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

                                   FORM 10-KSB
            Annual Report for the fiscal year ended December 31, 1999

                               Ambient Corporation
             (Exact name of registrant as specified in its chapter)

Delaware                        0-23723             98-0166007
(State or Other Jurisdiction    (Commission File    (IRS Employer
of Incorporation)               Number)             Identification No.)

       Jerusalem Technological Park, Building 9, Malha, Jerusalem, Israel.
                    (Address of Principal Executive Offices)

                                  888-861-0205
              (Registrant's Telephone Number, including Area Code)

[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, 1999

|_| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      None

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                          $.001 Par Value Common Stock

      Check whether the Issuer (1) 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 (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No |_|

      Check if there is no disclosure contained herein of delinquent filers in
response to Item 405 of Regulation S-B, and will not be contained, to the best
of the Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |X|

      The Issuer did not report any revenues for the year ended December 31,
1999.

      As of April 14, 2000, there were 9,656,611 outstanding shares of the
issuer's Common Stock. The aggregate market value of the shares of the issuer's
Common Stock on April 11, 2000 held by non-affiliates was approximately
$34,631,375.

<PAGE>

ITEM 1. BUSINESS

      We are engaged in the design and development of products and services in
the fields of electronic commerce, Internet access and advanced telephony
applications. All of our design and development activities are conducted within
the State of Israel.

      Our activities are currently centered in two distinct areas: (i) the
completion of the design and development of a unique technology that facilitates
the provision of rapid power line telecommunication services to ordinary
business and personal consumers and (ii) the establishment, initially in Israel,
of a nationwide screen phone network that is designed to enable e-commerce and
Internet browsing for consumers who do not have access to, or are unable or
unwilling to use, personal computers.

      Since our founding in June 1996, we have been engaged primarily in the
design and development of smart card based technologies and products. Owing to a
fundamental reassessment of general market developments in the field of smart
card based technologies, we elected to leverage our experience and expertise
acquired in the area of smart card based technologies to the design, development
and commercialization of our proprietary technologies in the field of
power-line- telecommunications (PLT) and screen phones. We have ceased all
research and design efforts in the smart card area.

      We have recently established a wholly-owned subsidiary, PLT Solutions,
Inc. to promote a unique technology designed to facilitate the use of existing
electricity power lines and grids in the United States and Japan for Internet,
telephone and data transfer to ordinary business and personal users. Existing
electrical power grids are not currently in use for high speed data transmission
due to certain power utility infrastructure limitations. We have designed and
developed proprietary technology that overcome these infrastructure limitations.
We believe that our technology will be especially attractive to Internet
providers/integrators (AOL, Cisco, IBM etc.).

      We also have a 40% interest in a newly established Israeli company,
Kliks.com Ltd., which is engaged in designing and attempting to establish a
nationwide Screen Phone network in Israel. The network will enable Internet
access for a wide segment of the population which is less familiar with the use
of personal computers (PC's), or belongs to the large segment of populace which
does not have a PC. Our Vice-President, Mr. Bernie Wolff, holds the remaining
60% interest in Kliks.

      A discussion of each of power line transmission, the screen-phone network
follows:

                       ELECTRICAL POWER-LINE TRANSMISSION

General Background Relating To Internet Access

      Worldwide Internet communications can be divided into the "backbone"
network and the "access" network. The backbone network is carried over optical
fibers between cities and continents, and we believe, provides essentially
unlimited capacity for sending relatively large amounts of data over long
distances. However, the optical fiber technology used for the backbone network
is too expensive to extend to each

<PAGE>

individual user. Accordingly, distributing the data from the backbone network to
homes and business is done via an "access" network, also referred to as the
"last mile" network.

     To date, traditional Access networks have included modems connected to
conventional telephone lines, higher speed digital subscriber telephone lines
(ADSL), cable TV with data modems in set-top boxes and, more recently, wireless
networks. However, we believe that the traditional access methods have certain
drawbacks. The ADSL method typically requires high implementation costs. Cable
TV modems are characterized by loss of rapidity of service when the number of
subscribers reaches a critical mass and wireless networks are unreliable, as is
generally the case in the use of cell phones.

     One of the more rapid and affordable methods of access utilizes
conventional electrical power grids, also known as power-line communication, to
transmit data to individual users. The use of electrical power grids as an
access method is, in our view, an especially attractive proposition given the
widespread infrastructure "wiring" already in place. The same electrical wiring
that carries electrical power to individual homes and business can also transmit
high speed data. However, there are certain infra-structural limitations that
have, until recently, effectively precluded the use of conventional electrical
power grids as an affordable access method.

     Electrical power is generated at a power station and furnished to an urban
or rural substation which services a neighborhood, typically extending over
several square miles. The electrical power generated at the power station is
sent over relatively high voltage lines and needs to be reduced to a lower
voltage for further distribution within the neighborhood. At the neighborhood
substation level, a "stepdown transformer" reduces the high voltage electrical
power generated to "medium" voltage for further distribution within the
neighborhood. The medium voltage needs to be further reduced to familiar 120
volts by "distribution transformers" located near the neighborhood homes and
businesses.

     However, the distribution transformers were designed for 60 Hz power, and
completely fail to transmit the high frequency, data-carrying signals arriving
over the grid from the substation. Therefore, to ensure that data can get from
the neighborhood lines to the 120 volt outlets, a "bypass coupler" is needed as
a bridge around the distribution transformer. These couplers need to be
physically (and therefore electrically) connected directly to the high voltage
lines. To achieve the electrical connection the coupler needs to withstand high
voltage, and is therefore very expensive to manufacture.

      Our proprietary technology enables coupling the data to and from the
neighborhood distribution lines without the need to establish an electrical
connection. Our propietary coupler, a prototype of which is ready for
feasibility demonstation, either uses the existing insulation of underground
cables or is easily insulated to slip around overhead medium voltage
distribution wires. Accordingly, the manufacturing costs are significantly
reduced in comparison to the conventional bypass coupler.

<PAGE>

Advantages of Utilizing Existing Power lines for High Speed Data Transmission

      The use of electricity power lines to connect homes and businesses to the
Internet, for telephony or for any other form of data transmission provides both
consumers and suppliers with a range of compelling economic and practical
benefits.

      The advantages in employing power line communication include:

   o Coverage - the power grid is the most extensive "wire" network in the
   world. More individuals and businesses have access to the electrical grid
   than any other "wire" network, including telephone lines. The low voltage
   wiring extends to every room in the business and home, and obviates expensive
   and disruptive wiring.

   o Modernity - the electric grid in most areas of the world is more modern and
   better maintained than any other wired communication network.

   o Simplicity - power line communications are not burdened by telephony's
   conventional technologies, including outdated routers, bridges, gateways,
   legacy switches and software, which slow down traditional communications.

      Fueled by recognition of the overwhelming financial and practical
benefits, interest in high speed power-line telecommunication has expanded.
Technical conferences on the subject are frequent, and attended by power
companies, as well those from other relevant fields including telecommunications
and networking companies such as 3COM, Nortel, Cisco, Cinergy and others. PLT
chips and modems for in-house networking are maturing, and a large number of
companies are vying for this market. Network speeds of data transmission are
rapidly increasing. To realize maximum benefit from the in-home network, users
are looking to connect it to a high speed Internet feed. So an initial group of
users who already use PLT and trust the technology is emerging, with a built-in
demand for access connectivity to the Internet backbone.

      Europe's 230 volt line voltage allows a large number of customers to be
fed by each distribution transformer. Most of the trials of neighborhood PLT
have taken place in Europe, but have usually limited themselves to sending data
over the 230 volt feed lines, and have not attempted to establish
substation-to-home neighborhood Access networks.

Comparison of Power-Line Communication with other High Speed Access Solutions

   o Digital Subscriber Line (DSL) - subscribers need to be within approximately
   5.5 km of the telephone company's central office. It is a point-to-point
   connection, so the one time installation cost to the end user is high. Users
   report that installation times are long, and availability is sparse. Phone
   companies need to invest considerably to beef up their networks, which were
   never designed for high speed data and very long session times.

      In contrast, our networks can be deployed in entire neighborhoods in a
   matter of days, and their direct connection to the backbone means no
   bottlenecks or heavy investments. Also, telephone outlets typically exist in
   only one to three locations within a premise, while power outlets are already
   installed in every room.

<PAGE>

   o T1 Trunks - T1 (1.544 Mbps) is a digital telephony trunk, typically used by
   phone companies to provide telephone service to large organizations. It
   provides high speed in both directions, the equivalent of 24 telephone
   conversations. But, its $250 monthly tariff prices it out of the market for
   most home and small business users.

   Satellite - Some satellites serve as data relay stations, and some of these
   are connected to the Internet backbone to provide high speed data to users.
   The user needs to buy, mount and aim a fairly large dish, he needs a
   microwave transmitter/receiver, and a special modem. Since the ground-based
   antennae cannot beam a strong signal back to the satellite, only low speeds
   of 56 kilobits per second can be sent from the user to the Web, the same data
   speed as is available over dialup modems.

   o Cable Modems - TV cable networks have been designed and constructed as
   one-way feed systems, providing a large number of channels to a large user
   base. Subscribers to cable companies share their cable lines with other
   subscribers, sometimes a very large number of them, so even the high promised
   data speeds (up to 36Mbps) may not guarantee good service during peak usage.
   Sending data back from the user to the network is problematic over cable TV
   lines, due to the accumulation of noise generated by the television sets and
   other devices, from all of the connected customers, reaching the TV cable.
   Cable companies must invest substantially in upgrading their equipment to be
   able to send data upstream, and in laying cables outside of urban areas. Data
   service is available to only a small percentage of Internet users.

      In contrast, PLT exploits the natural segmentation of the neighborhood
   power grid, to keep the number of users sharing the data stream within
   reasonable limits. Typically, only 50 - 200 premises share a common phase
   line in the US, and the number of users demanding simultaneous downloads of
   large files is likely to be very small. PLT Solutions expects the typical
   user to enjoy data rates from 1 - 10 megabits per second, usually enough to
   pass the maximum data rate available from the Web site being accessed, for
   the foreseeable future.

      In addition, cable TV outlets typically exist in only one or two locations
   within a premise, while power outlets are already installed in every room.
   This saves expensive and disruptive rewiring, when data users include PCs,
   Internet telephones, and eventually many intelligent appliances.

   o Wireless Local Loop - Similar to cellular telephone network deployment,
   microwave relay stations may be deployed in neighborhoods to provide last
   mile Access for Internet data to homes and businesses. The same problems of
   communications reliability that beset cellular telephones are likely to
   affect wireless local loop systems. These include need for near line of sight
   between hub and user, multiple reflections of signals in dense residential
   areas, the blocking effects of the metal building materials, and seasonal
   variation of foliage and effects of precipitation on radio transmission
   quality.

<PAGE>

      Another inherent limitation is the frequency bandwidth available in the
   shared domain of radio frequencies, and the difficulty of providing
   significant future upgrades in data speeds without regulatory permission and
   massive retrofitting of equipment.

Our Solution

      PLT Solutions proposes utilization of conventional electrical power lines
as its access channel. The data path is as follows: (i) high speed data arrives
over the optical fiber backbone cable, routed to the neighborhood utility
substation, (ii) the specific data intended for the subscribers of a particular
neighborhood is selected from the general data stream by a standard network
device called a router, (iii) the digital data is turned into a high frequency
signal using a modem, and (iv) the high frequency, data-carrying signal is
carried onto the neighborhood power distribution line using our proprietary
coupler.

      At each distribution transformer, serving typically two to six premises,
the data is received, as follows: (i) the high frequency, data-carrying signal
is coupled from the neighborhood power distribution line onto the customers' 120
volt feed lines using our proprietary coupler, (ii) the high frequency signal is
converted back to data using a modem, and (iii) the PC or other user device
listens to the neighborhood data, and accepts that data which is addressed to
itself.

      The process of sending data from the user device to its destination uses
the above pathway in the reverse direction.

Integrating Our Coupler into a Complete Access Network

      In order to provide a comprehensive power line access solution to the end
user, our coupler is required to be integrated with the following technologies:

o     a spread spectrum modem
o     a media access control processor
o     a network control system
o     user interface devices

      The spread spectrum modem is the device which turns the digital data into
a high frequency signal, and its spread spectrum character both minimizes radio
interference and provides tolerance for the noise interference to be found on
power lines. The media access control processor is the "traffic cop" which
coordinates packaging of data into "packets," and who sends listens. The network
control system provides overall control of traffic. And the user interface
devices translate the high frequency signals coming over the power line into
useable data for their computers and other devices.

<PAGE>

      In order to provide a comprehensive solution in an expeditious manner, we
need to coordinate our efforts with companies experienced in the modem and
networking fields. We are currently examining options respecting alliances with
such companies. We cannot provide any assurance that we will be successful in
concluding such alliances.

      Our solution seeks to provide an initial system data rate of 10 megabits
per second, and we believe that this can be upgraded to several times this
speed, with future developments in hardware and software. For example, current
modems use relatively simple "modulation" techniques that turn data bits into
high frequency energy. Future modems are expected to use more sophisticated
modulation techniques which allow the same frequency band to carry at least
three times more data.

Our Coupler Product

      We believe that we have completed the design and development of a unique
coupling method with very low projected manufacturing costs and that does not
materially impact on power grid reliability. Our prototype product has passed
high voltage testing at a lab in the US and has been field tested for
communications between two transformers at a power company site.

     Our coupler features:

o    Low cost (25% cost of an existing solution)

o    Capacity for very high data rates, exceeding 10 megabits per second, which
     is 200 times faster than dialup modems can provide.

o    Installation without interruption of service to customers

o    No material impact on reliability of electrical grid

o    Works even during power outage

o    Installation without exposure to high voltages

o    Virtually unlimited life of service

     We are currently in the process of arranging for the pilot testing of our
proposed product with potential commercial partners. Further productization
steps will include Standards testing and certification, mechanical package
design and tooling for mass production.

     To provide a end to end data distribution network, we need to collaborate
with a modem and media access control processor chip manufacturer, and a data
network equipment manufacturer.

<PAGE>

      It will be necessary for us to obtain the cooperation of a utility company
in order to progress with full pilot testing and commercialization.

Production & Supplies

      Our proprietary couplers utilize special magnetic materials and high
voltage weatherproof plastics, as well as standard components that are
obtainable from local sources. We have identified potential suppliers who can
supply the special magnetic materials and high voltage weatherproof plastics. We
have held meetings with these suppliers, and initial estimates have been made
for one time tooling costs. We do not regard any one supplier as essential to
our operations since equivalent replacements for the components are either
available from one or more sources at competitive prices. We believe that
approximate cost to the Company of the components for the couplers should not
exceed $20 per unit. The Company currently does not have a written contract with
any supplier for any of the components.

      Subject to successful completion of pilot testing, we intend to initially
assemble the couplers at our facilities. We anticipate that we will need to
retain appropriate professionals to assemble and test the couplers. We estimate
that with 5 assemblers and 3 testers we can fill orders of up to eight thousand
units per month. As quantities grow, offshore assembly facilities may be
selected, to increase production capabilities and reduce cost.

      We anticipate that all of future suppliers and the assemblers will be
certified to recognized international quality assurance standards.

Competition

      The Internet Access market is highly competitive. We face competition from
many Internet access and service providers with significantly greater financial
resources, well-established brand names and large, existing customer bases.
Moreover, we expect the level of competition to intensify in the future. We
expect significant competition from:

      I.    (ISPs) Internet Service Providers

      ISPs provide Internet access to residential and business customers. These
companies provide Internet access over existing networks. They have nationwide
marketing presences and strategic or commercial alliances with telecom carriers.
Significant ISPs include Concentric Network Corporation, Mindspring Enterprises,
Inc., PSINet Inc. and Verio, Inc. Incumbent Local Exchange Carriers, ILECs, such
as SBC Communications, Inc.,GTE Corp., Ameritech Corp. and US WEST, Inc.

      II.   Wireless and Satellite Service Providers.

      We also face competition from other fixed-wireless services, such as
Teligent, Inc., NEXTLINK Communications, Inc. Winstar Communications, Inc. AT&T
has also announced plans to expand its fixed-wireless network to compete for
voice and high-speed data customers in businesses and residences. We also may
face competition from satellite-based systems. Motorola Satellite Systems, Inc.,
Hughes Communications, Inc. (a subsidiary of General Motors Corporation),
Teledesic LLC and others have filed applications with the FCC for global
satellite networks that can be used to provide ubiquitous two-way broadband
voice and data services to fixed locations. Many of these competitors are
offering, or may soon offer, technologies and services that will directly
compete with some or all of our service offerings.

      III.  Other Telephony Services

      We also face intense competition from other providers of telephony
transmission services. Many of the existing providers of telephony services,
such as regional Bell operating companies and other local exchange carriers,
have significantly greater financial and other resources than us and better
established brand awareness in their service areas.

      IV.   Subscription Television Competition Hardwire Cable.

      Our principal subscription television competitors are traditional hardwire
cable operators such as AT&T Broadband & Internet Services (formerly
TeleCommunications, Inc.), and Time Warner Entertainment. Hardwire cable
companies generally are well established and known to our potential customers
and have significantly greater financial and other resources than we have. In
addition, these competitors are also bundling additional services with their
cable TV services, such as high-speed Internet access, to enhance their
products. Direct Broadcast

<PAGE>

Satellite ("DBS"). DBS service is available from DirecTV,Inc., which is a
subsidiary of the Hughes Electronic unit of General Motors Corporation and
Echostar Communications Corporation. We compete with many retail distributors of
DirecTV and other DBS service.

                                 SCREEN PHONES

      Through Kliks.com Ltd., an Israeli company, we intend to serve as the
vehicle in Israel to offer the screen phone as an effective tool for offering a
full range of Internet and e-commerce services to the business (B-to-B) and
public consumers. Kliks has developed a concept that offers all the elements
essential for capitalizing on current consumer interest in the Internet and e-
commerce, while overcoming most of the shortcomings of a PC-based market
approach by the on-line services industry.

      The means to deliver services to the end-user will be through
screen-enhanced telephones phones supporting enhanced telephony services that
are now commercially available. The screen phones are Internet enabled with an
integrated alphanumeric keyboard, and a reader capable of handling smart cards
for electronic payments. The model relies on using Internet enhanced screen
phones instead of the personal computer (PC) as the conduit for electronic
commerce.

      Kliks is proposing a staged approach for this opportunity by which
consumers will initially be offered standard applications (e-mail, advanced
telephony, and Internet browsing/access) through the screen phone with the
opportunity at a second stage to expand the services to include a full suite of
e-commerce activities. The user being able to order consumer items/services at
home via the screen phone in the comfort of the home creates a very attractive
and friendly environment for enhancing e-commerce activities.

      Kliks success will be dependant on its ability to obtain the exclusive
distribution rights in Israel for a screen phone. Kliks is currently negotiating
such rights for a screen phone which it believes to be a superior product. In
addition, Kliks will need to enter into strategic relationships with
well-established providers, such as the national telecommunication carrier
(Bezeq), and a platform operator, who together will launch a portfolio of screen
telephony and electronic services to both business and the consumer.

Customer Profile

      The screen phone which Kliks intends to offer in the Israeli market, is a
conventional telephone. For the implementation plan, the screen phone deployment
will start in upscale communities with a high percentage of families with
children, business seniors and professional people. Once the business is
established, deployment can proceed to the wider community, with a goal of
achieving high penetration in the minimum period of time.

      In addition to revenues from home-based services, we believe that Kliks
will be

<PAGE>

able to generate revenues from large organizations whose business depends on
establishing and maintaining long-term account relationships with customers.
This will include banks and other financial service companies, telephone and
utility companies, consumer orientated services (supermarkets, travel agencies,
etc.) and leisure organizations (cable, pay per view, lottery etc.). Within a
community, sponsors will use this channel to deliver local content services,
thereby developing sustainable long-term relationships. Community services
organizations (schools, local authorities, libraries etc.) will have a direct
electronic link into the homes in their community, in order to promote local
services. This will be achieved through conventional e-mail messaging through
the server.

Competition

      Kliks will face competition primarily from two different avenues.

      Alternative Screen phones - there are other Internet Screen phones
available on the market, but so far none are being marketed in Israel. Kliks
believes that the screen phone for which it is currently negotiating the
exclusive Israeli distributions rights is a superior product in the market and
that it will provide a high entry barrier for potential competitors.

      Other Communication Media - there are several media which do, or are
expected, to provide services which overlap with the Kliks portal:

      ISPs (Internet Service Providers) - offer online portals. However, the
screen phone is well positioned against the PC, since it is a more user-friendly
device, always switched on and is more cost-effective. Moreover the US and UK
experience has shown widespread acceptance of screen phones in communities with
higher than average PC penetration.

      Web TV is expected to enter the market with similar services using the TV
as interface. The TV is currently seen primarily as an entertainment device,
while the screen phone will be easier and quicker to access.

      Cellular - operators in Israel are establishing portals that will enable
their subscribers to access the web and information services. Wireless Access
Protocol (WAP) services are under development which will be delivered to mobile
phones. Although these services will also be suited to screen phones, they are
primarily for

<PAGE>

mobile use. They do not, in our view, represent a threat to the screen phone in
the home due to differences in communication costs and size of the screen among
other factors.

      Online Banking Services - Existing commerce systems (telephone/home
banking services) are being offered by financial institutions. Most Israeli
banks offer this service to their customers, and the current number of
subscribers per bank is approaching 150,000. Apart from cash withdrawals and
cash deposits, all teller services can be activated. Similar services exist for
commercial banking, with additional services in wholesale banking such as L/C,
Foreign Exchange, etc. Citigroup has announced that within the next few months,
it will enter the local market, and concentrate on offering electronic banking
services to high net-worth customers.

                            PATENTS AND TRADE SECRETS

      A provisional application, with a 1999 priority date, which has been
assigned to PLT Solutions, Inc., has been submitted to the United States Patent
& Trademark Office. Our Israeli subsidiary, Ambient Ltd., has two smart card
patent applications pending in Israel which were filed in 1996, for one of which
a corresponding application was filed in the United States in 1997. The United
States Patent and Trademark Office ("PTO") has allowed one patent application,
which was filed in the United States in 1996, for which a corresponding
application was filed under the international Patent Cooperation Treaty in 1997.
There is currently one US patent pending in the field of contactless smart
cards. The smart card technology is not currently being exploited nor do we
foresee that it will be exploited in the near future.

      There can be no assurance that any of our future patent applications will
be granted, that any current or future patent or patent application will provide
significant protection for our products or technology, be of commercial benefit
to us, or that the validity of such patents or patent applications will not be
challenged. Furthermore, there can be no assurance that any patent underlying
licensed technology will not be challenged. Moreover, there can be no assurance
that foreign patent, trade secret or copyright laws will protect our
technologies or that we will not be vulnerable to competitors who attempt to
copy or use our Smart Card products or processes.

                             RESEARCH & DEVELOPMENT

      A wholly owned subsidiary of the Company in Israel, Insulated Connections
Corporation Ltd., provides research and development work for PLT Solutions Inc.
The Company does not undertake any research and development activities

                                    EMPLOYEES

      As of March 30, 2000, we have two full-time employees employed at Ambient
Corporation and one at Ambient Ltd. PLT Solutions Inc. employs five employees,
two of which are also employed by Ambient Corporation. Kliks.com employs four
employees, one of which is employed by Ambient Corporation. In all, there are 5
different individuals employed by these companies.

ITEM 2. PROPERTIES

<PAGE>

      Our Israeli subsidiary, Ambient Ltd., leases 180 square meter office space
in Jerusalem Israel. We sublease approximately 135 square meters to unrelated
companies. The Company is looking for substitute space.

      Ambient Israel's corporate offices are located at Jerusalem Technological
Park, Building 9, Malha, Jerusalem, Israel and its telephone number is
972-2648-2993. Kliks corporate offices are located at 3 Gavish St., Kfar Saba,
Israel. PLT Solutions Inc.'s and Ambient Corporation's offices in the United
States are located at 1285 Avenue of the Americas, New York 10019 and its
telephone number is (888) 861-0205.

ITEM 3. LEGAL PROCEEDINGS

      Our Israeli subsidiary is party to various litigation matters involving
ordinary and routine claims incidental to our business. We cannot estimate with
certainty its ultimate legal and financial liability with respect to such
pending litigation matters. However, the Company believes, based on its
examination of such matters, that the Company's ultimate liability will not have
a material adverse effect on its financial position, results of operations or
cash flows.

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

      We held our Annual Meeting of Shareholders on December 29, 1999 and the
shareholders voted as to the following: (a) election of Michael Braunold and
Aryeh Weinberg as directors to serve for a term of one (i) year or until their
respective successors are elected and (b) the approval of Brightman Almagor &
Co. (a member of Deloitte Touche Tohmatsu), as independent public accountants of
the Company for the year ending December 31, 1999. All of these matters were
approved.

Voting Results were as follows:

                   FOR            AGAINST           ABSTAIN
1.   Directors     1,691,152      20,500            0

2.   Auditors      1,689,152      22,500            0

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company's Common Stock is quoted on OTCBB under the symbol "ABTG". The
following table sets forth, for the periods indicated the range of high and low
sales prices per share of the Company's Common Stock, as reported on OTCBB.

<PAGE>

                             HIGH         LOW
By Quarter End

1999
First Quarter                8.5           2.625
Second Quarter               5.5           0.8125
Third Quarter                1.1875        0.625
Fourth Quarter               2.1875        0.75

1998
First Quarter                10.75         3.25
Second Quarter               9.5           4
Third Quarter                10.5          4
Fourth Quarter               8             3.5

      As of April 10, 2000, there were approximately 68 holders of record of our
Common Stock. We believe that there are a significant number of shares of our
common stock held either in nominee name or street name brokerage accounts and
consequently, we are unable to determine the number of beneficial owners of our
common stock.

      We have not declared or paid dividends on the Common Stock since our
formation, and we does not anticipate paying dividends in the foreseeable
future. Declaration or payment of dividends, if any, in the future, will be at
the discretion of the Board of Directors and will depend on our then current
financial condition, results of operations, capital requirements and other
factors deemed relevant by the Board of Directors.

ITEM 6. PLAN OF OPERATIONS

      The following discussion and expositions should be read in conjunction
with the Financial Statements and related Notes contained elsewhere in this Form
10-KSB.

      We are engaged in the design and development of products and services in
the fields of electronic commerce, Internet access and advanced telephony
applications. All of our design and development activities are conducted within
the State of Israel.

      Our activities are currently centered in two distinct areas: (i) the
completion of the design and development of a unique technology designed to
facilitate the provision of rapid power line telecommunication services to
ordinary business and personal consumers and (ii) the establishment, initially
in Israel, of a nationwide screen phone network that is designed to enable
e-commerce and Internet browsing for consumers who do not have access to, or are
unable or unwilling to use, personal computers.

      Since our founding in June 1996, we have been engaged primarily in the
design and development of smart card based technologies and products. Owing to a
fundamental reassessment of general market developments in the field of smart
card based technologies, we elected to leverage our experience and expertise
acquired in the area of smart card based technologies to the design, development
and commercialization of our proprietary technologies in the field of
power-line- telecommunications (PLT) and screen phones. We have effectively
ceased all research and design efforts in the smart card area.

<PAGE>

      We have recently established a wholly-owned subsidiary, PLT Solutions,
Inc. to promote a unique technology designed to facilitate the use of existing
electricity power lines and grids in the United States and Japan for Internet,
telephone and data transfer to ordinary business and personal users. Existing
electrical power grids are not currently in use for high speed data transmission
due to certain power utility infrastructure limitations. We have designed and
developed proprietary technology that overcome these infrastructure limitations.
We believe that our technology will be especially attractive to Internet
providers/integrators (AOL, Cisco, IBM etc.).

      We also have a 40% interest in a newly established Israeli company,
Kliks.com Ltd. ("Kliks"), which is engaged in designing and attempting to
establish a nationwide Screen Phone network in Israel. The remaining 60%
interest in Kliks is held by our Vice-President, Mr. Bernie Wolff. The network
will enable Internet access for a wide segment of the population which is less
familiar with the use of personal computers (PC's), or belongs to the large
segment of populace which does not have a PC.We are engaged in the design and
development of products and services in the fields of electronic commerce,
internet and telephony activities. All of our design and development activities
are conducted within the State of Israel.

      As a development stage company, We have a limited operating history upon
which an evaluation of our prospects can be made. Our prospects must therefore
be evaluated in light of the problems, expenses, delays and complications
associated with a new business.

      To date, we have incurred net losses aggregating $6,078,528, reflecting
principally research and development expenses and general and administrative
expenses. We expect to incur significant up-front expenditures in connection
with the new focus of our operations, and operating losses are expected to
continue for the foreseeable future. There can be no assurance that we can be
operated profitably in the future. Our continuation as a going-concern is
dependent upon, among other things, our ability to obtain additional financing
when and as needed, and to generate sufficient cash flow to meet its obligations
on a timely basis. We may also explore other business options including
strategic joint ventures and business combinations, including investments in
other companies, or mergers.

      As of December 31, 1999, we have expended $1,721,837 on our research and
development activities (including $558,195 received from the Office of Chief
Scientist of the Israeli Ministry of Industry and Trade).

      In February 2000, we issued $1,000,000 of our 10% Convertible Debentures
to private investors. The Debentures were issued pursuant to the terms of an
agreement which further provides that, subject to certain conditions, the
investors will purchase an additional $1,000,000 of Debentures no later than
five days after the effective date of a registration statement covering the
Common Stock into which the Debentures may be converted. In January 2000, the
investors pre-funded $250,000 of this obligation. The Debentures mature on
February 28, 2002. The Debentures are convertible into shares of the Company's
Common Stock at a conversion rate $0.40 per share, subject to adjustment under
certain conditions.

<PAGE>

      In connection with the issuance of the 10% Convertible Debentures, we
issued to Debenture holders warrants to purchase, in the aggregate, 625,000 of
our Common Shares at an exercise price per share of $1. The warrants expire in
April 2003.

      In connection with the sale of our Debentures, we issued to an independent
consultant warrants, exercisable through February 2002, to purchase up to 1.3
million shares of our common stock, at an exercise price per share of $1.00. As
a result of the issuance of these warrants, we recognized a significant non-cash
financing costs, and recorded approximately $2.4 million as deferred financing
costs and charged the entire balance to operations.

      In February 2000 we converted outstanding debts of approximately $700,000
in principal and accrued interest into common stock of the Company.

      We anticipate that cash on hand, as well as the $1.0 million (before
deducting approximately $137,500 in fees and commissions) due to be invested
upon purchase of the additional Convertible Debentures, will allow us to
maintain operations through December 31, 2000. Thereafter, we will need
additional financing to maintain operations. We are currently reviewing possible
private sales of equity or debt with equity features. We have no commitments for
any such financing and there can be no assurance that we will obtain additional
capital when needed or that any such additional capital will not have a dilutive
effect on current stockholders.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Our financial statements are included in this report following the "Index
to Financial Statements".

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

      The names, ages and positions of our directors, executive officers and key
employees are as follows:

Name                Age   Position

Michael Braunold    40    Chairman of the Board and Director; Chief
                          Executive Officer and Director of PLT Solutions, Inc.,
                          Director of Kliks.com Ltd.

Aryeh Weinberg      42    Chief Financial Officer and Director;
                          Chief Financial Officer of Kliks.com Ltd.; Chief
                          Financial officer of PLT Solutions Inc.

Bernie Wolff        54    Vice-President; Chief Executive Officer and
                          Director of Kliks.com Ltd.

      The business experience, principal occupations and employment, as well as
the periods of service, of each of our directors and executive officers during
at least the last five years are set forth below.

<PAGE>

      Michael Braunold has been the Chairman of our Board since November 1999
and Chief Executive Officer and Director of PLT Solutions, Inc. since March,
2000 and Director of Kliks.com Ltd. since January, 2000. Mr. Braunold
concurrently serves as Chief Executive Officer and Chairman of the Board of SPO
Medical Equipment Ltd., an Israeli company that specializes in medical
technology related to pulse oximetry techniques, a position which he has held
since March, 1998. Prior to this assignment, Mr. Braunold was Senior Director of
Business Development at Scitex Corporation Ltd., a multinational corporation
specializing in visual information communication. As part of his corporate role,
Mr. Braunold played a strategic role in managing a team of professionals
assigned to M&A activities. During his 12-year tenure at Scitex, he held various
positions within the worldwide organization including a period in the US as Vice
President of a Scitex US subsidiary company specializing in medical imaging. Mr.
Braunold originates from the UK where he obtained a B.Sc. in Management Sciences
and a Master of Business Administration from Imperial College Business School,
London.

      Aryeh Weinberg has been our Chief Financial Officer and of Ambient Israel
since January 1997. Concurrently from January 1997 through January 1998, Mr.
Weinberg has served as Chief Financial Officer of Delta Three.Com., Inc., a
global internet telecommunications company. From 1980 to 1996, Mr. Weinberg, a
certified public accountant, worked at Schiller Holinsky & Garolyn P.A., a
public accounting firm in the United States, becoming the audit and accounting
partner there in 1991. Mr. Weinberg earned a Bachelor's degree in business
administration from Towson State University in Baltimore, Maryland.

      Bernie Wolff has been our Vice President since March, 2000 and Chief
Executive Officer and Director of our subsidiary Kliks.com Ltd. since January
2000. Previously he held the post of Executive Vice President of Strategic
Alliances and Business Development for a software development company in Israel,
specializing in wholesale banking FX and MM trading systems for financial
institutions. From 1982, he held senior international corporate positions in 5
countries for Philips Electronics in a career spanning almost 25 years. Prior to
moving to Israel in 1997, he served for seven years as Senior Vice President of
Sales and Marketing for Philips Home Services in the US. In this capacity he was
responsible for the investigation of the on-line services industry in the US.

      All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Directors currently do
not receive cash compensation for serving on the Board of Directors. Officers
are elected annually by the Board of Directors and serve at the discretion of
the Board. Roan Capital Partners, L.P., the underwriter of the Company's initial
public offering, is entitled to designate one director to the Board during the
three (3) year period ending February 12, 2001. Roan Capital Partners, L.P. has
not identified any director designee.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

      Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers, directors and persons

<PAGE>

who beneficially own more than 10% of a registered class of the Company's equity
securities to file certain reports regarding ownership of, and transactions in,
the Company's securities with the Securities and Exchange Commission (the
"SEC"). These officers, directors and stockholders are also required by SEC
rules to furnish the Company with copies of all Section 16(a) reports that they
file with the SEC. During the year ended December 31, 1998, the Company's
executive officers and directors and beneficial owners of more than 10% of the
Company's Common Stock filed timely reports.

ITEM 10. EXECUTIVE COMPENSATION

      The following table sets forth all compensation awarded to, earned by, or
paid for all services rendered to the Company during the Company's fiscal years
ended December 31, 1999, 1998 and 1997 by the Company's Chief Executive Officer
and other named executive officers.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
        Name and            Year               Annual Compensation                          Long-Term Compensation
 Principal Position (1)
                                     ------------------------------------- ---------------------------------------------------------
                                       Salary        Bonus         Other              Awards                       Pay-outs
                                         ($)          ($)           ($)

                                                                           ---------------------------------------------------------
                                                                           Restricted       Securities         LTIP       All Other
                                                                           Stock            Underlying     Pay-outs ($)    Compen-
                                                                           Award(s)        Options/SARs                     sation
                                                                           ($)                  (#)                          ($)
<S>                         <C>        <C>            <C>           <C>      <C>                 <C>            <C>           <C>
------------------------------------------------------------------------------------------------------------------------------------
Michael Braunold,           1999         ---          ---           ---                          -              -             -
Chairman of the Board      ---------------------------------------------------------------------------------------------------------
and President               1998         ---          ---
                           ---------------------------------------------------------------------------------------------------------
                            1997         ---          ---           ---          -               -              -             -
------------------------------------------------------------------------------------------------------------------------------------
Aryeh Weinberg, Chief       1999       65,666         ---           (1)      51,000(2)
Executive Officer and      ---------------------------------------------------------------------------------------------------------
Chief Financial Officer     1998       52,484         ---           (1)
                           ---------------------------------------------------------------------------------------------------------
                            1997       16,250         ---           (1)      20,000
------------------------------------------------------------------------------------------------------------------------------------
Yehuda Cern                 1999      115,139         ---           (1)                          -              -             -
Former Chief Technical     ---------------------------------------------------------------------------------------------------------
Officer(3)                  1998      120,017         ---           (1)                          -              -             -
                           ---------------------------------------------------------------------------------------------------------
                            1997       29,537                                 84,167
------------------------------------------------------------------------------------------------------------------------------------
Jacob Davidson, Former      1999       23,991         ---           (1)      119,000(5)
Chief Executive            ---------------------------------------------------------------------------------------------------------
Office(4)                   1998       83,244         ---           (1)
                           ---------------------------------------------------------------------------------------------------------
                            1997       61,085
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The above compensation figures do not include the cost to the Company of the
use of a Company automobile.

(2) Represents 51,000 vested options issued in May 1999 under the Company's 1998
Stock Option Plan. See "Certain Relationships and Related Transactions."

(3) Dr. Cern resigned from the position of our Chief Technology Officer in
January 2000. Dr. Cern has held the position of Chief Technology Officer of our
affiliate Insulated Connections Corporation Ltd. since March 2000.

<PAGE>


(4) Jacob Davidson resigned from our employ in September 1999.

(5) Represents 119,000 vested options issued in May 1999 under the Company's
1998 Stock Option Plan. See Item 13.

                             Options Granted In 1999

      The following table sets forth certain information concerning options
granted during 1999 to the executive officers named in the Summary Compensation
Table:

<TABLE>
<CAPTION>
                                                                  Market
                                Percentage                        Price of
                 Number of      of Total                          Common
                 Securities     Options                           Stock on
                 Underlying     Granted to          Exercise      Date of
Name             Options        Employees           Price         Grant               Expiration
                 Granted (#)    in 1999             ($/Share)     ($/Share)           Date

<S>              <C>            <C>                 <C>           <C>                 <C>
Jacob Davidson   119,000        70%                 0.81(1)       0.81(1)                2009

Aryeh Weinberg   51,000         30%                 0.81(1)       0.81(1)                2009
</TABLE>

(1) Based on the closing price of the common stock ($0.81) on May 24, 1999, as
reported on the OTC Electronic Bulleting Board.

                       Aggregate Options Exercised in 1999
                        And Fiscal Year End Option Values

<TABLE>
<CAPTION>
                     Number of
                     Shares                                                         Value of Unexercised
                     Acquired on   Value         Number of Un-Exercised             in-the-money Options
                     Exercise      Realized      Options at December 31, 1999(4)    at December 31, 1999
                     (#)           ($)           Exercisable/Unexercisable          Exercisable/unexercisable(1)
<S>                  <C>           <C>           <C>                                <C>
Jacob Davidson       0             0             119,000/0                          $134,470/0

Aryeh Weinberg       0             0             51,000/0                           $ 57,630/0
</TABLE>

(1) Based on the difference between the exercise price of such options ($0.81)
and the closing price of the common stock on December 31, 1999 ($1.94), as
reported on the OTC Electronic Bulleting Board.

      1998 Stock Incentive Option Plan. The Company's current policy is that all
full time key employees be considered annually for the possible grant of stock
options, depending upon employee performance. The criteria for the awards are
experience, uniqueness of contribution and level of performance shown during the
year. Stock options are intended to improve loyalty to the company and help make
each employee aware of the importance of our business success.

      The Company has adopted the 1998 Incentive and Non-Qualified Stock Option
Plan (the "1998 Option Plan"). The 1998 Option Plan provides for the grant to
qualified employees (including officers and directors) of options to purchase
shares of common stock.

<PAGE>

      The 1998 Option Plan is administered by the Board of Directors. The Board
has discretion to select the optionee and to establish the terms and conditions
of each option, subject to the provisions of the 1998 Option Plan. Options
granted under the 1998 Option Plan may be non-qualified stock options or
Incentive Stock Options (an option which qualifies under Section 422 of the
Internal Revenue Code) but in any case the exercise price of options granted may
not be less than 100% of the fair market value of the common stock as of the
date of grant (110% of the fair market value if the grant is an Incentive Stock
Option to an employee who owns more than 10% of the outstanding common stock),
unless the Board decides otherwise. Options may not be exercised more than 10
years after the grant (five years if the grant is an Incentive Stock Option to
any employee who owns more than 10% of the outstanding common stock). The Board
may, in its discretion (i) accelerate the date or dates on which all or any
particular option or options granted under the 1998 Stock Plan may be exercised,
or (ii) extend the dates during which all, or any particular, option or options
granted under the 1998 Stock Plan may be exercised, provided, that no such
extension will be permitted if it would cause the 1998 Option Plan to fail to
comply with Section 422 of the Code or with Rule 16b-3 of the Securities and
Exchange Act of 1934, as amended. Except as otherwise determined by the Board at
the date of the grant of the option, and subject to the provisions of the 1998
Option Plan, an optionee may exercise an option at any time within one year (or
within such lesser period as may be specified in the applicable option
agreement) following termination of the optionee's employment or other
relationship with the Company if such termination was due to the death or
Disability (as defined) of the optionee but in no event later than the
expiration date of the Option. Except as otherwise determined by the Board at
the date of the grant of an Option, if the termination of the optionee's
employment or other relationship is for any other reason the Option will expire
immediately upon such termination. Options granted under the 1998 Option Plan
are not transferable and may be exercised only by the respective grantees during
their lifetimes or by their heirs, executors or administrators in the event of
death. Under the 1998 Option Plan, shares subject to canceled or terminated
options are reserved for subsequently granted options. The number of options
outstanding and the exercise price thereof are subject to adjustment in the case
of certain transactions such as mergers, recapitalizations, stock splits or
stock dividends.

      As of March 30, 2000, 230,000 options to purchase shares of common stock
were outstanding under the 1998 Option Plan.

EMPLOYMENT AGREEMENTS

      The Company entered into an employment agreement in March 2000 with Aryeh
Weinberg pursuant to which Mr. Weinberg is employed as the Company's Chief
Financial Officer for a one year term which is automatically renewable from year
to year unless either party gives notice of termination at least 90 days prior
to the expiration date. Mr. Weinberg currently receives an annual salary of
$72,000 and, subject to (and upon) the adoption of a new Company stock option
plan at the Company's Annual Stockholders Meeting to be held in 2000, will be
granted 50,000 options to purchase, at a nominal price, shares of Common Stock
of the Company. Mr. Weinberg has agreed to certain customary confidentiality and
non-compete provisions that prohibit him from competing with the Company for one
year, or soliciting employees for one year, following the termination of his
employment.

<PAGE>

      Michael Braunold entered into an employment contract with our subsidiary,
PLT Solutions Inc. He receives $3000 per month in salary and, subject to (and
upon) the adoption of a new Company stock option plan at the Company's Annual
Stockholders Meeting to be held in 2000, will be granted 100,000 options to
purchase, at a nominal price, shares of Common Stock of the Company. The
employment agreement is for one year beginning March 2000 and will renew
automatically for additional one year terms unless terminated by either party
upon three months prior written notice. Mr. Braunold has agreed to certain
customary confidentiality and non-compete provisions that prohibit him from
competing with the Company for one year, or soliciting employees for one year,
following the termination of his employment.

      Bernie Wolff serves as our Vice President pursuant to a letter appointment
between us. Mr. Wolf is employed by Kliks.com Ltd. as Chief Executive Officer
pursuant to an employment agreement entered into in February 2000. Mr. Wolff
receives $5,000 per month and owns 60% of the outstanding capital of Kliks. We
issued to Mr. Wolff, 10,000 options from the 1998 Option Plan, to vest as
follows: (i) 5,000 options following 12 months of employment with PLT Solutions
Inc. and (ii) an additional 5,000 options following 24 months of employment with
PLT Solutions Inc. Mr. Wolff has agreed to certain customary confidentiality and
non-compete provisions that prohibit him from competing with the Company for one
year, or soliciting employees for one year, following the termination of his
employment.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth, as of March 30, 2000, certain information
with respect to the beneficial ownership of Common Stock by (i) each person
known by the Company to be the owner of more than 5% of the outstanding Common
Stock, (ii) each director, (iii) each executive officer named in the Summary
Compensation Table and (iv) all directors and executive officers as a group:

Name of                         Shares of Common Stock      Percent of Class (1)
Beneficial Owner                  Beneficially Owned

Englewood Industries Ltd.              1,300,000(2)                11.86

Grove Industries Ltd.                  700,000                     7.25

Clearview International
Investment                             625,000(3)                  6.08

Ashfield Investment                    625,000(3)                  6.08

Econor Investment
Corporation                            625,000(3)                  6.08

Mantle International
Investment                             625,000(3)                  6.08

Trax Investments Ltd.                  589,750                     6.11

Howard Weiss                           500,000                     5.18

Aryeh Weinberg(4)                      71,000(5)                   *

Michael Braunold(4)                          *(6)                  *(6)

Bernie Wolff(4)                              *(7)                  *

<PAGE>

Directors and executive officers
as a group (3 persons)                  71,000(5)(6)

* Less than 1%

(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them. A person is deemed to be the beneficial owner
of securities that can be acquired by such person within 60 days from the date
hereof upon the exercise of warrants or options. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants that are
held by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised.

(2) Represents shares issuable upon exercise of warrants. Warrants held by
Englewood have a nominal exercise price.

(3) Represents (i) shares issuable upon conversion of the entire $200,000 in
aggregate principal amount of 10% Convertible Debentures due February 28, 2002,
based on an assumed conversion price of $0.40, and (ii) 125,000 shares issuable
upon exercise of outstanding warrants, which warrants are exercisable at an
exercise price per share of $1.00

(4) The address of such beneficial owner is c/o Ambient Israel, Jerusalem
Technological Park, Building Nine, Malha, Jerusalem, Israel.

(5) Includes 51,000 fully vested options issued under the Company's 1998 Stock
Option Plan.

(6) We have undertaken to issue to Mr. Braunold 100,000 options at an
exercise price of $0.01 per share upon and subject to the adoption of a new
Company employee stock option plan at the Company annual stockholders meeting to
be held in 2000.

(7) We issued to Mr. Wolff 10,000 options to vest as follows: (i) 5,000 options
following 12 months of employment with the Company and (ii) an additional 5,000
options following 24 months of employment with the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In May 1999, we granted to Aryeh Weinberg, the Company's Chief Financial
Officer, 51,000 vested options under the Company's 1998 Stock Option Plan with a
per share exercise price of $0.81. Subject to (and upon) the adoption of a new
Company employee stock option plan at the Company's Annual stockholders meeting
to be held in 2000, we undertook to issue to Mr. Weinberg, from any such newly
adopted plan, 50,000 options at an exercise price of $0.01 per share.

      Michael Braunold, a director, is paid $7,500 annually for serving on the
Company's Board. Subject to (and upon) the adoption of a new Company employee
stock option plan at the Company's Annual stockholders meeting to be held in
2000, we undertook to issue to Mr. Braunold, from any such newly adopted plan,
100,000 options at an exercise price of $0.01 per share.

<PAGE>

      In March 2000 we undertook to issue to Yehuda Cern, chief technology
officer of a Company subsidiary, subject to (and upon) the adoption of a new
Company employee stock option plan at the Company's Annual stockholders meeting
to be held in 2000, (i) 50,000 options from such any newly adopted plan, such
options to vest following 12 months of continuous employment with PLT Solutions
Inc. and (ii) an additional 50,000 options vesting following 24 months of
continuous employment with PLT Solutions Inc., in each case at an exercise price
per share to be agreed upon at a future date.

      Pursuant to the letter appointment, dated March 28, 2000, of Bernie Wolff
as Vice President, we issued to Mr. Wolff, 10,000 options from the Company's
1998 Option Plan as follows: (i) 5,000 options to vest following 12 months of
employment with the Company as Vice President, and (ii) an additional 5,000
options to vest following 24 months of employment with the Company as Vice
President.

      Mr. Wolff, our Vice-President, currently owns 60% of the issued capital of
our affiliate Kliks.com Ltd. We and Mr. Wolff entered into a shareholders
agreement dated December 31, 1999 respecting the operations of Kliks. We hold an
option to acquire an additional 10% of the equity of Kliks, exercisable until
the second anniversary of the shareholders agreement, upon payment to Kliks of
$250,000. The members of the board of Kliks are Mr. Wolff and Michael Braunold.

      In February 12, 1998, the Company entered into a two-year employment
agreement with Mr. Davidson as President and Chief Executive Officer of Ambient
Corporation and Ambient Israel. Under the agreement, Mr. Davidson received an
annual salary of $60,000. As of December 31, 1998, Mr. Davidson loaned the
Company $53,367, bearing 10% interest. The Company used $30,000 from such loans
for general working capital purposes. The remaining $23,367 was loaned in the
form of unpaid accrued salaries. Mr. Davidson resigned from his position with
the Company in September 1999. In connection with his resignation, the Company
agreed to (i) remit to Mr. Davidson, upon the completion of public offering of
the Company's stock, $20,000, plus interest at a per annum rate of 10%, as
reimbursement for amounts owed him (ii) maintain on the Company's records unpaid
salary owed to Mr. Davidson in the amount of $75,329 until such time as the per
share closing price of the Company's Common Stock is at least $2.00, as reported
on the OTC Electronic Bulletin Board, for a consecutive 10 day period. Mr.
Davidson received 119,000 vested options in May 1999 under the Company's 1998
Stock Option Plan, at an exercise price per share of $0.81.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

3.1   Certificate of Incorporation of the Company, as amended (1)
3.2   By-Laws of the Company, as amended (1)
3.3   Memorandum of Association of Ambient Israel (1)
3.4   Articles of Association of Ambient Ltd. (1)
3.5   Certificate of Incorporation of PLT Solutions, Inc. *
3.6   By-Laws of PLT Solutions, Inc. *
3.7   Memorandum of Kliks.com Ltd. *
3.8   Articles of Association of Kliks.com Ltd. *
3.9   Memorandum of Insulated Connections Corporation Ltd.*

<PAGE>

3.10 Articles of Association of Insulated Connections Corporation Ltd.*
4.1 Specimen Stock Certificate (1)
4.2 Form of 10% Promissory Note due January __, 2000 *
4.2.1 Form of 10% Convertible Debenture due February 28, 2002 *
4.2.2 Form of Common Stock Purchase Warrant *
4.2.3 Warrant Agreement dated as of February 17, 2000 between Ambient and
Englewood Holding Inc. *
10.1 Form of the Company's 1998 Stock Option Plan. (1)
10.2 Form of Employment Agreement between the Company and Jacob Davidson(1)
10.3 Employment Agreement between Ambient Ltd. and Dr. Yehuda Cern (1)
10.4 Summary (in English) of principal terms of lease between Ambient Israel and
Jerusalem Technological Park (1)
10.5 Employment Agreement dated March 27, 2000 between PLT solutions, Inc. and
Michael Braunold *
10.6 Employment Agreement dated April 10, 2000 between Ambient Corporation and
Aryeh Weinberg *
10.7 Employment Agreement dated December 31, 1999 between Kliks.com Ltd. and
Bernie Wolff *
10.8 Marketing Agreement dated as of February 25, 2000 between Ambient
Corporation and Hamilton Trading Ltd. *
10.9 Consulting Agreement dated as of March 29, 2000 between Ambient Corporation
and Cabus Ltd. *
10.10 Consulting Agreement dated as of March 27, 2000 between Ambient
Corporation and Rivermill Ltd. *
10.11 Consulting Agreement dated as of February 15, 2000 between Ambient
Corporation and Limekiln Ltd. *
10.12 Consulting Agreement dated as of February 17, 2000 between Ambient
Corporation and Gershon Tokayer *
10.13 Consulting Agreement dated as of February 14, 2000 between Ambient
Corporation and Grove Industries Ltd.*
10.14Amendment Agreement dated as of March 19, 2000 between Grove Industries
Ltd. and Ambient Corporation.*
10.15 Consulting Agreement dated as of March 27, 2000 between Lingfield Ltd. and
Ambient Corporation.*
10.16 Consulting Agreement dated as of February 19, 2000 between Trax
Investments Ltd. and Ambient Corporation.*
10.17 Consulting Agreement dated as of March 20, 2000 between Nina Fischman and
Ambient Corporation.*
10.18 Shareholders Agreement dated as of December 31, 1999 between Bernie Wolff
and Ambient Corporation concerning Kliks.com Ltd.*
10.19 Form of Securities Purchase Agreement between Ambient and certain
securityholders dated as of February 17, 2000 *
10.20 Form of Registration Rights Agreement dated as of February 17, 2000
between Ambient and certain investors *
21.1 Subsidiaries of the Company *
27.1 Financial Data Schedule *

*    Filed Herewith

<PAGE>

(1) Filed as an Exhibit to Ambient's Registration Statement on Form SB-2, No.
33-40045, and incorporated herein by reference

(b) Reports on Form 8-K

(i) Report on Form 8-K filed on November 15, 1999

<PAGE>

                                   SIGNATURES

      In accordance with the requirements of the Exchange Act the registrant
caused this report to be signed by the undersigned thereunto duly authorized.


Date:  April 14, 2000        /s/ Aryeh Weinberg
                             --------------------------------------------
                             Aryeh Weinberg,
                             Chief Financial Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following person on behalf of the Company and in
the capacities and on the date indicated.

Signature                  Title                   Date

/s/ Michael Braunold       Chairman                April 14, 2000

<PAGE>


                               AMBIENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 1999

<PAGE>

                               AMBIENT CORPORATION

                          (A DEVELOPMENT STAGE COMPANY)

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----

INDEPENDENT AUDITORS' REPORT                                                1

CONSOLIDATED FINANCIAL STATEMENTS:

   Balance Sheets                                                           2

   Statements of Operations                                                 3

   Statement of Changes in Shareholders Deficiency                          4

   Statements of Cash Flows                                                 5

   Notes to Financial Statements                                           6-16


<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Ambient Corporation

We have audited the accompanying consolidated balance sheets of Ambient
Corporation (a development stage company) and subsidiary (collectively, "the
Company") as of December 31, 1999 and 1998, and the related consolidated
statements of operations, changes in shareholders' deficiency and cash flows for
the years then ended. These financial statements 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 in accordance with auditing standards generally accepted
in the 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 audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Ambient
Corporation and subsidiary as of December 31, 1999 and 1998, and the results of
their operations, changes in shareholders' deficiency and cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company incurred a net loss in 1999 of
approximately $1.1 million (and approximately $6.1 million since inception) and
anticipates that it will continue to incur losses for some time. In addition,
the Company had a working capital deficit of approximately $0.7 million and a
shareholders' deficiency of approximately $1million as of December 31, 1999.
Although the Company raised net proceeds of approximately $3.4 million from an
initial public offering in February 1998, it has substantially utilized all of
such proceeds, primarily for product development. The Company's continued
existence as going concern is dependent on obtaining additional financing for
product development and commercialization. After the balance sheet date, the
Company raised debt financing, through convertible debenture in the amount of $1
million. The Company continues to seek out other potential sources of equity
capital, but there can be no assurance that it will be able to do so in the
foreseeable future. These matters raise substantial doubt about the Company's
ability to continue as a going concern. Management plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


Brightman Almagor & Co.
Certified Public Accountants (Israel)
A member of Deloitte Touche Tohmatsu

Tel Aviv, Israel
April 13, 2000

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                      (in U.S. dollars, except share data)

<TABLE>
<CAPTION>
                                                                                                   As of December 31,
                                                                                                   ------------------
                                                                                 Note          1 9 9 9             1 9 9 8
                                                                                 ----          -------             -------
<S>                                                                               <C>        <C>                  <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                                                      8,071               16,138
   Restricted cash                                                                3              84,820              131,259
   Receivables and prepaid expenses                                                              34,628              334,983
                                                                                             ----------           ----------
       Total current assets                                                                     127,519              482,380
                                                                                             ----------           ----------
LONG TERM INVESTMENT                                                              4             170,000              350,000
                                                                                             ----------           ----------
PROPERTY AND EQUIPMENT                                                            5
   Cost                                                                                         264,928              328,320
   Less - accumulated depreciation                                                              129,630               92,057
                                                                                             ----------           ----------
       Property and equipment, net                                                              135,298              236,263
                                                                                             ----------           ----------
DEPOSITS FOR SEVERANCE PAY                                                        9                 193                6,587
                                                                                             ==========           ==========
       Total assets                                                                             433,010            1,075,230
                                                                                             ==========           ==========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
   Short-term credit                                                              6A            140,903              144,006
   Accounts payable                                                                             212,967              337,105
   Other current liabilities                                                      8             491,713              175,264
                                                                                             ----------           ----------
       Total current liabilities                                                                845,583              656,375
                                                                                             ----------           ----------
LONG-TERM LIABILITIES
   Long-term bank credit                                                          6B              9,958               37,886
   Notes payable                                                                  7             600,000              585,900
   Liability for severance pay                                                    9              15,334               37,613
                                                                                             ----------           ----------
       Total long-term liabilities                                                              625,292              661,399
                                                                                             ==========           ==========
       Total liabilities                                                                      1,470,875            1,317,774
                                                                                             ----------           ----------
CONTINGENT LIABILITIES AND COMMITMENTS                                            10

SHAREHOLDERS' DEFICIENCY                                                          11

   Common stock $0.001 par value; authorized - 20,000,000 shares; issued and
      outstanding - 3,130,833 and 3,074,333 shares, respectively                                  3,131                3,074
   Additional paid-in capital                                                                 5,041,595            4,941,189
   Deferred stock  - based compensation                                                          (4,063)            (239,683)
   Deficit accumulated during the development stage                                          (6,078,528)          (4,947,124)
                                                                                             ----------           ----------
       Total shareholders' deficiency                                                        (1,037,865)            (242,544)
                                                                                             ==========           ==========
       Total liabilities and shareholders' deficiency                                           433,010            1,075,230
                                                                                             ==========           ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.


                                       2
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
                      (in U.S. dollars, except share data)

<TABLE>
<CAPTION>

                                                                                                     Cumulative from
                                                                         Year ended                   inception to
                                                                        December 31,                  December 31,
                                                                ------------------------------      -----------------
                                                      Note           1999            1998                  1999
                                                      ----           ----            ----                  ----
<S>                                                   <C>         <C>             <C>                  <C>
Research and development expenses                                    340,287         726,479            1,721,837
Less - participation by the Office of the Chief
    Scientist of the State of Israel                  10A            231,767         230,452              558,195
                                                                  ----------      ----------           ----------
                                                                     108,520         496,027            1,163,642

Operating, general and administrative expenses         13            684,234       1,904,273            3,875,308
                                                                  ----------      ----------           ----------

       Operating loss                                               (792,754)     (2,400,300)          (5,038,950)

Financing expenses, net                                              332,546         416,427            1,029,887
Other expenses, net                                                    6,104           3,587                9,691
                                                                  ----------      ----------           ----------

       Net loss                                                   (1,131,404)     (2,820,314)          (6,078,528)
                                                                  ==========      ==========           ==========
Basic and diluted loss per share                                       (0.36)          (0.95)
                                                                  ==========      ==========

Weighted average number of shares outstanding                      3,121,479       2,979,541
                                                                  ==========      ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.


                                       3
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
          CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIENCY
          -------------------------------------------------------------
                      (in U.S. dollars, except share data)

<TABLE>
<CAPTION>
                                                                                                       Deficit
                                                                                                     accumulated
                                                                    Additional       Deferred        during the
                                         Number of       Share       paid-in       stock - based     development
                                           shares       capital      capital       Compensation         stage             Total
                                           ------       -------      -------       ------------         -----             -----
<S>                                       <C>             <C>       <C>                <C>            <C>              <C>
   Balance - December 31, 1997            2,419,333       2,419       730,582        (241,112)        (2,126,810)      (1,634,921)
Stock issued pursuant to consulting
   agreement                                 75,000          75       654,925        (655,000)             -                -

Initial public offering in February
   1998                                     525,000         525     3,432,502            -                 -            3,433,027
Stock issued in connection with
   short-term debt financing                 20,000          20        99,980            -                 -              100,000
Additional stock pursuant to founders
   agreement for nominal consideration       35,000          35          -               -                 -                   35
Warrants issued pursuant to private
   placement of units                         -             -          21,600            -                 -               21,600
Options granted pursuant to
   consulting agreement                       -             -           1,600          (1,600)             -                -
Amortization of unearned compensation         -             -            -            658,029              -              658,029

Net loss                                      -             -            -               -            (2,820,314)      (2,820,314)
                                          ---------       -----     ---------        --------         ----------       ----------

   Balance - December 31, 1998            3,074,333       3,074     4,941,189        (239,683)        (4,947,124)        (242,544)
Stock issued pursuant to consulting
   agreement - January 1999                   4,000           4         7,996          (8,000)             -                -
Stock issued pursuant to consulting
   agreement - February 1999                 15,000          15          -                                 -                   15
Stock issued pursuant to consulting
   agreement - February 1999                 22,500          23        69,977         (70,000)             -                -
Stock issued pursuant to consulting
   agreement - April 1999                    15,000          15        12,173         (12,188)             -                -
Warrants issued pursuant to
   consulting agreement - April 1999          -             -          10,260            -                 -               10,260
Amortization of deferred stock -
   based compensation                         -             -            -            325,808              -              325,808

Net loss                                      -             -            -               -            (1,131,404)      (1,131,404)
                                          ---------       -----     ---------        --------         ----------       ----------

   Balance - December 31, 1999            3,130,833       3,131     5,041,595          (4,063)        (6,078,528)      (1,037,865)
                                          =========       =====     =========        ========         ==========       ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.


                                       4
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                (in U.S. dollars)

<TABLE>
<CAPTION>
                                                                                                              Cumulative from
                                                                                                                inception
                                                                                    Year ended                      to
CASH FLOWS - OPERATING ACTIVITIES                                                  December 31,                 December 31,
                                                                              ------------------------        ---------------
                                                                                 1999          1998                1999
                                                                              ----------    ----------          ----------
<S>                                                                           <C>           <C>                 <C>
Net loss                                                                      (1,131,404)   (2,820,314)         (6,078,528)
Adjustments to reconcile net loss to net cash used in operating
   activities -
Items not involving cash flows:
  Depreciation and amortization                                                  397,058       950,009           1,884,672
  Loss on sale of fixed assets                                                    13,817            --              13,817
  Financing expenses paid via the issuance of common stock                            --       100,000             100,000
  Consulting expenses paid via the issuance of common stock
  and warrants                                                                    10,275            --              10,275
  Increase (decrease) in net liability for severance pay                         (15,885)       11,026              15,141
  Accrued interest on loans and notes payable                                         --            --             210,016
  Write-down of long term investment                                             180,000       485,000             665,000
  Write-off of leasehold improvements                                                 --        20,453              20,453
  Changes in operating assets and liabilities:
  Decrease (increase) in receivables and prepaid expenses                        300,355      (295,061)             (7,866)
  Increase (decrease) in accounts payable                                       (124,138)       90,343             (16,280)
  Increase (decrease) in other current liabilities                               316,449       (64,691)            303,158
                                                                              ----------    ----------          ----------
Net cash provided by (used in) operating activities                              (53,473)   (1,523,235)         (2,880,142)
                                                                              ----------    ----------          ----------
CASH FLOWS - INVESTING ACTIVITIES
Loan provided to another company                                                      --      (835,000)           (835,000)
Additions to property and equipment                                              (12,102)     (112,317)           (371,819)
Proceeds from disposal of fixed assets                                            42,100            --              42,100
Decrease (increase) in restricted cash                                            46,439      (101,259)            (84,820)
                                                                              ----------    ----------          ----------
    Net cash used in investing activities                                         76,437    (1,048,576)         (1,249,539)
                                                                              ----------    ----------          ----------
CASH FLOWS - FINANCING ACTIVITIES
Proceeds from issuance of share capital                                               --            35               2,264
Proceeds from issuance of notes payable                                               --       600,000           1,000,000
Repayment of notes payable                                                            --      (400,000)           (400,000)
Proceeds of loans from shareholders, net                                              --            --             919,600
Repayment of loans from shareholders                                                  --      (968,000)           (968,000)
Repayment of loan from related party                                                  --       (13,947)                 --
Repayment of long-term loan                                                           --      (120,000)                 --
Proceeds from long-term bank credit                                                   --        58,859              95,969
Repayment of long-term bank credit                                               (40,935)      (37,110)            (78,045)
Increase in bank short term credit                                                 9,904        11,047             108,899
Public offering of common stock                                                       --     3,433,027           3,433,027
Proceeds from short-term bank loan                                                    --        24,038              24,038
                                                                              ----------    ----------          ----------
    Net cash provided by (used in) financing activities                          (31,031)    2,587,949           4,137,752
                                                                              ==========    ==========          ==========
    INCREASE (DECREASE) IN CASH AND
       CASH EQUIVALENTS                                                           (8,067)       16,138               8,071
CASH AND CASH EQUIVALENTS - BEGINNING
    OF PERIOD                                                                     16,138            --                  --
                                                                              ----------    ----------          ----------
    CASH AND CASH EQUIVALENTS - END OF PERIOD                                      8,071        16,138               8,071
                                                                              ==========    ==========          ==========
</TABLE>

The accompanying notes are an integral part of the financial statements


                                       5
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 1 - DESCRIPTION OF BUSINESS AND GENERAL

      A.    Description of business

            Ambient Corporation ("Ambient"), a development stage company, was
            founded in June 1996 to design and develop advanced smart card
            interface technology. A smart card is a credit card-sized plastic
            card equipped with an integrated circuit that can store and transfer
            information in electronic form.

            In August 1996, Ambient purchased substantially all of the assets
            and assumed substantially all of the liabilities of Gen
            Technologies, Inc., a smart card research and development company,
            at their approximate book value, including the capital stock of its
            subsidiary, Gen Tec Ltd. (which subsequently changed its name to
            Ambient Ltd.). The results of operations of Gen Technologies, Inc.
            prior to the acquisition were not material. Ambient and its
            subsidiary are collectively referred to herein as "the Company."

            The Company has recently commenced the design and development of
            products and services in the field of electronics commerce, internet
            and telephony activities.

            The Company's activities are currently centered in two distinct
            areas; the completion of the design and development of a unique
            technology designed to facilitate the provision of rapid power line
            telecommunication (PLT) services to ordinary business and personal
            consumers and the establishment, initially in Israel, of nationwide
            screen phone network that design to enable internet access for
            consumers who do not have access to, or unable, or unwilling to use,
            personal computers.

            The Company has not generated any revenues since inception.

      B.    Going concern assumption

            The Company incurred a net loss in 1999 of approximately $1.1million
            (and approximately $6.1 million since inception) and anticipates
            that it will continue to incur losses for some time. In addition,
            the Company had a working capital deficit of approximately
            $0.7million and a shareholders' deficiency of approximately
            $1.1million as of December 31, 1999. Although the Company raised net
            proceeds of approximately $3.4 million from an initial public
            offering in February 1998, it has substantially utilized all of such
            proceeds, primarily for product development. The Company's continued
            existence is dependent on obtaining additional financing for product
            development and commercialization.

            In February 2000, the Company issued $1,000,000, 10% convertible
            debentures to private investors. The debentures mature on February
            28, 2002 (see Note 15).

            Management's plans to continue operations in the normal course of
            business include the following: (i) continuing to seek out potential
            sources of equity capital; (ii) seeking out strategic partnerships;
            (iii) negotiating with a number of companies to install pilot
            projects; and (iv) diversification through establishment of new
            subsidiaries in the fields of internet technology and
            communications. In management's estimation, the above measures, if
            substantially realized, should enable the Company to continue
            operating through at least December 31, 2000, although there can be
            no assurance of this.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 1 - DESCRIPTION OF BUSINESS AND GENERAL (cont.)

      B.    Going concern assumption (cont.)

            In order to reduce its fixed costs until the above measures are
            partially or fully realized, during 1999, the Company terminated the
            employment of most of its employees. The Company has also undertaken
            other cost-cutting measures, such as reducing its lease space. In
            addition, due to the Company's adverse liquidity position, the
            Company did not pay salaries and salaries related amount to its
            remaining employees and to related institutions for several months.

            The above matters raise substantial doubt about the Company's
            ability to continue as a going concern. The financial statements do
            not include any adjustments that might be necessary should the
            Company be unable to continue as a going concern.

      C.    Use of estimates in preparation of financial statements

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and assumptions that affect the reported amounts of assets and
            liabilities and disclosure of contingent assets and liabilities as
            of the date of the financial statements, and the reported amounts of
            revenues and expenses during the reporting periods. Actual results
            could differ from those estimates.

      D.    Nature of industry

            The industries in which Company conducts business is characterized
            by rapid changes. Internet and internet related products quickly
            become out of date because of technological and other advances.
            Accordingly, the industry is typified by the constant need to
            develop and introduce new and enhanced products, which may result in
            substantial costs without any guarantee that such new products or
            enhancements will produce significant revenues.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The consolidated financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States. The
      significant accounting policies followed in the preparation of the
      financial statements, on a basis consistent with prior years, are as
      follows:

      A.    Cash and cash equivalents

            Cash and cash equivalents consist of cash and demand deposits in
            banks and other financial institutions, and other short-term, highly
            liquid investments (primarily interest-bearing time deposits) with
            maturity dates not exceeding three months from the date of deposit.

      B.    Functional currency and foreign currency translation

            The currency of the primary economic environment in which the
            operations of the Company are conducted is the U.S. dollar
            ("dollar"). Therefore, the Company uses the dollar as its functional
            and reporting currency. Certain of the dollar amounts in the
            financial statements may represent the dollar equivalent of other
            currencies, and may not necessarily be exchangeable for dollars.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

            Transactions and balances denominated in dollars are presented at
            their dollar amounts. Non-dollar transactions and balances are
            remeasured into dollars in accordance with the principles set forth
            in Statement No. 52, "Foreign Currency Translation," of the
            Financial Accounting Standards Board of the United States ("FASB").
            Transaction gains and losses are reflected in net financing
            expenses.

      C.    Consolidation

            The consolidated financial statements include those of Ambient and
            its 95%-owned subsidiary. Material intercompany transactions and
            balances have been eliminated in consolidation. The Company has
            recorded 100% of the subsidiary's losses since acquisition and,
            accordingly, no minority interest has been recorded in the financial
            statements.

      D.    Property and equipment

            Property and equipment are presented at cost, less accumulated
            depreciation. Depreciation is calculated based on the straight-line
            method over the estimated useful lives of the assets, as follows:

                                                                    Years
                                                                    -----
            Computers                                             4 (primarily)
            Motor vehicles                                        7
            Machinery and equipment                               7
            Furniture and office equipment                       14 (primarily)

            Management reviews property and equipment and other long-lived
            assets on a periodic basis to determine whether events or changes in
            circumstances indicate that the carrying amount of such assets may
            not be recoverable.

      E.    Research and development

            Research and development costs, net of participation by the
            Government of Israel through the Ministry of Industry and Trade's
            Office of the Chief Scientist ( "Office of the Chief Scientist"),
            are charged to operations as incurred.

      F.    Stock-based compensation

            The Company accounts for employee stock-based compensation in
            accordance with Accounting Principles Board Opinion No. 25,
            "Accounting for Stock Issued to Employees." Pursuant to this
            accounting standard, the Company records compensation for stock and
            stock options granted to employees at the date of grant based on the
            difference, if any, between the cost to the employee of the stock or
            options (including exercise price) and the market value of the
            Company's stock at that date. Deferred compensation is amortized to
            compensation expense over the vesting period of the stock or
            options. Grants to non-employees are accounted for at fair value as
            of the date of grant in accordance with Statement No. 123,
            "Accounting for Stock-Based Compensation," ("SFAS 123") of the FASB.
            The pro forma effects of the application of SFAS 123 with respect to
            grants to employees are presented in Note 16.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

      G.    Loss per share

            Loss per share is presented in accordance with Statement No. 128
            ("SFAS 128") of the FASB, "Earnings per Share." Pursuant to this
            standard, basic earnings (loss) per share exclude the dilutive
            effects of convertible securities and are computed by dividing
            income (loss) available to common shareholders by the
            weighted-average number of common shares outstanding for the period.
            Diluted earnings (loss) per share reflect the potential dilutive
            effect of all convertible securities and are presented in the
            financial statements with the same prominence as basic earnings per
            share. Diluted loss per share information has not been separately
            presented herein since the Company has recorded a net loss for all
            years presented and, accordingly, the effect of potentially dilutive
            securities is antidilutive. Retroactive recognition has been given
            in the calculation of basic loss per share to shares issued for
            nominal consideration prior to the Company's initial public
            offering.

      H.    Fair value of financial instruments

            The Company's financial instruments are principally non-derivative
            assets and non-derivative liabilities, such as cash and cash
            equivalents, deposits in banks, receivables, loan receivable,
            short-term and long-term credit, accounts payable and other current
            liabilities. Because of the nature of these financial instruments,
            fair value generally equals or approximates the amounts presented in
            these financial statements.

NOTE 3 - RESTRICTED CASH

            In connection with a line of credit and short-term loan from a bank
            (see Note 6), the Company is required to maintain a compensating
            balance which is restricted for a period of up to one year. The
            restricted balance amounted to $ 84,820 as of December 31, 1999
            (December 31, 1998 - $131,259).

NOTE 4 - LONG TERM INVESTMENT

            On May 20, 1998, a letter of intent was signed between the Company
            and Ordacard Hi-Tech Industries (1995) Ltd. ("Ordacard"), an Israeli
            manufacturer of plastic ID and bank cards, relating to a proposed
            merger with Ordacard, which was to be consummated by December 31,
            1998.

            Pursuant to the letter of intent, the Company was to provide
            $1,000,000 of loans to Ordacard - $350,000 upon execution of the
            letter of intent and $650,000 by July 1, 1998. The loans were to be
            evidenced by two convertible promissory notes, secured by Ordacard's
            assets and subordinated to Ordacard's secured bank loans in
            existence as of the date of payment. The notes were to bear interest
            at an annual rate of 6%. In addition, the Company was to carry out a
            private or public offering of equity securities with minimum net
            proceeds (after commissions and expenses) of $7.5 million by
            December 31, 1998. Since the merger and the equity financing were
            not consummated by December 31, 1998, the Company had the option to
            demand full payment of the aggregate outstanding principal and
            accrued interest on the notes through the date of payment, or
            convert, at its sole option, the aggregate outstanding principal and
            interest into 50,000 shares of Ordacard.


<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 4 - LONG TERM INVESTMENT (cont.)

            The Company provided the $350,000 loan upon execution of the letter
            of intent and provided additional cash advances during the third
            quarter of 1998 in the total amount of $485,000, such that the
            amounts provided to Ordacard by the Company aggregated $835,000.
            During 1999 the Company has elected to convert the loan into 36,490
            shares of Ordacard common stock, and has written down the investment
            to its estimated fair value of $170,000 (1998, Loan Term Receivable
            - $350,000).

NOTE 5 - PROPERTY AND EQUIPMENT
                                                            December 31
                                                    --------------------------
                                                       1999             1998
                                                    ---------        ---------
            Computers                                 104,437          104,437
            Machinery and equipment                    63,164           63,164
            Furniture and office equipment             40,346           40,346
            Leasehold improvements                     12,102                -
            Motor vehicles (*)                         44,879          120,373
                                                    ---------        ---------
                                                      264,928          328,320
            Less - accumulated depreciation           129,630           92,057
                                                    ---------        ---------
                                                      135,298          236,263
                                                    =========        =========

(*) The motor vehicles are pledged as collateral for a long-term bank loan.

NOTE 6 - CREDITS

      A.    Short-term credit

<TABLE>
<CAPTION>
                                                                Interest rate               December 31
                                                                -------------      ---------------------------
                                                                 At December          1999              1998
                                                                 -----------       ----------         --------
                                                                  31, 1999
                                                               ---------------
                <S>                                                <C>                <C>              <C>
                Current maturities of long-term bank credit        14%-16%              7,966           20,973
                Bank overdraft line of credit                        18%              132,937           98,995
                Short-term bank loan                                 14%                    -           24,038
                                                                                   ----------         --------
                                                                                      140,903          144,006
                                                                                   ==========         ========
</TABLE>

      B.    Long-term bank credit

            Consists of vehicle financing loans in the aggregate amount of
            $17,924, payable in monthly installments through 2002, including
            interest at various market rates. Current maturities in 2000 amount
            to $7,966.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 7 - NOTES PAYABLE

            In June 1998, the Company conducted a private placement of units.
            Each unit consisted of: (i) a promissory note in the principal
            amount of $50,000 and (ii) warrants to purchase 10,000 shares of the
            Company's common stock. The Company sold 12 units in the private
            placement for aggregate consideration of $600,000. The aggregate
            fair value of the consideration allocated to the warrants was
            $21,600, which was credited to additional paid-in capital.

            The notes bear interest at an annual rate of 10% and are repayable
            at the earlier of: (i) 12 months from the date of issuance or (ii)
            consummation by the Company of any public or private equity or debt
            financing in excess of $1,500,000 (as well as certain other
            conditions).

            The purchase price for each share pursuant to the warrants is equal
            to the lower of: (i) $8.00 and (ii) the offering price of the
            Company's common stock in a subsequent public offering with
            aggregate proceeds to the Company of at least $1,500,000. The
            warrants are exercisable for a period of four years from the date of
            issuance.

            In February 2000 the Company entered into an agreement to convert
            these notes to equity. Principal and interest of approximately
            $700,000 were converted into 3,490,000 shares of the Company's
            common stock.

NOTE 8 - OTHER CURRENT LIABILITIES

                                                           As of December 31
                                                      --------------------------
                                                         1999             1998
                                                      ---------        ---------
             Accrued vacation                            23,560           27,125
             Employees and officers                      99,797            1,472
             Accrued liabilities                        190,930           72,312
             Related parties                            177,426           74,355
                                                      ---------        ---------
                                                        491,713          175,264
                                                      =========        =========

NOTE 9 - LIABILITY FOR SEVERANCE PAY

            Israeli law and labor agreements determine the obligations of the
            Company to make severance payments to dismissed employees and to
            employees leaving employment under certain other circumstances. The
            obligation for severance pay benefits, as determined by Israeli Law,
            is based upon length of service and the employee's most recent
            salary. This obligation is partially funded by the purchase from
            outside insurance companies of managers' insurance policies, which
            are controlled by the insurance companies and are not under the
            control and management of the Company.

            Expenses relating to severance pay benefits were $22,560 and $23,564
            in 1999 and 1998, respectively.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 10 - CONTINGENT LIABILITIES AND COMMITMENTS

      A.    In connection with its research and development, the Company
            received participation payments from the Office of the Chief
            Scientist of $231,767, $230,452 and $95,976 for the years 1999, 1998
            and 1996, respectively. In return for such participation, the
            Company is committed to pay royalties at a rate of 3%-5% of sales of
            the product, up to 100% of the amount of grants received (1998 -
            $220,364 included in receivables and prepaid expenses).

      B.    The Company is committed to pay royalties to a shareholder of its
            subsidiary, in connection with technology transferred by him to the
            Company, at rates of between 15% and 20% of the net proceeds from
            all sales, less the cost of components, as defined in an agreement
            with the shareholder.

      C.    The Company is obligated to pay to an affiliated company up to
            $1,000,000 to meet its financing needs (see Note 15).

      D.    The Company's Israeli subsidiary is party to various litigation
            matters, in most cases involving ordinary and routine claims
            incidental to our business. We cannot estimate with certainty its
            ultimate legal and financial liability with respect to such pending
            litigation matters. However, the Company believes, based on its
            examination of such matters, that the Company's ultimate liability
            will not have a material adverse effect on its financial position,
            results of operations or cash flows.

NOTE 11 - SHAREHOLDERS DEFICIENCY

      A.    General

            As of December 31, 1999 and 1998, Ambient's authorized share capital
            consisted of 20,000,000 shares of common stock and 5,000,000 shares
            of preferred stock of $0.001 par value per share. 3,130,833 and
            3,074,333 shares of common stock were issued and outstanding as of
            December 31, 1999 and 1998, respectively. Holders of common stock
            are entitled to participate equally in the payment of cash dividends
            and in stock dividend distributions and, in the event of the
            liquidation of the Company, in the distribution of assets after
            satisfaction of liabilities to creditors. Each share of common stock
            is entitled to one vote on all matters to be voted on by
            shareholders. As of december 31, 1999 no preferred shares were
            issued.

      B.    Stock option plan

            In February 1998, the Company's shareholders approved a stock option
            plan for the issuance of stock options to employees and consultants
            of the Company. Pursuant to the plan, 250,000 common shares were
            reserved for issuance. Options under the plan may be either
            incentive stock options under the Internal Revenue Code or
            non-qualified options. For incentive stock options, the exercise
            price may not be less than 110% of the fair market value of the
            Company's common stock at the date of grant and are exercisable for
            a period not exceeding five years from the date of grant. For
            non-qualified options, the exercise may not be less than 100% of the
            fair market value of the Company's common stock at the date of grant
            and are exercisable for a period not exceeding ten years from the
            date of grant.

            During 1998, 80,000 stock options were granted under the plan to a
            consultant of the Company. The exercise price of the options was $6
            and the options were exercisable until August 1, 1999. Compensation
            expense of $1,600 was recorded in respect of this grant. The stock
            options expired on August 1, 1999.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 11 - SHAREHOLDERS EQUITY (DEFICIENCY) (contd.)

            During 1999, 170,000 stock options were granted to the Chief
            Financing Officer (51,000 stock options) and to the former Chief
            Executive Officer (119,000 stock options) under the "1998 Stock
            Option Plan". To date, a total of 220,000 shares of common stock
            have been reserved for issuance upon exercise of stock options
            granted under the 1998 Option Plan.

            Since the Company accounts for employee stock-based compensation in
            accordance with Accounting Principles Board Opinion No. 25,
            "Accounting for Stock Issued to Employees" and since the exercise
            prices were set at no less than 100% of the share's price no
            compensation expenses were recorded in respect of theses grants. For
            pro - forma effect see Note 16.

            The total number of stock options as of December 31, 1999 is
            170,000.

      C.    Stock issuances to consultants

            During 1999, the Company issued to certain consultants 56,500 shares
            of common stock for their services. The Company recorded deferred
            compensation of $90,188 in respect of these issuances, based on the
            fair value of the shares at the date of issuance. The deferred
            compensation was amortized over the period of the service.

      D.    Warrants issuance to consultant

            During 1999, the Company issued to a certain consultant 18,000
            warrants for past services. The exercise price of the warrants was
            $1.88 and the warrants are exercisable until April 2006. The Company
            recorded expenses of $10,260 in respect of this issuance, based on
            the fair value of the warrants at the date of issuance.

            The total number of warrants outstanding as of December 31, 1999 is
            138,000 (see Note 7).

      E.    Commitments for stock options issuance

            (1) In March 2000 the Company undertook to issue to Company's C.F.O
            additional options (see Note 14A).

            (2) Pursuant to the letter appointment, dated March 2000, of the
            Vice President, the Company undertook to issue to him upon and
            subject to the adoption of a new Company stock option plan (i)
            options for 5,000 shares of common stock of the Company following 12
            months of employment with the Company as Vice President, and (ii) an
            additional 5,000 options to vest following 24 months of employment
            with the Company as Vice President.

            (3) In March 2000 The Company undertook to issue to the, chief
            technology officer of a Company subsidiary, subject to (and upon)
            the adoption of a new Company employee stock option plan at the
            Company's Annual stockholders meeting to be held in 2000, (i) 50,000
            options from such any newly adopted plan, such options to vest
            following 12 months of continuous employment with PLT Solutions Inc.
            and (ii) an additional 50,000 options vesting following 24 months of
            continuous employment with PLT Solutions Inc., in each case at an
            exercise price per share to be agreed upon at a future date.

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

NOTE 12 - INCOME TAXES

      A.    Tax loss carryforwards

            Due to the uncertainty of realizing the benefit of the Company's tax
            loss carryforwards of approximately $6 million, a valuation
            allowance for the entire amount of related deferred tax asset has
            been recorded.

      B.    Inflation adjustment for tax purposes

            The Company's Israeli subsidiary is subject to the Income Tax Law
            (Inflationary Adjustments) - 1985, pursuant to which taxable income
            is measured on the basis of changes in the Israeli Consumer Price
            Index.

      C.    Approved investment program

            The Company's Israeli subsidiary received "approved enterprise"
            status for an investment plan of $180,000 under the Israeli Law for
            the Encouragement of Capital Investments - 1959. The Company has
            elected to receive benefits through the "alternative benefits"
            program. The benefits under this program include a tax exemption on
            income derived from the approved enterprise for a period of six
            years and a reduced tax rate for a period of up to four years
            commencing with the date on which taxable income is first earned.

            The benefits are subjected to certain conditions, that some of them
            have not been fulfilled as of the balance sheet date.

NOTE 13 - OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES

            Operating, general and administrative expenses in 1999 include
            approximately $96,000 of marketing advisory and other consulting
            fees (1998 - approximately $518,000), which were primarily paid via
            the issuance of common shares.

NOTE 14 - TRANSACTIONS WITH RELATED PARTIES

<TABLE>
<CAPTION>
                                                                Year ended December 31
                                                             1999                     1998
                                                           --------                ---------
            <S>                                            <C>                     <C>
            Rent                                                  -                  $62,400
                                                           ========                =========
            Salary                                          $89,657                *$135,728
                                                           ========                =========
            Proceeds from disposal of vehicles              $42,100                        -
                                                           ========                =========
            Restricted stock awards                         170,000                        -
                                                           ========                =========
</TABLE>

      * Including $52,484 salary to the Chief Finance Officer, who serves as a
      Director since 1999.

<PAGE>

      A.    The Company entered into an employment agreement in March 2000 with
            the Chief Finance Officer ("C.F.O") pursuant to which he is employed
            as the Company's Chief Financial Officer for a one year term which
            is automatically renewable from year to year unless either party
            gives notice of termination at least 90 days prior to the expiration
            date. The C.F.O. currently receives an annual salary of $72,000.
            Subject to the adoption of a new stock option plan, the C.F.O. was
            granted 50,000 options to purchase, at a nominal price, shares of
            common stock of the Company. The C.F.O. has agreed to certain
            customary confidentiality and non-compete provisions that prohibit
            him from competing with the Company for one year, or soliciting
            employees for one year, following the termination of his employment.

      B.    During March 2000 the Chairman entered into an employment contract
            with the Company's subsidiary, PLT Solutions Inc. He receives $3,000
            per month in salary and $7,500 annually for serving on the Company's
            Board, and subject to the adoption of a new stock option plan, the
            Chairman was granted 100,000 options to purchase, at a nominal
            price, shares of common stock of the Company at an exercise price of
            $0.01 per share. The employment agreement is for one year beginning
            March 2000 and will renew automatically for additional one year
            terms unless terminated by either party upon three months prior
            written notice. The Chairman has agreed to certain customary
            confidentiality and non-compete provisions that prohibit him from
            competing with the Company for one year, or soliciting employees for
            one year, following the termination of his employment.

      C.    In February 12, 1998, the Company entered into a two-year employment
            agreement with the former President and Chief Executive Officer of
            the Company. Under the agreement, the former President received an
            annual salary of $60,000. As of December 31, 1998, former President
            loaned the Company $53,367, bearing 10% interest. The Company used
            $30,000 from such loans for general working capital purposes. The
            remaining $23,367 was loaned in the form of unpaid accrued salaries.
            The former President resigned from his position with the Company in
            September 1999. In connection with his resignation, the Company
            agreed to (i) remit to the former President, upon the completion of
            public offering of the Company's stock, $20,000, plus interest at a
            per annum rate of 10%, as reimbursement for amounts owed him (ii)
            maintain on the Company's records unpaid salary owed to the former
            President in the amount of $75,329 until such time as the per share
            closing price of the Company's common stock is at least $2.00, for a
            consecutive 10 day period. The former President received 119,000
            vested options in May 1999 under the Company's 1998 Stock Option
            Plan.

NOTE 15 - POST - BALANCE SHEET EVENTS

      A.    The Company has established wholly owned subsidiaries, PLT Solutions
            Inc. ("PSI"), registered in United States, and Insulated Connections
            Corporation Limited ("ICC"), registered in Israel, to promote and
            develop a unique technology designed to facilitate the take - off of
            Power Line Telecommunication ("PLT") in the United States and Japan.
            PLT enables existing electricity power lines to be used for
            Internet, telephone and data transfer to all homes and offices. In
            practice PLT is not currently in use due to power utility
            infrastructure limitations. PSI provides patented technology for
            transmitting data over the power lines with, the Company believes,
            compelling economic and

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

            practical benefits for power companies, telecommunication, and
            Internet providers/integrators to incorporate PSI's product and
            technology offering in their product and services repertoire.

      B.    The Company acquired a 40% interest in a newly established Israeli
            company, Kliks.com Ltd. ("Kliks"), which is engaged in designing and
            establishing a nationwide Screen Phone network in Israel. The
            network will enable Internet access for a wide spread of the
            population who are less familiar with the use of personal computers
            (PC's).
            Top management has been recruited.
            The Company shall be entitled, but not obligated, to purchase up to
            10% of Kliks' share capital upon the payment of $250,000 to Kliks.
            The Company shall pay (by way of equity investment) to Kliks up to
            $1,000,000 to meet the financing needs of Kliks. The Company shall
            not be issued any additional shares or securities of any kind for
            such payments.
            From the period January 2000 to April 2000, the Company paid
            $150,000 as part of this commitment.

      C.    In February 2000, the Company issued $1,000,000, 10% convertible
            debentures to private investors. The debentures were issued pursuant
            to the terms of an agreement which further provides that, subject to
            certain conditions, the investors will purchase an additional
            $1,000,000 of debentures no later than five days after the effective
            date of a registration statement covering the common stock into
            which the debentures may be converted. In January 2000, the
            investors pre-funded $250,000 of this obligation. The debentures
            mature on February 28, 2002.
            The debentures are convertible into shares of the Company's common
            stock at a conversion rate $0.40 per share.

            In connection with the issuance of the 10% convertible debentures,
            the Company issued to debenture holders warrants to purchase, in the
            aggregate, 625,000 of the Company's common shares at an exercise
            price per share of $1. The warrants expire in April 2003. In
            connection with the sale of the convertible debentures the company
            also issued to a consultant warrants to purchase 1.3 million shares
            of common stock. The warrants are exercisable at a price of $1 per
            share and expire in February 2002. The related deferred compensation
            costs of $2.4 million will be amortized over the life of the
            convertible debentures.

      D.    In February 2000 the Company entered into an agreement with a
            certain lender to convert a loan to equity. Principle and interest
            of approximately $700,000 were converted into 3,490,000 shares of
            the Company's common stock.

      E.    The Company entered into various marketing and financial consulting
            agreements in February and March 2000. Under these agreements the
            Company will issue 2,691,000 shares of common stock and pay $8,000
            per month as compensation. The agreements terminate on or before
            March 2001.

            The related compensation costs of $11 million will be allocated to
            the statement of operations in parallel to attainment of the
            service.

NOTE 16 - PRO FORMA EFECT OF SFAS 123

            Had compensation cost for the Company's stock compensation plan been
            determined based on fair value as of the date of grants for awards
            made in 1999 under such plan in accordance with SFAS

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                (in U.S. dollars)

            No. 123, instead of APB No. 25, the Company's pro forma net loss and
            loss per share for the year ended December 31, 1999, would have been
            as follows:

                  Pro forma net loss                     (1,186,340)
                                                         ==========
                  Pro forma loss per share                    (0.38)
                                                         ==========