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

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

                        For the quarterly period ended June 30, 2006
                                                       -------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
                        For the transition period from __________ to ___________
                        Commission file number  0-503777
                                              ----------------------------------


                         FLATBUSH FEDERAL BANCORP, INC.
--------------------------------------------------------------------------------
       (Exact name of small business issuer as specified in this charter)

FEDERAL                                                   11-3700733
--------------------------------------------------------------------------------
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

                 2146 NOSTRAND AVENUE, BROOKLYN, NEW YORK 11210
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (718) 859-6800
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

--------------------------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date

      As of August 14, 2006 the Registrant had outstanding 2,774,917 shares of
      common stock

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]

<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                     Number
                                                                                     ------
<S>                                                                                     <C>
PART I - FINANCIAL INFORMATION

         Item 1:  Financial Statements

                  Consolidated Statements of Financial Condition
                  at June 30, 2006 and December 31, 2005 (Unaudited)                    1

                  Consolidated Statements of Income and Comprehensive
                  Income for the Three months and Six months Ended
                  June 30, 2006 and 2005 (Unaudited)                                    2

                  Consolidated Statements of Cash Flows for the Six months
                  Ended June 30, 2006 and 2005 (Unaudited)                              3

                  Notes to Consolidated Financial Statements                            4 - 8

         Item 2:  Management's Discussion and Analysis or
                  Plan of Operation                                                     9 - 15

         Item 3:  Controls and Procedures                                               16

PART II - OTHER INFORMATION

1.       Legal Proceedings                                                              17

2.       Unregistered Sales of Equity Securities and Use of Proceeds                    17

3.       Defaults upon Senior Securities                                                17

4.       Submission of Matters to a Vote of Securities Holders                          17

5.       Other Information                                                              18

6.       Exhibits                                                                       18

SIGNATURES                                                                              19
</TABLE>

<PAGE>

                         PART I - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS
                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                    June 30,       December 31,
ASSETS                                                                2006             2005
------                                                            ------------------------------
<S>                                                               <C>              <C>
Cash and amounts due from depository institutions                 $   1,888,429    $   2,457,712
Interest earning deposits in other banks                              1,349,599        2,103,511
Federal Funds sold                                                      100,000          350,000
                                                                  ------------------------------
    Cash and cash equivalents                                         3,338,028        4,911,223

Investment securities held to maturity                                6,989,194        7,808,507
Mortgage-backed securities held to maturity                          28,776,270       25,633,274
Loans receivable                                                    102,612,421       96,591,008
Premises and equipment                                                2,949,810        2,807,623
Federal Home Loan Bank of New York stock                              1,378,400          978,400
Interest receivable                                                     696,360          654,744
Bank owned life insurance                                             3,678,567        3,607,353
Other assets                                                          1,458,967          960,433
                                                                  ------------------------------
    Total assets                                                  $ 151,878,017    $ 143,952,565
                                                                  ------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Liabilities:
------------
Deposits                                                          $ 108,383,760    $ 109,217,654
FHLB Advances                                                        25,580,706       16,969,464
Advance payments by borrowers for taxes and insurance                   419,678          325,478
Other liabilities                                                     1,395,974        1,407,347
                                                                  ------------------------------
    Total liabilities                                               135,780,118      127,919,943
                                                                  ------------------------------
Stockholders' equity:
Preferred stock $0.01 par value, 1,000,000 shares authorized;
     none issued and outstanding                                             --               --
Common stock $0.01 par value, 9,000,000 shares authorized;
     2,799,657 and 2545,464 issued; and 2,774,917 and 2,534,064          27,998           25,455
shares outstanding, respectively
Additional paid in capital                                           12,002,943        9,741,564
Retained earnings substantially restricted                            4,871,564        6,988,292
Unearned employees' stock ownership plan ("ESOP") shares               (600,916)        (617,824)
Treasury stock - 24,740 shares and 11,400 shares respectively          (203,690)        (104,865)
                                                                  ------------------------------
    Total stockholders' equity                                       16,097,899       16,032,622
                                                                  ------------------------------

    Total liabilities and stockholders' equity                    $ 151,878,017    $ 143,952,565

                                                                  ------------------------------
</TABLE>

See notes to consolidated financial statements.


                                       1
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       Three months Ended           Six months Ended
                                                                    -------------------------   -----------------------
                                                                             June 30                    June 30
                                                                    -------------------------   -----------------------
                                                                        2006          2005         2006         2005
                                                                    -------------------------   -----------------------
<S>                                                                 <C>            <C>          <C>         <C>
Interest income
   Loans                                                            $ 1,602,614    $1,461,348   $3,160,614  $ 2,893,705
   Mortgage-backed securities                                           398,048       284,027      756,949      571,252
   Investments                                                          107,912       109,620      215,552      216,636
   Other interest earning assets                                         32,804        41,266       80,478       64,816
                                                                    -------------------------   -----------------------
          Total interest income                                       2,141,378     1,896,261    4,213,593    3,746,409
                                                                    -------------------------   -----------------------

Interest expense on deposits                                            575,719       495,831    1,107,334      957,248
Interest expense on FHLB advances                                       275,421        25,278      510,551       25,278
                                                                    -------------------------   -----------------------
          Total interest expense                                        851,140       521,109    1,617,885      982,526
                                                                    -------------------------   -----------------------

Net interest income                                                   1,290,238     1,375,152    2,595,708    2,763,883
Provision for loan losses                                                37,832         4,304       47,949       10,887
                                                                    -------------------------   -----------------------
          Net interest income after provision for loan losses         1,252,406     1,370,848    2,547,759    2,752,996
                                                                    -------------------------   -----------------------

Non-interest income:
   Fees and service charges                                              40,163        48,885       95,594       96,525
   BOLI investment income                                                35,886            --       71,214           --
   Miscellaneous                                                          1,639         1,488        3,359        8,344
                                                                    -------------------------   -----------------------
          Total non-interest income                                      77,688        50,373      170,167      104,869
                                                                    -------------------------   -----------------------

Non-interest expenses:
   Salaries and employee benefits                                       706,229       763,184    1,481,942    1,528,224
   Net occupancy expense of premises                                    120,621       129,327      271,244      251,497
   Equipment                                                            140,586       131,126      270,330      257,599
   Directors' fees                                                      140,234        42,878      204,613       87,138
   Legal fees                                                            16,343         8,500       41,597       30,383
   Audit and accounting fees                                             25,023        26,000       46,545       50,500
   Advertising                                                            5,438         6,945       11,234       13,981
   Federal insurance premium                                              3,871         4,544        7,967        9,202
   Other insurance premium                                               40,707        46,022       81,750       91,866
   Miscellaneous                                                        127,166       112,689      230,532      203,672
                                                                    -------------------------   -----------------------
        Total non-interest expenses                                   1,326,218     1,271,215    2,647,754    2,524,062
                                                                    -------------------------   -----------------------

Income before income taxes                                                3,876       150,006       70,172      333,803
Income taxes                                                              8,086        64,123       31,642      145,037
                                                                    -------------------------   -----------------------
Net income and comprehensive income                                     ($4,210)   $   85,883   $   38,530   $  188,766
                                                                    -------------------------   -----------------------

Net income per common share - Basic and diluted                          ($.002)   $    0.032   $    0.014   $    0.071
Weighted average number of shares outstanding - Basic and diluted     2,693,286     2,663,415    2,693,678    2,663,415
</TABLE>

See notes to consolidated financial statements.


                                       2
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               Six months Ended June 30
                                                              ---------------------------
                                                                  2006           2005
                                                              ---------------------------
<S>                                                           <C>             <C>
Cash flows from operating activities:
  Net income                                                  $     38,530    $   188,766
  Adjustments to reconcile net income to net cash
  (used in) provided by operating activities:
     Depreciation and amortization of premises and
        equipment                                                   82,127         55,544
     Net amortization of premiums, discounts and
        deferred loan fees and cost                               (109,432)       (77,266)
     Provision for loan losses                                      47,949          9,743
     MRP amortization                                               59,747             --
     Stock option amortization                                      47,578             --
     (Increase) in accrued interest receivable                     (41,616)       (29,366)
     (Increase) in cash surrender value of BOLI                    (71,214)            --
     (Increase)  in other assets                                  (498,533)        (3,498)
     (Decrease) increase in other liabilities                      (11,372)       321,766
     ESOP Shares committed to be released                           21,250         22,649
                                                              ---------------------------
        Net cash (used in) provided by operating activities       (434,986)       488,338
                                                              ---------------------------

Cash flows from investing activities:
     Proceeds from calls and maturities of investment
        securities held to maturity                                822,193        911,428
     Principal repayment on mortgage-backed securities
        held to maturity                                         2,522,498      2,701,322
     Purchases of mortgage-backed securities
        held to maturity                                        (5,607,461)    (1,104,099)
     Purchases of loan participation interest                   (5,675,215)    (1,600,000
     Net change in loans receivable                               (345,628)       787,966
     Additions to premises and equipment                          (224,315)            --
     Purchase of FHLBNY stock                                     (400,000)      (180,800)
                                                              ---------------------------
        Net cash provided by (used in) investing activities     (8,907,928)     1,515,817
                                                              ---------------------------

Cash flows from financing activities:
     Net  (decrease) in deposits                                  (833,894)    (1,936,326)
     Advances from FHLBNY                                       23,200,000      3,600,000
     Repayment of advances from FHLBNY                         (14,588,758)            --
     Increase  in advance payments by borrowers
        for taxes and insurance                                     94,200         65,541
     Cash dividend paid to stockholders                             (3,004)        (3,680)
     Purchase of treasury stock                                    (98,825)      (155,145)
                                                              ---------------------------
        Net cash provided by financing activities                7,769,719      1,570,390
                                                              ---------------------------
Net increase (decrease) in cash and cash equivalents            (1,573,195)     3,574,545
Cash and cash equivalents - beginning                            4,911,223      6,215,474
                                                              ---------------------------

Cash and cash equivalents - ending                            $  3,338,028    $ 9,790,019
                                                              ===========================
Supplemental disclosure of cash flow information
  Cash paid during the year for:
     Interest                                                 $  1,595,189    $   982,526
                                                              ---------------------------
     Income taxes                                             $     31,642    $   145,037
                                                              ---------------------------
</TABLE>

See notes to consolidated financial statements.


                                       3
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

NOTE 1. PRINCIPLES OF CONSOLIDATION
-----------------------------------

The consolidated  financial  statements include the accounts of Flatbush Federal
Bancorp, Inc. ("the Company"), the Flatbush Federal Savings and Loan Association
("the  Association")  and the Association's  subsidiary  Flatbush REIT, Inc. The
Company's  business  is  conducted  principally  through  the  Association.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

NOTE 2. BASIS OF PRESENTATION
-----------------------------

The accompanying  unaudited  consolidated  financial statements were prepared in
accordance  with  instructions  for Form  10-QSB and  regulation  S-X and do not
include  information  or  footnotes  necessary  for a complete  presentation  of
financial  condition,  results of operations  and cash flows in accordance  with
U.S.  generally  accepted  accounting  principles.  However,  in the  opinion of
management,   all  adjustments  (consisting  of  normal  recurring  adjustments)
necessary for a fair presentation of the consolidated  financial statements have
been  included.  The results of  operations  for the three months and six months
ended June 30, 2006, are not necessarily  indicative of the results which may be
expected for the entire year.

NOTE 3. NET INCOME PER COMMON SHARE
-----------------------------------

Net income per common share was computed by dividing net income for three months
and six months ended June 30, 2006 by the weighted  average  number of shares of
common stock outstanding adjusted for unearned shares of the ESOP. Stock options
and restricted stock awards granted are considered  common stock equivalents and
therefore considered in diluted net income per share calculations,  if dilutive,
using treasury stock method.

NOTE 4. CRITICAL ACCOUNTING POLICIES
------------------------------------

We consider accounting policies involving  significant judgments and assumptions
by management  that have, or could have, a material impact on the carrying value
of certain  assets or on income to be  critical  accounting  policies.  Material
estimates that are particularly susceptible to significant changes relate to the
determination  of the allowance for loan losses.  Determining  the amount of the
allowance  for loan  losses  necessarily  involves  a high  degree of  judgment.
Management  reviews  the  level of the  allowance  on a  quarterly  basis,  at a
minimum,  and establishes the provision for loan losses based on the composition
of the loan portfolio, delinquency levels, loss experience, economic conditions,
and other factors related to the  collectibility  of the loan  portfolio.  Since
there has been no material shift in loan  portfolio,  the level of the allowance
for loan  losses has  changed  primarily  due to changes in the size of the loan
portfolio and the level of nonperforming  loans. We have allocated the allowance
among  categories  of  loan  types  as  well as  classification  status  at each
period-end date.  Assumptions and allocation percentages based on loan types and
classification  status  have been  consistently  applied.  Management  regularly
evaluates  various risk factors related to the loan  portfolio,  such as type of
loan, underlying collateral and payment status, and the corresponding  allowance
allocation percentages.

Although we believe that we use the best information  available to establish the
allowance  for loan losses,  future  additions to the allowance may be necessary
based on  estimates  that are  susceptible  to change as a result of  changes in
economic conditions and other factors. In addition, the regulatory  authorities,
as an  integral  part of their  examination  process,  periodically  reviews our
allowance for loan losses. Such agencies may require us to recognize adjustments
to the allowance based on its judgments about information available to it at the
time of their examinations.


                                       4
<PAGE>

NOTE 5. RETIREMENT PLANS - COMPONENTS OF NET PERIODIC PENSION COST
------------------------------------------------------------------

Periodic pension expense was as follows:

<TABLE>
<CAPTION>
                                                Three months Ended        Six months Ended
                                               --------------------    ----------------------
                                                     June 30                  June 30
                                               --------------------    ----------------------
                                                 2006        2005         2006         2005
                                               --------------------    ----------------------
<S>                                            <C>         <C>         <C>          <C>
Service Cost                                   $ 43,121    $ 42,962    $  86,242    $  85,924
Interest Cost                                    62,996      56,549      125,992      113,098
Expected return on assets                       (46,233)    (43,364)     (92,466)     (86,727)
Amortization of past service cost                (2,750)     (2,750)      (5,500)      (5,500)
Amortization of unrecognized net (gain) loss     15,551      18,400       31,102       36,800
                                               --------------------    ----------------------
     Net periodic benefit cost                 $ 72,685    $ 71,797    $ 145,370    $ 143,595
                                               --------------------    ----------------------
</TABLE>

NOTE 6. STOCK COMPENSATION PLANS
--------------------------------

The Company has two stock-related compensation plans, including stock option and
restricted  stock  plans,  which  are  described  in  Note  11 to the  Company's
Consolidated  Financial  Statements included in its Annual Report on Form 10-KSB
for the fiscal year ended  December 31,  2005.  Through  December 31, 2005,  the
Company  accounted for its stock option and employee  stock purchase plans using
the intrinsic value method set forth in Accounting  Principles Board Opinion No.
25,  "Accounting  for Stock  Issued to  Employees,"  ("APB No.  25") and related
interpretations for these plans. Under APB No. 25, generally,  when the exercise
price of the Company's  stock options equaled the market price of the underlying
stock on the date of the grant,  no  compensation  expense was  recognized.  The
Company adopted SFAS No. 123R, using the modified-prospective transition method,
beginning on January 1, 2006 and, therefore,  began to expense the fair value of
all options over their remaining  vesting periods to the extent the options were
not fully vested as of the adoption  date and began to expense the fair value of
all share-based  compensation  granted subsequent to December 31, 2005, over its
requisite service periods.

SFAS No. 123R also requires the benefits of realized tax deductions in excess of
previously  recognized tax benefits on compensation  expense to be reported as a
financing cash flow rather than an operating cash flow, as previously  required.
In  accordance  with Staff  Accounting  Bulletin  ("SAB") No.  107,  the Company
classified  share-based  compensation for employee and non-employee directors to
correspond with the same line item as the cash compensation paid to employees.

Options vest over an eight-year service period.  Compensation expense recognized
for all options is  recognized  over the awards'  respective  requisite  service
periods.  The fair values relating to all options granted prior to calendar 2005
were  estimated  using  the   Black-Scholes   option  pricing  model.   Expected
volatilities are based on historical  volatility of our stock and other factors,
such as implied market volatility. We used historical exercise data based on the
age at grant of the option holder to estimate the options'  expected term, which
represents  the  period of time that the  options  granted  are  expected  to be
outstanding.  We anticipated  the future option holding periods to be similar to
the historical option holding periods. The risk-free rate for periods within the
contractual  life of the  option is based on the U.S.  Treasury  yield  curve in
effect at the time of grant.  We  recognize  compensation  expense  for the fair
values of these awards, which have graded vesting, on a straight-line basis over
the requisite service period of the awards. There were no options granted during
the three months and six months ended June 30, 2006 and 2005 respectively.

Restricted shares vest over an eight-year  period.  The fair value of restricted
shares under the Company's  restricted  stock plans is determined by the product
of the number of shares granted and the grant date market price of the Company's
common stock. The fair value of restricted shares is expensed on a straight-line
basis over the requisite service period of eight years.

During the three  months ended June 30, 2006,  the Company  recorded  $56,000 of
share-based compensation expense, which was comprised of stock option expense of
$13,000 and restricted stock expense of $43,000. During


                                       5
<PAGE>

the six months ended June 30, 2006, the Company recorded $107,000 of share-based
compensation expense, which was comprised of stock option expense of $47,000 and
restricted  stock  expense of  $60,000.  The  Company  estimates  it will record
share-based compensation expense of approximately $173,000 in fiscal 2006.

      The following table illustrates the impact of share-based  compensation on
reported amounts:

<TABLE>
<CAPTION>
                                        Three months ended               Six month ended
                                           June 30, 2006                  June 30, 2006
                                                       Impact of                       Impact of
                                                      Share-Based                     Share-Based
                                                     Compensation                    Compensation
                                     As Reported        Expense       As Reported       Expense
                                    --------------------------------------------------------------
<S>                                    <C>              <C>             <C>            <C>
Income before taxes                    $ 3,876          $55,844         $70,172        $107,325

Income from continuing operations           --               --              --              --

Net Income                              (4,210)          31,610          38,530          72,311

Earnings per Share:

          Basic                        $(0.002)         $  .012         $ 0.014        $ 0.0268
                                    -----------------------------------------------------------

         Diluted                       $(0.002)         $  .012         $ 0.014        $ 0.0268
                                    -----------------------------------------------------------
</TABLE>

      A summary of the Company's stock option  activity and related  information
for its option plans for the six months ended June 30, 2006, was as follows:

<TABLE>
<CAPTION>
                                                              Weighted
                                                 Weighted     Average     Aggregate
                                                 Average     Remaining    Intrinsic
                                    Options      Exercise    Contractua     Value
                                    (000's)       Price         Term       (000's)
                                   ----------   ----------   ----------   ----------
<S>                                   <C>            <C>     <C>            <C>
Outstanding at December 31, 2005      139,745        $9.71           --           --

      Granted                              --           --           --           --

      Exercised                            --           --           --           --

      Forfeited                            --           --           --           --
                                   ----------

Outstanding at June 30, 2006          139,745        $9.71   6.5 years      $      0
                                   ==========

Exercisable at June 30, 2006           21,660        $9.71   6.5 years      $      0
</TABLE>


                                       6
<PAGE>

      A summary of the status of the Company's  nonvested options as of June 30,
2006 and changes during the six months ended June 30, 2006, is presented below:


                                                                      Weighted
                                                                       Average
                                                                     Grant Date
                                                        Options         Fair
                                                        (000's)         Value
                                                      -----------    -----------
Nonvested at December 31, 2005                            122,272    $      9.71

      Granted                                                  --             --

      Vested                                               (4,192)   $      9.71

      Forfeited                                                --             --
                                                      -----------

Nonvested at June 30, 2006                                118,080    $      9.71
                                                      ===========

      Expected future  compensation  expense  relating to the 118,080  nonvested
options  outstanding  as of June 30,  2006 is $454,000  over a  weighted-average
period of 6.5 years.

      A summary of the status of the Company's  restricted shares as of June 30,
2006 and changes during the six months ended June 30, 2006, is presented below:

                                                                       Weighted
                                                       Restricted      Average
                                                         Shares       Grant Date
                                                        (000's)       Fair Value
                                                       ----------     ----------
Nonvested at December 31, 2005                             48,751     $     9.71

      Granted                                                  --             --

      Vested                                               (3,343)    $     9.71

      Forfeited                                                --             --
                                                       ----------

Nonvested at June 30, 2006                                 45,408     $     9.71
                                                       ==========

      Expected future  compensation  expense  relating to the 45,408  restricted
shares at June 30, 2006 is $406,000 over a weighted-average period of 6.5 years.


                                       7
<PAGE>

      For purposes of pro forma  disclosures,  the  estimated  fair value of the
stock options,  restricted  shares, and shares under the employee stock purchase
plan were amortized to expense over their assumed vesting periods. The following
table illustrates the effect on net income and earnings per share if the Company
had  applied  the fair value  recognition  provisions  of SFAS No.  123,  to all
stock-related compensation.

<TABLE>
<CAPTION>
                                                           Three months end     Six months ended
                                                             June 30, 2005        June 30, 2005
                                                           ----------------     ----------------
<S>                                                          <C>                  <C>
Net income, as reported                                      $     85,884         $    188,766

Add: Stock-related compensation expense included in
   reported net income, net of income taxes                         9,470               18,941

Deduct: Stock-related compensation expense determined
   under the fair value method, net of income taxes               (25,489)             (50,978)
                                                             ------------         ------------

Pro forma net income                                         $     69,865         $    156,729
                                                             ------------         ------------

Earnings per share:                                          $      0.032         $      0.071

      Basic, as reported                                            0.026                0.059

      Basic, pro forma                                              0.032                0.071

      Diluted, as reported                                          0.026                0.059
</TABLE>

NOTE 7. - EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
----------------------------------------------------

      In May 2005, the FASB issued SFAS No. 154,  "Accounting  Changes and Error
Corrections."  The Statement  requires  retroactive  application  of a voluntary
change in accounting principle to prior period financial statements unless it is
impracticable.   SFAS  No.  154  also  requires  that  a  change  in  method  of
depreciation, amortization, or depletion for long-lived, non-financial assets be
accounted for as a change in accounting estimate that is affected by a change in
accounting  principles.  SFAS No.  154  replaces  APB  Opinion  20,  "Accounting
Changes,  " and SFAS 3,  "Reporting  Accounting  Changes  in  Interim  Financial
Statements."  SFAS  No.  154  will  be  effective  for  accounting  changes  and
corrections  of errors made in fiscal years  beginning  after December 15, 2005.
Management  currently  believes that  adoption of the  provisions of SFAS N. 154
will not have a material impact on the Bank's financial statements.

      In  July  2006,  FASB  issued   Interpretation   No.  48  "Accounting  for
Uncertainty in Income Taxes - An  Interpretation  of FASB Statement No 109" (FIN
48), which  clarifies the accounting  for  uncertainty in tax positions.  FIN 48
requires that an entity  recognize in its financial  statements  the impact of a
tax position only if the entity has determined,  based upon the technical merits
of the tax  position,  that  the tax  position  would  more  likely  than not be
sustained  upon  an  examination  by  the  appropriate  taxing  authority.   The
provisions of FIN 48 are effective for fiscal years beginning after December 15,
2006, with the cumulative effect of the change in accounting  principle recorded
as an adjustment to opening retained earnings.  We are currently  evaluating the
impact of adopting FIN 48 on our financial statements.

                                       8
<PAGE>

                                     ITEM 2
                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            ---------------------------------------------------------


Forward-Looking Statement

This Form 10-QSB may include certain forward-looking statements based on current
management  expectations.  The Company's actual results could differ  materially
from those management  expectations.  Factors that could cause future results to
vary from  current  management  expectations  include,  but are not  limited to,
general economic  conditions,  legislative and regulatory changes,  monetary and
fiscal policies of the federal  government,  changes in tax policies,  rates and
regulations  of federal,  state and local tax  authorities,  changes in interest
rates,  deposit flows, the cost of funds,  demand for loan products,  demand for
financial services,  competition,  changes in the quality or composition of loan
and  investment  portfolios of the Company,  changes in  accounting  principles,
policies  or  guidelines,  and other  economic,  competitive,  governmental  and
technological  factors affecting the Company's  operations,  markets,  products,
services and prices.

Comparison of Financial Condition at June 30, 2006 and December 31, 2005

The  Company's  assets at June 30,  2006 were  $151.9  million  compared to $144
million at December 31, 2005,  an increase of $7.9  million,  or 5.5%.  Cash and
cash equivalents  decreased $1.6 million,  or 32.7%, to $3.3 million at June 30,
2006 from $4.9  million at December 31, 2005.  Investment  securities  decreased
$819,000 due to repayments, or 10.5%, to $7.0 million at June 30, 2006 from $7.8
million at December 31, 2005. As a partial  offset,  mortgage-backed  securities
increased $3.2 million,  or 12.5%,  to $28.8 million at June 30, 2006 from $25.6
million as of December 31,  2005.  In addition,  loans  receivable  increased $6
million,  or 6.2%,  to $102.6  million at June 30, 2006 from $96.6 million as of
December 31, 2005.

Total deposits decreased  $834,000,  or 0.8%, to $108.4 million at June 30, 2006
from $109.2 million at December 31, 2005. As of June 30, 2006,  borrowings  from
Federal Home Loan Bank of New York were $25.6 million compared to $17 million as
of  December  31,  2005,  an  increase  of $8.6  million,  or 50.6%.  Management
continued  to  invest  the   borrowings  in  loans   receivable   consisting  of
residential,  commercial, construction, mixed-use properties and mortgage-backed
securities  resulting  in a net  increase  of $3.2  million  in  mortgage-backed
securities, and an increase of $6.0 million in loans receivable.  Prepayments in
investment securities resulted in the net decrease of $819,000.

Total  stockholders'  equity increased $65,000 to $16.1 million at June 30, 2006
from $16.0 million at December 31, 2005.

On June 30, 2005, the Company approved a stock repurchase program and authorized
the  repurchase of up to 50,000 shares of the  Company's  outstanding  shares of
common  stock.  Stock  repurchases  will be made  from  time to time  and may be
effected through open market purchases, block trades and in privately negotiated
transactions.  Repurchased  stock  will be held as  treasury  stock  and will be
available for general  corporate  purposes.  As of June 30, 2006,  24,740 shares
were acquired at a weighted average price of $8.23 per share.

Comparison  of  Operating  Results for the Three  Months Ended June 30, 2006 and
June 30, 2005

      General.  Net income decreased by $90,000,  or 104.7%, to ($4,000) for the
quarter  ended June 30,  2006 from  $86,000  for the same  quarter in 2005.  The
decrease in earnings for the quarter was  primarily  due to increases of $80,000
in interest  expense on  deposits,  $250,000 in interest  expense on FHLB of New
York borrowings, $34,000 in provision for loan losses, and a $55,000 increase in
non-interest  expense,  partially  offset by an increase of $245,000 in interest
income, an increase of $28,000 in non-interest  income and a decrease of $56,000
in income taxes,

      Interest  Income.  Interest income increased  $245,000,  or 12.9%, to $2.1
million  for the quarter  ended June 30, 2006 from $1.9  million for the quarter
ended June 30, 2005.  We attribute  the increase in interest  income to a higher
average  yield on a higher  interest  earning  asset base.  For the three months
ended June 30, 2006, the


                                       9
<PAGE>

average balance of $139.5 million in  interest-earning  assets earned an average
yield of 6.14% compared to 5.77% on an average balance of $131.4 million for the
three months ended June 30, 2005.

      Interest income on loans increased $141,000,  or 9.7%, to $1.6 million for
the quarter  ended June 30, 2006 from $1.5 million for the same quarter in 2005.
The average  balance of loans  increased  $6.0 million to $100.4 million for the
quarter  ended June 30, 2006 from $94.4  million for the quarter  ended June 30,
2005.  The average yield on loans  increased by 19 basis points to 6.38% for the
quarter ended June 30, 2006 from 6.19% for the quarter ended June 30, 2005.

      Interest  income on  mortgage-backed  securities  increased  $114,000,  or
40.1%,  to $398,000  for the quarter  ended June 30, 2006 from  $284,000 for the
quarter ended June 30, 2005. The average balance of  mortgage-backed  securities
increased $7.7 million to $28.9 million for the quarter ended June 30, 2006 from
$21.2 million for the quarter ended June 30, 2005.  The average yield  increased
by 15 basis  points to 5.52% for the quarter  ended June 30, 2006 from 5.37% for
the same period in 2005.

      Interest income on investment  securities  decreased  $1,700,  or 1.5%, to
$108,000 for the quarter ended June 30, 2006 from $110,000 for the quarter ended
June 30, 2005.  The average  balance of  investment  securities  decreased  $1.3
million to $8.2  million for the quarter  ended June 30, 2006 from $9.5  million
for the quarter ended June 30, 2005. As a partial  offset,  the average yield on
investment  securities  increased  by 62 basis  points to 5.24% for the  quarter
ended June 30, 2006 from 4.62% for the quarter ended June 30, 2005.

      Interest   income   on   other    interest-earning    assets,    primarily
interest-earning deposits and federal funds sold, decreased $8,000, or 19.5%, to
$33,000 for the quarter  ended June 30, 2006 from $41,000 for the quarter  ended
June 30, 2005. The average yield on other interest  earning assets  increased by
400 basis points to 6.61% for the quarter ended June 30, 2006 from 2.61% for the
quarter  ended June 30,  2005.  The average  balance of other  interest  earning
assets  decreased  $4.3 million to $2.0  million for the quarter  ended June 30,
2006 from $6.3 million for the quarter ended June 30, 2005.

      Interest Expense. Total interest expense, comprised of interest expense on
deposits and interest expense on FHLB of New York advances,  increased $330,000,
or 63.3%,  to $851,000 for the quarter ended June 30, 2006 from $521,000 for the
quarter ended June 30, 2005.  The average cost of  interest-bearing  liabilities
increased by 83 basis  points to 2.67% for the quarter  ended June 30, 2006 from
1.84%  for  the  quarter   ended  June  30,   2005.   The  average   balance  of
interest-bearing  liabilities  increased $13.9 million to $127.3 million for the
quarter  ended June 30, 2006 from $113.4  million for the quarter ended June 30,
2005.

      Interest expense on deposits increased $79,000,  or 15.9%, to $575,000 for
the quarter  ended June 30, 2006 from  $496,000  for the quarter  ended June 30,
2005. The average cost of interest-bearing deposits increased by 41 basis points
to 2.20% for the quarter  ended June 30,  2006 from 1.79% for the quarter  ended
June 30,  2005,  reflecting  the upward  trend of  interest  rates on  deposits.
However, the average balance of interest-bearing deposits decreased $6.6 million
to $104.4  million for the quarter  ended June 30, 2006 from $111.0  million for
the quarter ended June 30, 2005.

      Interest  expense  on FHLB of New  York  advances  increased  $251,000  to
$276,000 for the quarter  ended June 30, 2006 from $25,000 for the quarter ended
June 30,  2005.  The average cost of FHLB of New York  advances  increased by 62
basis  points to 4.83% for the  quarter  ended June 30,  2006 from 4.21% for the
quarter  ended June 30, 2005.  The average  balance of FHLB of New York advances
increased  $20.5  million to $22.9  million for the quarter  ended June 30, 2006
from $2.4 million for the quarter ended June 30, 2005.

      Net Interest Income.  Net interest income decreased  $85,000,  or 6.2%, to
$1.3 million for the quarter  ended June 30, 2006 from $1.4 million for the same
quarter in 2005.  Our interest  rate spread was 3.47% for the quarter ended June
30, 2006 compared to 3.94% for the quarter ended June 30, 2005, a decrease of 47
basis points.  Our interest margin for the quarter ended June 30, 2006 was 3.70%
compared to 4.19% for the quarter  ended June 30,  2005,  a decrease of 49 basis
points. We attribute the decrease in interest rate spread and interest margin to
the higher cost of interest-bearing liabilities.


                                       10
<PAGE>

      Provision for Loan Losses. We establish  provisions for loan losses, which
are charged to  operations,  at a level  necessary  to absorb known and inherent
losses  that are  both  probable  and  reasonably  estimable  at the date of the
financial statements.  In evaluating the level of the allowance for loan losses,
management  considers  historical  loss  experience,  the types of loans and the
amount of loans in the loan  portfolio,  adverse  situations that may affect the
borrower's  ability to repay, the estimated value of any underlying  collateral,
and prevailing economic conditions.  This evaluation is inherently subjective as
it requires  estimates  that are  susceptible  to  significant  revision as more
information  becomes  available  or  as  future  events  change.  Based  on  our
evaluation of these factors,  management recorded a provision of $38,000 for the
three months  ended June 30,  2006.  For the three months ended June 30, 2005, a
provision of $4,000 was recorded.  Our provision for loan losses was established
to address  probable and estimable  losses in our SBA loan  portfolio as well as
inherent  losses that are  probable and  estimable in our larger loan  portfolio
consisting of residential,  commercial,  construction, and mixed-use properties.
The  recorded  increase in the  provision  for loan losses for the three  months
ended June 30, 2006 included  calculations  of probable and estimable  losses in
current and non-delinquent  loans in residential,  commercial,  construction and
mixed-use properties. For quarter ended June 30, 2006, the increase to provision
for loan losses was attributed in part to the growth of our loan portfolio.  The
level of the allowance at June 30, 2006 is based on estimates,  and the ultimate
losses may vary from the estimates.

      Non-Interest  Income.  Non-interest income increased $27,000, or 54.0%, to
$78,000 for the quarter  ended June 30, 2006 from $50,000 for the quarter  ended
June 30, 2005.  We attribute  the increase to increases of $36,000 in Bank Owned
Life  Insurance  income,  partially  offset by a decrease  of $9,000 in fees and
service charges.

      Non-Interest Expense.  Non-interest expense increased $55,000, or 4.3%, to
$1.3 million for the quarter ended June 30, 2006. The net increase of $55,000 to
non-interest  expense  is  primarily  attributable  to  increases  to  directors
compensation, equipment expense, legal fees and miscellaneous expense, partially
offset by decreases in salaries and employee benefits, occupancy expenses, other
insurance  premiums,  audit  and  accounting  fees,  advertising,   and  federal
insurance premium.  Director's  compensation  increased  $97,000,  or 225.6%, to
$140,000  for the three  months  ended June 30,  2006 from  $43,000 for the same
period in 2005. The increase to director's  expense included the accrual for the
accelerated  vesting of benefits due to the death of a Flatbush  Federal Bancorp
director  during the quarter  ended June 30, 2006.  The expense in stock options
was not applicable for the quarter ended June 30, 2005.

      Income Tax Expense.  The provision for income taxes decreased $56,000,  or
87.5%,  to $8,000 for the quarter  ended June 30, 2006 from $64,000 for the same
quarter in 2005.  The income tax expense is based on the level of income  before
taxes of $4,000 and minimum  taxes  payable for New York State and New York City
for the quarter  ended June 30, 2006  compared to $150,000 for the quarter ended
June 30, 2005.

Comparison of Operating  Results for the Six Months Ended June 30, 2006 and June
30, 2005

      General.  Net income decreased $150,000,  or 79.4%, to $39,000 for the six
months ended June 30, 2006 from $189,000 for the six months ended June 30, 2005.
The decrease in earnings was  primarily due to increases of $150,000 in interest
expenses  on  deposits,  $486,000  in  interest  expenses  from FHLB of New York
advances,  $37,000 in  provision of loan  losses,  and $123,000 in  non-interest
expenses. This was offset in part by an increase of $468,000 in interest income,
an increase  of $65,000 in  non-interest  income,  and a decrease of $113,000 in
income taxes.

      Interest  Income.  Interest income increased  $467,000,  or 12.5%, to $4.2
million  for six months  ended June 30,  2006 from $3.7  million  for six months
ended June 30, 2005. The average yield on  interest-earning  assets increased by
35 basis  points to 6.08% for six months  ended June 30, 2006 from 5.73% for the
same period in 2005. The average balance of  interest-earning  assets  increased
$7.8  million to $138.6  million for six months  ended June 30, 2006 from $130.8
million for six months ended June 30, 2005.

      Interest income on loans  increased  $267,000 or 9.2%, to $3.2 million for
six months  ended June 30, 2006 from $2.9  million for six months ended June 30,
2005. The average  balance of loans  increased $4.4 million to $98.9 million for
six months ended June 30, 2006 from $94.5  million for six months ended June 30,
2005.  The average  yield on loans  increased by 27 basis point to 6.39% for six
months ended June 30, 2006 from 6.12% for six months ended June 30, 2005.


                                       11
<PAGE>

      Interest  income on  mortgage-backed  securities  increased  $186,000,  or
32.6%,  to $757,000  for six months  ended June 30, 2006 from  $571,000  for six
months ended June 30, 2005. The average  balance of  mortgage-backed  securities
increased  $6.6 million to $27.8 million for six months ended June 30, 2006 from
$21.2  million  for six  months  ended  June  30,  2005.  The  average  yield on
mortgage-backed  securities  increased  by 6 basis  points to 5.44%  from  5.38%
during the comparative periods.

      Interest income on investment  securities  decreased  $1,000,  or 0.5%, to
$216,000 for six months  ended June 30, 2006 from  $217,000 for six months ended
June 30, 2005.  The average  balance of  investment  securities  decreased  $1.1
million to $8.6 million for six months ended June 30, 2006 from $9.7 million for
the same period in 2005. As a partial offset,  the average yield increased by 57
basis  points to 5.05% for six  months  ended  June 30,  2006 from 4.48% for six
months ended June 30, 2005.

      Interest income on other interest-earning assets,  consisting primarily of
interest-earning  deposits and federal funds sold,  increased $15,000, or 23.1%,
to $80,000 for six months  ended June 30, 2006 from $65,000 for six months ended
June 30, 2005. The average balance of other  interest-earning  assets  decreased
$2.1  million  to $3.3  million  for six months  ended  June 30,  2006 from $5.4
million for the  comparable  period in 2005.  As a partial  offset,  the average
yield  increased by 246 basis points to 4.88% for six months ended June 30, 2006
from 2.42% for six months ended June 30, 2005.

      Interest Expense. Total interest expense, comprised of interest expense on
deposits and interest expense on FHLB of New York advances,  increased $635,000,
or 64.6%,  to $1.6 million for six months ended June 30, 2006 from  $983,000 for
six months ended June 30, 2005. The average cost of interest-bearing liabilities
increased  by 81 basis  points to 2.56% for six months  ended June 30, 2006 from
1.75% for the same  period in 2005.  The  average  balance  of  interest-bearing
liabilities  increased $13.9 million to $126.5 million for six months ended June
30, 2006 from $112.6 million for six months ended June 30, 2005.

      Interest expense on deposits increased $149,000, or 15.6%, to $1.1 million
for six months  ended June 30, 2006 from  $957,000 for six months ended June 30,
2005. The average cost of interest-bearing deposits increased by 40 basis points
to 2.12% from 1.72% during the comparative periods. However, the average balance
of  interest-bearing  deposits  decreased $6.8 million to $104.6 million for six
months ended June 30, 2006 from $111.4 million for the six months ended June 30,
2005.

      Interest  expense  on FHLB of New York  advances  increased  $486,000,  or
1,944.0%,  to $511,000  for the six months  ended June 30, 2006 from $25,000 for
the six months  ended June 30,  2005.  The  average  balance of FHLB of New York
advances  increased $20.7 million to $21.9 million for the six months ended June
30, 2006 from $1.2 million for the six months  ended June 30, 2005.  The average
cost of FHLB of New York advances  increased by 46 basis points to 4.67% for the
six  months  ended June 30,  2006 from  4.21% for the six months  ended June 30,
2005.

      Net Interest Income. Net interest income decreased  $168,000,  or 6.1%, to
$2.6  million for the six months  ended June 30, 2006 from $2.8  million for the
six months ended June 30, 2005.  Our interest rate spread  decreased by 46 basis
points to 3.52% for the six months  ended  June 30,  2006 from 3.98% for the six
months ended June 30, 2005. Our interest margin  decreased by 48 basis points to
3.75% for six  months  ended June 30,  2006 from 4.23% for the six months  ended
June 30, 2005.

      Provision for Loan Losses. We establish  provisions for loan losses, which
are charged to  operations,  at a level  necessary  to absorb known and inherent
losses  that are  both  probable  and  reasonably  estimable  at the date of the
financial statements.  In evaluating the level of the allowance for loan losses,
management  considers  historical  loss  experience,  the types of loans and the
amount of loans in the loan  portfolio,  adverse  situations that may affect the
borrower's  ability to repay, the estimated value of any underlying  collateral,
and prevailing economic conditions.  This evaluation is inherently subjective as
it requires  estimates  that are  susceptible  to  significant  revision as more
information  becomes  available  or  as  future  events  change.  Based  on  our
evaluation of these factors,  management recorded a provision of $48,000 for the
six months  ended June 30,  2006,  as compared to a provision of $11,000 for the
six months ended June 30, 2005. Our provision for loan losses was established to
address  probable  and  estimable  losses in our SBA loan  portfolio  as well as
inherent  losses that are  probable and  estimable in our larger loan  portfolio
consisting of residential,  commercial,  construction and mixed-use  properties.
The recorded  increase in the provision for loan losses for the six months ended
June 30, 2006 included calculations of probable and


                                       12
<PAGE>

estimable losses in current and non-delinquent loans in our loan portfolio.  For
six months  ended June 30, 2006,  the increase to provision  for loan losses was
attributed  in part to the  growth  of our  loan  portfolio.  The  level  of the
allowance at June 30, 2006 is based on  estimates,  and the ultimate  losses may
vary from the estimates.

      Non-Interest  Income.  Non-interest income increased by $65,000, or 61.9%,
to $170,000  for the six months  ended June 30, 2006 from  $105,000  for the six
months ended June 30,  2005.  The increase was caused by increases of $71,000 in
Bank Owned Life Insurance  income,  partially  offset by a decrease of $1,000 in
fees and service charges and $5,000 in miscellaneous fees.

      Non-Interest Expense. Non-interest expense increased $124,000, or 4.9%, to
$2.6  million for the six months  ended June 30, 2006 from $2.5  million for the
same period in 2005. The increase in  non-interest  expense is  attributable  to
increases in directors' compensation,  occupancy expense, equipment, legal fees,
and miscellaneous expense,  partially offset by decreases in salary and employee
benefits, audit and accounting fees, advertising,  federal insurance premium and
other insurance premiums. Director's compensation increased $117,000, or 134.5%,
to $205,000  for the six months  ended June 30,  2006 from  $87,000 for the same
period in 2005. The increase in director's  expense included the accrual for the
accelerated  vesting of benefits due to the death of a Flatbush  Federal Bancorp
director during the six months ended June 30, 2006. The expense in stock options
was not applicable for the quarter ended June 30, 2005.

      Income Tax Expense.  The provision for income taxes decreased  $113,000 to
$32,000 for the six months ended June 30, 2006 from  $145,000 for the six months
ended June 30, 2005.  The decrease in income tax expense  reflects a decrease in
income  before  taxes to  $70,000  for the six months  ended June 30,  2006 from
$334,000 for six months ended June 30, 2005.

Liquidity and Capital Resources

The Association is required to maintain levels of liquid assets under the Office
of  Thrift  Supervision  (the  "OTS")  regulations   sufficient  to  ensure  the
Association's  safe and sound operation.  The Association's  liquidity  averaged
2.91%  during the month of June 2006.  The  Association  adjusts  its  liquidity
levels in order to meet  funding  needs for  deposit  outflows,  payment of real
estate taxes from escrow  accounts on mortgage  loans,  repayment of borrowings,
when applicable, and loan funding commitments.  The Association also adjusts its
liquidity level as appropriate to meet its asset/liability objectives.

The  Association's  primary  sources  of funds are  deposits,  amortization  and
prepayments of loans and  mortgage-backed  securities,  maturities of investment
securities  and  funds  provided  from  operations.  While  scheduled  loan  and
mortgage-backed securities amortization and maturing investment securities are a
relatively   predictable   source   of  funds,   deposit   flows  and  loan  and
mortgage-backed securities prepayments are greatly influenced by market interest
rates, economic conditions and competition.

The  Association's  liquidity,  represented by cash and cash  equivalents,  is a
product of its operating, investing and financing activities.

The primary  sources of  investing  activity  are  lending  and the  purchase of
investment securities and mortgage-backed  securities.  Net loans totaled $102.6
million and $96.6 million at June 30, 2006 and December 31, 2005,  respectively.
Mortgage-backed and investment securities held to maturity totaled $35.8 million
and $33.4  million at June 30, 2006 and  December  31,  2005,  respectively.  In
addition  to funding new loans and  mortgage-backed  and  investment  securities
purchases through operating activities, such activities were funded by principal
repayments  on  existing  loans,   mortgage-backed  securities,   maturities  of
investment securities and advances from FHLB.

Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.  Excess liquidity is generally  invested in short-term  investments,
such as federal funds and interest-bearing deposits. If the Association requires
funds beyond its ability to generate them internally, borrowing agreements exist
with the Federal Home Loan Bank


                                       13
<PAGE>

of New York ("FHLB")  which provide an additional  source of funds.  At June 30,
2006, our FHLB borrowings totaled $25.6 million.

The Association anticipates that it will have sufficient funds available to meet
its current loan commitments and obligations.  At June 30, 2006, the Association
had  outstanding  commitments  to originate or purchase  loans of $12.4 million.
Certificates  of  deposit  scheduled  to  mature in one year or less at June 30,
2006, totaled $35.5 million. Management believes that, based upon its experience
and the Bank's deposit flow history, a significant portion of such deposits will
remain with the Association.

Under OTS  regulations,  three separate  measurements  of capital  adequacy (the
"Capital Rule") are required. The Capital Rule requires each savings institution
to maintain  tangible  capital  equal to at least 1.5% and core capital equal to
4.0% of its  adjusted  total  assets.  The Capital rule  further  requires  each
savings  institution  to maintain  total  capital  equal to at least 8.0% of its
risk-weighted assets.

The following table sets forth the  Association's  capital  position at June 30,
2006, as compared to the minimum regulatory capital requirements:

<TABLE>
<CAPTION>
                                                         Minimal Capital  Under Prompt corrective
                                     Actual               Requirements     Actions Prospective
                            ----------------------     --------------------------------------------
                             Amount         Ratio      Amount     Ratio     Amount       Ratio
                             ------         -----      ------     -----     ------       -----
                            (Dollars in Thousands)
<S>                         <C>              <C>      <C>           <C>    <C>            <C>
Total Capital               $ 15,516         20.0%    $  6,205      8.0%   $  7,756       10.0%
(to risk-weighted assets

Tier Capital                  15,329         19.8%          --       --       4,654        6.0%
(to risk-weighted assets

Core(Tier 1) Capital          15,413         10.2%       6,076      4.0%      7,595        5.0%
(to adjusted total assets

Tangible Capital              15,413         10.2%       2,279      1.5%         --         --
(to adjusted total assets
</TABLE>

Management of Interest Rate Risk

      The  ability  to  maximize  net  interest   income  largely  depends  upon
maintaining a positive interest rate spread during periods of fluctuating market
interest rates. Interest rate sensitivity is a measure of the difference between
amounts of interest-earning assets and interest-bearing liabilities which either
reprice or mature within a given period of time. The difference, or the interest
rate  repricing  "gap",  provides  an  indication  of the  extent  to  which  an
institution's  interest  rate  spread  will be  affected  by changes in interest
rates. A gap is considered  positive when the amount of interest-rate  sensitive
assets  exceeds  the  amount  of  interest-rate  sensitive  liabilities,  and is
considered  negative  when the amount of  interest  rate  sensitive  liabilities
exceeds the amount of interest-rate sensitive assets. Generally, during a period
of rising  interest  rates,  a negative  gap  within  shorter  maturities  would
adversely  affect  net  interest  income,  while a positive  gap within  shorter
maturities  would  result in an increase in net  interest  income,  and during a
period of falling interest rates, a negative gap within shorter maturities would
result in an increase in net interest income while a positive gap within shorter
maturities would result in a decrease in net interest income.

      The Association's  current  investment  strategy is to maintain an overall
securities portfolio that provides a source of liquidity and that contributes to
the Association's  overall  profitability and asset mix within given quality and
maturity considerations.


                                       14
<PAGE>

Net Portfolio Value

      The  Association's  interest rate  sensitivity  is monitored by management
through the use of the OTS model which estimates the change in the Association's
net portfolio value ("NPV") over a range of interest rate scenarios.  NPV is the
present value of expected cash flows from assets,  liabilities,  and off-balance
sheet contracts.  The NPV ratio, under any interest rate scenario, is defined as
the NPV in that  scenario  divided  by the  market  value of  assets in the same
scenario.  The OTS  produces  its  analysis  based  upon data  submitted  on the
Association's quarterly Thrift Financial Reports. The following table sets forth
the  Association's  NPV  as  of  March  31,  2006,  the  most  recent  date  the
Association's NPV was calculated by the OTS.

<TABLE>
<CAPTION>
                                                                       Net Portfolio Value as a
                                                                     Percentage of Present Value of
                                  Net Portfolio Value                            Assets
Change in               --------------------------------------     ----------------------------------
Interest Rates          Estimated       Amount of   Percent of                     Change in Basis
(basis points)          NPV             Change      Change         NPV Ratio       Points
--------------------    ------------    ----------  ----------     -------------   ------------------
                         (Dollars in Thousands)
<S>                     <C>             <C>         <C>            <C>             <C>
+300                    $10,378         $(10,058)   (49%)           7.37%          -586 basis points
+200                     13,620           (6,816)   (33%)           9.38%          -385 basis points
+100                     17,045           (3,391)   (17%)          11.38%          -185 basis points
  0                      20,436               --     --            13.24%                   --
-100                     22,907            2,471     12%           14.48%          +124 basis points
-200                     22,926            2,490     12%           14.35%          +111 basis points
</TABLE>

Certain  shortcomings are inherent in the methodology used in the above interest
rate risk  measurement.  Modeling  changes in net portfolio value require making
certain  assumptions  that may or may not  reflect  the  manner in which  actual
yields and costs respond to changes in market  interest  rates.  In this regard,
the net portfolio  value table  presented  assumes that the  composition  of our
interest-sensitive  assets and liabilities existing at the beginning of a period
remains  constant over the period being measured,  and assumes that a particular
change  in  interest  rates  is  reflected  uniformly  across  the  yield  curve
regardless  of the  duration or repricing  of specific  assets and  liabilities.
Accordingly,  although the net portfolio  value table  provides an indication of
our interest rate risk exposure at a particular point in time, such measurements
are not  intended  to and do not  provide a precise  forecast  of the  effect of
changes in market interest rates on its net interest income and will differ from
actual results.


                                       15
<PAGE>

                                     ITEM 3
                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES
                             CONTROLS AND PROCEDURES
                             -----------------------

As of the end of the period  covered by this report,  based on an  evaluation of
the Company's  disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities and Exchange Act of 1934),  each of the Chief
Executive  Officer and the Chief Financial  Officer of the Company has concluded
that the Company's  disclosure  controls and  procedures are effective to ensure
that  information  required to be  disclosed  by the Company in its Exchange Act
reports is recorded,  processed,  summarized and reported  within the applicable
time periods specified by the SEC's rules and forms.

There were no significant  changes in the Company's  internal controls or in any
other factors which could significantly  affect those controls subsequent to the
date of the most recent evaluation of the June 30, 2006 internal controls by the
Company,  including  any  corrective  actions  with  regard  to any  significant
deficiencies or material weaknesses.


                                       16
<PAGE>

                 FLATBUSH FEDERAL BANCORP, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings
        -----------------

      We are not involved in any pending  legal  proceedings  other than routine
      legal  proceedings  occurring  in the ordinary  course of business,  which
      involve  amounts in the aggregate  believed by management to be immaterial
      to the financial condition of the Company and the Association.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
        -----------------------------------------------------------

      On June 30,  2005,  the Board of  Directors  approved  a stock  repurchase
      program  and  authorized  the  repurchase  of up to  50,000  shares of the
      Company's  outstanding  shares of common stock.  Stock repurchases will be
      made from time to time and may be effected through open market  purchases,
      block trades and in privately negotiated  transactions.  Repurchased stock
      will be held as treasury stock and will be available for general corporate
      purposes.  As of June 30, 2006,  23,400 shares have been  repurchased with
      repurchases in the second quarter described in the following table:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                           Company Purchases of Common Stock
-------------------------------------------------------------------------------------------------------------------------
                                                                                   Total number of   Maximum number (or
                                                                                        shares       approximate dollar
                                                                                     purchased as     value) of shares
                                                                                       part of         that may yet be
                                                                                       publicly        purchased under
                                               Total number of    Average price    announced plans      the plans or
               Period                          shares purchased   paid per share     or programs          programs
-------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>               <C>                <C>
Apr. 1, 2006 through Apr. 30, 2006                   --                --                --                36,600
-------------------------------------------------------------------------------------------------------------------------
May. 1, 2006 through May. 31, 2006                  1,300             $8.05             14,700             35,300
-------------------------------------------------------------------------------------------------------------------------
June 1, 2006 through June 30, 2006                  8,700             $8.02             23,400             26,600
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

ITEM 3. Defaults Upon Senior Securities
        -------------------------------

      Not applicable.

ITEM 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

      At the  Company's  Annual  Meeting  held on April 27,  2006,  stockholders
      considered and voted on the following:

      1. The election of directors:   FOR           %       WITHHOLD    %
                                      ---          ----     --------   ---
         Anthony J. Monteverdi        2,220,484    98.7     28,612     1.3
         D. John Antoniello           2,231,346    99.2     17,750     0.8

      2. The  ratification  of the  appointment  of Beard Miller  Company LLP as
          independent auditors of the Company:

           FOR           %        AGAINST        %       ABSTAIN        %
           ---         ----       -------       ---      -------       ---

           2,235,481   99.7        5,611        0.3       8,004        0.3




                                       17
<PAGE>

ITEM 5. Other Information
        -----------------

      None

ITEM 6. Exhibits
        --------

      The following Exhibits are filed as part of this report.

            11.0  Computation of earnings per share

            31.1  Certification  of Chief Executive  Officer Pursuant to Section
                  302 of the Sarbanes- Oxley Act of 2002 (filed herewith).

            31.2  Certification  of Chief Financial  Officer Pursuant to Section
                  302 of the Sarbanes- Oxley Act of 2002 (filed herewith).

            32.1  Certification  of Chief Executive  Officer and Chief Financial
                  Officer  Pursuant  to  18  U.S.C.  Section  1350,  as  Adopted
                  Pursuant  to  Section  906 of the  Sarbanes-Oxley  Act of 2002
                  (filed herewith).


                                       18
<PAGE>

                                   SIGNATURES

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

                                            FLATBUSH FEDERAL BANCORP, INC.


Date:    August 14, 2006                    By:  /s/ Jesus R. Adia
     ---------------------                     --------------------------------
                                                Jesus R. Adia
                                                President and
                                                Chief Executive Officer


Date:    August 14, 2006                    By: /s/ John S. Lotardo
     ---------------------                     --------------------------------
                                                John S. Lotardo
                                                Executive Vice President and
                                                Chief Financial Officer


                                       19