The  Company  retains  ownership  of  these  investment
securities consisting of convertible preferred stock and common stock in SDG and
AMDG, which were purchased  through private  placements.  These  investments are
carried at a written down value of $0 at December 31, 2004 and 2003.

     Note 4 - Earnings Per Share

     The  calculation  of basic and diluted  earnings per share,  including  the
effect of dilutive securities, for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
<S>                                                                  <C>                <C>                   <C>

(in thousands, except per share data)                                 2004                2003                  2002
                                                                     =====              ======                ======

Net loss......................................................  $   (3,351)         $  (3,559)              $(5,133)
                                                                     =====              ======                 =====

Weighted average common shares outstanding ...................      46,225              46,182                46,209

Effect of Dilutive Securities:
Assumed stock option exercise.................................           -                   -                     -
                                                                  --------           ---------             ---------
Weighted average common shares outstanding assuming dilution..      46,225              46,182                46,209
                                                                     =====               =====                 =====
Net loss per common share:
Basic.........................................................  $   (0.07)          $   (0.08)            $    (0.11)
Assuming dilution ............................................      (0.07)              (0.08)                 (0.11)
                                                                      =====              =====                  =====
</TABLE>

     Options to purchase  common  stock of 1,245,000  shares in 2004,  1,125,000
shares in 2003 and 1,170,000  shares in 2002 were excluded from the  computation
of diluted earnings per share because these options were antidilutive.

     Note 5 - Stockholders' Equity

     Authorized  capital  stock  consists  of  50,000,000  shares of  cumulative
preferred stock,  $0.01 par value, and 200,000,000 shares of Common Stock, $0.01
par value.

     Changes in the  outstanding  shares of Common  Stock of the  Company are as
follows:
<TABLE>
<CAPTION>
<S>                                                               <C>               <C>                    <C>

                                                                       2004              2003                  2002
                                                                  ==============    ==============        ==============
Balance at beginning of year..................................      46,158,519        46,208,519            46,208,519

Issuance of common shares.....................................          75,000                 -                     -

Common shares repurchased.....................................               -           (50,000)                    -
                                                                  --------------    --------------        ---------------
Balance at end of year........................................       46,233,519       46,158,519            46,208,519
                                                                   =============    ==============        ===============
</TABLE>

     The Company  issued  75,000  previously  authorized  common  shares  during
February  2004, in connection  with the exercise of an employee  stock option at
the exercise price of $0.21 per share.




<PAGE>


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

     During June 2003, the Company  repurchased 50,000 shares of common stock at
a purchase  price of $0.75 per share  pursuant  to its common  stock  repurchase
plan.

     At December 31, 2004 and December 31, 2003,  Common Stock balances  exclude
176,488  treasury  shares  carried  at an  average  cost  of  $3.88  per  share,
aggregating  approximately $685,000. At December 31, 2002, Common Stock balances
exclude  126,488  treasury  shares  carried  at an  average  of $5.12  per share
aggregating approximately $647,000.

     At December 31,  2004,  there were  5,110,000  common  shares  reserved for
issuance under the Company's stock option and other employee benefit plans.

     Stockholder Rights Plan:

     On January 29, 1986, the Company's  Board of Directors  declared a dividend
distribution  of one right  for each  outstanding  share of Common  Stock of the
Company.  The rights, as amended,  which entitle the holder to purchase from the
Company a common share at a price of $75.00,  are not exercisable until either a
person or group of  affiliated  persons  acquires  25% or more of the  Company's
outstanding common shares or upon the commencement or disclosure of an intention
to  commence  a tender  offer or  exchange  offer for 20% or more of the  common
shares.  The rights are redeemable by the Company at $0.05 per right at any time
until the earlier of the tenth day following an  accumulation  of 20% or more of
the Company's shares by a single acquirer or group, or the occurrence of certain
Triggering Events (as defined in the Stockholder  Rights Plan). In the event the
rights become exercisable and thereafter, the Company is acquired in a merger or
other business combination,  or in certain other circumstances,  each right will
entitle the holder to purchase from the surviving corporation,  for the exercise
price,  Common Stock  having a market  value of twice the exercise  price of the
right.  The rights are subject to adjustment  to prevent  dilution and expire on
February 10, 2006.

     Common Stock Repurchase Plan:

     The Company's Board of Directors has approved and authorized  management to
establish and implement a common stock repurchase plan (the "Repurchase  Plan").
The  Repurchase  Plan  is  dependent  upon  favorable  business  conditions  and
acceptable purchase prices for the common stock and allows for the repurchase of
up to 10 million shares of the Company's common stock in the open market. During
June 2003, the Company  repurchased  50,000 shares of common stock at a purchase
price of $0.75 per share pursuant to the Repurchase Plan.

     Note 6 - Comprehensive Income (Loss)

     Comprehensive  income (loss), for the year ended December 31 is composed of
net income  (loss) and other  comprehensive  income  (loss)  which  includes the
change in unrealized  gains on  investment  securities  available for sale,  and
recognition of additional minimum pension liability as follows:
<TABLE>
<CAPTION>
<S>                            <C>             <C>          <C>              <C>              <C>

(in thousands)
                                               2004                                       2003
                               ===========================================   ===============================
                               Minimum         Unrealized   Accumulated      Unrealized       Accumulated
                               Pension         Gains on     Other            Gains on         Other
                               Liability       Investment   Comprehensive    Investment       Comprehensive
                               Adjustment      Securities   Income           Securities       Income
                               =========       =========    =============    ===========      ===============
Balance beginning of period....$       -       $      84    $          84    $        22      $            22
Reclassification adjustment for
  gains realized in net loss...        -            (432)            (432)           (35)                 (35)
Change during the period.......     (412)            385              (27)            97                   97
................................---------       -----------  -------------    -----------      ---------------
Balance end of period..........$    (412)      $      37    $        (375)   $        84      $            84
                               =========       ===========  =============    ===========      ===============
</TABLE>




<PAGE>


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

     Note 7 - 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 for the years ended December 31
was as follows:
<TABLE>
<CAPTION>
<S>                                                                  <C>                <C>                 <C>

(in thousands)                                                              2004                2003               2002
                                                                            ====                ====               ====
Service cost of current period................................       $       948        $        870        $       756
Interest cost on projected benefit obligation.................               710                 646                549
Amortization of unrecognized losses...........................               232                 206                 82
                                                                     -----------        ------------        -----------
                                                                     $     1,890        $      1,722        $     1,387
                                                                     ===========        ============        ===========
</TABLE>

     A reconciliation  of the changes in the projected  benefit  obligation from
the beginning of the year to the end of the year is as follows:
<TABLE>
<CAPTION>
<S>                                                                                          <C>                   <C>

(in thousands)                                                                               2004                  2003
                                                                                             ====                  ====
Projected benefit obligation at beginning of year...............................          $11,022             $   9,601
Service cost....................................................................              948                   869
Interest cost...................................................................              710                   646
Actuarial (gain) loss, including effect of change in assumptions................              702                   (56)
Benefits paid...................................................................                -                   (38)
                                                                                          --------            ----------
Projected benefit obligation at end of year.....................................          $13,382             $  11,022
                                                                                          ========            =========
</TABLE>

     Accrued  pension  costs for the  Supplemental  Plan at December 31, and the
major assumptions used to determine these amounts, are summarized below:
<TABLE>
<CAPTION>
<S>                                                                                     <C>                    <C>

(dollars in thousands)                                                                       2004                  2003
                                                                                             ====                  ====
Actuarial present value of benefit obligations:
Accumulated benefit obligations, fully vested...................................         $ 11,594              $  9,238
                                                                                         ========              ========
Projected benefit obligation for service rendered to date.......................         $ 13,382              $ 11,022
Unrecognized net loss...........................................................           (2,200)              (1,730)
Accumulated other comprehensive loss............................................              412                     -
                                                                                         --------              --------
Accrued pension costs...........................................................         $ 11,594              $  9,292
                                                                                         ========              ========
Major assumptions:
Discount rate...................................................................             5.75%                 6.25%
Rate of increase in future compensation.........................................              6.0%                  6.0%
                                                                                         ========              =========
</TABLE>

     The Company's unfunded  accumulated benefit obligation for the Supplemental
Plan  exceeded  the accrued  pension  liability  as of  December  31,  2004.  An
additional  minimum  liability was  established to increase the accrued  pension
liability to the  accumulated  benefit  obligation  at December  31, 2004.  This
additional  minimum  liability  was recorded as a charge to other  comprehensive
loss in 2004.


<PAGE>



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



     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 salary, which are matched by the Company at a
percentage  determined  annually.  The employer  match is currently  100% of the
employee's salary 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 salary
reduction  contributions.  The Company's  matching  contributions to the Savings
Plan,  charged to expense,  were $45,000,  $36,000 and $24,000 in 2004, 2003 and
2002,  respectively.  All  contributions  are  subject  to  maximum  limitations
contained in the Code.

     Note 8- Incentive Plans

     Under the Company's 1994 Senior Management Incentive Compensation Plan (the
"1994  Plan"),  any  executive  officer of the  Company  whose  compensation  is
required to be reported to  stockholders  under the  Securities  Exchange Act of
1934 (the  "Participants")  and who is  serving  as such at any time  during the
fiscal  year as to which an award is  granted,  may  receive  an award of a cash
bonus  ("Bonus"),  in an amount  determined  by the  Personnel  Committee of the
Company's Board of Directors (the  "Committee") and payable from an annual bonus
fund (the "Annual Bonus  Pool").  The Committee may award Bonuses under the 1994
Plan to  Participants  not later than 120 days after the end of each fiscal year
(the "Reference Year").

     If the  Committee  grants a Bonus  under the 1994  Plan,  the amount of the
Annual Bonus Pool will be an amount equal to the sum of (i) plus (ii), where:

     (i) is ten  percent  (10%) of the  amount  by  which  the  Company's  Total
Stockholders'  Equity, as defined, on the last day of a Reference Year increased
over the Company's Total  Stockholders'  Equity, as defined,  on the last day of
the immediately preceding Reference Year; and

     (ii) is five  percent  (5%) of the  amount  by which the  Company's  market
value,  as defined,  on the last day of the Reference  Year  increased  over the
Company's  market value on the last day of the immediately  preceding  Reference
Year.

     Notwithstanding the foregoing,  the 1994 Plan provides that in the event of
a decrease in either or both of items (i) and/or (ii)  above,  the Annual  Bonus
Pool is determined by reference to the last Reference Year in which there was an
increase in such item.  If the  Committee  determines  within the  120-day  time
period to award a Bonus,  the share of the Annual  Bonus Pool to be allocated to
each  Participant  shall be as  follows:  45% of the Annual  Bonus Pool shall be
allocated to the Company's Chief Executive Officer,  and 55% of the Annual Bonus
Pool  shall be  allocated  pro  rata to each of the  Company's  Participants  as
determined  by the  Committee.  The Committee in its  discretion  may reduce the
percentage of the Annual Bonus Pool to any  Participant  for any Reference Year,
and such reduction  shall not increase the share of any other  Participant.  The
1994 Plan is not the  exclusive  plan under  which the  Executive  Officers  may
receive cash or other incentive  compensation  or bonuses.  No Bonuses were paid
attributable to the 1994 Plan for 2004.

     Under the  Company's  1993  Stock  Incentive  Plan (the "1993  Plan"),  the
Company may grant to officers and employees of the Company and its subsidiaries,
stock options ("Options"),  stock appreciation rights ("SARs"), restricted stock
awards ("Restricted Stock"), merit awards ("Merit Awards") and performance share
awards ("Performance  Shares"),  through May 28, 2008. An aggregate of 5,000,000
shares of the  Company's  Common Stock are reserved for issuance  under the 1993
Plan (upon the exercise of Options and Stock Appreciation Rights, upon awards of
Restricted  Stock  and  Performance  Shares);  however,  of  such  shares,  only
2,500,000 shares in the aggregate shall be available for issuance for Restricted
Stock  Awards and Merit  Awards.  Such shares shall be  authorized  but unissued
shares of Common  Stock.  Options  may be granted  as  incentive  stock  options
("ISOs")  intended to qualify for favorable tax treatment  under Federal tax law
or as nonqualified stock options ("NQSOs").  SARs may be granted with respect to
any  Options  granted  under  the 1993 Plan and may be  exercised  only when the
underlying Option is exercisable. The 1993 Plan requires that the exercise price
of all Options and SARs be equal to or greater than the fair market value of the
Company's Common Stock on the date of grant of that Option.  The term of any ISO
or related SAR cannot  exceed ten years from the date of grant,  and the term of
any NQSO cannot  exceed ten years and one month from the date of grant.  Subject
to the terms of the 1993 Plan and any  additional  restrictions  imposed  at the
time of grant,  Options and any related SARs ordinarily will become  exercisable
commencing  one year  after  the date of  grant.  In the  case of a  "Change  of
Control" of the
<PAGE>

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

     Company (as defined in the 1993 Plan), Options granted pursuant to the 1993
Plan may become fully  exercisable as to all optioned  shares from and after the
date of such  Change in Control in the  discretion  of the  Committee  or as may
otherwise be provided in the grantee's Option agreement.  Death, retirement,  or
absence for disability will not result in the cancellation of any Options.

     As a condition  to any award of  Restricted  Stock or Merit Award under the
1993 Plan, the Committee may require a participant to pay an amount equal to, or
in excess of, the par value of the shares of  Restricted  Stock or Common  Stock
awarded to him or her. Restricted Stock may not be sold, assigned,  transferred,
pledged or otherwise encumbered during a "Restricted Period",  which in the case
of grants to  employees  shall not be less than one year from the date of grant.
The Restricted Period with respect to any outstanding shares of Restricted Stock
awarded to  employees  may be reduced by the  Committee  at any time,  but in no
event  shall  the  Restricted  Period be less  than one  year.  Except  for such
restrictions,  the  employee  as the owner of such  stock  shall have all of the
rights of a  stockholder  including,  but not limited to, the right to vote such
stock and to receive  dividends  thereon as and when paid.  In the event that an
employee's  employment is terminated  for any reason,  an employee's  Restricted
Stock will be forfeited;  provided,  however,  that the Committee may limit such
forfeiture in its sole  discretion.  At the end of the  Restricted  Period,  all
shares  of  Restricted  Stock  shall  be  transferred  free  and  clear  of  all
restrictions to the employee.  In the case of a Change in Control of the Company
(as defined in the 1993 Plan),  an  employee  may receive his or her  Restricted
Stock free and clear of all restrictions in the discretion of the Committee,  or
as may otherwise be provided pursuant to the employee's Restricted Stock award.

     Performance  Share  awards of  Common  Stock  under the 1993 Plan  shall be
earned on the basis of the  Company's  performance  in relation  to  established
performance  measures  for a specific  performance  period.  Such  measures  may
include, but shall not be limited to, return on investment,  earnings per share,
return on stockholder's  equity, or return to stockholders.  Performance  Shares
may not be sold, assigned,  transferred,  pledged or otherwise encumbered during
the relevant performance period.  Performance Shares may be paid in cash, shares
of Common Stock or shares of Restricted  Stock in such portions as the Committee
may determine. An employee must be employed at the end of the performance period
to receive payments of Performance Shares; provided,  however, in the event that
an  employee's  employment  is  terminated  by  reason  of  death,   disability,
retirement or other reason  approved by the  Committee,  the Committee may limit
such  forfeiture in its sole  discretion.  In the case of a Change in Control of
the Company (as  defined in the 1993 Plan),  an employee  may receive his or her
Performance  Shares in the discretion of the  Committee,  or as may otherwise be
provided in the employee's Performance Share award.

     During  January  2005,  the Board of Directors of the Company  approved the
award of  incentive  and  non-qualified  stock  options to certain  employees to
acquire  240,000 shares of AmBase Common Stock at an exercise price of $0.81 per
share, pursuant to the 1993 Plan.

     The Company's  1985 Stock Option Plan (the "1985  Plan"),  provided for the
granting of up to  2,000,000  shares of stock  options for the purchase of up to
2,000,000 shares of Common Stock to salaried employees, through May 22, 1995. No
additional  stock options are outstanding or can be awarded under the 1985 Plan.
In February 2004, a previously  issued and outstanding  stock option,  under the
1985 Plan, for 75,000 common shares was exercised.

<PAGE>

                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
<TABLE>
<CAPTION>

     Incentive plan activity is summarized as follows:
<S>                                                    <C>              <C>                <C>                 <C>

                                                              1993 Stock                           1985 Stock
(shares in thousands)                                         Incentive Plan                       Option Plan
                                                       =========================          =============================
                                                                        Weighted                               Weighted
                                                        Shares           Average           Shares               Average
                                                         Under          Exercise            Under              Exercise
                                                        Option             Price           Option                 Price
                                                         =====           =======            =====              ========
Outstanding at December 31, 2001...................        395           $  1.49               75              $   0.21
Granted............................................        700              1.14                -                     -
                                                      --------           =======            ------             ========
Outstanding at December 31, 2002...................      1,095           $  1.27               75              $   0.21
Expired............................................        (45)             4.02                -                     -
                                                      --------           =======            ------             ========
Outstanding at December 31, 2003...................      1,050           $  1.15               75              $   0.21
 Expired...........................................        (45)             4.02                -                     -
 Granted...........................................        240              0.66                -                     -
 Exercised.........................................          -                 -              (75)                 0.21
                                                      --------           =======            ------             ========
Outstanding at December 31, 2004...................      1,245           $  1.00                -                     -
                                                      ========           =======            ======             ========
Options exercisable at:
     December 31, 2004.............................        753           $  1.04                -              $      -
       December 31, 2003...........................        614              1.14               75                  0.21
     December 31, 2002.............................        285              1.81               75                  0.21
                                                      ========           =======            ======             ========
</TABLE>

     The  following  table  summarizes  information  about the  Company's  stock
options  outstanding  and  exercisable  under  the 1985  Plan  and 1993  Plan at
December 31, 2004, as follows:
<TABLE>
<CAPTION>
<S>    <C>              <C>            <C>                   <C>                       <C>                     <C>

(shares in thousands)
                                            Outstanding Options                             Options Exercisable
                                      ===============================                  ================================
                                          Weighted
                                           Average
                                         Remaining           Weighted                                          Weighted
       Range of                        Contractual            Average                                           Average
       Exercise                               Life           Exercise                                          Exercise
         Prices         Shares          (in years)              Price                  Shares                     Price
         ======          =====            ========            =======                   =====                   =======
$0.60 to $0.66             460                   5               0.66                     220                      0.66
$0.95 to $1.05              60                   1               1.03                      60                      1.03
$1.09 to $1.19             700                   4               1.14                     448                      1.12
$2.56 to $3.65              25                   4               3.00                      25                      3.00
                      --------               =====              =====                --------                   =======
          Total          1,245                                                            753
                         =====                                                          =====
</TABLE>

     The Company has adopted the  disclosure  only  provisions of Statement 123,
but  continues to apply APB 25 in  accounting  for employee  stock  options.  No
compensation expense, attributable to stock incentive plans, has been charged to
earnings.  The fair value of stock  options  granted by the  Company in 2004 and
2002  used to  compute  pro forma  net  income  (loss)  and  earnings  per share
disclosures is the estimated fair value at date of grant.


<PAGE>


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


     The Black-Scholes  option pricing model was used to estimate the fair value
of the options at grant date based on factors as  follows:
<TABLE>
<CAPTION>
<S>                                <C>               <C>

                                    2004              2002
                                   ======            ======

Dividend yield..............           0%                0%
Volatility..................        0.46              0.56
Risk free interest rate.....         4.3%             5.04%
Expected life in years......           6               5-6
Weighted average fair
  value at grant date.......       $0.32             $0.59
                                   ======            ======
</TABLE>

     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  substantial  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 a
summary of the pro forma amounts  calculated  in  accordance  with SFAS 123, see
Note 2.

     Note 9 - Income Taxes

     The components of income tax expense for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
<S>                                                                     <C>                 <C>                 <C>

(in thousands)                                                              2004                2003               2002
                                                                            ====                ====               ====
Income tax expense - current state and local..................          $   (120)           $   (125)           $  (124)
                                                                            ====                ====               ====
</TABLE>

     The  components of pretax income (loss) and the  difference  between income
taxes computed at the statutory  federal rate of 35% in 2004, 2003 and 2002, and
the provision for income taxes for the years ended December 31 follows:
<TABLE>
<CAPTION>
<S>                                                                    <C>                  <C>                 <C>
(in thousands)                                                              2004                2003               2002
                                                                            ====                ====               ====

Loss before income taxes........................................       $  (3,231)           $ (3,434)           $(5,009)
                                                                       =========            ========            =======

Tax (expense) benefit:
Tax at statutory federal rate...................................       $   1,131            $  1,202            $ 1,753
Accounting loss benefit not recognized..........................          (1,131)             (1,202)            (1,753)
State income taxes..............................................            (120)               (125)              (124)
                                                                       ---------            --------           --------
Income tax expense..............................................       $    (120)           $   (125)          $   (124)
                                                                       =========            ========           ========
</TABLE>

     State income tax amounts for 2004, 2003 and 2002,  respectively,  primarily
consist of a minimum tax on capital to the state of Connecticut.



<PAGE>


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

     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,  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  amount 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 December  31,  2004,  the Company has NOL  carryforwards  available to reduce
future  federal  taxable  income,  which  expire if  unused,  as  follows:
<TABLE>
<CAPTION>
<S>           <C>

2008          $1,300,000
2009           6,900,000
2010           5,300,000
2012           1,100,000
2018           5,400,000
2019           4,000,000
2020           2,600,000
2021           4,000,000
2022           3,200,000
2023           1,800,000
             -----------
             $35,600,000
             ===========
</TABLE>

<PAGE>


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

     The Company's  federal income tax returns for the years  subsequent to 1992
have not been reviewed by the IRS. The utilization of certain  carryforwards  is
subject to  limitations  under U.S.  federal  income tax laws. In addition,  the
Company  has  approximately  $21  million  of  AMT  credit  carryforwards  ("AMT
Credits"),  which are not  subject  to  expiration.  Based on the  filing of the
Carryback  Claims, as further discussed above, the Company would seek to realize
approximately $8 million of the $21 million of AMT Credits.

     The Company has  calculated  a net  deferred tax asset of $34 million as of
December  31,  2004 and 2003,  respectively,  arising  primarily  from NOL's and
alternative  minimum tax credits (not including the  anticipated  tax effects of
the NOL's  expected to be generated  from the  Company's  tax basis in Carteret,
resulting  from  the  Election  Decision,  as more  fully  described  above).  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.

     Note 10 - Legal Proceedings

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

     (a)  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  which the Company believes are without merit. A trial in
this matter was completed during May 2003, and all parties  submitted post trial
briefs during August 2003. The Court has not yet made a ruling. The Company will
continue  to  monitor  the status of SDG and its  subsidiary,  AMDG,  Inc.,  and
vigorously pursue the matter.

     (b) Supervisory Goodwill Litigation.  During the third quarter of 1993, the
Company filed a claim against the United  States,  in the United States Court of
Federal  Claims (the "Court of Federal  Claims" or the "Court"),  based upon the
impact of the Financial  Institutions  Reform,  Recovery and  Enforcement Act of
1989   ("FIRREA")  on  the  Company's   investment  in  Carteret   Savings  Bank
("Carteret").  Approximately 120 other similar so-called  "supervisory goodwill"
cases, were commenced by other financial institutions and/or their shareholders,
many are still  pending in the Court of Federal  Claims.  Three of these  cases,
Winstar Corp. v. United States, Glendale Federal Bank, FSB v. United States, and
Statesman  Savings  Holding Corp. v. United States (the  "Consolidated  Cases"),
which  involve  many of the same  issues  raised  in the  Company's  suit,  were
appealed to the United States  Supreme Court (the "Supreme  Court").  On July 1,
1996, the Supreme Court issued a decision in the Consolidated Cases. The Supreme
Court's  decision  affirmed the lower Court's grant of summary judgment in favor
of the  plaintiffs  on the  issue of  liability  and  remanded  the  cases for a
determination  of damages.  Although the decision in the  Consolidated  Cases is
beneficial  to the  Company's  case,  it is not  necessarily  indicative  of the
ultimate outcome of the Company's action.

     On September 18, 1996,  the Court of Federal Claims entered an Omnibus Case
Management  Order that will govern further  proceedings in the Company's  action
and most of the other so-called  "Winstar-related" cases. On March 14, 1997, the
Court entered an order permitting the Federal Deposit Insurance Company ("FDIC")
to intervene as an  additional  plaintiff in  forty-three  cases,  including the
Company's  case,  but not  allowing  the  FDIC  to be  substituted  as the  sole
plaintiff in those cases.



<PAGE>


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

     On March 20,  1998,  the FDIC filed a motion for partial  summary  judgment
against the United States on certain liability  issues,  and the Company filed a
memorandum  in  support of that  motion.  Fact  discovery  for the  Company  was
completed  November  30,1999  pursuant to an  extension  of time  granted by the
Court.  On September  9, 1999,  the Company  filed a Motion For Partial  Summary
Judgment On Liability under a Fifth Amendment  Takings claim theory of recovery.
On November  24, 1999,  the FDIC,  as successor to the rights of Carteret and as
Plaintiff-Intervenor  in the case, filed a response brief opposing the Company's
Motion. On December 6, 1999, the Department of Justice (the "DOJ") (on behalf of
the United  States)  filed a brief  opposing  the  Company's  Motion For Partial
Summary  Judgment On  Liability  and  Cross-Moved  for  Summary  Judgment On the
Company's Takings claim. On January 25, 2000, the Company responded to the DOJ's
brief  and the  FDIC's  brief  by  filing a Brief  (i) In  Reply To  Defendant's
Opposition  To  Plaintiffs'  Motion  For  Partial  Summary  Judgment,   (ii)  In
Opposition To Defendant's  Cross-Motion For Summary Judgment, and (iii) In Reply
To FDIC's  Response To  Plaintiffs'  Motion For  Partial  Summary  Judgment.  On
February 22, 2000 the DOJ filed a brief in Reply To  Plaintiffs'  Opposition  To
Defendant's Cross-Motion For Summary Judgment.

     On October 2, 2000, Senior Judge Loren Smith of the Court of Federal Claims
heard oral  arguments in the  Company's  Supervisory  Goodwill  case against the
United States  government.  The Court heard arguments both as to the contractual
liability of the United States to Carteret Savings Bank, and as to the Company's
claim against the United States under the Takings Clause of the Fifth Amendment.

     On August 25, 2003,  the Court of Federal Claims issued a decision in which
it (i) ruled that the Government  had entered into and breached its  supervisory
goodwill contracts with the Company's wholly-owned  subsidiary,  Carteret;  (ii)
rejected the Company's  claim that it was entitled to recover  damages  directly
from the Government under the Takings Clause for the loss of Carteret; and (iii)
rejected the Company's  claim that the Government had "illegally  exacted" $62.5
million  that the Company  paid into  Carteret  subsequent  to the  Government's
breach of the Goodwill contracts.  Specifically, the Court held that the Company
could not recover  damages under the Takings Clause because it could be restored
to the  position  it was in  before  the  breach  through  Carteret's  breach of
contract action.

     On September  17, 2003,  the Company filed a Motion to Dismiss The FDIC and
to Define The Appropriate  Measure of Carteret's  Contract Damages. On September
30, 2003, the FDIC, as  plaintiff-intervenor in the case, and the United States,
as  defendant  in the case,  each filed a  separate  response  to the  Company's
motion.  The Company  argued in its motion that because  Carteret would not have
been seized but for the Government's breach of contract, no receivership deficit
would have been incurred.  Accordingly,  the Company argued that Carteret should
be entitled to recover  contract  damages that include both: (i) the full amount
of the  receivership  deficit,  as an  offset to the  deficit  and (ii) the full
amount  of  the   positive   value  it  would  have  had  but  for  the  breach.
Alternatively,  the Company  argued that, if Carteret is not entitled to recover
both  these  amounts,  or if any  award  must be  offset  by the  amount  of the
receivership  deficit,  the Company  should be entitled to  demonstrate  why the
receivership deficit has been erroneously overstated.  The Department of Justice
responded  with the theories that Carteret would have failed even if Supervisory
Goodwill  was  counted.  The FDIC,  who is both the  receiver  for the estate of
Carteret  (and hence its legal  advocate  in court) as well as a creditor of the
estate,  took the position that the Court of Federal Claims has no  jurisdiction
to review the accuracy, validity, or amount of the Carteret receivership deficit
reported  by  the  FDIC.  That  receivership  deficit  consists  of  the  FDIC's
subrogated  claim  against  the  thrift,  interest,  taxes,  and  administrative
expenses  charged by the FDIC to the thrift.  Because the  receivership  deficit
continues  to  accrue  interest,  it  grows  on a  daily  basis.  The  FDIC  has
represented  to the Court of Federal  Claims  that is does not expect to present
any expert  testimony  articulating  a theory of damages for Carteret that would
exceed the current size of the  receivership.  While the failure to seek damages
in excess of the  receivership  deficit has previously been held to be cause for
dismissal  for lack of  standing,  the FDIC has stated that it believes it still
has standing in this case based upon the damage  theories it expects the Company
to present.


<PAGE>


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

     On October 1, 2003, the Court held a telephonic status conference  pursuant
to an order set forth in the August 25,  2003  opinion.  Pursuant to that status
conference,  the Court  ordered that through  their  additional  briefing on the
Company's  Motion to Dismiss the FDIC and to define the  appropriate  measure of
Carteret's  contract  damages (i.e.,  through the Company's  reply brief and the
surreply  brief granted to the FDIC and the United  States),  the parties should
address the question  of,  "whether the Court has the power to review the amount
of the  receivership  deficit as  administered  by the FDIC." In an order  dated
October 16, 2003, the Court modified the briefing schedule such that the Company
filed its reply brief as required on October 31, 2003, and the surreply brief of
the FDIC and the United  States were filed as required in  November,  2003.  The
Court held oral argument on this issue on November 20, 2003.  The  Department of
Justice and the FDIC filed briefs  arguing that (1) the Court of Federal  Claims
had no authority to scrutinize the validity of the receivership deficit reported
by the FDIC and (2) the Court should dismiss AmBase's  remaining  damages claims
because they were  allegedly  waived.  On August 31, 2004,  the Court denied the
Company's Motion to Dismiss the FDIC, but granted the Company's Motion to Define
the Measure of Carteret's  Contract Damages to the extent it requested the Court
to  consider  the  size  and  value  of the  FDIC's  receivership  deficit  when
calculating  damages.  The Court  subsequently  conducted a status conference on
October 4,  2004,  and  ordered  the  Company  to submit a  proposed  litigation
time-line to the Court by October 22, 2004 which was timely submitted. The Court
ordered  the United  States and the FDIC to  respond to the  Company's  proposed
litigation  time-line by November 5, 2004 which was timely  submitted.  A status
conference  was held on January 11, 2005. On January 12, 2005, the Court ordered
that pursuant to the Court's order from the bench,  the  Defendant's  Motion for
Reconsideration  of the August 31,  2004  Ruling,  and, in the  Alternative,  to
dismiss the Stockholder  Derivative Claim and the  Complaint-in-Intervention  is
denied. The Court further ordered that this matter be stayed for 30 days for the
Defendant  and/or   Plaintiff-Intervenor   to  consider  filing  a  Request  for
Certification  for  Interlocutory  Appeal.  The Court held a  telephonic  status
conference  on  February  11,  2005 at which  time the Court  ordered  that fact
discovery  was to resume on February  14, 2005 and would  continue  for at least
three (3) months.  The Court further scheduled a telephonic status conference to
be held on Thursday, May 12, 2005 to discuss the need for further discovery.

     On January 12, 2005, Judge Smith denied the government's  motion to dismiss
the Company's remaining claims arising out of damages for breach of contract. On
March 15, 2005, the United States  Department of Justice and the FDIC each filed
motions requesting that Judge Smith certify for immediate appeal his ruling that
the Company is entitled to challenge the validity of the  receivership  deficit.
The  Company's  filed its reply to these  motions on March 29,  2005,  and Judge
Smith has scheduled  oral argument on these motions for April 21, 2005.  Because
Judge  Smith's  ruling on the  receivership  deficit issue is not a final order,
both Judge  Smith and the  Federal  Circuit  would have to agree to an appeal of
that issue at this time. If an immediate appeal is not granted, expert discovery
is likely to commence at the close of the current round of factual discovery. No
assurance can be given regarding the ultimate outcome of the litigation.

     Both the Court of Federal  Claims and the Court of Appeals  for the Federal
Circuit have issued numerous  decisions in cases that involve claims against the
United  States  based upon its breach of its  contracts  with  savings  and loan
institutions  through its 1989 enactment of FIRREA.  In particular,  the Federal
Circuit  has issued  decisions  rejecting  Takings  Clause  claims  advanced  by
shareholders of failed thrifts. Castle v. United States, 301F.3d 1328 (Fed. Cir.
2002);  Bailey v. United  States,  341 F. 3d 1342 (Fed.  Cir 2003)  petition for
certiorari which was filed January 26, 2004. In April 2004, the Company filed an
amicus brief in support of the petition for certiorari filed by Bailey.  In June
2004, the United States  Supreme Court denied the petition for certiorari  filed
by Bailey.  The Court of Claims decision in the Company's case, as well as other
decisions in  Winstar-related  cases, are publicly available and may be relevant
to the Supervisory Goodwill Company's claims, but are not necessarily indicative
of the ultimate outcome of the Company's actions.



<PAGE>


                       AMBASE CORPORATION AND SUBSIDIAIRES
              Notes to Consolidated Financial Statement (continued)

     Note 11 - Fair Value of Financial Instruments

     The  carrying  amounts  reported  in the  balance  sheet  for cash and cash
equivalents, and accounts payable and accrued liabilities approximate fair value
due to the short-term nature of these instruments.  The fair value of investment
securities - held to maturity and investment  securities  available for sale are
based on current market  quotations.  During 2002, other  investment  securities
were written down to their net realizable value as further  described in Note 3.
The carrying  value of  applicable  other  liabilities  approximates  their fair
value.

     Note 12 - Property Owned

     The Company owns 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 and leases the remaining  square footage to unaffiliated  third parties.
The buildings are carried at cost, net of accumulated  depreciation  of $763,000
and $433,000 at December 31, 2004 and 2003,  respectively.  Depreciation expense
is recorded on a straight-line  basis over 39 years. Tenant security deposits of
$305,000 and $308,000 at December 31, 2004 and 2003, respectively,  are included
in other liabilities.

     The  property is leased to tenants  under  operating  leases  with  varying
terms.  Future  minimum  rentals  receivable  from tenants under  non-cancelable
operating leases, excluding tenant reimbursements of operating expenses and real
estate  tax   escalations,   are   approximately   as   follows:

<TABLE>
<CAPTION>
      <S>                                                            <C>
                                                                     December 31
                                                                     -----------
     2005 ..............................................             $ 2,069,000
     2006...............................................               1,838,000
     2007...............................................               1,619,000
     2008...............................................               1,115,000
     2009...............................................                 955,000
</TABLE>

     Note 13 - Quarterly Financial Information (unaudited)

     Summarized quarterly financial information follows:
<TABLE>
<CAPTION>
<S>                                          <C>              <C>                <C>              <C>          <C>

                                                First            Second            Third            Fourth         Full
(in thousands, except per share data)         Quarter           Quarter          Quarter           Quarter         Year
                                                =====             =====            =====             =====        =====
2004:
Revenues................................     $    535         $     556          $   561          $    577     $  2,229
Operating expenses......................        1,457             1,492            1,490             2,273        6,712
Operating loss..........................         (922)             (936)            (929)           (1,696)      (4,483)
Loss before income taxes................         (700)             (584)            (664)           (1,283)      (3,231)
Net loss................................         (730)             (614)            (694)           (1,313)      (3,351)
                                             ========         =========          =======          ========     ========
Net loss per common share:
Basic ..................................     $  (0.02)        $   (0.01)         $ (0.02)         $  (0.02)    $  (0.07)
Assuming dilution.......................        (0.02)            (0.01)           (0.02)            (0.02)       (0.07)
                                             ========         =========          =======          ========     ========
2003:
Revenues................................     $    614         $     617          $   615          $    732     $  2,578
Operating expenses......................        1,392             1,857            1,573             1,614        6,436
Operating loss..........................         (778)           (1,240)            (958)             (882)      (3,858)
Loss before income taxes................         (693)           (1,102)            (875)             (764)      (3,434)
Net loss................................         (724)           (1,133)            (907)             (795)      (3,559)
                                             ========         =========          =======          ========     ========
Net loss per common share:
Basic...................................     $  (0.02)        $   (0.02)           (0.02)            (0.02)       (0.08)
Assuming dilution.......................        (0.02)            (0.02)           (0.02)            (0.02)       (0.08)
                                             ========         =========          =======          ========     ========
</TABLE>

<PAGE>


     ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE. None.

     ITEM 9A. 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.  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.

     As of December 31, 2004, 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.  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 in other  factors  that  could  significantly  affect the  internal  controls
subsequent to the date the Company completed its evaluation.

     ITEM 9B. OTHER INFORMATION

     None.

     PART III

     ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information  concerning  executive  officers  required  by this item is set
forth  following  Item 4 of Part I of this report  under the caption  "Executive
Officers of the Registrant", pursuant to General Instruction G to Form 10-K. For
the information required to be set forth by the Company in response to this item
concerning  directors  of  the  Company,  see  the  Company's  definitive  Proxy
Statement  for its Annual  Meeting of  Shareholders  to be held on May 20, 2005,
under the  captions  "Proposal  No. 1 - Election of Director"  and  "Information
Concerning  the  Board  and its  Committees",  which is  incorporated  herein by
reference,  which the Company  intends to file with the  Securities and Exchange
Commission not later than 120 days after the close of its 2004 fiscal year.

     Code of Ethics

     We have  adopted  a Code of Ethics  that  applies  to our  Chief  Executive
Officer,  Senior Financial Officer and other senior officers. A copy of the Code
of Ethics was filed with the SEC as Exhibit 14 to the Company's Annual Report on
Form 10-K for the year ending December 31, 2003.

     ITEM 11. EXECUTIVE COMPENSATION

     For the information  required to be set forth by the Company in response to
this item, see the Company's  definitive  Proxy Statement for its Annual Meeting
of  Shareholders  to be held on May 20,  2005,  under  the  captions  "Executive
Compensation"  and  "Employment  Contracts",  which are  incorporated  herein by
reference,  which the Company  intends to file with the  Securities and Exchange
Commission not later than 120 days after the close of its 2004 fiscal year.

<PAGE>

     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table summarizes  information about securities authorized for
issuance under equity  compensation plans of the Company at December 31, 2004 as
follows:
<TABLE>
<CAPTION>
<S>                      <C>                          <C>                          <C>
                         Shares to be issued          Weighted average
                         upon exercise of             exercise price of            Shares available for
                         outstanding options          outstanding options            future issuance
                         ===================          ===================          ====================
Equity Compensation
   Plans approved
   by stockholders               1,245,000            $             1.00                      3,755,000

Equity Compensation
   Plan not approved
   By stockholders                       -                             -                        110,000
                            --------------            -------------------          ----------------------
Total                            1,245,000            $             1.00                       3,865,000
                            ==============            ===================          ======================
</TABLE>

     Plan not approved by stockholders

     The Company has 110,000  shares of common stock reserved for issuance under
the AmBase  Corporation  Stock Bonus Plan (the "Stock  Bonus  Plan"),  which was
approved by the Board of  Directors  of the Company in 1989.  The purpose of the
Stock Bonus Plan is to encourage  individual  performance and to reward eligible
employees whose performance,  special achievements,  longevity of service to the
Company or suggestions  make a significant  improvement or  contribution  to the
growth and profitability of the Company. The Stock Bonus Plan is administered by
the  Personnel  Committee of the Board of  Directors.  Members of the  Personnel
Committee  are not eligible for an award  pursuant to the Stock Bonus Plan.  The
Company's  President may also designate  eligible  employees to receive  awards,
which are not to be in excess of 100 shares of Common Stock. No fees or expenses
of any kind are to be charged to a  participant.  Any  employee of the  Company,
except for certain officers or directors of the Company, are eligible to receive
shares  under the Stock  Bonus  Plan.  Distributions  of shares may be made from
authorized but unissued shares,  treasury shares or shares purchased on the open
market.

     For other  information  required to be set forth by the Company in response
to this  item,  see the  Company's  definitive  Proxy  Statement  for its Annual
Meeting of  Shareholders  to be held on May 20, 2005,  under the caption  "Stock
Ownership", which is incorporated herein by reference, which the Company intends
to file with the  Securities  and  Exchange  Commission  not later than 120 days
after the close of its 2004 fiscal year.

     ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

     ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information  concerning  Principal  Accountant Fees and Services is set
forth by the Company under the heading  "Proposal 3 - Appointment of Independent
Registered Public  Accounting Firm" in the Company's  definitive Proxy Statement
for its Annual  Meeting of  Shareholders  to be held on May 20,  2005,  which is
incorporated  herein by  reference,  which the Company  intends to file with the
Securities  and Exchange  Commission  not later than 120 days after the close of
its 2004 fiscal year.



<PAGE>


     PART IV

     ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     Documents filed as a part of this report:
<TABLE>
<S>  <C>      <C>                                                                                              <C>

1.   Index to Financial Statements:                                                                            Page

         AmBase Corporation and Subsidiaries:
              Report of Independent Registered Public Accounting Firm...........................................11
              Consolidated Statements of Operations.............................................................12
              Consolidated Balance Sheets.......................................................................13
              Consolidated Statements of Changes in Stockholders' Equity........................................14
              Consolidated Statements of Comprehensive Income (Loss) ...........................................14
              Consolidated Statements of Cash Flows.............................................................15
              Notes to Consolidated Financial Statements........................................................16
</TABLE>

     2. Index to Financial Statements Schedules:

     Schedule III - Real Estate and Accumulated Depreciation

     3.  Exhibits:   3A.  Restated   Certificate  of   Incorporation  of  AmBase
Corporation (as amended through February 12, 1991) (incorporated by reference to
Exhibit  3A to the  Company's  Annual  Report  on Form  10-K for the year  ended
December 31, 1990).

     3B.  By-Laws of AmBase  Corporation  (as amended  through  March 15, 1996),
(incorporated  by reference to Exhibit 3B to the Company's Annual Report on Form
10-K for the year ended December 31, 1995).

     4. Rights  Agreement  dated as of February 10, 1986 between the Company and
American Stock  Transfer and Trust Co. (as amended March 24, 1989,  November 20,
1990,  February  12, 1991,  October 15,  1993,  February 1, 1996 and November 1,
2000), (incorporated by reference to Exhibit 4 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990, the Company's  Quarterly  Report
on Form 10-Q for the quarterly  period ended  September 30, 1993,  the Company's
Annual  Report  on Form  10-K  for the  year  ended  December  31,  1995 and the
Company's Quarterly Report on Form 10-Q for the Quarterly period ended September
30, 2000, respectively).

     10A.   1985  Stock  Option  Plan  for  Key  Employees  of  AmBase  and  its
Subsidiaries  (incorporated  by reference to Exhibit 10B to the Company's Annual
Report on Form 10-K for the year ended December 31, 1989).

     10B. 1993 Stock  Incentive  Plan as amended  (incorporated  by reference to
Exhibit  A  to  the  Company's   Proxy  Statement  for  the  Annual  Meeting  of
Stockholders held on May 28, 1998).

     10C. 1994 Senior Management  Incentive  Compensation Plan  (incorporated by
reference to Exhibit A to the Company's  Proxy  Statement for the Annual Meeting
of Stockholders held on May 27, 1994).

     10D.  AmBase  Officers  and Key  Employees  Stock  Purchase  and Loan  Plan
(incorporated by reference to Exhibit 10E to the Company's Annual Report on Form
10-K for the year ended December 31, 1989).

     10E.  AmBase  Supplemental  Retirement Plan  (incorporated  by reference to
Exhibit  10C to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 1989).

     10F.  Assignment  and  Assumption  Agreement  dated as of August 30,  1985,
between the Company and City  Investing  Company  (incorporated  by reference to
Exhibit  28 to the  Company's  Current  Report on Form 8-K dated  September  12,
1985).


<PAGE>


     10G.  Employment  Agreement  dated as of June 1, 1991  between  Richard  A.
Bianco and the Company,  as amended December 30, 1992 (incorporated by reference
to Exhibit 10G to the  Company's  Annual  Report on Form 10-K for the year ended
December 31, 1992), as amended February 24, 1997,  (incorporated by reference to
Exhibit  10G to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31,  1996),  as amended  March 6, 2001,  (incorporated  by reference to
Exhibit  10G to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2000), and as amended December 16, 2001, (incorporated by reference
to Exhibit 10G to the  Company's  Annual Report on Form 10-K for the year ending
December 31, 2001).

     14.  AmBase  Corporation  - Code of Ethics as adopted by Board of Directors
(incorporated  by reference to Exhibit 14 to the Company's Annual Report on Form
10-K for the year ending December 31, 2003).

     21. Subsidiaries of the Registrant.

     23. Consent of Independent Registered Public Accounting Firm.

     31.1 Rule 13a-14(a)  Certification  of Chief Executive  Officer Pursuant to
Rule 13a-14.

     31.2 Rule 13a-14(a)  Certification  of Chief Financial  Officer Pursuant to
Rule 13a-14.

     32.1 Section 1350 Certification of Chief Executive Officer pursuant to Rule
18 U.S.C. Section 1350.

     32.2 Section 1350 Certification of Chief Financial Officer pursuant to Rule
18 U.S.C. Section 1350.

     Exhibits, except as otherwise indicated above, are filed herewith.

<PAGE>

     Signatures

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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/ RICHARD A.  BIANCO
Chairman,  President  and Chief  Executive  Officer
(Principal Executive Officer)
Date: March 30, 2005

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities on the dates indicated.




/s/ RICHARD A. BIANCO                /s/ JOHN P. FERRARA
Chairman, President,                 Vice President, Chief Financial Officer
Chief Executive Officer & Director   & Controller
Date: March 30, 2005                (Principal Financial and Accounting Officer)
                                     Date: March 30, 2005





/s/ JOHN B. COSTELLO                 /s/ ROBERT E. LONG
Director                             Director
Date: March 30, 2005                 Date: March 30, 2005




/s/ MICHAEL L. QUINN
Director
Date: March 30, 2005



















<PAGE>
<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
             SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 2004
                             (dollars in thousands)

<S>             <C>                   <C>                                   <C>                    <C>
COLUMN A        COLUMN B                          COLUMN C                       COLUMN D                 COLUMN E
-----------     ------------------    ---------------------------------     -------------------    ------------------------
                                                                            Cost Capitalized
                                                                            Subsequent to          Gross Amount at which Carried at
                                      Initial Cost to Company               Acquisition            the Close of the Period
                                      =======================               ================       ================================
                                                   Building &                                      Building &
Description          Encumbrances     Land       Improvements    Improvements       Land           Improvements      Total
===========          ===========     ======      ============    ============      ======          ============      ======
Office Building:
Greenwich, CT...  $           -      $  554      $      1,880    $         20      $  554          $      1,900      $2,454
Greenwich, CT...  $           -       6,400            10,892              18       6,400                10,910      17,310
                  --------------     -------     -------------   ------------      ------          ------------      --------
Total...........  $           -      $6,954      $      12,772   $         38      $6,954                12,810      $19,764
                  ==============     =======     =============   ============      ======          ============      ========

                                                                                             [Additional columns below]
[Continued from above table, first column(s) repeated]

COLUMN A          COLUMN F           COLUMN G                                 COLUMN H                    COLUMN I
-----------       --------------     --------                               -------------          ---------------------------
                  Accumulated                                                                      Life on Which
Description       Depreciation       Date Constructed                       Date Acquired          Latest Income Statement
===========       ============       ================                       =============          ===========================
Office Building:
Greenwich, CT...  $         181      1970                                   Apr.-01                         39 years
Greenwich, CT...            583      1977                                   Dec.-02                         39 years
                  -------------      ================                       ============           ===========================
Total...........  $         764
                  =============
</TABLE>

     [a] Reconciliation of total real estate carrying value is as follows:
<TABLE>
<CAPTION>
<S>                                         <C>                      <C>                         <C>
                                              Year Ended               Year Ended                   Year Ended
                                            December 31, 2004        December 31, 2003            December 31, 2002
                                            =================        =================            =================
Balance at beginning of year..............  $          19,764        $          19,726            $           2,435
Improvements..............................                  -                       38                            -
Acquisitions..............................                  -                        -                       17,291
                                            ------------------       -----------------            -----------------
Balance at end of year..................... $          19,764        $          19,764            $          19,726
                                            ==================       =================            =================
Total cost for federal tax
purposes at end of each year..............  $          19,764        $          19,764            $          19,726
                                            ==================       =================            =================

     [b] Reconciliation of accumulated depreciation as follows:

Balance at beginning of year..............  $             433        $             104            $              42
Depreciation expense......................                330                      329                           62
                                            ------------------       -----------------            -----------------
Balance at end of year....................  $             763        $             433            $             104
                                            ==================       =================            =================
</TABLE>

<PAGE>

     DIRECTORS AND OFFICERS

     Board of  Directors
Richars A. Bianco          John B.  Costello          Robert E. Long
Chairman,  President and   Private  Investor          Managing Director
Chief  Executive Officer                              Goodwyn, Long & Black
                                                      AmBase Corporation

Michael Quinn
Private Investor

AmBase Officers
Richard A. Bianco                     John P. Ferrara
Chairman, President and               Vice President, Chief Financial Officer
Chief Executive Officer               and Controller

INVESTOR INFORMATION

<TABLE>
<CAPTION>
<S>                                                                 <C>
Annual Meeting of Stockholders                                      Corporate Headquarters

 The 2005 Annual Meeting is currently  scheduled to be held          AmBase Corporation
 at 9:00 a.m. Eastern Time, on Friday, May 20, 2005, at:             100 Putnam Green, 3rd Floor
                                                                     Greenwich, CT  06830-6027
     Hyatt Regency Hotel                                             (203) 532-2000
     1800 East Putnam Avenue
     Greenwich, CT  06870

                                                                     Stockholder Inquiries

 Common Stock Trading                                                Stockholder  inquiries,  including requests for the
 ====================
                                                                     following:  (i) change of address; (ii) replacement
                                                                     AmBase stock is traded through one or more market-makers
                                                                     of lost stock certificates;(iii) Common Stock name with
                                                                     quotations made available in the "pink sheets"
                                                                     registration changes; (iv) Quarterly Reports on published
                                                                     by the National Quotation Bureau, Inc. Form 10-Q; (v)
                                                                     Annual Reports on Form 10-K; (vi) proxy  material;  and
                                                                    (vii)  information  regarding Issue Abbreviation Ticker Symbol
                                                                    stockholdings, should be directed to:

 Common Stock AmBase ABCP                                           American Stock Transfer and Trust Company
                                                                         59 Maiden Lane
                                                                         New York, NY  10038
 Transfer Agent and Registrar                                            Attention: Shareholder Services
 ============================
                                                                         (800) 937-5449 or (718) 921-8200 Ext. 6820
 American Stock Transfer and Trust
     Company                                                         In  addition,   the   Company's   public   reports,
 59 Maiden Lane                                                      including  Quarterly  Reports on Form 10-Q,  Annual
 New York, NY  10038                                                 Reports on Form 10-K and Proxy  Statements,  can be
 Attention: Shareholder Services                                     obtained   through  the   Securities  and  Exchange
 (800) 937-5449 or (718) 921-8200 Ext. 6820                          Commission  EDGAR  Database over the World Wide Web
                                                                     at www.sec.gov.

 Independent Registered Public Accountants                           Number of Stockholders

 PricewaterhouseCoopers LLP                                          As of February 28, 2005, there were
 PricewaterhouseCoopers Center                                       approximately 15,000 stockholders.
 300 Madison Avenue, 32nd Floor
 New York, NY  10017
</TABLE>