SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549


                                 FORM 10-K/A

AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED  DECEMBER 31, 1997

Commission File Number:    0-18267

Noise Cancellation Technologies, Inc.
(Exact name of registrant as specified in its charter)

        Delaware                                    59-2501025
-------------------------------                --------------------
(State or other jurisdiction of                   (IRS Employer
  incorporation organization)                   Identification No.)

1025 West Nursery Road, Linthicum, MD               21090
(Address of principal executive office)            (Zip Code)

(410) 636-8700
(Registrant's telephone number, including area code)





<PAGE>


                                        PART II
ITEM 11.    EXECUTIVE COMPENSATION

   Set forth  below is certain  information  for the three  fiscal  years  ended
December  31,  1997,  1996 and 1995  relating  to  compensation  received by the
Company's  Chief  Executive  Officer and all  executive  officers of the Company
other  than the Chief  Executive  Officer  (collectively  the  "Named  Executive
Officers")  whose  total  annual  salary  and bonus for the  fiscal  year  ended
December 31, 1997, exceeded $100,000 for services rendered in all capacities.
<TABLE>
<CAPTION>


                           SUMMARY COMPENSATION TABLE


                                                                                     Securities
                                                               Other                 Underlying           All
Name and Principal                                             Annual                Options/Warrants     Other
     Position               Year     Salary($)   Bonus($)      Compensation($)       SARs(#)              Compensation
-------------------         -------  ---------   -------       ---------------       ----------------     ------------
<S>                         <C>      <C>         <C>           <C>                   <C>                  <C>

Michael J. Parrella         1997     $120,000    $243,058      $15,348               3,062,500 (2)        $5,218  (3)
     President and          1996      120,000     106,885       15,348                 475,000             5,218  (3)
     Chief                  1995       90,833      47,168        6,395               1,622,000 (4),(16)        -
     Executive
     Officer  (1)

Jay M. Haft                 1997       52,638           -            -                 543,500 (5)             -
     Chairman  (1)          1996       64,000           -            -                 200,000                 -
                            1995      110,000           -            -                 937,000 (6),(16)        -

Cy E. Hammond               1997       94,000      65,939            -                 150,000 (8)             -
     Sr. Vice               1996       94,000           -            -                       -                 -
     President, Chief       1995       92,500           -            -                 439,436 (9),(16)        -
     Financial
     Officer  (7)

John B. Horton              1997      105,000      50,000            -                 325,000 (10)            -
     Sr.Vice                1996      116,932 (11)      -            -                       -                 -
     President, General     1995       93,101 (11)      -            -                 903,834 (12),(16)
     Counsel and 
     Secretary (11)

Irene Lebovics              1997      105,000           -            -                 301,250 (13)            -
     Sr. Vice               1996      105,000           -            -                       -                 -
     President and          1995       88,000           -            -                 658,850 (14),(16)       -
     President of                                                          
     NCT Hearing
     Products, a
     div. of
     the Company

Stephen J. Fogarty          1997      105,000      16,653       15,986                  30,000                 -
     Sr.Vice                1996      105,833           -            -                       -                 -
     President,
     Chief                  1995      104,434      10,083            -                 391,400 (15), (16)      -
     Financial Officer (7)                                                   

</TABLE>


     (1)  Mr. Haft was elected  Chairman of the Board and relinquished the title
          of Chief Executive  Officer on July 17,1996.  Prior thereto,  and from
          November 15,  1994,  Mr. Haft served as  Co-Chairman  of the Board and
          Chief  Executive  Officer.  From July 17, 1996 to June 19,  1997,  the
          authority  and  responsibility  of the Chief  Executive  Officer  were
          delegated  by  the  Board  of  Directors  to the  Executive  Committee
          consisting  of Messrs.  Haft and Parrella with Mr. Haft serving as the
          Committee's Chairman. Mr. Parrella was elected Chief Executive on June
          19, 1997.

     (2)  Refer to the  "Options  and  Warrants  Granted in 1997"  table and the
          footnotes thereto.

     (3)  Consists of annual  premiums for $2.0 million  personal life insurance
          policy paid by the Company on behalf of Mr. Parrella.

     (4)  Excludes  options and  warrants to  purchase  1,385,000  shares of the
          Company's   common  stock  forfeited  under  the  "Exchange   Program"
          described  in  footnote  (16)  below,  for a net new  grant  under the
          Exchange  Program and the "1992  Plan",  described  in  footnote  (16)
          below, of 237,000  options and warrants all of which were  exercisable
          at December 31, 1997.

     (5)  Refer to the  "Options  and  Warrants  Granted in 1997"  table and the
          footnotes thereto.

     (6)  Excludes  options  and  warrants  to  purchase  585,000  shares of the
          Company's   common  stock  forfeited  under  the  "Exchange   Program"
          described  in  footnote  (16)  below,  for a net new  grant  under the
          Exchange Program and the "Directors Plan",  described in footnote (16)
          below),  of 402,000 options and warrants all of which were exercisable
          at December 31, 1997.

     (7)  Mr.  Fogarty  resigned as Senior Vice  President  and Chief  Financial
          Officer  on April 24,  1997,  and Mr.  Hammond  was  elected  to those
          offices on September 4, 1997. Services were rendered by Mr. Fogarty as
          a  consultant  to the  Company  for the  period  July 1, 1997  through
          December 31, 1997.

     (8)  Refer to the  "Options  and  Warrants  Granted in 1997"  table and the
          footnotes thereto.

     (9)  Excludes  options to purchase  389,436 shares of the Company's  common
          stock  forfeited  under the "Exchange  Program"  described in footnote
          (16)  below,  for a net new grant under the  Exchange  Program and the
          "1992 Plan"  described in footnote (16) below of 50,000 options all of
          which were exercisable at December 31, 1997.

     10)  Refer to the  "Options  and  Warrants  Granted in 1997"  table and the
          footnotes thereto.

     (11) Mr.  Horton was elected  Senior Vice  President,  General  Counsel and
          Secretary of the Company on May 6, 1996. Services were rendered by Mr.
          Horton as a  consultant  to the Company for the period  January,  1995
          through April, 1996.

     (12)Excludes  options to purchase  828,834  shares of the Company's  common
          stock  forfeited  under the "Exchange  Program"  described in footnote
          (16)  below,  for a net new grant under the  Exchange  Program and the
          "1992 Plan"  described in footnote (16) below of 75,000 options all of
          which were exercisable at December 31, 1997.

     (13) Refer to the  "Options  and  Warrants  Granted in 1997"  table and the
          footnotes thereto.

     (14)Excludes  options to purchase  507,600  shares of the Company's  common
          stock  forfeited  under the "Exchange  Program"  described in footnote
          (16)  below,  for a net new grant under the  Exchange  Program and the
          "1992 Plan",  described in footnote (16) below, of 151,250 options all
          of which were exercisable at December 31, 1997.

     (15)Excludes  options to purchase  316,400  shares of the Company's  common
          stock  forfeited  under the "Exchange  Program"  described in footnote
          (16) below,  for a new grant under the Exchange  Program and the "1992
          Plan",  described  in footnote  (16) below,  of 75,000  options all of
          which were exercised at December 31, 1997.

     (16)On November  8, 1995,  the  Company  received  an offer from a Canadian
          institutional  investor to purchase  4,800,000 shares of the Company's
          common  stock at a price of $0.75 per share,  the fair market value of
          such shares on that date. At that time  virtually all of the Company's
          authorized  capital of  100,000,000  shares of common stock was issued
          and  outstanding  or  reserved  for  issuance  upon  the  exercise  of
          outstanding  warrants  and  options to  purchase  common  stock of the
          Company.  Therefore,  in order to make sufficient  shares available to
          effect the sale of 4,800,000  shares of common stock to such investor,
          the  Company  adopted  a  program  (the  "Exchange  Program"),  to  be
          partially  implemented  through the Noise  Cancellation  Technologies,
          Inc. Stock  Incentive Plan (the "1992 Plan") and the Company's  Option
          Plan for  Certain  Directors  (the  "Directors  Plan")  and  partially
          outside  such plans,  under  which all  directors,  officers,  certain
          active  consultants  (all of whom were former directors or officers of
          the  Company)  and all  current  employees  were  given  the  right to
          exchange  presently  owned  warrants  and  options  that had shares of
          common stock reserved for issuance upon their exercise  (respectively,
          "Old  Warrants" and "Old  Options") for new warrants and options which
          initially,  and  until the  requisite  corporate  action  was taken to
          increase  the  authorized  capital  of the  Company  and  reserve  the
          required  number of shares of common  stock for  issuance  upon  their
          exercise,  would  not have any  shares of common  stock  reserved  for
          issuance upon their  exercise  (respectively,  "New Warrants" and "New
          Options").  The exercise price of the New Warrants and New Options was
          established at $0.75 per share, the fair market value of the Company's
          common stock on November 8, 1995,  the date the  Exchange  Program was
          adopted,  and  exchanges  were to be  effected  starting  with the Old
          Warrants  and Old  Options  having  the  highest  exercise  prices and
          proceeding in  descending  order of exercise  prices until  sufficient
          shares of common stock became  available  for the Company to implement
          the sale of common stock to the  Canadian  investor.  If possible,  no
          exchanges  were to be made which  would  involve  Old  Warrants or Old
          Options having an exercise price below $0.75 per share,  and, in fact,
          no such  exchanges  were  required.  The  exercise  prices  of the Old
          Warrants  and Old Options  exchanged  for New Warrants and New Options
          ranged from a high of $5.09 per share to $0.75 per share.

          The  New  Warrants  and New Options  became fully vested upon the
           surrender and  forfeiture of Old Warrants and Old Options to
           purchase a  corresponding  number of shares (as  adjusted in
           accordance  with the foregoing  formula in the case of those
           having a $0.75 per share exercise price).  However,  the New
           Warrants and New Options would not become exercisable until:
           (i) approval by the Company's  stockholders  of an amendment
           to  the   Certificate   of   Incorporation   increasing  the
           authorized  capital  by an  amount of  additional  shares of
           common  stock at least  sufficient  to provide the number of
           shares  needed to be reserved to permit the  exercise of all
           New  Warrants and New Options,  and (ii) the  completion  of
           such further  corporate action  including  amendments to the
           1992 Plan and the  Directors  Plan that may be  necessary or
           appropriate  in connection  with the  implementation  of the
           Exchange  Program.  Such  stockholder  approval  and further
           corporate  action were  obtained  and  completed on July 17,
           1996,  and August 14,  1996,  respectively.  The  expiration
           dates of the New  Warrants  and New  Options are the same as
           the  expiration  dates of the Old  Warrants  and Old Options
           exchanged except that if such expiration date occurred prior
           to the date on which the New Warrants or New Options  become
           exercisable,  the  expiration  date for such New Warrants or
           New Options would be ninety (90) days  following the date on
           which such New Warrants and New Options become  exercisable.
           In all other  respects,  the terms and conditions of the New
           Warrants  and New  Options  are the  same as the  terms  and
           conditions of the Old Warrants and Old Options exchanged.

          Under the  Exchange  Program,  4,800,249  shares of the  Company's
          common  stock  were  made  available  for  issuance  to  the
          Canadian  institutional  investor  and it was  necessary  in
          order  to  make  the New  Warrants  and  New  Options  fully
          exercisable   for  the  Company  to  take  the   appropriate
          corporate   action  to  reserve   5,055,499  shares  of  the
          Company's  common  stock for  issuance  upon their  exercise
          which action was  completed  following  the above  described
          increase in the Company's authorized capital.


Stock Options and Warrants

      The following tables summarize the Named Executive  Officers' stock option
and warrant activity during 1997.
<TABLE>
<CAPTION>

                      OPTIONS AND WARRANTS GRANTED IN 1997


                                              
                                                Percent of            
                                                Total           
                               Warrants         Options                              Potential Realized Value
                                                and                                  at Assumed Annual
                               Shares           Warrants                             Rates of Stock Price
                               Underlying       Granted     Exercise                 Appreciation for Option
                               Options and      to          Price                    and Warrant Term (4)
                               Warrants         Employees   Per      Expiration      --------------------- 
    Name                       Granted          in 1997     Share    Date            5%         10%
    ----                       -----------      ----------  -------- --------        --------   ----------
    <S>                        <C>               <C>       <C>       <C>             <C>         <C>


     Michael J. Parrella        862,500 (1)       13.3%    $0.7500   12/31/99        $99,814     $209,398
                                250,000 (1)        3.9%     0.5000   02/26/99         13,473       27,700
                                450,000 (2)        6.9%     0.2656   05/02/04         48,657      113,391
                              1,500,000 (3)       23.1%     0.6875   10/06/04        419,822      978,365

     Jay M. Haft                218,500 (1)        3.4%     0.7500   12/31/99         25,286       53,047
                                 75,000 (2)        1.2%     0.2656   05/02/04          8,109       18,898
                                250,000 (3)        3.9%     0.6875   10/06/04         69,970      163,061

     Cy E. Hammond               25,000 (1)        0.4%     0.7500   12/31/99          2,893        6,070
                                 50,000 (2)        0.8%     0.2656   05/02/04          5,406       12,599
                                 75,000 (3)        1.2%     0.6875   10/06/04         20,991       48,918

     John B. Horton             200,000 (1)        3.1%     0.7500   09/16/00         20,744       43,285
                                 50,000 (2)        0.8%     0.2656   05/02/04          5,406       12,599
                                 75,000 (3)        1.2%     0.6875   10/06/04         20,991       48,918

     Irene Lebovics             201,250 (1)        3.1%     0.7500   12/31/99         23,290       48,860
                                100,000 (2)        1.5%     0.2656   05/02/04         10,813       25,198

     Stephen J. Fogarty          30,000 (2)        0.5%     0.2656   05/02/04          3,244        7,559
    

</TABLE>


(1) Expiration dates of the warrants and options to purchase common stock of the
    Company were extended for an additional  two years from the original date of
    expiration.

(2) Options to purchase these shares were granted  pursuant to the 1992 Plan and
    are currently exercisable.

(3) Options to purchase these shares were granted  pursuant to the 1992 Plan and
    are not exercisable until such time as the Company's stockholders approve an
    increase in the number of shares of the Company's  common stock  included in
    the 1992 Plan.

(4) The dollar amounts on these columns are the result of calculations at the 5%
    and 10%  rates  required  by the SEC and,  therefore,  are not  intended  to
    forecast possible future appreciation, if any, of the stock price.



<PAGE>

<TABLE>
<CAPTION>

               1997 Aggregated Options and Warrant Exercises and
                  December 31, 1997 Option and Warrant Values

                                
                                                     Number of Shares    
                         Number                      Underlying                       Value of Unexercised
                         of                          Unexercised Options              In-the-Money Options
                         Shares                      and Warrants at                  and Warrants at
                         Acquired                    December 31, 1997                December 31, 1997
                         on          Value        ---------------------------     ----------------------------
     Name                Exercise    Realized     Exercisable   Unexercisable     Exercisable    Unexercisable
---------------          --------    ---------    -----------   -------------     -----------    -------------
<S>                      <C>         <C>          <C>            <C>            <C>              <C>

Michael J. Parrella      449,456     $389,035     2,737,000      1,500,000       $1,401,962      $656,250

Jay M. Haft                    -            -     1,282,000        250,000          587,074       109,375

Cy E. Hammond                  -            -       319,718         75,000          148,018        32,813

John B. Horton                 -            -       539,417         75,000          233,528        32,813

Irene Lebovics                 -            -       592,550              -          282,358             -

Stephen J. Fogarty       263,200       77,640             -              -                -             -


</TABLE>


Compensation Arrangements with Certain Officers and Directors

      On February 1, 1996, the  Compensation  Committee  awarded Mr. Parrella an
incentive  bonus  equal  to 1% of the  cash  received  by the  Company  upon the
execution of the agreement or other documentation  evidencing  transactions with
unaffiliated  parties (other than certain parties involved in transactions  then
in negotiation) or otherwise  received at the closing of said transactions which
occur subsequent to January 1, 1996.

Compensation Committee Interlocks and Insider Participation

      During the fiscal year ended  December 31,  1997,  the  following  persons
served as  members  of the  Compensation  Committee  of the  Company's  Board of
Directors: Jay M. Haft, John J. McCloy, II, and Sam Oolie. Mr. Haft, Chairman of
the  Committee,  during  such  fiscal  year,  was  Chairman  of the Board and an
employee  of the  Company,  and was a manager of OnActive  Technologies,  LLC, a
subsidiary  of the  Company.  Mr. Haft served as  President  of the Company from
November, 1994, until July, 1995, and served as its Chief Executive Officer from
November,  1994,  to July 17, 1996.  Mr. Haft has also served as a member of the
Board of  Directors of the  Company's  subsidiary,  NCT Audio,  since August 25,
1997.  Messrs.  McCloy  and Oolie  have also  served as  members of the Board of
Directors  of NCT  Audio  since  November  14,  1997,  and  September  4,  1997,
respectively.

      In October 1990, the Company's Board of Directors  authorized the issuance
of warrants to acquire 420,000 shares of common stock to each of Messrs. McCloy,
Parrella and Oolie and Ms. Lebovics,  exercisable through September 30, 1994, at
$.375 per share,  being the market  price of the  Company's  common stock on the
date of such  authorization,  based upon each such person's commitment to extend
his or her personal  guarantee  on a joint and several  basis with the others in
support  of  the  Company's  attempt  to  secure  bank  or  other  institutional
financing,  the amount of which to be covered by the guarantee  would not exceed
$350,000.  No firm  commitment  for any such  financing  has been secured by the
Company and at present no such financing is being sought.  However, each of such
persons'  commitment  to  furnish  said  guarantee  continues  in full force and
effect.

      In 1989,  the  Company  established  a joint  venture  with  Environmental
Research Information, Inc., ("ERI") to jointly develop, manufacture and sell (i)
products  intended for use solely in the process of electric  power  generation,
transmission and distribution and which reduce noise and/or vibration  resulting
from such process, (ii) personal quieting products sold directly to the electric
utility industry and (iii) products that reduce noise and/or vibration emanating
from fans and fan systems (collectively,  "Power and Fan Products"). In 1991, in
connection with the termination of this joint venture, the Company agreed, among
other things,  during the period ending  February  1996, to make payments to ERI
equal to (i) 4.5% of the  Company's  sales of Power  and Fan  Products  and (ii)
23.75% of fees derived by the Company from its license of Power and Fan Products
technology,  subject to an overall  maximum of $4,500,000.  Michael J. Parrella,
President  of  the  Company,  was  Chairman  of  ERI at the  time  of  both  the
establishment and termination of the joint venture and owns approximately 12% of
the outstanding capital of ERI. In addition, Jay M. Haft, Co-Chairman, and Chief
Executive Officer of the Company,  shares investment  control over an additional
24% of the outstanding  capital of ERI. The Company believes that the respective
terms  of  both  the  establishment  of the  joint  venture  with  ERI  and  its
termination  were comparable to those that could have been negotiated with other
persons or entities. During the fiscal year ended December 31, 1997, the Company
was not required to make any such payments to ERI under these agreements.

      In 1993, the Company  entered into three  Marketing  Agreements with Quiet
Power Systems,  Inc. ("QSI") (until March 2, 1994, "Active Acoustical Solutions,
Inc."),  a company which is 33% owned by ERI and 2% owned by Mr. Haft. Under the
terms of one of these Marketing  Agreements,  QSI has undertaken to use its best
efforts to seek research and  development  funding for the Company from electric
and natural gas utilities for applications of the Company's  technology to their
industries.  In exchange for this undertaking,  the Company has issued a warrant
to QSI to purchase  750,000 shares of Common Stock at $3.00 per share.  The last
sale price for the Common Stock reported on the NASDAQ National Market System on
May 15, 1993,  the date of the  Marketing  Agreement,  was $2.9375.  The warrant
becomes  exercisable  as to  specific  portions of the total  750,000  shares of
Common Stock upon the occurrence of defined events  relating to QSI's efforts to
obtain such funding for the Company. When such defined events occur, the Company
will  record a charge  for the  amount by which the  market  price of the Common
Stock on such  date  exceeds  $3.00  per  share,  if any.  The  warrant  remains
exercisable  as to each such portion from the  occurrence  of the defined  event
through  October 13,  1998.  As of December  31,  1994,  contingencies  had been
removed  against  525,000  warrants  resulting  in a  1993  non-cash  charge  of
$120,250.  This Marketing  Agreement also grants to QSI a non-exclusive right to
market the  Company's  products that are or will be designed and sold for use in
or with equipment used by electric and/or natural gas utilities for non-retrofit
applications in North America.  QSI is entitled to receive a sales commission on
any sales to a customer of such  products for which QSI is a procuring  cause in
obtaining  the first order from such  customer.  In the case of sales to utility
company customers, the commission is 6% of the revenues received by the Company.
On sales to original equipment manufacturers for utilities, the commission is 6%
on the gross  revenue NCT  receives on such sales from the customer in the first
year, 4% in the second year, 2% in the third year and 1% in the fourth year, and
 .5% in any future years after the fourth year. QSI is also entitled to receive a
5% commission on any research and development funding it obtains for NCT, and on
any license  fees it obtains for the Company  from the license of the  Company's
technology.  The  initial  term of  this  Agreement  is  three  years  renewable
automatically  thereafter on a  year-to-year  basis unless a party elects not to
renew.

      Under the terms of the second of the three  Marketing  Agreements,  QSI is
granted a non-exclusive  right to market the Company's products that are or will
be  designed  and sold for use in or with  feeder  bowls  throughout  the world,
excluding Scandinavia and Italy. Under this Marketing Agreement, QSI is entitled
to  receive  commissions  similar  to those  payable  to end  user and  original
equipment  manufacturer  customers  described  above.  QSI is also  entitled  to
receive  the same 5%  commission  described  above on research  and  development
funding and  technology  licenses which it obtains for the Company in the feeder
bowl area.  The initial  term of this  Marketing  Agreement  is three years with
subsequent automatic one-year renewals unless a party elects not to renew.

      Under  the terms of the  third  Marketing  Agreement,  QSI is  granted  an
exclusive  right to market the  Company's  products that are or will be designed
and  sold for use in or with  equipment  used by  electric  and/or  natural  gas
utilities for retrofit applications in North America. QSI is entitled to receive
a sales  commission on any sales to a customer of such products equal to 129% of
QSI's  marketing  expenses  attributable  to the  marketing  of the  products in
question,  which  expenses  are to be  deemed to be the  lesser of QSI's  actual
expenses or 35% of the  revenues  received by the Company  from the sale of such
products.  QSI is also  entitled  to receive a 5%  commission  on  research  and
development  funding similar to that described  above.  QSI's  exclusive  rights
continue for an indefinite term provided it meets certain  performance  criteria
relating  to  marketing  efforts  during the first two years  following  product
availability  in  commercial  quantity  and minimum  levels of product  sales in
subsequent years. In the event QSI's rights become  non-exclusive,  depending on
the  circumstances  causing  such change,  the initial term then becomes  either
three or five years from the date of this Marketing  Agreement,  with subsequent
one-year  automatic  renewals in each instance unless either party elects not to
renew.  During the fiscal  year ended  December  31,  1997,  the Company was not
required to pay any commissions to QSI under any of these Marketing Agreements.

      The Company has also entered into a Teaming Agreement with QSI under which
each  party  agrees  to  be  responsible  for  certain  activities  relating  to
transformer  quieting system development  projects to be undertaken with utility
companies.  Under this Teaming Agreement,  QSI is entitled to receive 19% of the
amounts to be received from participating  utilities and the Company is entitled
to receive 81%. During the fiscal year ended December 31, 1997, the Company made
no payments to QSI for project management services.

      In March 1995, the Company entered into a Master  Agreement with QSI under
which QSI was granted an exclusive  worldwide  license under certain NCT patents
and technical  information to market, sell and distribute  transformer  quieting
products,  turbine  quieting  products and certain other products in the utility
industry. Under the Master Agreement, QSI is to fund development of the products
by the Company and the Company is to manufacture the products.  However, QSI may
obtain the right to manufacture the products under certain circumstances include
NCT's  failure to develop the products or the failure of the parties to agree on
certain  development  matters.  In consideration of the rights granted under the
Master  Agreement,  QSI is to pay  the  Company  a  royalty  of 6% of the  gross
revenues  received  from the sale of the products and 50% of the gross  revenues
received from  sublicensing the rights granted to QSI under the Master Agreement
after QSI has recouped 150% of the costs  incurred by QSI in the  development of
the products in question.  The Company is obligated to pay similar  royalties to
QSI on its sale of the products and the  licensing of rights  covered  under the
Master  Agreement  outside the  utility  industry  and from sales and  licensing
within the  utility  industry  in the Far East.  In  addition  to the  foregoing
royalties, QSI is to pay an exclusivity fee to the Company of $750,000; $250,000
of which QSI paid to the  Company in June 1994.  The balance is payable in equal
monthly  installments of $16,667 beginning in April 1995. QSI's exclusive rights
become  non-exclusive  with  respect  to all  products  if it  fails  to pay any
installment  of the  exclusivity  fee when due and QSI loses  such  rights  with
respect  to any  given  product  in the  event it fails to make any  development
funding payment applicable to that product.  The Master Agreement supersedes all
other agreements  relating to the products  covered under the Master  Agreement,
including those agreements between the Company and QSI described above.

      Immediately  following the execution to the Master Agreement,  the Company
and QSI entered into a letter  agreement  providing for the  termination  of the
Master  Agreement  at the  Company's  election if QSI did not pay  approximately
$500,000 in payables then owed to the Company by May 15, 1995.

      In April 1995, the Company and QSI entered into another  letter  agreement
under  which QSI  agreed to  forfeit  and  surrender  the five year  warrant  to
purchase  750,000  shares of the Company's  common stock issued to QSI under the
first Marketing Agreement described above. In addition,  the $500,000 balance of
the  exclusivity  fee  provided  for under the Master  Agreement  was reduced to
$250,000 to be paid in 30 monthly installments of $8,333 each and the payment of
the  indebtedness  to be  paid  under  the  letter  agreement  described  in the
preceding  paragraph  was revised to be the earlier of May 15, 1996, or the date
of closing of a financing of QSI in an amount exceeding $1.5 million,  whichever
first occurs.  Such  indebtedness  is to be evidenced by a promissory  note, non
payment  of which is to  constitute  an event of  termination  under the  Master
Agreement.

      On May 21, 1996, the Company and QSI entered into another letter agreement
extending the time by which the payments from QSI to the Company under the April
1995  letter  agreement  described  above were to be made.  Under the letter the
payment of certain  arrearages in the payment of the  exclusivity  fee was to be
made not later than June 15, 1996, with the balance  continuing to be payable by
monthly payments of $8,333 and as provided in the May 1995 letter agreement.  In
addition the payment of the other indebtedness owed by QSI to the Company was to
be paid by a payment  of $25,000 at the time QSI  obtained  certain  anticipated
financing with the balance paid by monthly payments of $15,000 each.  Default in
QSI's timely payment of any of the amounts  specified in the May 21, 1996 letter
agreement was to cause the immediate termination of the Master Agreement and all
rights granted to QSI thereunder.

      On  April 9,  1997,  the  Company  and QSI  entered  into  another  letter
agreement  revising  the payment  schedule  set forth in the May 21, 1996 letter
agreement  applicable to the payment of the indebtedness  owed to the Company by
QSI other than the unpaid  portion of the  exclusivity  fee.  Under the  revised
schedule,  the full  amount  of such  indebtedness  is to be paid by an  initial
payment  of  $125,000  on or before  April 21,  1997,  and a second  payment  of
$200,000 upon the closing of a proposed  financing in June 1997 or on January 1,
1998, whichever first occurs. The Company is also entitled to receive 15% of any
other  financing  obtained by QSI in the interim as well as interest at the rate
of 10% per annum on the unpaid  amount of such  indebtedness  from July 1, 1997.
The letter  agreement also provides for the continuation of QSI's payment of the
exclusivity fee in accordance with the earlier letter  agreements as well as the
payment of $11,108 by April 21, 1997,  for headset  products sold by the Company
to QSI in 1996. In the event of a default in QSI's timely  payment of any of the
amounts  specified  in the April 9, 1997 letter  agreement,  the Company has the
right to cause the termination of the Master Agreement and all rights granted by
QSI thereunder upon 10 days notice of termination to QSI.

      As of April 15, 1998,  QSI has paid all  installments  due and payable for
the exclusivity fee and owes the Company $150,000.00 which was due on January 1,
1998,  and is fully  reserved.  Other  than as  described  above,  owes no other
amounts to the Company.

      The  Company  believes  that  the  terms  of its  agreements  with QSI are
comparable  to  those  that it could  have  negotiated  with  other  persons  or
entities.




<PAGE>


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT

      The  following  table  sets  forth,  as of  April  24,  1998,  information
concerning the shares of common stock  beneficially owned by each person who, to
the knowledge of the Company, is the holder of 5% or more of the common stock of
the Company, each Director,  and each Named Executive Officer, and all executive
officers  and  Directors of the Company as a group.  Except as otherwise  noted,
each  beneficial  owner has sole investment and voting power with respect to the
listed shares.




                                         Amount and             Approximate
                                          Nature of              Percentage
                                         Beneficial              of Class
      Name of Beneficial Owner          Ownership (1)               (1)
-------------------------------------  ------------------        ------------

Michael J. Parrella                            2,750,333   (2)         2.03%
John J. McCloy                                 3,661,591   (3)         2.72%
Jay M. Haft                                    1,282,000   (4)         0.96%
Sam Oolie                                        565,000   (5)         0.42%
Morton Salkind                                    75,000   (6)         0.06%
Stephan Carlquist                                150,000   (7)         0.11%
Irene Lebovics                                 1,388,067   (8)         1.04%
Cy E. Hammond                                    319,718   (9)         0.24%
John B. Horton                                   559,417  (10)         0.42%
Stephen J. Fogarty                                     -                  -
All Executive Officers and Directors          10,876,126  (11)         7.72%
    as a Group (10 persons)
Carole Salkind                                 9,542,143  (12)         7.18%
Her Majesty The Queen,                        11,250,000  (13)         8.46%
    Province of Alberta, Canada

     (1)  Assumes the exercise of currently  exercisable  outstanding options or
          warrants  to  purchase  shares of common  stock.  The percent of class
          ownership  is  calculated  separately  for  each  person  based on the
          assumption  that the  person  listed on the table  has  exercised  all
          options and warrants  shown for that person,  but that no other holder
          of options or warrants has exercised such options or warrants.

     (2)  Includes  862,500  shares  issuable  upon the  exercise  of  currently
          exercisable  warrants and 1,874,500  shares issuable upon the exercise
          of currently  exercisable  options.  Does not include 7,500,000 shares
          issuable  upon the exercise of options which become  exercisable  upon
          stockholder  approval of an amendment to the 1992 Plan  increasing the
          number of shares of common  stock  covered by the 1992 Plan (the "1992
          Plan Amendment").



     (3)  Includes  862,500  shares  issuable  upon the  exercise  of  currently
          exercisable  warrants and 900,000 shares issuable upon the exercise of
          currently   exercisable  options.  Does  not  include  150,000  shares
          issuable  upon the exercise of options which become  exercisable  upon
          stockholder approval of the 1992 Plan Amendment.

     (4)  Includes  218,500  shares  issuable  upon the  exercise  of  currently
          exercisable  warrants,  10,000  restricted shares and 1,053,500 shares
          issuable upon the exercise of currently  exercisable options. Does not
          include  700,000  shares  issuable  upon the exercise of options which
          become  exercisable  upon  stockholder   approval  of  the  1992  Plan
          Amendment.

     (5)  Includes 25,000 restricted shares and 290,000 shares issuable upon the
          exercise of currently  exercisable  options.  Does not include 150,000
          shares issuable upon the exercise of options which become  exercisable
          upon stockholder approval of the 1992 Plan Amendment.

     (6)  Includes  25,000  shares  issuable  upon  the  exercise  of  currently
          exercisable  options and 25,000 options to purchase shares in 1998 and
          1999, respectively.  Does not include 150,000 shares issuable upon the
          exercise of options which become exercisable upon stockholder approval
          of the 1992 Plan Amendment.


     (7)  Includes  150,000  shares  issuable  upon the  exercise  of  currently
          exercisable options. Does not include 150,000 shares issuable upon the
          exercise of options which become exercisable upon stockholder approval
          of the 1992 Plan Amendment.

     (8)  Includes  201,250  shares  issuable  upon the  exercise  of  currently
          exercisable  warrants and 391,300 shares issuable upon the exercise of
          currently  exercisable  options.  Does not  include  1,000,000  shares
          issuable  upon the exercise of options which become  exercisable  upon
          stockholder approval of the 1992 Plan Amendment.

     (9)  Includes  25,000  shares  issuable  upon  the  exercise  of  currently
          exercisable  warrants and 294,718 shares issuable upon the exercise of
          currently   exercisable  options.  Does  not  include  325,000  shares
          issuable  upon the exercise of options which become  exercisable  upon
          stockholder approval of the 1992 Plan Amendment.

     (10) Includes  20,000  shares  issuable  upon  the  exercise  of  currently
          exercisable  warrants and 539,417 shares issuable upon the exercise of
          currently   exercisable  options.  Does  not  include  175,000  shares
          issuable  upon the exercise of options which become  exercisable  upon
          stockholder approval of the 1992 Plan Amendment.

      (11) Includes  2,189,750  shares issuable to 6 executive  officers and
          directors of the Company  upon the  exercise of currently  exercisable
          warrants,  5,643,435  shares  issuable to 10  executive  officers  and
          directors of the Company  upon the  exercise of currently  exercisable
          options, 35,000 restricted shares issued to 2 directors of the Company
          and 50,000 shares issuable to 1 director of the Company, 25,000 shares
          in each of the years  1998 and 1999,  respectively.  Does not  include
          10,550,000 sahres issuable t o 10 executive  officers and directors of
          the Company upon the exercise of options which become exercisable upon
          stockholder approval of the 1992 Plan Amendment.

     (12) Carole Salkind's  address is 801 Harmon Cove Towers,  Secaucus,  New 
          Jersey 07094.

     (13) Her Majesty the Queen,  Province of Alberta,  Canada's address is Room
          530, Terrace Building, 9515 107th Street, Edmondton, Alberta T5K 2C3.









<PAGE>


                                      SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                        NOISE CANCELLATION TECHNOLOGIES, INC.


                        By:   /s/ CY E. HAMMOND
                              -------------------------------
                              Cy E. Hammond
                              Senior Vice President and
                              Chief Financial Officer

April 30, 1998