<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-K/A

(Mark One)

(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997.

     OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [FEE REQUIRED]


FOR THE TRANSITION PERIOD FROM __________________ TO _________________


COMMISSION FILE NUMBER: 0-18280
                        -------


                           DIGITAL SOUND CORPORATION
                 ---------------------------------------------
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


             CALIFORNIA                                      95-3222624
  ----------------------------------                    ---------------------
   (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER)
   INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)


6307 CARPINTERIA AVENUE, CARPINTERIA, CALIFORNIA                93013
------------------------------------------------        ----------------------
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                  (ZIP CODE)


                                (805) 566-2000
                      ----------------------------------
             (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE
                                      ----

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                           COMMON STOCK, NO PAR VALUE
                           --------------------------
                                (TITLE OF CLASS)


Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


   Yes      X                                  No  
        ----------                                 -----------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]

The aggregate market value of Registrant's voting stock held by non-affiliates
of the Registrant as of January 22, 1998 was approximately $28,967,294

The number of shares outstanding of Registrant's common stock as of January 22,
1998: 20,561,593.


Documents Incorporated by Reference:
------------------------------------

Part of the following document is incorporated by reference to Part III of the
Form 10-K Report: Proxy Statement for Registrant's 1998 Annual Meeting of
Stockholders (the "1998 Proxy Statement").
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                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 18, 1998.


     DIGITAL SOUND CORPORATION

     By:    /s/ B. Robert Suh
        ---------------------
        B. Robert Suh
        Vice President, Finance and
        Chief Financial Officer


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed by the following persons in the
capacities and on the dates indicated.

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<CAPTION>

     Name                     Title                        Date
     ----                     -----                        ----
<S>                          <C>                         <C>

Chief Executive Officer:

                              President,
/s/ Mark C. Ozur              Chief Executive Officer,   March 18, 1998
-------------------------     and Director
Mark C. Ozur


Chief Financial Officer:


/s/ B. Robert Suh             Vice President, Finance    March 18, 1998
-----------------------       Chief Financial Officer
Robert Suh


Directors:


/s/ John D. Beletic           Director                   March 18, 1998
--------------------------
John D. Beletic


/s/ Bandel L. Carano          Director                   March 18, 1998
-------------------------
Bandel L. Carano


/s/ J. David Hann             Director                   March 18, 1998
-------------------------
J. David Hann


/s/ Scot B. Jarvis            Director                   March 18, 1998
------------------------
Scot B. Jarvis


/s/ Cameron D. Myhrvold       Director                   March 18, 1998
---------------------------
Cameron D. Myhrvold


/s/ Frederick J. Warren       Director                   March 18, 1998
---------------------------
Frederick J. Warren

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