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, 2007
                                   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 if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes   No X

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant  to  Section  13 or  Section  15(d)  of  the  Act.  Yes  No X

     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.

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated  filer, a non-accelerated  filer, or a smaller reporting company.
See definition of "accelerated  filer",  "large accelerated filer", and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

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

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act). Yes  No X



<PAGE>

     At February 29, 2008, there were 43,858,664  shares of registrant's  Common
Stock  outstanding.  At June 29, 2007 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 $0.47 per share,  was  approximately  $13  million.  The  Common  Stock
constitutes registrant's only outstanding class of security.

     Portions of the registrant's definitive Proxy Statement for its 2008 Annual
Meeting of  Stockholders,  which Proxy Statement the 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 48.

<PAGE>
<TABLE>
<CAPTION>

AmBase Corporation

Annual Report on Form 10-K
December 31, 2007
<S>                                                                                                          <C>
TABLE OF CONTENTS                                                                                              Page
----------------------------------------------                                                               ------

PART I

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

Item 1A.      Risk Factors........................................................................................2

Item 1B.      Unresolved Staff Comments...........................................................................5

Item 2.       Properties..........................................................................................5

Item 3.       Legal Proceedings...................................................................................5

Item 4.       Submission of Matters to a Vote of Security Holders.................................................5

              Executive Officers of the Registrant................................................................5

PART II

Item 5.       Market for  Registrant's  Common  Equity,  Related  Stockholder  Matters and Issuer
                Purchases of
                Equity Securities.................................................................................6

Item 5.       Performance Graph...................................................................................7

Item 6.       Selected Financial Data.............................................................................8

Item 7.       Management's  Discussion  and  Analysis  of  Financial  Condition  and  Results  of
                Operations........................................................................................8

Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.........................................15

Item 8.       Financial Statements and Supplementary Data........................................................16

Item 9.       Changes  in  and  Disagreements   with  Accountants  on  Accounting  and  Financial
                Disclosure.......................................................................................45

Item 9AT.     Controls and Procedures............................................................................45

Item 9B.      Other Information..................................................................................46

PART III

Item 10.      Directors, Executive Officers and Corporate Governance.............................................46

Item 11.      Executive Compensation.............................................................................46

Item 12.      Security   Ownership  of  Certain   Beneficial  Owners  &  Management  and  Related
                Stockholder Matters..............................................................................47

Item 13.      Certain Relationships and Related Transactions and Director Independence...........................47

Item 14.      Principal Accounting Fees and Services.............................................................47

PART IV

Item 15.      Exhibits and Financial Statement Schedules.........................................................48
</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 one commercial
office  building in Greenwich,  Connecticut  that is managed and operated by the
Company.  The building is approximately  14,500 square feet; with  approximately
3,500  square  feet  utilized  by the Company  for its  executive  offices;  the
remaining space is currently  unoccupied and available for lease.  The executive
office of the Company is located at 100 Putnam  Green,  Third Floor,  Greenwich,
Connecticut 06830.

     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents,  investment  securities,  and real estate owned.  The Company earns
non-operating   revenue   principally   consisting  of  investment  earnings  on
investment securities and cash equivalents.  The Company continues to evaluate a
number of possible acquisitions,  and is engaged in the management of its assets
and  liabilities,  including the  contingent  assets  associated  with its legal
claims,  as  described  in Part  II - Item 8 -  Notes 9 and 10 to the  Company's
consolidated  financial  statements.  From  time to time,  the  Company  and its
subsidiaries may be named as a defendant in various lawsuits or proceedings. The
Company intends to  aggressively  contest all litigation and  contingencies,  as
well as pursue all sources for  contributions to settlements.  The Company had 6
employees at December 31, 2007.

     In July 2005,  the Company sold its 38,000  square foot office  building at
Two Soundview Drive in Greenwich,  Connecticut ("Two  Soundview").  Accordingly,
the results of operations of Two Soundview have been retroactively  reclassified
as  discontinued  operations  in  the  accompanying  Consolidated  Statement  of
Operations for the periods  presented in accordance  with  Financial  Accounting
Standards  Board,   Statement  of  Financial   Accounting   Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets" ("SFAS 144").
See  Part  II -  Item  8 -  Note  13 to  the  Company's  Consolidated  Financial
Statements for further information.

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  connection  with a  litigation  settlement  with SDG and AMDG,  the  Company
received  $72,000 in April 2006.  The Company  remains a shareholder  in SDG and
AMDG and will  continue to monitor the status of SDG and its  subsidiary,  AMDG,
Inc. These investments have no current carrying value, as the Company's original
cost basis was previously written off.


<PAGE>
STOCKHOLDER INQUIRIES

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

     As the Company does not maintain a website,  copies of Quarterly Reports on
Form 10-Q, Annual Reports on Form 10-K and Proxy Statements can also be obtained
directly  from the Company free of charge by sending a request to the Company by
mail as follows:

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

     The Company is subject to the informational  requirements of the Securities
Exchange Act of 1934 (the "Exchange  Act").  Accordingly,  the Company's  public
reports,  including  Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K
and Proxy  Statements,  can be obtained  through  the  Securities  and  Exchange
Commission ("SEC") EDGAR Database available on the SEC's website at www.sec.gov.
Materials  filed with the SEC may also be read or copied by  visiting  the SEC's
Public Reference Room, 100 F Street,  NE, Washington,  DC 20549.  Information on
the  operation  of  the  Public  Reference  Room  may  be  obtained  by  calling
1-800-SEC-0330.

ITEM 1A.      RISK FACTORS

     The  Company  is subject  to  various  risks,  many of which are beyond the
Company's  control,  which  could have a negative  effect on the Company and its
financial  condition.  As a result of these and other  factors,  the Company may
experience  material  fluctuations in future operating results on a quarterly or
annual  basis,  which  could  materially  and  adversely  affect  the  Company's
business, financial condition,  operating results and stock price. An investment
in the Company's stock involves  various risks,  including those mentioned below
and  elsewhere in this Annual Report on Form 10-K (this  "Annual  Report"),  and
those that are detailed  from time to time in the  Company's  other filings with
the  Securities  and  Exchange  Commission.  You should  carefully  consider the
following risk factors,  together with all of the other information  included or
incorporated  by reference in this Annual  Report,  before you decide whether to
purchase the Company's common stock.

     The  Company is a  plaintiff  in a legal  proceeding  seeking  recovery  of
damages for the loss of the Company's  investment  in Carteret.  There can be no
assurances of a favorable outcome for the Company in this legal proceeding.

     The  Company is a  plaintiff  in a legal  proceeding  seeking  recovery  of
damages from the United States  Government for the loss of the Company's  wholly
owned  subsidiary,  Carteret  Savings  Bank,  F.A.  This  legal  proceeding  was
commenced in 1993 and will likely  continue  for several more years.  There have
been and may continue to be rulings in other "supervisory  goodwill" cases which
have had and/or may have adverse affects on the Company's  Supervisory  Goodwill
proceeding.  In addition,  due to the extended length of time that  proceedings,
rulings, trial decisions and possible appeals in this matter may take, it is not
possible  for the  Company to predict  when this  matter will be resolved or the
likelihood of a favorable outcome.


<PAGE>
     The Company is subject to risks inherent in owning and leasing real estate.

     The  Company is subject to  varying  degrees of risk  generally  related to
leasing and owning real estate many of which are beyond the  Company's  control.
In addition to general  risks  related to owning  commercial  real  estate,  the
Company's risks include, among others:

     o  deterioration  in regional  and local  economic  and real estate  market
conditions,

     o potential changes in supply of, or demand for rental  properties  similar
to the Company's, o competition for tenants and changes in rental rates,

     o concentration in a single real estate asset and class,

     o difficulty in reletting properties on favorable terms or at all,

     o impairments in the Company's ability to collect rent payments when due,

     o the potential for uninsured casualty and other losses,

     o the impact of present or future environmental  legislation and compliance
with environmental laws,

     o adverse changes in zoning laws and other regulations,

     o changes in federal or state tax laws, and

     o acts of terrorism and war.

     Each  of  these  factors  could  cause a  material  adverse  effect  on the
Company's  financial  condition  and results of  operations.  In addition,  real
estate  investments  are  relatively  illiquid,  which means that the  Company's
ability to  promptly  sell the  Company's  property  in  response  to changes in
economic and other conditions may be limited.

     Property taxes on the Company's property may increase without notice.

     The property the Company owns is subject to real property  taxes.  The real
property  taxes on the  Company's  property  and any other  properties  that the
Company  acquires in the future may increase as property tax rates change and as
those  properties are assessed or reassessed by tax  authorities.  To the extent
that the Company's  available rental space remains  unoccupied or future tenants
are unable or unwilling to pay such  increase in  accordance  with their leases,
the Company's net operating expenses may increase.

     The Company's business is concentrated in Southern Connecticut, and adverse
conditions in the region could negatively impact the Company's operations.

     The Company's current operations are concentrated in Southern  Connecticut,
specifically in the Greenwich area. As a result, the value of the Company's real
estate is  dependent on the  economic  strength of that  region.  Because of the
Company's  geographic  concentration  and its  single  property,  the  Company's
operations are more vulnerable to adverse changes in the Greenwich  economy than
those of larger,  more  diversified  companies.  Should the  Company  experience
softening  in the  Company's  market  and not be able to  offset  the  potential
negative market influences on price and volume, the Company's  financial results
could be negatively impacted.

     The Company is in a competitive business.

     The real estate industry is highly  competitive.  The Company  competes for
tenants  for its  unoccupied  rental  space with a large  number of real  estate
property  owners and other  companies  that  sublet  properties.  The  Company's
principal  means of  competition  are rents  charged in  relation  to the income
producing  potential of the  location.  In addition,  the Company  expects other
major real estate  investors,  some with much greater resources than the Company
has,  may  compete  with  us for  attractive  acquisition  opportunities.  These
competitors  include REITs,  investment banking firms and private  institutional
investors.  This competition has increased prices for commercial  properties and
may impair the  Company's  ability to make  suitable  property  acquisitions  on
favorable terms in the future.


<PAGE>
     The  Company's  future  cash flow is  dependent  on  renewal  of leases and
reletting of the Company's space.

     The Company is subject to risks that its presently  available  rental space
may not be successfully rented, that financial distress of the Company's tenants
may lead to vacancies at the Company's property, that leases may not be renewed,
that  locations  may not be relet or that the  terms  of  renewal  or  reletting
(including the cost of required  renovations) may be less favorable than current
lease  terms.  In  addition,  numerous  properties  compete  with the  Company's
property  in  attracting  tenants  to lease  space.  The  number of  competitive
properties  in a  particular  area could have a material  adverse  effect on the
Company's ability to lease the Company's  property or newly acquired  properties
and on the rents charged.  If the Company were unable to promptly relet or renew
the leases for all or a substantial  portion of this location,  or if the rental
rates upon such renewal or reletting were significantly lower than expected, the
Company's  cash flow could be  adversely  affected  and the resale  value of the
Company's property could decline.

     The Company may not be able to insure certain risks economically.

     The Company may  experience  economic  harm if any damage to the  Company's
property is not covered by  insurance.  The Company  cannot be certain  that the
Company  will be able to insure  all risks  that the  Company  desires to insure
economically or that all of the Company's insurers will be financially viable if
the Company  makes a claim.  The Company may suffer  losses that are not covered
under the Company's insurance policies. If an uninsured loss or a loss in excess
of insured  limits  should occur,  the Company could lose capital  invested in a
property, as well as any future revenue from the property.

     Changes in the composition of the Company's assets and liabilities  through
acquisitions,  divestitures or corporate  restructuring may affect the Company's
results.

     The Company  may make  future  acquisitions  or  divestitures  of assets or
changes  in how such  assets  are held.  Any  change in the  composition  of the
Company's  assets and  liabilities or how such assets and  liabilities  are held
could  significantly  affect the Company's financial position and the risks that
the Company faces.

     The Company may not be able to generate  sufficient taxable income to fully
realize the Company's deferred tax asset.

     The Company has federal income tax net operating loss ("NOL") carryforwards
and other tax  attributes.  If the  Company  is  unable to  generate  sufficient
taxable income,  the Company may not be able to fully realize the benefit of the
NOL carryforwards.

     Because the Company from time to time maintains a majority of its assets in
securities,  the Company may in the future be deemed to be an investment company
under the  Investment  Company Act of 1940  resulting  in  additional  costs and
regulatory burdens.

     Currently, the Company believes that either it is not within the definition
of "Investment  Company" as the term is defined under the Investment Company Act
of 1940 (the "1940 Act") or,  alternatively  may rely on one or more of the 1940
Act's exemptions. The Company intends to continue to conduct its operations in a
manner that will exempt the Company from the  registration  requirements  of the
1940 Act.  If the  Company  were to become  deemed to be an  investment  company
because of the Company's investments  securities holdings,  the Company would be
required to register as an  investment  company under the 1940 Act. The 1940 Act
places   significant   restrictions  on  the  capital  structure  and  corporate
governance of a registered  investment  company,  and  materially  restricts its
ability to conduct  transactions  with affiliates.  Compliance with the 1940 Act
could also increase the  Company's  operating  costs.  Such changes could have a
material  adverse  affect on the Company's  business,  results of operations and
financial condition.

     Terrorist  attacks  and other acts of violence or war may affect the market
on which the  Company's  common stock  trades,  the markets in which the Company
operate, the Company's operations and the Company's results of operations.

     Terrorist attacks or armed conflicts could affect the Company's business or
the businesses of the Company's tenants. The consequences of armed conflicts are
unpredictable, and the Company may not be able to foresee events that could have
an adverse effect on the Company's business. More generally, any of these events
could cause consumer  confidence and spending to decrease or result in increased
volatility in the U.S. and worldwide  financial  markets and economy.  They also
could be a factor resulting in, or a continuation  of, an economic  recession in
the U.S. or abroad.  Any of these occurrences  could have a significant  adverse
impact  on the  Company's  operating  results  and  revenues  and may  result in
volatility of the market price for the Company's common stock.
<PAGE>

ITEM 1B.      UNRESOLVED STAFF COMMENTS

None.

ITEM 2.       PROPERTIES

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

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.  Other than those  noted  below,  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, 2007:
<TABLE>
<CAPTION>
<S>                                     <C>                            <C>

Name                                    Age                            Title
====                                    ===                            ========
Richard A. Bianco                        60                            Chairman, President and
                                                                       Chief Executive Officer


John P. Ferrara                          46                            Vice President, Chief
                                                                       Financial Officer
                                                                       and Controller

Joseph R. Bianco                         63                            Treasurer
</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.

     Mr. J. Bianco was elected to the  position of  Treasurer  of the Company in
January  1998.  He has  dedicated  his  career  to the  financial  services  and
investment industry. Prior to his employment with the Company in 1996, he worked
for Merrill Lynch & Co. ("Merrill") as Vice President, responsible for Sales and
Marketing  in the Merrill  Global  Securities  Clearing  from 1983 to 1996.  Mr.
Joseph R. Bianco and Mr. Richard A. Bianco are related.


<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>      <C>            <C>

                                                  2007                     2006
                                           =====================    =====================
                                           High             Low     High              Low
                                           ====             ===     ====              ===
First Quarter.......................      $ 0.59          $ 0.47   $ 0.63          $ 0.52
Second Quarter......................        0.52            0.47     0.55            0.46
Third Quarter.......................        0.50            0.40     0.55            0.44
Fourth Quarter......................        0.44            0.40     0.57            0.43
</TABLE>

     As of February 28, 2008, there were approximately  14,300 beneficial owners
of the  Company's  Common  Stock.  No  dividends  were  declared  or paid on the
Company's  Common Stock in 2007 or 2006.  The Company does not intend to declare
or pay dividends in the foreseeable future.

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

     Common Stock Repurchase Plan

     In January 2002, the Company  announced a common stock repurchase plan (the
"Repurchase  Plan") which allows for the  repurchase  by the Company of up to 10
million shares of its common stock in the open market.

     The Repurchase Plan is conditioned upon favorable  business  conditions and
acceptable prices for the common stock.  Purchases under the Repurchase Plan may
be made,  from  time to time,  in the  open  market,  through  block  trades  or
otherwise.  Depending on market  conditions and other factors,  purchases may be
commenced  or  suspended  any time or from time to time  without  prior  notice.

<TABLE>
<CAPTION>
<S>                                       <C>             <C>            <C>                       <C>
                                                             Average
                                                            Price Paid
                                               Total         per Share       Total Number           Maximum Number
                                             Number of      (including     Shares Purchased        Shares that may
                                              Shares         Broker      as Part of Publicly       yet be Purchased
                                             Purchased     Commissions)    Announced Plans         under the Plan
                                          --------------- -------------- -------------------       ----------------

Beginning balance January 1, 2007.........         -           -               1,315,000               8,685,000
January 1, 2007 - January 31, 2007........         -           -               1,315,000               8,685,000
February 1, 2007 - February 28, 2007......         -           -               1,315,000               8,685,000
March 1, 2007 - March 31, 2007............         -           -               1,315,000               8,685,000
April 1, 2007 - April 30, 2007............   110,000           0.48            1,425,000               8,575,000
May 1, 2007 - May 31, 2007................         -           -               1,425,000               8,575,000
June 1, 2007 - June 30, 2007..............   100,000           0.49            1,525,000               8,475,000
July 1, 2007 - July 31, 2007..............    50,000           0.48            1,575,000               8,525,000
August 1, 2007 - August 31, 2007..........    26,844           0.44            1,601,844               8,398,156
September 1, 2007 - September 30, 2007....     2,302           0.47            1,604,146               8,395,854
October 1, 2007 - October 31, 2007........   214,509           0.43            1,818,655               8,181,345
November 1, 2007 - November 30, 2007......   450,900           0.43            2,269,555               7,730,445
December 1, 2007 - December 31, 2007......   155,300           0.42            2,424,855               7,575,145
                                        ------------
Total....................................  1,109,855
                                        ============
</TABLE>

     During  January,  2008,  the Company  repurchased  an  aggregate of 189,100
shares of common stock from unaffiliated parties at a purchase price,  including
broker  commissions,  of $0.43 per share  pursuant to the  Company's  Repurchase
Plan.
<PAGE>

STOCK PERFORMANCE GRAPH

     The following graph compares the cumulative total shareholder return on the
Company's  Common  Stock for the past five  years  with the  performance  of the
Standard & Poor's 500 Financials  Index (S&P 500  Financials) and the Standard &
Poor's 500 Stock Index (S&P 500) for that period.  The graph assumes that a $100
investment was made in the Company's Common Stock and each of the indices at the
earliest date shown, and the dividends,  if any, were  reinvested.  No dividends
have been paid by the  Company  over the past five (5)  years.  The stock  price
performance  shown in the graph below  should not be  considered  indicative  of
potential future stock price performance.



































<TABLE>
<CAPTION>

                                                        December 31
<S>                   <C>             <C>             <C>              <C>             <C>             <C>

   Company/Index           2002            2003            2004             2005            2006            2007
--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------
AmBase Corporation
                              100.00           73.86            87.50           59.66           56.82           45.45
--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------
S&P 500
Index                         100.00          128.68           142.69          149.70          173.34          182.86
--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------
S&P 500 Financials
Index                         100.00          131.03           145.30          154.71          184.41          150.05
--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------
</TABLE>

<PAGE>
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. The consolidated statements of operations for the periods ended prior
to the July  2005  sale of Two  Soundview  were  retroactively  reclassified  to
reflect the operations as discontinued operations.
<TABLE>
<CAPTION>
<S>                                               <C>            <C>          <C>           <C>             <C>

                                                                        Years ended December 31
                                                  =================================================================
(in thousands, except per share data)                 2007           2006         2005 (a)     2004            2003
                                                      ====           ====         ====         ====            ====
Operating revenue ..........................      $      -       $     92     $    170      $   176         $   320
Interest income.............................         1,305          1,846        1,034          505             334
                                                  ========       ========     ========      =======         =======
Loss from continuing operations.............      $ (3,936)      $ (5,463)    $ (5,519)     $(4,696)        $(5,102)
Income from discontinued operations.........             -              -       10,647        1,345           1,543
                                                  --------       --------     -------       --------        -------
Net income (loss)..........................       $ (3,936)      $ (5,463)    $  5,128      $(3,351)        $(3,559)
                                                  =======        ========     ========      ========        =======
Loss from continuing operations - Basic.....      $ (0.09)       $  (0.12)    $  (0.12)     $ (0.10)        $ (0.11)
Income from discontinued operations - Basic.            -               -         0.23         0.03            0.03
                                                  --------       --------     --------      -------         -------
Net income (loss) per common share - Basic..      $ (0.09)       $  (0.12)    $   0.11      $ (0.07)        $ (0.08)
                                                  =======        ========     ========      =======         =======
Dividends ..................................            -               -            -            -               -
                                                  =======        ========     ========      =======         =======
Total assets................................      $21,559        $ 42,148     $ 45,883      $40,860         $41,668
Total stockholders' equity..................       20,578          24,667       29,682       25,574          29,367
                                                  =======        ========     ========      =======         =======
</TABLE>

     (a) Net  income in 2005  includes a  $10,298,000  gain from the sale of Two
Soundview.


     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.
As a result of the sale of the Company's  38,000 square foot office  building at
Two Soundview Drive in Greenwich, CT ("Two Soundview") in July 2005, the results
of operations of Two Soundview have been designated as discontinued  operations,
and the Consolidated  Statements of Operations for the periods  presented herein
have been  retroactively  reclassified  to report the income  from  discontinued
operations separately from the results of continuing operations by excluding the
operating  revenues and expenses of discontinued  operations from the respective
statement  captions.  See Part I - Item 8 - Note 13 for  additional  information
concerning the sale of Two Soundview.

BUSINESS OVERVIEW

     AmBase is a holding company which, through a wholly-owned subsidiary,  owns
a commercial office building in Greenwich,  Connecticut.  The Company previously
owned an insurance company and a savings bank.

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



<PAGE>
     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents,  investment  securities,  and real estate owned.  The Company earns
non-operating   revenue   principally   consisting  of  investment  earnings  on
investment securities and cash equivalents.  The Company continues to evaluate a
number of possible  acquisitions  and is engaged in the management of its assets
and  liabilities,  including the  contingent  assets  associated  with its legal
claims,  as described in Part I - Item 1. From time to time, the Company and its
subsidiaries may be named as a defendant in various lawsuits or proceedings. The
Company intends to  aggressively  contest all litigation and  contingencies,  as
well as pursue all sources for contributions to settlements.

FINANCIAL CONDITION AND LIQUIDITY

     The  Company's  assets  at  December  31,  2007,  aggregated   $21,559,000,
consisting  principally of cash and cash  equivalents of $2,894,000,  investment
securities of $16,313,000  and real estate owned of $2,120,000.  At December 31,
2007, the Company's liabilities aggregated $981,000.  Total stockholders' equity
was $20,578,000.

     Other assets at December 31, 2006 of $1,336,000 consisted  principally of a
$1,201,000 interest refund due from the Internal Revenue Service ("IRS"),  which
was received by the Company in January  2007.  This amount was recorded as other
income in the  accompanying  consolidated  Statement of Operations  for the year
ending  December 31,  2006.  See Results of  Operations - Continuing  Operation,
below for further information.

     The  Company   previously   sponsored  a  non  tax-qualified   supplemental
retirement  plan,  initially  adopted by the Company in 1985, and as amended and
restated  (the  "Supplemental  Plan"),  under which only one  current  executive
officer of the Company was the sole  participant.  The cost of the  Supplemental
Plan was previously accrued but not funded.

     In  accordance  with an amendment to the  Supplemental  Plan, as previously
adopted  in March  2006,  the  liability  for the  Supplemental  Plan was  fully
satisfied on May 31, 2007, by the lump-sum  benefit  payment of $16,676,115  (to
Mr. Bianco, the Company's Chairman,  President and Chief Executive Officer), and
immediately  thereafter,  the Supplemental Plan  automatically  terminated.  The
lump-sum  Supplemental  Plan  benefit  payment  to Mr.  Bianco was paid from the
Company's  available  financial  resources.  After  May  31,  2007,  no  further
Supplemental  Plan expense was  required to be  recognized  by the Company.  See
Results of Operations below for further  information  regarding the Supplemental
Plan expense.  For a further discussion of the Supplemental Plan termination and
Mr.  Bianco's 2007  Employment  Agreement,  see Part II - Item 8 - Note 7 to the
Company's consolidated financial statements.

     For the year ended  December  31,  2007,  cash of  $19,116,000  was used by
continuing  operations,  primarily due to the payment of the  Supplemental  Plan
lump-sum  benefit  payment of $16,676,115,  as further  discussed above and to a
lesser  extent  the  payment of  operating  expenses  and prior  year  accruals,
partially offset by the receipt of interest income and investment earnings.  The
cash needs of the Company for 2007 were  principally  satisfied by the Company's
financial  resources  and the  receipt  of  investment  earnings  on  investment
securities and cash equivalents.  Management believes that the Company's capital
resources are sufficient to continue operations for the next twelve months.

     For the year  ended  December  31,  2006,  cash of  $4,519,000  was used by
continuing  operations,  including  the payment of operating  expenses and prior
year accruals; partially offset by the receipt of interest income and investment
earnings.  The cash needs of the Company for 2006 were principally  satisfied by
interest income received on investment  securities and cash  equivalents and the
Company's financial resources.

     For the year  ended  December  31,  2005,  cash of  $5,144,000  was used by
continuing  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 2005 were principally
satisfied  by rental  income and  investment  earnings  received  on  investment
securities and cash equivalents and the Company's  financial  resources.  During
July 2005, the Company  received  $27,442,000 of net cash proceeds from the sale
of Two Soundview as further discussed in Part II - Item 8 - Note 13.

     Real estate owned  consists of a commercial  office  building in Greenwich,
Connecticut  which the Company owns and manages.  The building is  approximately
14,500 square feet;  approximately  3,500 square feet is utilized by the Company
for its executive  offices;  the  remaining  space is currently  unoccupied  and
available for lease.



<PAGE>
     Although the portion of the  building not being  utilized by the Company is
currently  unoccupied and available for lease,  based on the Company's  analysis
including but not limited to current market rents in the area,  leasing  values,
and comparable  property sales,  the Company believes the property's fair market
value exceeds the property's current carrying value; and, therefore the carrying
value of the property as of December 31, 2007, has not been impaired.

     See Part II - Item 8 - Note 13 for further information  concerning the sale
of the Company's 38,000 square foot building in July 2005. A gain from the sale,
of  approximately  $10.3  million,  is reflected in the  Company's  Statement of
Operations for the year ending December 31, 2005.

     Pursuant to the Company's  Repurchase Plan, the Company  repurchased,  from
unaffiliated  parties,  an aggregate of 1,109,855  shares of common stock during
the year ended  December 31, 2007, at various  dates,  at market prices at their
time of purchase for an aggregate cost of $489,000.  See Part II - Item 8 - Note
5 for further  details  with regard to the  Company's  purchases of common stock
pursuant to its common stock repurchase plan. There are no material  commitments
for capital  expenditures as of December 31, 2007. 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

Continuing Operations

     In 2007, the Company earned non-operating revenue consisting principally of
investment earnings on investment  securities and cash equivalents;  the Company
had no  operating  revenue  in  2007.  The  Company's  management  expects  that
operating  cash needs for the next twelve months is currently  anticipated to be
met principally by the receipt of investment  earnings on investment  securities
and  cash  equivalents,  and the  Company's  current  financial  resources.  The
Company's  main source of operating  revenue in 2006 and 2005 was rental  income
earned on real estate owned.

     The Company  recorded a loss from  continuing  operations  of $3,936,000 or
$0.09 per share for the year ended  December 31, 2007;  $5,463,000  or $0.12 per
share for the year ended  December 31, 2006;  and  $5,519,000 or $0.12 per share
for the year ended December 31, 2005.

     No rental income was earned by the Company in 2007. Rental income from real
estate owned in 2006 and 2005 relates to the  Company's  remaining  property and
was $92,000 in 2006 compared to $170,000 in 2005.  The decreased  amounts in the
2007 period,  compared to the 2006  period,  is due to  unoccupied  office space
currently available for lease, versus partial occupancy in the same 2006 period.
The  decreased  amount of $92,000 in 2006,  compared  to  $170,000  in 2005,  is
principally  the result of a decrease in rental income received in 2006 compared
to 2005 due to  unoccupied  office  space  during the last half of 2006,  versus
occupancy in 2005.

     Compensation  and benefits  decreased to $2,911,000 in 2007 from $4,778,000
in 2006, and from $4,212,000 in 2005.  Included in compensation  and benefits is
an accrual for the Supplemental Plan of $868,000 for 2007,  $2,539,000 for 2006,
and  $2,087,000  for 2005.  The  decrease in  compensation  and benefits in 2007
compared to 2006 and 2005 is primarily  due to the  significant  decrease in the
Supplemental  Plan  expense  in  2007,  as a  result  of the  Supplemental  Plan
termination  as of May 31,  2007,  as  further  described  below and to a lesser
extent, a lower level of incentive compensation accruals in 2007.

     As a result of the  termination  of the  Supplemental  Plan,  after May 31,
2007, no further  Supplemental Plan expense was required to be recognized by the
Company.  The  increase  in  compensation  and  benefits  in 2006 versus 2005 is
principally  due to a $452,000  increase  in the  Supplemental  Plan  accrual as
discussed  below,  and to a  lesser  extent,  an  increase  resulting  from  the
recognition of stock option  expense of $88,000 in 2006, in accordance  with the
recognition  provisions of Statement of Financial  Accounting  Standards No. 123
(revised 2004),  "Share-Based  Payment," ("SFAS 123R").  The  Supplemental  Plan
expense  reflects  recognition  of an  expense  of  $394,000  for the year ended
December 31, 2007,  recorded to increase the Supplemental  Plan liability to the
present  value of the May 31,  2007  lump-sum  payment  amount  of  $16,676,115,
utilizing a 5.75%  discount rate factor based on the 2007  Employment  Agreement
between the Company and Mr. Bianco and the amendment of the Supplemental Plan.


<PAGE>
     An  additional  Supplemental  Plan  expense of  $474,000  in the year ended
December  31,  2007,  and  $852,000  for the year ended  December  31,  2006 was
recorded to amortize the Supplemental Plan minimum pension liability adjustment.
The minimum pension liability  adjustment,  which was included as a component of
stockholders'   equity  within  accumulated  other  comprehensive  loss  in  the
Company's  consolidated  financial  statements,  was  $1,326,000 as of March 31,
2006,  and was amortized on a straight line basis over the 14-month  period from
April 1, 2006, through May 31, 2007, as an additional  Supplemental Plan expense
of $284,000 per quarter.  The  amortization  of the additional  minimum  pension
liability  in the 2007 and 2006  periods,  although  recorded as a component  of
compensation expense in the Company's consolidated statement of operations,  did
not result in a  decrease  in total  stockholders'  equity,  as its  recognition
results in an increase in one component and a corresponding  decrease in another
component of  stockholders'  equity.  In connection with the  Supplemental  Plan
lump-sum benefit payment,  the Company paid  approximately  $242,000 of employer
Medicare taxes,  which are included as a component of compensation  and benefits
expense in the Company's Consolidated Statement of Operations for the year ended
December  31,  2007.  See  Part  II - Item 8 -  Notes  6 and 7 to the  Company's
consolidated financial statements for further information.

     The increased  Supplemental  Plan expense of $2,539,000 in 2006 compared to
$2,087,000 in 2005 is due to recognition of an expense of $1,687,000,  comprised
of an expense of $1,224,000 recorded to increase the Supplemental Plan liability
to reflect the December 31, 2006 present value of the  anticipated  May 31, 2007
lump-sum  payment amount of $16,676,115,  utilizing a 5.75% discount rate factor
based on the 2007  Employment  Agreement  between the Company and Mr. Bianco and
the amendment of the Supplemental  Plan as further described in Part II - Item 8
- Note 7 to the Company's consolidated  financial statements,  and an expense of
$463,000 to reflect actuarially determined pension costs.

     The Company  adopted SFAS 123R  effective on January 1, 2006. In accordance
with SFAS 123R,  the Company has applied the  "modified  prospective"  method in
which  compensation  cost for stock  options is  recognized  beginning  with the
effective  date. No stock based  compensation  expense was recorded for the year
ended December 31, 2007, as all previously granted outstanding options vested as
of January 2, 2007. No stock option awards have been granted since January 2005.
During the year  ended  December  31,  2006,  the  Company  recorded  $88,000 of
compensation expense relating to stock options. In accordance with the "modified
prospective"  method,  no  compensation  expense  relating to stock  options was
recorded for the year ended December 31, 2005. For further information regarding
the Company's  adoption of SFAS 123R and its impact on the  Company's  financial
statements,  see  Part  II -  Item 8 -  Note  8 to  the  Company's  consolidated
financial statements.

     Professional  and outside  services  decreased to  $2,195,000  in 2007 from
$2,655,000 in 2006 and from  $2,003,000 in 2005. The decrease in the 2007 period
to $2,195,000 from $2,655,000 in 2006 is principally the result of a lower level
of legal fees in 2007, relating to the Supervisory  Goodwill litigation and to a
lesser extent, a lower level of other corporate  professional fees. During 2007,
Supervisory  Goodwill  fees  were  principally  attributable  to  expert  report
preparation  costs,  expert  depositions  of the Company's and the  Government's
witnesses and overall trial  preparations  costs in anticipation of the February
2008  Supervisory  Goodwill trial. The increase in the 2006 period of $2,655,000
from  $2,003,000 in 2005 is principally the result of higher legal fees relating
to  the  Supervisory  Goodwill  litigation  as  a  result  of  discovery,  brief
preparation  and expert's  reports  relating to the Show Cause  hearing and to a
lesser extent, other corporate professional fees. See Part II - Item 8 - Note 10
to the  Company's  consolidated  financial  statements  for a discussion  of the
Supervisory Goodwill litigation proceedings.

     Property operating and maintenance expenses were $122,000 in 2007, $123,000
in  2006,  and  $124,000  in 2005.  Although  the 2007  property  operating  and
maintenance  expenses  includes  increased  utility costs,  the overall  expense
amount  was in line with  prior  years as a result  of  overall  cost  reduction
measures.

     Interest income was $1,305,000 in 2007,  $1,846,000 in 2006, and $1,034,000
in 2005.  The decrease in 2007  compared to 2006 is  principally  due to a lower
level  of  cash  equivalents  and  investments  securities  as a  result  of the
Supplemental  Plan lump-sum  benefit payment,  as further  described in Part I -
Item  1,  Note 7 to  the  Company's  consolidated  financial  statements  offset
slightly by an increased yield on investments due to rising interest rates.  The
payment  decreased the Company's cash  equivalents and investment  securities by
approximately  $16.7  million,  resulting in a decrease in the  interest  income
earned by the Company  beginning  in June 2007.  See Item 3 -  Quantitative  and
Qualitative   Disclosure  about  Market  Risk  for  information  concerning  the
Company's  weighted  average interest rate yield on investment  securities.  The
increase  in 2006  compared  to 2005 is  principally  due to an  increase in the
aggregate amount of cash equivalents and investment  securities invested for the
full year of 2006, as a result of the cash proceeds  received in connection with
the July 2005 sale of real estate owned,  and to a lesser  extent,  an increased
yield on investments due to rising interest rates.



<PAGE>
     During  2007,  2006,  and  2005  realized  gains  on  sales  of  investment
securities available for sale were $310,000,  $45,000, and $20,000 respectively.
The  increase in 2007 is the result of a higher level of  investment  securities
available for sale and realization of gains on sales due to market appreciation.

     Other  expense  of  $1,100,000  for 2006 is  attributable  to a payment  in
October 2006 for the settlement of potential  claims by two  stockholders of the
Company as more fully described in the Company's  Annual Report on Form 10-K for
the year ended  December 31,  2006.  Other income of $400,000 for the year ended
December 31, 2006, is attributable to receipt of insurance  proceeds received in
connection with the settlement of those claims.  The net cost to the Company for
the settlement of the matter was approximately $700,000.

     Other income of $1,273,000 in 2006 consists of $1,201,000  attributable  to
an IRS interest  refund,  consented to by the IRS in December 2006, and received
by the  Company in January  2007.  The IRS refund  resulted  from the  Company's
pursuit of interest  refund  claims for several prior tax years under a tax code
provision   which  allowed  for  the   retroactive   recovery  of  the  interest
differential where a taxpayer had a tax underpayment (subject to higher interest
payment rates) for one tax year and a simultaneous  tax overpayment  (subject to
lower interest  refund rates) for another tax year. The Company is continuing to
pursue similar claims from several other tax years,  but at the current time the
Company  can  give no  assurances  as to the  final  amounts  of any  additional
interest refunds, if any, or when they might be received. The additional $72,000
of other  income  is  attributable  to  settlement  proceeds  received  from the
litigation with SDG, Inc. The Company remains a shareholder in SDG and AMDG, but
has no current  carrying value for this  investment,  as the Company's  original
cost basis was previously written off.

     As noted  above,  during the year ended  December  31,  2006,  the  Company
recorded various amounts of other  non-recurring  other income and other expense
from  various   sources  and  matters.   The  net  aggregate   amount  of  these
non-recurring items resulted in the recognition of other income of $573,000, for
the year ended December 31, 2006.

     The income tax provisions of $50,000 for the year 2007 and $132,000 for the
year ended December 31, 2006, are  attributable to a provision for a minimum tax
on capital to the state of Connecticut.  The income tax provision for continuing
operations of $95,000 for the year ending  December 31, 2005, is attributable to
a  provision  for a minimum  tax on  capital  to the state of  Connecticut.  The
Company  utilized net  operating  loss  ("NOL")  carryforwards  and  alternative
minimum tax ("AMT") NOL  carryforwards  which were  available to offset  taxable
income generated from the sale of Two Soundview as discussed in Part II - Item 8
- Notes 9 and 13 to the  Company's  consolidated  financial  statements.  Due to
limitations  on the amount of NOL  carryforwards  that can be  utilized  against
taxable income, the income tax provision of $400,000 for discontinued operations
for the year ended December 31, 2005, is attributable to a provision for federal
alternative  minimum tax of $150,000 and a provision of $250,000 for Connecticut
state 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.

Discontinued Operations

     As  further  discussed  in  Part  II - Item 8 -  Note  13 to the  Company's
consolidated financial statements,  the Company sold Two Soundview in July 2005.
The sale  price was  $28,000,000  less  normal  real  estate  closing  costs and
adjustments.  A gain from the sale of  $10,298,000 is reflected in the Company's
financial statements for the year ended December 31, 2005.

     Income from discontinued operations before gain on disposition was $749,000
for the year ended  December 31, 2005,  which reflects the results of operations
for Two Soundview for the period through July 15, 2005 (date of sale).
<TABLE>
<CAPTION>
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
<S>                                              <C>           <C>        <C>          <C>          <C>
(in thousands)                                                            Payment Due By Period
                                                 =============================================================

                                                               Less Than      One to      Three to     More than
                                                  Total          One Year   Three Years  Five Years   Five Years
                                                 -------       ----------   -----------  ----------   ----------
Operating leases...............................  $    41       $       14    $       27  $        -   $        -
                                                 -------       ----------    ----------  ----------   ----------
Total obligations..............................  $    41       $       14    $       27  $        -   $        -
                                                 =======       ==========    ==========  ==========   ==========
</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 to the  Company's
consolidated financial statements.

     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  which may be  necessary.  The  assessment of such 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, 2007, 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 $32 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.

New Accounting Pronouncements

     Effective  January 1, 2007,  the Company  adopted the Financial  Accounting
Standards Board ("FASB")  Interpretation  No. 48, "Accounting for Uncertainty in
Income Taxes, - an  interpretation  of FASB  Statement  109," ("FIN 48"). FIN 48
applies to all "tax  positions"  accounted for under FASB Statement No. 109. FIN
48 refers to "tax positions" as positions taken in a previously filed tax return
or positions  expected to be taken in a future tax return that are  reflected in
measuring current or deferred income tax assets and liabilities  reported in the
financial  statements.  FIN 48  clarifies  the  accounting  for income  taxes by
prescribing a minimum  recognition  threshold a tax position is required to meet
before  being  recognized  in the  financial  statements.  FIN 48 also  provides
guidance on derecognition,  measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition. The adoption of FIN 48
had no effect on the Company's consolidated financial statements.

     In September 2006, the Financial  Accounting Standard Board ("FASB") issued
SFAS No. 157,  "Fair Value  Measurements"  ("SFAS157").  SFAS No. 157,  which is
effective for the Company in 2008, defines fair values,  establishes a framework
for measuring fair value and expands  disclosures about fair value measurements.
The Company is currently  evaluating  the potential  impact of adopting SFAS No.
157.




<PAGE>
     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial  Assets and  Financial  Liabilities  - including  an Amendment of FASB
Statement  No.  115"  ("SFAS159").  SFAS No.  159  permits  entities  to measure
eligible  financial assets,  financial  liabilities and certain other assets and
liabilities at fair value on an  instrument-by-instrument  basis. The fair value
measurement  election is irrevocable  once made and  subsequent  changes in fair
value must be recorded in earnings. The effect of adoption will be reported as a
cumulative-effect  adjustment to beginning retained  earnings.  The Company will
adopt SFAS No. 159 in 2008 and is currently evaluating if it will elect the fair
value option for any of its eligible financial instruments and other items.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 158, "Employer's  Accounting for Defined Benefit Pension and Other
Postretirement  Plans,  an  Amendment  of SFAS No. 87, 88, 106 and 132R"  ("SFAS
158").  SFAS 158  requires an  employer to (i)  recognize  in its  statement  of
financial position an asset for a plan's over funded status or a liability for a
plan's under funded  status;  (ii) measure a plan's  assets and its  obligations
that  determine  its funded status as of the end of the  employer's  fiscal year
(with limited exceptions); and (iii) recognize changes in the funded status of a
defined  benefit  postretirement  plan in the year in which the  changes  occur.
Those changes will be reported in comprehensive  income of a business entity. As
required,  the Company adopted SFAS 158 as of December 31, 2006. The requirement
to recognize the funded status of a benefit plan and the disclosure requirements
are  effective as of the end of the fiscal year ending after  December 15, 2006,
for entities  with  publicly  traded  equity  securities,  and at the end of the
fiscal year ending after June 15, 2007, for all other entities.  The requirement
to measure plan assets and benefit  obligations as of the date of the employer's
fiscal  year-end  statement of financial  position is effective for fiscal years
ending  after  December 15,  2008.  In  accordance  with the  Supplemental  Plan
Amendment,  as previously  adopted,  the liability for the Supplemental Plan was
fully satisfied on May 31, 2007, by the lump-sum  benefit payment of $16,676,115
(to Mr. Bianco, the Company's Chairman,  President and Chief Executive Officer),
and immediately thereafter,  the Supplemental Plan automatically terminated. The
lump-sum  Supplemental  Plan  benefit  payment  to Mr.  Bianco was paid from the
Company's  available  financial  resources.  After  May  31,  2007,  no  further
Supplemental  Plan  expense  was  required  to be  recognized  by  the  Company.
Accordingly, because of the termination of the Supplemental Plan the adoption of
SFAS 158 did not have a material effect on the Company's  consolidated financial
statements. See Note 7 herein for further information.

Cautionary Statement for Forward-Looking Information

     This Annual Report together with other statements and information  publicly
disseminated  by the  Company  may contain  certain  forward-looking  statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the  Securities  Exchange  Act of 1934,  as amended.  The Company
intends  such  forward-looking  statements  to be  covered  by the  safe  harbor
provisions for  forward-looking  statements  contained in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are inherently subject
to risks and uncertainties, many of which cannot be predicted or quantified. The
forward-looking  statements may relate to such matters as anticipated  financial
performance, future revenues or earning, business prospects, projected ventures,
anticipated market performance,  anticipated litigation results or the timing of
pending  litigation,  and similar matters.  When used in this Annual Report, the
words "estimates," "expects," "anticipates,"  "believes," "plans," "intends" and
variations  of such words and  similar  expressions  are  intended  to  identify
forward-looking statements that involve risks and uncertainties. These risks and
uncertainties,  many of which are beyond the Company's control, include, but are
not limited to those set forth in "Item 1A, Risk  Factors" and elsewhere in this
Annual Report and in the Company's  other public filings with the Securities and
Exchange Commission including, but not limited to: (i) transaction volume in the
securities  markets,  (ii)  the  volatility  of the  securities  markets,  (iii)
fluctuations in interest rates, (iv) risks inherent in the real estate business,
including,  but not limited to, tenant  defaults,  changes in occupancy rates or
real estate values,  (v) changes in regulatory  requirements  which could affect
the cost of doing business,  (vi) general economic conditions,  (vii) changes in
the rate of inflation and the related impact on the securities  markets,  (viii)
changes in federal and state tax laws,  and (ix) risks arising from  unfavorable
decisions in the Company's current material  litigation  matters, or unfavorable
decisions in other supervisory goodwill cases.

     Undue reliance  should not be placed on these  forward-looking  statements,
which are  applicable  only as of the date  hereof.  The Company  undertakes  no
obligation  to revise or update  these  forward-looking  statements  to  reflect
events or  circumstances  that arise after the date of this Annual  Report or to
reflect  the  occurrence  of  unanticipated  events.  Accordingly,  there  is no
assurance that the Company's expectations will be realized.



<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, 2007 and 2006,
with maturity dates of less than one year consist of the following:
<TABLE>
<CAPTION>
<S>                                                         <C>             <C>        <C>         <C>
                                                                     2007                     2006
(in thousands)                                              =====================      =================
                                                            Carrying        Fair       Carrying     Fair
                                                             Value          Value        Value      Value
                                                            -----------    ------      ---------   -------
U.S. Treasury Bills and Notes........................        $16,313       $16,329     $34,623     $34,625
                                                             =======       =======     =======     =======
Weighted average interest rate.......................           4.77%                     4.65%
                                                             =======                   =======
</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, are accounted for as available for sale securities and are
carried at fair value with net unrealized gains and losses recorded  directly in
a separate component of other comprehensive income (loss).

     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)
                                                                        12/31/2007       12/31/2006
Equity Securities Available for Sale:                                   ==========       ==========

Fair value...........................................................   $        -       $    1,417
                                                                        ==========       ==========
Hypothetical fair value at a 20% increase in market price............   $        -       $    1,700
                                                                        ==========       ==========
Hypothetical fair value at a 20% decrease in market price............   $        -       $    1,134
                                                                        ==========       ==========
</TABLE>



<PAGE>
ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                REPORT OF UHY LLP
                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
AmBase Corporation

     We have  audited  the  accompanying  consolidated  balance  sheet of AmBase
Corporation   and   subsidiaries  as  of  December  31,  2007  and  the  related
consolidated   statements  of  operations,   changes  in  stockholders'  equity,
comprehensive  (loss) income,  and cash flows for the year then ended. Our audit
also  included  the  financial   statement  schedule  for  2007.  The  Company's
management is  responsible  for these  financial  statements  and schedule.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audit.

     We  conducted  our audit in  accordance  with the  standards  of the Public
Company Accounting Oversight Board (United States). Those 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.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in  all  material  respects,  the  consolidated  financial  position  of  AmBase
Corporation  and  subsidiaries  as of  December  31,  2007 and the  consolidated
results  of their  operations  and their  cash  flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

     We  were  not  engaged  to  examine   management's   assertion   about  the
effectiveness of the Company's  internal control over financial  reporting as of
December  31, 2007  included  under Item 9A(T)  under the caption  "Management's
Annual Report on Internal Control Over Financial  Reporting" and accordingly we
do not express an opinion thereon.

/s/ UHY LLP
New Haven, CT
March 27, 2008

                      REPORT OF PRICEWATERHOUSECOOPERS LLP
                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
AmBase Corporation

     In our opinion,  the accompanying  consolidated balance sheet listed in the
index appearing under Item 15(a) (1) and the related consolidated  statements of
operations,  comprehensive  income (loss),  changes in stockholders'  equity and
cash flows present fairly, in all material  respects,  the financial position of
AmBase  Corporation and its subsidiaries at December 31, 2006 and the results of
their  operations  and their  cash flows for each of the two years in the period
ended  December 31, 2006 in  conformity  with  accounting  principles  generally
accepted  in the  United  States of  America.  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 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).
Those 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
audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
New York, NY
March 27, 2007




<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)                                       2007             2006              2005
                                                                            ====             ====              ====
Revenues:
Rental income.................................................       $         -      $        92           $   170

Operating expenses:
Compensation and benefits.....................................             2,911            4,778             4,212
Professional and outside services.............................             2,195            2,655             2,003
Property operating and maintenance............................               122              123               124
Depreciation..................................................                51               51                51
Insurance.....................................................                79               80                79
Other operating...............................................               143              200               179
                                                                     -----------      -----------           -------
                                                                           5,501            7,887             6,648
                                                                     -----------      -----------           -------
Operating loss................................................            (5,501)          (7,795)           (6,478)
                                                                     -----------      -----------           -------
Interest income...............................................             1,305            1,846             1,034
Other expense, claims settlement..............................                 -           (1,100)                -
Other income, insurance recovery..............................                 -              400                 -
Realized gains on sales of investment securities, net.........               310               45                20
Other income..................................................                 -            1,273                 -
                                                                     -----------      -----------           -------
Loss from continuing operations before income taxes...........            (3,886)          (5,331)           (5,424)
Income tax expense on continuing operations...................               (50)            (132)              (95)
                                                                     -----------      -----------           -------
Loss from continuing operations...............................            (3,936)          (5,463)           (5,519)
                                                                     -----------      -----------           -------
Income from discontinued operations...........................                 -                -               749
Gain on disposition...........................................                 -                -            10,298
Income tax expense on discontinued operations.................                 -                -              (400)
                                                                     -----------      -----------           -------
Income from discontinued operations...........................                 -                -            10,647
                                                                     -----------      -----------           -------
Net income (loss).............................................       $    (3,936)     $    (5,463)          $ 5,128
                                                                     ===========      ===========           =======
Per share data:
Basic:
Loss from continuing operations...............................       $     (0.09)     $     (0.12)          $ (0.12)
Income from discontinued operations...........................                 -                -              0.23
                                                                     -----------      -----------           -------
Net income (loss) attributable to common stockholders.........       $     (0.09)     $     (0.12)          $  0.11
                                                                     ===========      ===========           =======
Assuming dilution:
Loss from continuing operations...............................       $     (0.09)     $     (0.12)          $ (0.12)
Income from discontinued operations...........................                 -                -              0.23
                                                                     -----------      -----------           -------
Net income (loss) attributable to common stockholders.........             (0.09)          (0.12)              0.11
                                                                     ===========      ===========           =======
Weighted average common shares outstanding:
Basic.........................................................            44,691           45,327            46,234
                                                                     ===========      ===========           =======
Assuming dilution.............................................            44,691           45,327            46,234
                                                                     ===========      ===========           =======
</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 and per share amounts)                                       2007              2006
                                                                                             ====              ====
Assets:
Cash and cash equivalents.......................................................      $     2,894       $     2,601
Investment securities:
    Held to maturity (market value $16,329 and $34,625, respectively)...........           16,313            34,623
    Available for sale, carried at fair value...................................                -             1,417
                                                                                      -----------        ----------
Total investment securities.....................................................           16,313            36,040
                                                                                      -----------        ----------
Real estate owned:
    Land........................................................................              554               554
    Buildings...................................................................            1,900             1,900
                                                                                      -----------        ----------
                                                                                            2,454             2,454
    Accumulated depreciation ...................................................             (334)             (283)
                                                                                      -----------        ----------
Real estate owned, net..........................................................            2,120             2,171
                                                                                      -----------        ----------
Other assets....................................................................              232             1,336
                                                                                      -----------        ----------
Total assets....................................................................      $    21,559        $   42,148
                                                                                      ===========        ==========
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities........................................      $       962        $    1,171
Supplemental retirement plan....................................................                -            16,282
Other liabilities...............................................................               19                28
                                                                                      -----------        ----------
Total liabilities...............................................................              981            17,481
                                                                                      -----------        ----------
Commitments and contingencies (Note 10).........................................
Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued
   and 43,858,664 outstanding in 2007 and 44,968,519 outstanding in 2006).......              464               464
Additional paid-in capital......................................................          548,044           548,044
Accumulated other comprehensive loss............................................                -              (336)
Accumulated deficit.............................................................         (526,057)         (522,121)
Treasury stock, at cost - 2,551,343 and 1,441,488 shares, respectively..........           (1,873)           (1,384)
                                                                                      -----------        ----------
Total stockholders' equity......................................................           20,578            24,667
                                                                                      -----------        ----------
Total liabilities and stockholders' equity......................................      $    21,559        $   42,148
                                                                                      ===========        ==========
</TABLE>

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


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
            Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
<S>                             <C>         <C>           <C>                    <C>             <C>           <C>
                                            Additional    Accumulated other
(in thousands)                  Common        paid-in       comprehensive        Accumulated     Treasury
                                stock         capital       income (loss)          deficit         stock       Total
                                ======      ==========    ==================     ===========     ========      =====
December 31, 2004............  $   464      $  547,956     $          (375)      $  (521,786)    $   (685)     $25,574
Net income...................        -               -                   -             5,128            -        5,128
Other comprehensiveloss......        -               -              (1,020)                -            -       (1,020)
                               -------      ----------     ---------------       -----------     --------      -------
December 31, 2005............      464         547,956              (1,395)         (516,658)        (685)      29,682
                               -------      ----------     ---------------       -----------     --------      -------
Net loss.....................        -               -                   -             (5,463)          -       (5,463)
Stock-based compensation.....        -              88                   -                  -           -           88
Common stock  repurchased....        -               -                   -                  -        (699)        (699)
Other comprehensive income...        -               -               1,059                  -           -        1,059
                               -------      ----------     ---------------       ------------    ---------     -------
December 31, 2006............      464         548,044                (336)          (522,121)      (1,384)     24,667
                               -------      ----------     ---------------       ------------    ---------     -------
Net loss.....................        -               -                   -             (3,936)           -      (3,936)
Common stock repurchased.....        -               -                   -                  -         (489)       (489)
Other comprehensive income...        -               -                 336                  -            -         336
                               -------      ----------     ---------------       ------------    ---------     -------
December 31, 2007............  $   464      $  548,044     $             -       $   (526,057)   $  (1,873)    $20,578
                               =======      ==========     ===============       ============    =========     =======
</TABLE>

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

<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
                     Consolidated Statements of Comprehensive Income (Loss)
                             Years Ended December 31
                                 (in thousands)
<S>                                                                                    <C>            <C>           <C>
                                                                                         2007           2006           2005
                                                                                        ======         ======         ======
Net income (loss)..........................................................          $  (3,936)     $  (5,463)     $   5,128

Minimum pension liability adjustment, net of tax effect of $0..............                474            852           (914)

Unrealized holding gains (losses) on investment securities - available for sale,
       net of tax effect of $0.............................................               (138)           207           (106)
                                                                                     ---------      ---------      ---------
Comprehensive income (loss)................................................          $  (3,600)     $  (4,404)     $   4,108
                                                                                     =========      =========      =========
</TABLE>

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



<PAGE>
<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             Years Ended December 31
<S>                                                                                  <C>              <C>            <C>
(in thousands)                                                                       2007             2006           2005
                                                                                     ====             ====           ====
Cash flows from operating activities:
Net income (loss)........................................................         $ (3,936)        $  (5,463)     $  5,128
Adjustments to reconcile net income (loss) to net cash used
     by operations:
Accretion of discount - investment securities............................              (34)              (53)         (575)
Depreciation and amortization............................................               51                51            51
Realized gains on sales of investment securities available for sale......             (310)              (45)          (20)
Stock-based compensation expense.........................................                -                88             -
Amortization of minimum pension liability................................              474               852             -
Changes in other assets and liabilities:
    Accrued interest receivable..........................................              125               (33)            -
    Accounts receivable..................................................                -                 -             1
    Other assets.........................................................            1,014            (1,197)          426
    Accounts payable and accrued liabilities.............................             (209)             (397)           73
    Payment of Supplemental Plan lump-sum benefit........................          (16,676)                -             -
    Supplemental Plan and other liabilities..............................              387             1,677           233
Discontinued operations:
    Gain from sale of discontinued operations...........................                 -                 -       (10,298)
    Depreciation and amortization related to discontinued operations....                 -                 -           140
    Changes in other assets and liabilities of discontinued operations..                 -                 -          (305)
Other, net...............................................................               (2)                1             2
                                                                                  --------         ---------      --------
Net cash used by operating activities...................................           (19,116)           (4,519)       (5,144)
                                                                                  --------         ---------      --------
Cash flows from investing activities:
Maturities of investment securities - held to maturity...................           59,164           106,561        81,627
Purchases of investment securities - held to maturity....................          (40,855)         (102,158)     (111,493)
Purchases of investment securities - available for sale..................              (31)                -          (252)
Sales of investment securities - available for sale......................            1,620               564           548
Proceeds from sale of real estate owned..................................                -                 -        27,442
                                                                                  --------         ---------      --------
Net cash provided (used) by investing activities.........................           19,898             4,967        (2,128)
                                                                                  --------         ---------      --------
Cash flows from financing activities:
Common stock repurchased.................................................             (489)             (699)            -
                                                                                  --------         ---------      --------
Net cash used by financing activities....................................             (489)             (699)            -
                                                                                  --------         ---------      --------
Net change in cash and cash equivalents..................................              293              (251)       (7,272)
Cash and cash equivalents at beginning of year...........................            2,601             2,852        10,124
                                                                                  --------         ---------      --------
Cash and cash equivalents at end of year.................................         $  2,894         $   2,601      $  2,852
                                                                                  ========         =========      ========
Supplemental cash flow disclosure:
Income taxes paid........................................................         $     83         $     492      $    100
                                                                                  ========         =========      ========
</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 a  commercial  office  building  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 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 currently earns non-operating revenue consisting principally of
investment earnings on investment  securities and cash equivalents.  The Company
continues to evaluate a number of possible  acquisitions,  and is engaged in the
management  of its assets  and  liabilities,  including  the  contingent  assets
associated with its legal claims,  as described in Notes 9 and 10. The Company's
main source of operating  revenue in 2006 and 2005 was rental  income  earned on
real estate owned.

     In July 2005,  the  Company  completed  the sale of its 38,000  square foot
office  building  at  Two  Soundview  Drive  in  Greenwich,   Connecticut  ("Two
Soundview").  Accordingly,  the results of operations of Two Soundview have been
retroactively  reclassified  as  discontinued  operations  in  the  accompanying
Consolidated  Statement of Operations in accordance  with  Financial  Accounting
Standards  Board,   Statement  of  Financial   Accounting   Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets" ("SFAS 144").
See Note 13 for additional information.

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").

Use of estimates in the preparation of financial statements

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the 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.

Cash and cash equivalents

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

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, were
those  securities  that could be sold prior to  maturity,  were  carried at fair
value, with any net unrealized gains or losses reported in a separate  component
of other comprehensive income (loss), net of taxes.

     Interest and dividends on investment securities are recognized 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.

     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 operations.

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

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 income (loss) from continuing operations 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

     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 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.

     Effective  January 1, 2006, the Company adopted the fair value  recognition
provisions  of  Statement  of Financial  Accounting  Standards  No. 123 (revised
2004),  "Share-Based  Payment,"  ("SFAS 123R"),  using the modified  prospective
approach and therefore has not restated  results for prior  periods.  Under this
method,  stock-based  compensation expense for the years ended December 31, 2007
and  December  31,  2006,  includes  compensation  expense  for all  stock-based
compensation  awards granted prior to, but not yet vested as of January 1, 2006,
based on the grant date fair value  estimated  in  accordance  with the original
provisions of Statement of Financial  Accounting  Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS123").  Stock-based compensation expense for
all  stock-based  compensation  awards  granted after January 1, 2006, for which
vesting is based solely on employment  service,  will be based on the grant date
fair value estimated in accordance with the provisions of SFAS 123R. The Company
recognizes these compensation costs for only those shares expected to vest, on a
straight-line  basis over the requisite  service  period of the award,  which is
generally the option vesting term of two years.  See Note 8 herein for a further
discussion of stock-based compensation.

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

     No stock based compensation expense was recorded in 2007, as all previously
granted outstanding options vested as of January 2, 2007. No stock option awards
have been granted since January 2005.  During the year ended  December 31, 2006,
the Company recorded  compensation expense of $88,000 relating to unvested stock
options.  Compensation  expense  relating  to stock  options is  recorded in the
consolidated   statement  of  operations,   with  a  corresponding  increase  to
additional paid in capital in the statement of  stockholders'  equity.  Prior to
2006, as permitted by SFAS 123, the Company  accounted for share-based  payments
to  employees   using  APB  25's  intrinsic   value  method  and  recognized  no
compensation  cost for employee  stock  options in prior years.  Had the Company
adopted SFAS 123R in the prior period,  the impact of that  standard  would have
approximated  the impact of SFAS 123 in the  disclosure  of pro-forma net income
and earnings per share described as follows:
<TABLE>
<CAPTION>
(in thousands, except per share data)
<S>                                                                                               <C>
                                                                                                  2005
Net income                                                                                   =========
As reported.......................................................................           $    5,128
Deduct: pro forma stock based compensation expense for
    stock options pursuant to Statement 123.......................................                 (126)
                                                                                             ----------
Pro forma.........................................................................           $    5,002
                                                                                             ==========
Net income per common share
Basic - as reported...............................................................           $     0.11
Basic - pro forma.................................................................                 0.11
Assuming dilution - as reported...................................................                 0.11
Assuming dilution - pro forma ....................................................                 0.11
                                                                                             ==========
</TABLE>

Deferred rent receivable and revenue recognition

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

Property operating and maintenance

     Property  operating and maintenance  expenses for common area  maintenance,
utilities, real estate taxes and other reimbursable operating expenses, were not
reduced by amounts reimbursed by tenants pursuant to lease agreements.

Depreciation

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

Liquidity

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



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

New Accounting Pronouncements

     Effective  January 1, 2007,  the Company  adopted the Financial  Accounting
Standards Board ("FASB")  Interpretation  No. 48, "Accounting for Uncertainty in
Income Taxes - an  interpretation  of FASB  Statement  109," ("FIN 48").  FIN 48
applies to all "tax  positions"  accounted for under FASB Statement No. 109. FIN
48 refers to "tax positions" as positions taken in a previously filed tax return
or positions  expected to be taken in a future tax return that are  reflected in
measuring current or deferred income tax assets and liabilities  reported in the
financial  statements.  FIN 48  clarifies  the  accounting  for income  taxes by
prescribing a minimum  recognition  threshold a tax position is required to meet
before  being  recognized  in the  financial  statements.  FIN 48 also  provides
guidance on derecognition,  measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition. The adoption of FIN 48
had no effect on the Company's consolidated financial statements.

     In September 2006, the Financial  Accounting Standard Board ("FASB") issued
SFAS No. 157, "Fair Value Measurements"  ("SFAS157").  SFAS No. 157 defines fair
values, establishes a framework for measuring fair value and expands disclosures
about fair value  measurements.  SFAS No. 157 is  effective  for the  Company in
2008. The Company is currently  evaluating the potential impact of adopting SFAS
No. 157.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial  Assets and  Financial  Liabilities  - including  an Amendment of FASB
Statement  No.  115"  ("SFAS159").  SFAS No.  159  permits  entities  to measure
eligible  financial assets,  financial  liabilities and certain other assets and
liabilities at fair value on an  instrument-by-instrument  basis. The fair value
measurement  election is irrevocable  once made and  subsequent  changes in fair
value must be recorded in earnings. The effect of adoption will be reported as a
cumulative-effect  adjustment to beginning retained  earnings.  The Company will
adopt SFAS No. 159 in 2008 and is currently evaluating if it will elect the fair
value option for any of its eligible financial instruments and other items.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 158, "Employer's  Accounting for Defined Benefit Pension and Other
Postretirement  Plans,  an  Amendment  of SFAS No. 87, 88, 106 and 132R"  ("SFAS
158").  SFAS 158  requires an  employer to (i)  recognize  in its  statement  of
financial position an asset for a plan's over funded status or a liability for a
plan's under funded  status;  (ii) measure a plan's  assets and its  obligations
that  determine  its funded status as of the end of the  employer's  fiscal year
(with limited exceptions); and (iii) recognize changes in the funded status of a
defined  benefit  postretirement  plan in the year in which the  changes  occur.
Those changes will be reported in comprehensive income of a business entity. The
requirement  to recognize the funded status of a benefit plan and the disclosure
requirements  are  effective  as of the  end of the  fiscal  year  ending  after
December 15, 2006, for entities with publicly traded equity  securities,  and at
the end of the fiscal year ending after June 15, 2007,  for all other  entities.
As  required  the  Company  adapted  SFAS  158  as of  December  31,  2006.  The
requirement to measure plan assets and benefit obligations as of the date of the
employer's  fiscal  year-end  statement of financial  position is effective  for
fiscal years ending after December 15, 2008. In accordance with the Supplemental
Plan Amendment,  as previously adopted,  the liability for the Supplemental Plan
was  fully  satisfied  on May 31,  2007,  by the  lump-sum  benefit  payment  of
$16,676,115  (to  Mr.  Bianco,  the  Company's  Chairman,  President  and  Chief
Executive   Officer),   and  immediately   thereafter,   the  Supplemental  Plan
automatically terminated.  The lump-sum Supplemental Plan benefit payment to Mr.
Bianco was paid from the Company's available financial resources.  After May 31,
2007, no further  Supplemental Plan expense was required to be recognized by the
Company.  Accordingly,  because of the termination of the Supplemental  Plan the
adoption  of  SFAS  158  did  not  have  a  material  effect  on  the  Company's
consolidated financial statements. See Note 7 herein for further information.



<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 and
a U.S.  Treasury Note with  original  maturities of three months or more 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, at December 31, 2007, consisted
of  investments  in equity  securities  held for an  indefinite  period and were
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>
                                                  2007                                       2006
                              =========================================       ===============================================
<S>                           <C>             <C>                <C>          <C>              <C>                <C>
                                               Cost or                                          Cost or
                              Carrying        Amortized           Fair        Carrying         Amortized           Fair
(in thousands)                   Value             Cost          Value           Value              Cost          Value
                                ======         ========          =====          ======          ========          =====
Held to Maturity:
    U.S. Treasury Bills......$  16,313         $ 16,313       $ 16,329       $  18,187         $  18,187    $    18,196
    U.S. Treasury Note.......        -                -              -          16,436            16,436         16,429
                              --------         --------       --------       ---------         ---------    -----------
                                16,313           16,313         16,329          34,623            34,623         34,625
Available for Sale:
     Equity Securities.......        -                -              -           1,417             1,279          1,417
                              --------         --------       --------       ---------         ---------    -----------
                             $  16,313         $ 16,313       $ 16,329       $  36,040         $  35,902    $    36,042
                             =========         ========       ========       ========          =========    ===========
</TABLE>

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

(in thousands)                                                                                 2007                2006
                                                                                               ====                ====
Held to Maturity:
Gross unrealized gains..............................................................        $    17               $   9
                                                                                            =======               =====
Gross unrealized losses............................................................         $    (1)              $  (7)
                                                                                            =======               =====
Available for Sale:
Gross unrealized gains..............................................................        $     -               $ 138
                                                                                            =======               =====
Gross unrealized losses.............................................................        $     -               $   -
                                                                                            =======               =====
</TABLE>

     Realized  gain on the sales of  investment  securities  available  for sale
follow:
<TABLE>
<CAPTION>
<S>                                                                   <C>                  <C>                   <C>
(in thousands)
                                                                       2007                  2006                  2005
                                                                      =======              =======               ======
Net sale proceeds..............................................       $ 1,620              $   564               $  548
Cost basis.....................................................        (1,310)                (519)                (528)
                                                                      -------              -------               ------
Realized gain..................................................       $   310              $    45               $   20
                                                                      =======              =======               ======
</TABLE>


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


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)                                  2007                2006                     2005
                                                                      =======             =======                 ======

Loss from continuing operations...............................        $(3,936)            $ (5,463)             $(5,519)
                                                                      =======             ========              =======

Weighted average common shares outstanding ...................         44,691               45,327               46,234

Effect of Dilutive Securities:
Assumed stock option exercise.................................             -                     -                    -
                                                                      -------             --------              -------
Weighted average common shares outstanding assuming dilution..         44,691               45,327               46,234
                                                                      =======             ========              =======
Loss from continuing operations per common share:
Basic.........................................................        $ (0.09)            $  (0.12)             $ (0.12)
Assuming dilution.............................................          (0.09)               (0.12)               (0.12)
                                                                      =======             ========              =======
</TABLE>

     Options  to  purchase  common  stock of 876,000  shares in 2007,  1,240,000
shares in 2006 and 1,440,000  shares in 2005 were excluded from the  computation
of diluted earnings per share because they were  antidilutive in the computation
of earnings per share from continuing operations.

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>
                                                                    2007               2006                  2005
                                                                ==========          ==========            ==========
Balance at beginning of year.................................   44,968,519          46,233,519            46,233,519

Common shares repurchased....................................   (1,109,855)         (1,265,000)                    -
                                                                ----------          ----------            ----------
Balance at end of year.......................................   43,858,664          44,968,519            46,233,519
                                                                ==========          ==========            ==========
</TABLE>

     Common  stock  balances  exclude  treasury  shares  as of  December  31, as
follows:
<TABLE>
<CAPTION>
<S>                                                             <C>                 <C>                     <C>
                                                                   2007                2006                   2005
                                                                ==========          ==========              ========
Treasury shares..............................................    2,551,343           1,441,488               176,488
                                                                ==========          ==========              ========
Aggregate dollar value of treasury shares....................   $1,873,000          $1,384,000              $685,000
                                                                ==========          ==========              ========
Average cost per treasury share..............................        $0.73               $0.96                 $3.88
                                                                ==========          ==========              ========
</TABLE>



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

     At December 31,  2007,  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, 2011.

Common Stock Repurchase Plan

     In January 2002, the Company  announced a common stock repurchase plan (the
"Repurchase  Plan") which allows for the  repurchase by the Company for up to 10
million shares of its common stock in the open market.

     The Repurchase Plan is conditioned upon favorable  business  conditions and
acceptable prices for the common stock.  Purchases under the Repurchase Plan may
be made,  from  time to time,  in the  open  market,  through  block  trades  or
otherwise.  Depending on market  conditions and other factors,  purchases may be
commenced or suspended any time or from time to time without prior notice.

     During the year 2007,  the Company  repurchased  an  aggregate of 1,109,855
shares of common stock from  unaffiliated  parties,  at various dates, at market
prices  at their  time of  purchase  for an  aggregate  cost,  including  broker
commissions of $489,000, pursuant to the Repurchase Plan.

     During  January,  2008,  the Company  repurchased  an  aggregate of 189,100
shares of common stock from unaffiliated parties at a purchase price,  including
broker  commissions,  of $0.43 per share  pursuant to the  Company's  Repurchase
Plan.


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

Note 6 - Comprehensive Income (Loss)

     Components of other accumulated  comprehensive  income (loss), for the year
ended December 31 follow:

<TABLE>
<CAPTION>
<S>                           <C>          <C>              <C>                <C>         <C>               <C>
(in thousands)                                      2007                                         2006
                               ==========================================       =========================================
                              Minimum       Unrealized       Accumulated       Minimum      Unrealized        Accumulated
                              Pension      Gains (Losses)      Other           Pension     Gains (Losses)        Other
                              Liability    on Investment    Comprehensive      Liability   on Investment     Comprehensive
                              Adjustment    Securities      Income (Loss)      Adjustment   Securities       Income (Loss)
                              ==========   =============    =============      ==========  =============     =============
Balance beginning of period...$    (474)   $        138     $       (336)      $  (1,326)  $       (69)      $     (1,395)
Reclassification adjustment for
  gains realized in net loss..        -            (211)            (211)              -            32                 32
Change during the period......      474              73              547             852           175              1,027
                               --------    ------------     ------------       ---------   -----------       ------------
Balance end of period......... $      -    $          -     $          -       $    (474)  $       138       $       (336)
                               ========    ===========      ============       =========   ===========       ============
</TABLE>
<TABLE>
<CAPTION>
<S>                            <C>          <C>              <C>
(in thousands)                                      2005
                               ==========================================
                               Minimum      Unrealized       Accumulated
                               Pension       Gains on          Other
                               Liability    Investment      Comprehensive
                               Adjustment   Securities      Income (Loss)
                               ==========   ==========      =============
Balance beginning of period....$     (412)  $       37      $        (375)
Reclassification adjustment for
  gains realized in net loss...         -           (5)                (5)
Change during the period.......$     (914)        (101)            (1,015)
                               ----------   ----------      -------------
Balance end of period..........$   (1,326)  $      (69)     $      (1,395)
                               ==========   ==========      =============
</TABLE>

<PAGE>

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

Note 7 - Pension and Savings Plans

     The  Company   previously   sponsored  a  non  tax-qualified   supplemental
retirement  plan,  initially  adopted by the Company in 1985, and as amended and
restated  (the  "Supplemental  Plan"),  under which only one  current  executive
officer of the Company was the sole  participant.  The cost of the  Supplemental
Plan was accrued but not funded.

     In  accordance  with an amendment to the  Supplemental  Plan, as previously
adopted  in March  2006,  the  liability  for the  Supplemental  Plan was  fully
satisfied on May 31, 2007, by the lump-sum  benefit  payment of $16,676,115  (to
Mr. Bianco, the Company's Chairman,  President and Chief Executive Officer), and
immediately  thereafter,  the Supplemental Plan  automatically  terminated.  The
lump-sum  Supplemental  Plan  benefit  payment  to Mr.  Bianco was paid from the
Company's  available  financial  resources.  After  May  31,  2007,  no  further
Supplemental  Plan expense was  required to be  recognized  by the Company.  The
Supplemental Plan liability was $16,282,000 at December 31, 2006.

     The  Personnel  Committee  of the Board of  Directors  of the Company  (the
"Personnel  Committee")  had reviewed the  Supplemental  Plan and the  Company's
related  liability,  including  the  desirability  of continuing to maintain and
administer the  Supplemental  Plan, the untying of Mr. Bianco's  employment with
the Company from the timing of his  Supplemental  Plan benefit  payment(s),  the
Company's overall financial position, and the desirability of continued accruals
under  the  Supplemental  Plan  after Mr.  Bianco's  prior  employment  contract
expiration  on May 31,  2007.  In  connection  with this review,  the  Personnel
Committee  considered  various  options,  including  whether or not to terminate
and/or  curtail the  Supplemental  Plan.  Mr.  Bianco (the  Company's  Chairman,
President  and Chief  Executive  Officer,  and the  former  President  and Chief
Executive  Officer of Carteret  Savings Bank, FA), was the only current employee
of the Company who  participated in the  Supplemental  Plan and his Supplemental
Plan benefit was fully  vested.  For purposes of computing  his accrued  benefit
under the Supplemental  Plan, Mr. Bianco had 14.67 years of credited services as
of December 31, 2005 and 16.08 years of credited service as of May 31, 2007. His
accrual  percentage under the Supplemental  Plan was 4%, in effect from the time
of his  initial  employment  with  the  Company,  and  in  accordance  with  the
Supplemental  Plan  (prior  to  the  amendment  described  below),  he  had  the
entitlement to receive his Supplemental  Plan benefit in either a lump-sum or an
annuity upon termination of his employment with the Company.

     During March 2006, the Company entered into a new employment agreement with
Mr. Bianco to extend his employment  with the Company for an additional five (5)
years beyond May 31, 2007, until May 31, 2012 (the "2007 Employment Agreement").
As part of the 2007 Employment  Agreement terms: (i) Mr. Bianco's annual rate of
base salary will not increase  from his current  rate of base salary  during the
first three years of the 2007  Employment  Agreement (the amount of Mr. Bianco's
base salary for the fourth and fifth years of the 2007 Employment Agreement term
to be determined by the Personnel Committee, in its sole discretion, although in
no event less than $625,000 per annum); (ii) Mr. Bianco's service accruals under
the  Supplemental  Plan will cease as of May 31, 2007;  (iii) Mr. Bianco's Final
Average  Earnings (as defined in the Supplemental  Plan) for  Supplemental  Plan
benefit calculation  purposes,  was capped as of December 31, 2004; and (iv) Mr.
Bianco's annual bonus  opportunity  will no longer be linked to recovery efforts
in connection with the Company's  Supervisory Goodwill  litigation.  Instead, on
May 31, 2007, Mr. Bianco received a lump-sum  payment of his  Supplemental  Plan
benefit of  $16,676,115,  which  amount was  calculated  on the basis of a 5.75%
discount rate, a "RP-2000" projected to 2004 mortality table, and 16.08 years of
credited service, and the Company and Mr. Bianco agreed to a long term incentive
bonus formula,  at varying  percentages  ranging from 5% to 10%, or more,  based
upon recoveries  received by the Company for its investment in Carteret  Savings
Bank,  through  litigation or otherwise  (including  the  Company's  Supervisory
Goodwill litigation).

     Based  on  the  2007   Employment   Agreement  and  the  amendment  of  the
Supplemental Plan as previously  adopted in March 2006, each as described above,
the Company  revised the  calculation  of the  Supplemental  Plan  liability  to
reflect  a  5.75%  discount  rate as of  April  1,  2006,  as set  forth  in the
agreements.  The  Supplemental  Plan  liability  was  increased by an expense of
$394,000 in the full year period ended December 31, 2007, to reflect the May 31,
2007 lump-sum  payment amount of $16,676,115,  utilizing the 5.75% discount rate
factor.



<PAGE>

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

     An  additional  Supplemental  Plan  expense of $474,000 was recorded in the
full year period ended  December 31, 2007,  to fully  amortize the  Supplemental
Plan  minimum  pension  liability  adjustment.  The  minimum  pension  liability
adjustment,  which was included as a component of  stockholders'  equity  within
accumulated other  comprehensive  loss in the Company's  consolidated  financial
statements, was $1,326,000 as of March 31, 2006, and was amortized on a straight
line  basis  over the  14-month  period  ending  May 31,  2007 as an  additional
Supplemental Plan expense of $284,000 per quarter. This resulted in an aggregate
Supplemental  Plan expense of $474,000  for the full year period ended  December
31, 2007. The  amortization of the additional  minimum pension  liability in the
2007 and 2006 periods,  although recorded as a component of compensation expense
in the  Company's  consolidated  statement  of  operations,  did not result in a
decrease  in total  stockholders'  equity,  as its  recognition  resulted  in an
increase in one component and a corresponding  decrease in another  component of
stockholders'  equity.  See  Part  I -  Item  1 - Note  8,  herein  for  further
information.

     In connection with the  Supplemental  Plan lump-sum  benefit  payment,  the
Company  paid  approximately  $242,000 of  employer  Medicare  taxes,  which are
included as a component of  compensation  and benefits  expense in the Company's
Consolidated Statement of Operations for the full year period ended December 31,
2007.

     Pension expense for the  Supplemental  Plan for the years ended December 31
was as follows:
<TABLE>
<CAPTION>
<S>                                                                      <C>                 <C>                <C>
(in thousands)                                                             2007                2006               2005
                                                                         ========            ========           ========
Interest cost on projected benefit obligation.................           $    394            $  1,224           $    769
Amortization of minimum pension liability.....................                474                 852                  -
Service cost of current period................................                  -                 463              1,031
Amortization of unrecognized losses...........................                  -                   -                287
                                                                         --------            --------           --------
                                                                         $    868            $  2,539           $  2,087
                                                                         ========            ========           ========
</TABLE>

     A reconciliation  of the changes in the projected  benefit  obligation from
the  beginning  of the  year to the end of the  year  for  2007  and  2006 is as
follows:
<TABLE>
<CAPTION>
<S>                                                                                        <C>                   <C>
(in thousands)                                                                               2007                  2006
                                                                                           ========              ========
Projected benefit obligation at beginning of year...................................       $16,282               $ 14,595
Service cost........................................................................             -                    463
Interest cost.......................................................................           394                  1,224
Lump-sum benefit payment............................................................       (16,676)                     -
                                                                                           -------               --------
Projected benefit obligation at end of year.........................................       $     -               $ 16,282
                                                                                           =======               ========
</TABLE>


<PAGE>


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

     Accrued  pension costs for the  Supplemental  Plan at December 31, 2006 and
some of the assumptions used to determine these amounts, are summarized below:
<TABLE>
<CAPTION>
<S>                                                                                                <C>
(dollars in thousands)                                                                               2006
                                                                                                   ========
Actuarial present value of benefit obligations:
Accumulated benefit obligations, fully vested................................................      $ 16,282
                                                                                                   ========
Projected benefit obligation for service rendered to date....................................      $ 16,282
Unrecognized net loss........................................................................          (474)
Accumulated other comprehensive loss.........................................................           474
                                                                                                   --------
Accrued pension costs........................................................................      $ 16,282
                                                                                                   ========
Major assumptions:
Discount rate................................................................................          5.75%
Rate of increase in future compensation......................................................             -
                                                                                                   ========
</TABLE>

     The Company  sponsors the AmBase 401(k) Savings Plan (the "Savings  Plan"),
which is a "Section 401(k) Plan" within the meaning of the Internal Revenue Code
of 1986, as amended (the "Code"). The Savings Plan permits eligible employees to
make  contributions  of up to 15% of  compensation,  which  are  matched  by the
Company at a percentage  determined  annually.  The employer  match is currently
100% of the amount the employee elects to defer.  Employee  contributions to the
Savings Plan are invested at the employee's  discretion,  in various  investment
funds. The Company's  matching  contributions are invested in the same manner as
the compensation reduction  contributions.  The Company's matching contributions
to the Savings Plan,  charged to expense,  were $60,000,  $55,000 and $50,000 in
2007,  2006 and 2005,  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.



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

     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 2007, 2006, or 2005.

     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. The Board of Directors and
Personnel  Committee  have  approved an amendment to the 1993 Plan to extend the
termination  date,  for the period  during which awards may be granted under the
1993 Plan, for an additional 10 years to May 28, 2018 from May 28, 2008, subject
to the  approval  by a  majority  vote  of  the  Company's  stockholders  at the
Company's  Annual  Meeting  of  stockholders  scheduled  for  May 16,  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  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.


<PAGE>

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


Incentive plan activity is summarized as follows:
<TABLE>
<CAPTION>
<S>                                                            <C>                              <C>
                                                                               1993 Stock
(shares in thousands)                                                          Incentive Plan
                                                               =========================================
                                                                                                Weighted
                                                               Shares                            Average
                                                                Under                           Exercise
                                                               Option                             Price
                                                              ---------                        -----------
Outstanding at December 31, 2004.....................             1,245                        $   1.00
 Expired.............................................               (45)                           1.05
 Granted.............................................               240                            0.81
                                                              ---------
Outstanding at December 31, 2005.....................             1,440                        $   0.96
Expired..............................................              (200)                           0.66
                                                              ---------
Outstanding at December 31, 2006.....................             1,240                            1.01
Expired..............................................              (364)                           1.19
                                                              ---------
Outstanding at December 31, 2007.....................               876                            0.93
                                                              =========
Options exercisable at:
December 31, 2007....................................               876                        $   0.93
December 31, 2006....................................             1,036                            1.02
December 31, 2005....................................               912                            1.00
</TABLE>

     The  following  table  summarizes  information  about the  Company's  stock
options outstanding and exercisable under the 1993 Plan at December 31, 2007, as
follows:
<TABLE>
<CAPTION>
<S>    <C>              <C>              <C>                 <C>                       <C>                     <C>
(shares in thousands)
                                                    Options Outstanding                       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 $0.90            500                   6              $0.72                     500                       $0.72
       $0.95                15                   2               0.95                      15                      0.95
$1.09 to $1.19             336                   4               1.09                     336                      1.09
 $2.56 to $3.65             25                   1               3.00                      25                      3.00
                      --------                                                       --------
          Total            876                                                            876                      0.93
                         =====                                                          =====
</TABLE>


<PAGE>

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

     At December 31, 2007, the weighted  average  remaining  contractual life in
years for options  outstanding and options  exercisable was 4.40 and 4.34 years,
respectively.  At  December  31,  2007,  the  exercise  price of  stock  options
outstanding  and  exercisable was greater than the market price of the Company's
stock; therefore, no intrinsic value for stock options is reflected herein.

     No stock based compensation expense was recorded in 2007, as all previously
granted outstanding options vested as of January 2, 2007. No stock option awards
have been granted since January 2005.  During the year ended  December 31, 2006,
the Company recorded  compensation expense of $88,000 relating to unvested stock
options.  Compensation  expense  relating  to stock  options is  recorded in the
consolidated   statement  of  operations,   with  a  corresponding  increase  to
additional paid in capital in the statement of  stockholders'  equity.  Prior to
2006, as permitted by SFAS 123, the Company  accounted for share-based  payments
to  employees   using  APB  25's  intrinsic   value  method  and  recognized  no
compensation  cost for employee  stock  options in prior  years.  See Note 2 for
additional information,  including disclosure of the pro-forma net income (loss)
and earnings per share had the Company adopted SFAS 123R in prior periods.

     The fair  value of each  option  award was  estimated  on the date of grant
using the  Black-Scholes-Merton  option valuation model  ("Black-Scholes")  that
uses the assumptions  noted in the following  table.  Expected  volatilities are
based  on  historical  volatility  of the  Company's  stock.  The  Company  uses
historical data to estimate option  exercises and employee  terminations  within
the valuation  model. The expected term of options granted is estimated based on
the  contractual  lives of option  grants,  option vesting period and historical
data and represents  the period of time that options  granted are expected to be
outstanding. The risk-free interest rate for periods within the contractual life
of the option is based on the U.S.  Treasury bond yield in effect at the time of
grant.  No  adjustments  were  made  in 2006 to the  input  assumptions  for the
calculation  of the fair  value of stock  options  granted  in 2005 from the pro
forma  amounts  previously  presented in the  Company's  prior period  financial
statements.

     The  Black-Scholes  option  valuation  model  requires  the input of highly
subjective assumptions, including the expected life of the stock-based award and
stock price volatility. The assumptions noted herein represent management's best
estimates,   but  these  estimates   involve  inherent   uncertainties  and  the
application of management  judgment.  As a result, if other assumptions had been
used,  our recorded and pro forma  stock-based  compensation  expense could have
been materially different from that depicted herein. In addition, the Company is
required to estimate the expected forfeiture rate and only recognize expense for
those  shares  expected to vest.  If the actual  forfeiture  rate is  materially
different from the previous estimate, the share-based compensation expense could
be materially different.

     The Company believes that the use of the Black-Scholes model meets the fair
value  measurement   objectives  of  SFAS  123R  and  reflects  all  substantive
characteristics  of the instruments  being valued. No stock options were granted
during the year ending  December 31, 2007 and  December 31, 2006.  The per share
grant date weighted  average  estimated  values of employee  stock option grants
under the 1993 Plan, as well as the  assumptions  used to calculate  such values
granted during the year ended December 31, 2005 were as follows:
<TABLE>
<CAPTION>
<S>                                                                <C>
                                                                    2005
                                                                   =====
Weighted average fair
     value at grant date................................           $0.39
Estimated dividend yield................................               0%
Risk free interest rate.................................            4.24%
Estimated volatility....................................            0.44
Expected life in years..................................               6
                                                                    ====
</TABLE>


<PAGE>


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

     The  following  table  presents  information  regarding  non-vested  option
activity during the full year period ended December 31, 2006:
<TABLE>
<CAPTION>
<S>                                             <C>             <C>
                                                                Weighted  Average
                                                  Number of        Grant-Date
                                                    Shares          Fair Value
                                                --------------  ----------------
         Non-vested at January 1, 2007.......        204,000             $0.44
         Vested during period................       (204,000)             0.41
                                                --------------  ================
         Non-vested at December 31, 2007.....              -                 -
                                                ==============  ================
</TABLE>

     The total fair value of shares  vested  during the full year periods  ended
December 31, 2007 and December 31, 2006, was $96,000 and $134,000, respectively.
As of December 31, 2007, there was no remaining  unamortized  compensation  cost
related to non-vested  share-based  compensation  arrangements  related to stock
options granted under the 1993 Plan.

     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  continuing  operations  for the
years ended December 31 are as follows:

<TABLE>
<CAPTION>
<S>                                                                         <C>                 <C>                <C>
(in thousands)                                                              2007                2006               2005
                                                                            ====                ====               ====
Income tax expense - current state and local..................         $     (50)           $     (132)        $   (95)
                                                                       ----------           ----------         --------
Total                                                                  $     (50)           $     (132)        $   (95)
                                                                       ==========           ===========        ========
</TABLE>

     The  components of pretax income (loss) and the  difference  between income
taxes from continuing operations,  computed at the statutory federal rate of 35%
in 2007,  2006 and 2005,  and the  provision  for income  taxes from  continuing
operations for the years ended December 31 follows:
<TABLE>
<CAPTION>
<S>                                                                    <C>                  <C>                 <C>
(in thousands)                                                           2007                 2006               2005
                                                                       ========             =======            ========
Loss from continuing operations before income taxes.............       $  (3,886)           $ (5,331)          $ (5,424)
                                                                       =========            ========           ========
Tax (expense) benefit:
Tax at statutory federal rate...................................       $   1,360            $  1,866           $   1,898
Accounting loss benefit not recognized..........................          (1,360)             (1,866)            (1,898)
State income taxes..............................................             (50)               (132)               (95)
                                                                       ---------            ---------          ---------
Income tax expense..............................................       $     (50)           $   (132)          $    (95)
                                                                       =========            =========          =========
</TABLE>
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

     There were no unrecognized  tax benefits at January 1, 2007 or December 31,
2007.  Further,  no significant  changes in unrecognized income tax benefits are
currently  expected  to occur  over the next  year.  Interest  and/or  penalties
related to under payments of income taxes,  if applicable,  would be included in
interest  expense  and  operating  expenses,   respectively.   The  accompanying
financial  statements  do not  include  any  amounts  for any such  interest  or
penalties.  The Company's federal income tax returns for the years subsequent to
1992  have  not been  reviewed  by the IRS or state  authorities.  As such,  the
statute of limitations  for federal and state purposes are generally  closed for
tax years prior to 2004.

     State income tax amounts for 2007 and 2006  primarily  consist of a minimum
tax on capital to the state of  Connecticut.  In 2005, the Company  utilized net
operating loss ("NOL")  carryforwards  and  alternative  minimum tax ("AMT") NOL
carryforwards as available to offset taxable income generated from the 2005 sale
of Two Soundview as discussed in Note 13 herein.  However, due to limitations on
the amount of NOL  carryforwards  that could be utilized against taxable income,
an income tax provision of $400,000 for discontinued operations, attributable to
a provision for federal  alternative  minimum tax of $150,000 and a provision of
$250,000 for  Connecticut  state taxes was recorded in the fourth  quarter ended
December 31, 2005.

     In  December  2006,  the  Company   recorded  other  income  of  $1,201,000
attributable to an Internal Revenue Service ("IRS")  interest refund,  consented
to by the IRS in December 2006, and received by the Company in January 2007. The
refund resulted from the Company's pursuit of interest refund claims for several
prior tax years under a tax code  provision  which  allowed for the  retroactive
recovery of the interest  differential  where a taxpayer had a tax  underpayment
(subject to higher  interest  payment rates) for one tax year and a simultaneous
tax  overpayment  (subject to lower interest refund rates) for another tax year.
The Company is continuing to pursue similar claims from several other tax years,
but at the  current  time the  Company  can give no  assurances  as to the final
amounts  of any  additional  interest  refunds,  if any,  or when they  might be
received.

     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 reviewing 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 will have  expired  in 2007  unless  they are
absorbed in earler years based on inclusion of certain items in the consolidated
group, with the remaining  approximately $102 million of NOL carryforwards to be
generated,  expiring  (if  not  utilized),  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.
<PAGE>
                      AMBASE CORPORATION AND SUBSIDIARIES
           Notes to Consolidated Financial Statements (continued)

     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.

     The FDIC has previously  filed a federal income tax return for Carteret FSB
for 1995 (as well as other years),  which  indicates that Carteret FSB allegedly
could owe a 1995 federal  income tax liability of $32 million,  which  including
interest and penalty thereon,  could be in excess of $100 million,  The FDIC has
stated to the United States Court of Federal Claims ("Court of Claims") that the
tax amounts are only estimates and are highly  contingent.  Based on proceedings
in other  Supervisory  Goodwill  cases,  it is possible that the IRS may try to
collect the alleged  Carteret  FSB federal  income  taxes from the  Carteret FSB
receivership.

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

     Based on the  information  received to date,  if the correct  Carteret  FSB
federal  income tax results were included with the  Company's  originally  filed
federal income tax returns, the Company,  based upon consultation with its legal
and tax  advisors,believes  that no additional material federal income tax would
be owed by the Company.  This analysis  included  among other items, a review of
the  Carteret  FSB  federal  income tax  returns as prepared by the FDIC and the
correction of errors  originally  reported  therein,  the proper  application of
federal  NOL  carryforwards  and  carrybacks,  and the  adherence  to statute of
limitation provisions contained in the Internal Revenue Code, as amended.

     As explained  above,  although the Company does not believe that Carteret
FSB or the Company will have a material federal income tax liability  related to
Carteret FSB for tax year 1995 (or any other tax year),  the Company can give no
assurances  of the final  amounts,  if any, of federal  income taxes owed by the
Carteret  FSB  receivership  or by the Company as a result of the  Carteret  FSB
receivership operations.

     The Company is  continuing  to try to resolve  these matters as part of the
Supervisory  Goodwill  legal  process  and is also  continuing  to  review  the
Carteret FSB federal income tax returns and the results of their  inclusion with
the Company's  federal  income tax returns as previously  filed.  The Company is
also  reviewing the  possibility  of pursuing the Carryback  Claims,  as further
described  above,  which would have an impact on the analysis of the prior year
tax  information.  For further  information  on the  Supervisory  Goodwill legal
proceedings, see Note 10 herein.

     The  discussion of the Carteret FSB federal  income tax results is intended
to provide  details as to the  potential  interrelationship  of the Carteret FSB
federal income tax returns with the Company's  federal income tax positions.  It
is not a reflection of any federal  income tax liability of the Company  arising
from the Carteret receivership operations.
<PAGE>
                      AMBASE CORPORATION AND SUBSIDIARIES
           Notes to Consolidated Financial Statements (continued)

     Based upon the Company's  federal  income tax returns as filed from 1993 to
2006 (subject to IRS audit adjustments),  excluding all effects of the inclusion
of  Carteret/Carteret  FSB from December 4, 1992 forward,  as noted above, as of
December 31,  2006,  the Company has NOL  carryforwards  available to reduce the
future federal taxable income, which expire if unused, as follows:
<TABLE>
<CAPTION>
<S>             <C>              <C>
                2009             $2,200,000
                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
                2024                700,000
                2026              2,800,000
                                  ---------
                                $33,100,000
</TABLE>

     The Company's  federal income tax returns for the years  subsequent to 1992
have not been  reviewed by the IRS and the Company has not been  notified of any
potential  tax  audits  by any  federal,  state or local  tax  authorities.  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 $32 million as of
December  31,  2007 and 2006,  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) 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 SUBSIDIARIES
              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
("Judge Smith") 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 DOJ responded with the
theories  that,  among  other  things,   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 DOJ 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 for May 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  filed its reply to these  motions on March 29, 2005. In April 2005,
Judge Smith heard oral argument on the United  States  Department of Justice and
the FDIC motions  requesting  that Judge Smith certify for immediate  appeal his
ruling  that  the  Company  is  entitled  to  challenge   the  validity  of  the
receivership  deficit.  Because Judge Smith's ruling on the receivership deficit
issue was not a final  order,  both Judge Smith and the Court of Appeals for the
Federal  Circuit  would  have to agree to an appeal of that  issue at this time.
Following the April 2005 oral argument,  Judge Smith entered an order,  on April
25, 2005, staying  resolution of the motions to certify an interlocutory  appeal
pending the holding of a "show cause" hearing. Judge Smith indicated at the oral
argument  that the purpose of the show cause hearing was to allow the Company to
outline  the  evidence  and  arguments  it was  prepared  to  offer  in order to
challenge  the  validity  and  size of the  receivership  deficit.  Judge  Smith
directed the parties to attempt to reach agreement  regarding a schedule for the
completion  of discovery on  receivership  deficit  issues,  and he directed the
parties to submit to the Court such an agreed proposed discovery  schedule,  or,
if the parties are unable to reach agreement,  separate  proposed  schedules for
discovery,  in early May 2005.  Judge Smith  further  encouraged  the parties to
discuss the procedures  and schedule for the show cause hearing,  and to provide
the Court with a proposed order on such matters.

     In  accordance  with the  Court's  direction,  the  parties  agreed  upon a
schedule for the  completion of fact discovery and procedures for the show cause
proceeding.  In accordance with the parties'  agreement,  Judge Smith entered an
order on May 23, 2005,  providing that fact discovery would be completed  within
45 days of the completion of document production by the Government.  The May 23,
2005, order further provided that (i) 45 days after the close of discovery,  the
Company was to file a statement of issues  summarizing the respects in which the
receivership  books allegedly  overstate or misstate the  receivership  deficit;
(ii) 45 days after the filing of the Company's  statement of issues,  the United
States and the FDIC were to file  responses;  and (iii) 15 days after the filing
of such responses, the Company was to file a reply.


<PAGE>

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

     In May and June of 2005, the Government provided the Company with access to
Carteret's   documents  and  documents   relating  to  the   management  of  the
receivership. The Company selected approximately 3 million pages of documents to
be imaged at the Government's  expense.  In September 2005, a status  conference
was held before Judge Smith.  The  Government  indicated  that it would complete
production  of all the images of the selected  materials by the end of September
2005.  Additionally,  at the status  conference,  all  parties  agreed  that the
schedule  previously  set forth by the  Court's  May 23,  2005  order  should be
changed in one respect:  the Company would be given 75 days from the  completion
of the document production to complete  discovery.  The Court issued an order on
September 26, 2005 memorializing this agreement.  On January 11, 2006, the Court
held a status  conference.  At that time, the Court  indicated that the document
production  would be deemed  complete  as of that  date.  The  Court's  order of
January 13, 2006,  memorialized  this ruling.  Accordingly,  fact  discovery was
completed in April 2006,  and the Company's  statement of issues was  ultimately
filed in June of 2006.  In May 2006,  the Company  served on the  Government  an
expert report in support of some of the arguments the Company made regarding the
size of the receivership deficit. The Company's expert was deposed in July 2006.
In early  August  2006,  the  Government  submitted  its own  expert  report  on
receivership  deficit  issues,  and in October  2006,  the  Company  deposed the
Government's expert. In late August 2006, the Government filed a response to the
Company's  Statement of Issues,  and in September  2006,  the FDIC filed its own
response to the  Statement of Issues.  The Company filed its reply in support of
its  Statement  of Issues  in  October  2006.  A status  conference  was held in
November 2006 and December 2006, to discuss further proceedings. On December 13,
2006,  the Court  entered an order  denying  defendant's  request that the Court
allow an  immediate  appeal of the Court's  ruling that it had  jurisdiction  to
consider the validity of the receivership  deficit. The Court also found that it
continued  to have  jurisdiction  to hear the case.  The Court also  ordered the
parties to enter a schedule for expert discovery.

     On April 13, 2007,  Judge Smith issued an order  scheduling  pretrial,  and
trial deadlines and dates,  including scheduling a trial to commence on February
11, 2008. In  accordance  with the Court's  scheduling in May 2007,  the Company
submitted its expert report. The Government deposed the Company's expert in June
2007. In July 2007, the Government  identified its damages experts and submitted
its expert  reports in  September  2007.  The Company  deposed  the  Governments
experts in October 2007.

     Pursuant to the Court order,  the Court heard oral argument on November 14,
2007 at the U.S. Court of Federal  Claims,  to decide whether the trial could be
avoided by summary judgment, pursuant to papers filed by the parties on November
7, 2007 and  November 19, 2007.  On November  30,  2007,  the Court  ordered the
parties to continue with the trial schedule as previously set forth.

     Subsequently on December 7, 2007, the parties exchanged exhibit and witness
lists; on December 14, 2007 the parties  submitted an  hour-by-hour  anticipated
trial  schedule to the Court;  on December 21, 2007  Plaintiffs and FDIC-R filed
Appendix A  submissions;  on January 8, 2008 a pretrial  conference  was held in
U.S. Court of Federal Claims; on January 21, 2008 the Defendant filed Appendix A
submissions; and on February 11, 2008 trial was commenced.

     Trial testimony of fact and expert witnesses for the Company,  the DOJ, and
the FDIC is scheduled to be completed  during the week of March 31, 2008.  After
the  completion of trial  testimony,  it is expected that the Court will issue a
post trial  scheduling  order,  providing  for (i) the  parties to file  written
answers to a series of questions to be set forth by Judge Smith; (ii) the filing
of post  trial  briefs  by the  Company,  and DOJ and the  FDIC;  and  (iii) the
establishment of a date for the parties' presentation of closing arguments.

     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).  In June 2004,
the United  States  Supreme  Court denied the petition for  certiorari  filed by
Bailey.  The Court of  Federal  Claims  decisions  and  certain  filings  in the
Company's  case,  as well as other  decisions  in  Winstar  related  cases,  are
publicly available on the Court of Claims web site at www.cofc.uscourts.gov.  In
addition,  decisions in Winstar-related  cases that have been issued by the U.S.
Court of Appeals,  the court that hears  appeals from  decisions by the Court of
Claims, may be found on that court's website at www.cafc.uscourts.gov. Decisions
in other  Winstar  related  cases may be relevant to the  Company's  Supervisory
Goodwill claims,  but are not necessarily  indicative of the ultimate outcome of
the Company's actions.




<PAGE>

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

Note 11 - Fair Value of Financial Instruments

     The  carrying  amounts  reported  in the  balance  sheets for cash and cash
equivalents  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.
The carrying  value of  applicable  other  liabilities  approximates  their fair
value.  See note 13 herein for  information  regarding the Company's sale of Two
Soundview in July 2005.

Note 12 - Property Owned

     The Company owns one commercial  office building in Greenwich,  Connecticut
that  contains   approximately   14,500  square  feet.   The  Company   utilizes
approximately  3,500 square feet for its executive offices;  the remaining space
is  currently  unoccupied  and  available  for  lease.  Depreciation  expense is
recorded  on a  straight-line  basis over 39 years.  The  building is carried at
cost, net of accumulated  depreciation  of $358,000 and $283,000 at December 31,
2007 and 2006,  respectively.  See note 13 herein for information  regarding the
Company's sale of Two Soundview in July 2005.

     Although the portion of the  building not being  utilized by the Company is
currently  unoccupied and available for lease, based on the Company's  analysis,
including but not limited to current market rents in the area,  leasing  values,
and comparable  property sales,  the Company believes the property's fair market
value exceeds the property's current carrying value; and, therefore the carrying
value of the property as of December 31, 2007 has not been impaired.

Note 13 - Discontinued Operations

     In May 2005,  the Company  entered into an agreement to sell Two Soundview,
originally purchased in December 2002, to Ceruzzi Holdings, LLC, an unaffiliated
third party. In July 2005, the Company completed the sale of Two Soundview.  The
sale  price  was   $28,000,000   less  normal  real  estate  closing  costs  and
adjustments. As a result of the sale of Two Soundview, the results of operations
of Two  Soundview  have been  designated  as  discontinued  operations,  and the
Consolidated Statements of Operations for the periods presented herein have been
retroactively  reclassified  to report the income from  discontinued  operations
separately from the results of continuing  operations by excluding the operating
revenues and expenses of discontinued  operations from the respective  statement
captions, in accordance with SFAS 144. A gain from the sale, of $10,298,000,  is
reflected in the Company's financial statements for the year ending December 31,
2005.

Net gain on sale of real estate is as follows:
<TABLE>
<CAPTION>
<S>                                                                                                <C>
                                                                                                     2005
(in thousands)                                                                                       =====
Gross sales price.............................................................                     $28,000
Less:  Transactions costs.....................................................                        (558)
                                                                                                   -------
Net cash proceeds.............................................................                      27,442
Less:
    Real estate carrying value (net of accumulated depreciation of $722,000)..                     (16,588)
    Other assets..............................................................                        (556)
                                                                                                   -------
Net gain on sale of real estate...............................................                     $10,298
                                                                                                   =======
</TABLE>

     Transaction  costs above include broker  commissions,  transfer taxes,  and
legal and other fees.  Other assets above includes  $519,000 of deferred  rental
revenue  resulting from the  recognition  of rental  revenue on a  straight-line
basis over the terms of tenant leases versus  contractual  lease payment  terms,
and $37,000 of real estate commissions previously capitalized.



<PAGE>

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

     Income from  discontinued  operations,  as summarized below, for the twelve
months  periods ended  December 31, 2005,  reflects the results of operations of
Two Soundview and the net gain realized upon disposition.

     Income from discontinued operations is as follows:
<TABLE>
<CAPTION>
<S>                                                                           <C>
(in thousands)                                                                   2005
Revenues:                                                                        ====
Rental income.....................................................            $  1,158
Operating expenses:
Professional and outside services.................................                  25
Property operating and maintenance................................                 231
Depreciation......................................................                 140
Insurance.........................................................                  11
Other operating...................................................                   2
                                                                            ----------
                                                                                   409
                                                                            ----------
Income from operation of discontinued property....................                 749
Gain on disposition...............................................              10,298
Income tax expense on discontinued operations.....................                (400)
                                                                            ----------
Income from discontinued operations...............................            $ 10,647
                                                                            ==========
</TABLE>

     The  Company  utilized  NOL  carryforwards  and  AMT NOL  carryforwards  as
available  to offset  taxable  income  generated  from sale of Two  Soundview as
discussed in Note 9 to the Company's consolidated financial statements. However,
due to  limitations  on the amount of NOL  carryforwards  that could be utilized
against  taxable  income,  an income tax provision of $400,000 for  discontinued
operations  attributable to a provision for federal  alternative  minimum tax of
$150,000 and a provision of $250,000 for Connecticut state taxes was recorded in
the fourth quarter ended December 31, 2005.

Note 14 - 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
2007:                                          =======           =======          =======           =======        =====
Revenues................................     $      -         $       -          $     -          $      -      $     -
Operating expenses......................        1,689             2,152              858               802        5,501
Operating loss..........................       (1,689)           (2,152)            (858)             (802)      (5,501)
                                                =====            ======            =====             =====        =====
Net loss................................      $(1,093)        $  (1,655)         $  (588)         $   (600)     $(3,936)
                                                =====            ======            =====             =====        =====
Per common share data:
Net loss................................     $  (0.03)        $   (0.03)          $(0.01)         $  (0.01)     $ (0.09)
                                                =====            ======            =====             =====        =====
2006:
Revenues................................     $     41         $      49          $     2          $      -      $    92
Operating expenses......................        1,913             2,729            1,724             1,521        7,887
Operating loss..........................       (1,872)           (2,680)          (1,722)           (1,521)      (7,795)
                                                =====            ======            =====             =====        =====
Net income (loss).......................     $ (1,485)        $  (2,184)         $(1,964)         $    170      $(5,463)
                                                =====            ======            =====             =====        =====
Per common share data:
Net income (loss).......................     $  (0.03)        $   (0.05)         $ (0.04)         $      -      $ (0.12)
                                                ======           ======            =====             =====        =====
</TABLE>



<PAGE>


     ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     (a) Previous independent registered public accounting firm

     On September 11, 2007, the Company dismissed  PricewaterhouseCoopers LLP as
its independent  registered public accounting firm. The Company's Accounting and
Audit  Committee  and the Board of  Directors  participated  in and approved the
decision  to change its  independent  registered  public  accounting  firm.  The
reports of PricewaterhouseCoopers LLP on the financial statements for the fiscal
years  ended  December  31,  2005 and  2006  contained  no  adverse  opinion  or
disclaimer  of opinion and were not  qualified  or  modified as to  uncertainty,
audit scope or accounting principle.  During the fiscal years ended December 31,
2005 and 2006 and through  September 11, 2007, there were no disagreements  with
PricewaterhouseCoopers  LLP on any matter of accounting principles or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers  LLP
would  have  caused  them to make  reference  thereto  in their  reports  on the
financial  statements for such years. During the fiscal years ended December 31,
2005 and 2006 and through  September 11, 2007,  there were no reportable  events
(as defined in Item 304(a)(1)(v) of Regulation S-K).

     The Company  requested  that  PricewaterhouseCoopers  LLP furnish it with a
letter  addressed to the Securities and Exchange  Commission  stating whether or
not it agreed with the above statements.  A copy of such letter, dated September
14, 2007,  was filed as an exhibit to the Company's  Current  Report on Form 8-K
filed with the Securities and Exchange Commission on September 14, 2007.

     (b) New independent registered public accounting firm

     The  Company  engaged  UHY LLP as its  new  independent  registered  public
accounting firm as of September 11, 2007. During the fiscal years ended December
31, 2005 and 2006 and through  September 11, 2007, the Company had not consulted
with UHY LLP regarding any of the matters described in Item 304(a)(2)(i) or Item
304(a)(2)(ii) of Regulation S-K.

ITEM 9AT.     CONTROLS AND PROCEDURES

     Disclosure Controls and Procedures

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

     As of December 31, 2007, 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.



<PAGE>


     Management's Annual Report on Internal Control Over Financial Reporting

     The Company's  management is responsible for  establishing  and maintaining
adequate internal control over financial  reporting,  as such term is defined in
Exchange Act Rules 13a-15(f).  Under the supervision and with the  participation
of the  Company's  management,  including its  principal  executive  officer and
principal financial officer, the Company's management conducted an evaluation of
the effectiveness of its internal control over financial  reporting based on the
framework in Internal Control - Integrated  Framework issued by the Committee of
Sponsoring  Organizations  of the Treadway  Commission.  Based on the evaluation
under the framework in Internal  Control - Integrated  Framework,  the Company's
management  concluded  that its internal  control over  financial  reporting was
effective as of December 31, 2007.

     This annual report does not include an attestation  report of the Company's
registered  pubic  accounting  firm  regarding  internal  control over financial
reporting.  Management's  report was not subject to attestation by the Company's
registered  public accounting firm pursuant to temporary rules of the Securities
and Exchange  Commission  that permit the Company to provide  only  management's
report in this annual report.

     Changes in Internal Control Over Financial Reporting

     There was no  significant  change in the  Company's  internal  control over
financial reporting that occurred during the most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

     ITEM 9B. OTHER INFORMATION

     Not applicable.

     PART III

     ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     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 16, 2008,
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 2007 fiscal year.

     Code of Ethics

     We have  adopted  a Code of Ethics  that  applies  to our  Chief  Executive
Officer,  Chief 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 ended 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 16,  2008,  under  the  captions  "Executive
Compensation," "Employment Contracts," and "Compensation of Directors" 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 2007 fiscal year.



<PAGE>

     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

     The following table summarizes  information about securities authorized for
issuance under equity  compensation plans of the Company at December 31, 2007 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                 876,000            $              1.01                     4,124,000

Equity Compensation
   Plan not approved
   by stockholders                       -                              -                       110,000
                            --------------            -------------------               ---------------
Total                              876,000            $              1.01                     4,234,000
                            ==============            ===================               ===============
</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 16, 2008,  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 2007 fiscal year.

     ITEM 13.  CERTAIN  RELATIONSHIPS  AND RELATED  TRANSACTIONS,  AND  DIRECTOR
INDEPENDENCE

     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 16, 2008, under the captions "Proposal No. 1 -
Election  of  Directors"   and   "Information   Concerning  the  Board  and  its
Committees,"  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 2007 fiscal year.

     ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     The information  concerning  Principal  Accounting Fees and Services is set
forth by the Company  under the heading  "Proposal  2 -  Independent  Registered
Public  Accounting  Firm" in the Company's  definitive  Proxy  Statement for its
Annual Meeting of Shareholders to be held on May 16, 2008, 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 2007 fiscal
year.



<PAGE>

     PART IV

     ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a) Documents filed as a part of this report:
<TABLE>
<CAPTION>
<S>  <C>      <C>                                                                                              <C>
1.   Index to Financial Statements:                                                                            Page

         AmBase Corporation and Subsidiaries:

              Report of UHY LLP, Independent Registered Public Accounting Firm..................................16
              Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm...............17
              Consolidated Statements of Operations.............................................................18
              Consolidated Balance Sheets.......................................................................19
              Consolidated Statements of Changes in Stockholders' Equity........................................20
              Consolidated Statements of Comprehensive Income (Loss)............................................20
              Consolidated Statements of Cash Flows.............................................................21
              Notes to Consolidated Financial Statements........................................................22
</TABLE>
     2. Index to Financial Statements Schedules:


     Schedule III - Real Estate and Accumulated Depreciation

     (b) 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
and November 9, 2005),  (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,
the  Company's  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
September  30, 2000,  and the  Company's  Quarterly  Report on Form 10-Q for the
quarterly period ended September 30, 2005, respectively).

     10A. 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).

     10B. 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).

     10C.  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).

     10D.  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) and as amended March 30, 2006  (incorporated  by reference to
Exhibit  10E to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2005).



<PAGE>


     10E.  Employment  Agreement  dated as of March 30, 2006 between  Richard A.
Bianco and the Company,  for employment  from June 1, 2007 through May 31, 2012,
(incorporated by reference to Exhibit 10H to the Company's Annual Report on Form
10-K for the year ending  December 31,  2005),  and as amended  January 1, 2008,
included herein.

     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.

     23.1 Consent of UHY LLP, Independent Registered Public Accounting Firm.

     23.2 Consent of  PricewaterhouseCoopers  LLP, 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 28, 2008

     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
Chief Executive Office and Director     Officer and Controller
Date:  March 28, 2008                   (Principal  Financial and Accounting
                                         Officer)
                                         Date:  March 28, 2008

/s/ ROBERT E. LONG                       /s/ SALVATORE TRANI
Director                                 Director
Date:  March 28, 2008                    Date:  March 28, 2008

/s/ PHILIP M. HALPERN
Director
Date:  March 28, 2008






















<PAGE>


                       AMBASE CORPORATION AND SUBSIDIARIES
             SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 2007
                             (dollars in thousands)

<TABLE>
<CAPTION>
<S>                  <C>                  <C>                       <C>                 <C>
COLUMN A             COLUMN B                 COLUMN C                 COLUMN D                   COLUMN E
-----------     ------------------        -----------------         ----------------          ------------------
<CAPTION>
<S>                 <C>               <C>                           <C>                 <C>     <C>               <C>
                                                                    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
                     ------------   -------      -----------        ------------        ----    ------------      ------
Total...........     $          -   $   554      $     1,880        $         20        $554    $      1,900      $2,454
                     ============   =======      ===========        ============        ====    ============      ======

                                                                       [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 Depreciated
Description     Depreciation              Date Constructed          Date Acquired             Latest Income Statement
==========      =================        =================         ================          =======================
Office Building:
Greenwich, CT...     $        334                     1970             Apr.-01                      39 years
                -----------------        =================         =================         ========================
Total...........     $       334
                ================
</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, 2007           December 31, 2006         December 31, 2005
                                            =================           =================         =================
Balance at beginning of year...........     $          2,454            $       2,454             $     19,764
Improvements...........................                    -                        -                        -
Acquisitions...........................                    -                        -                        -
Disposition.............................                   -                        -                 (17,310)
                                            ----------------            -----------------         ------------------
Balance at end of year.................     $          2,454            $       2,454             $      2,454
                                            ================            =================         ==================
Total cost for federal tax
purposes at end of each year...........     $          2,454            $       2,454             $      2,454
...................                          ================            =================         ===================

[b] Reconciliation of accumulated depreciation as follows:

Balance at beginning of year...........     $            283            $         232              $       763
Depreciation expense...................                   51                       51                      191
Dispositions...........................                    -                        -                    (722)
                                            ----------------            -----------------          ------------------
Balance at end of year.................     $            334            $         283              $       232
                                            ================            =================          ==================
</TABLE>


<PAGE>



     DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
<S>                              <C>                               <C>                        <C>
Board of Directors
Richard A. Bianco                Robert E. Long                    Salvatore Trani            Philip M. Halpern
Chairman, President and          Chairman, Chief                   Executive Vice             Managing Partner
Chief Executive Officer          Executive Officer                 President                  Collier, Halpern, Newberg,
AmBase Corporation               GLB Group, Inc.                   BGC Partners, L.P.         Nolletti & Bock, LLP
</TABLE>
<TABLE>
<CAPTION>
<S>                              <C>                                         <C>
AmBase Officers
Richard A. Bianco                John P. Ferrara                             Joseph R. Bianco
Chairman, President and          Vice President, Chief Financial Officer     Treasurer
Chief Executive Officer          and Controller
</TABLE>

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

 The 2008 Annual Meeting is currently  scheduled to be held          AmBase Corporation
 at 9:00 a.m. Eastern Time, on Friday, May 16, 2008, 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
 with quotations made available in the "pink sheets"                 name registration changes; (iv) Quarterly Reports
 published by the National Quotation Bureau, Inc.                    on Form 10-Q; (v) Annual Reports on Form 10-K;
                                                                     (vi) proxy material; and (vii) information
 Issue                Abbreviation       Ticker Symbol               regarding 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

 UHY LLP                                                             As of February 29, 2008, there were
 Maritime Center                                                     approximately 14,300 stockholders.
 555 Long Wharf Drive
 New Haven, CT  06511
</TABLE>