SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

     |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 for the Quarterly Period Ended March 31, 2002

                                       OR

     |_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
   Exchange Act of 1934 for the transition period from _________ to _________

                         Commission File Number: 0-23723

                               Ambient Corporation
        (Exact name of small business issuer as specified in its charter)

            Delaware                                     98-0166007
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

               1033 Beacon Street, Brookline, Massachusetts, 02446
          (Address of principal executive offices, including zip code)

                                  617 735-9395
                (Issuer's telephone number, including area code)

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

      As of May 15, 2002 Ambient Corporation had outstanding 26,177,384 shares
of common stock, par value $.001 per share.

      Transitional Small Business Disclosure Format (Check one) Yes | | No |X|


<PAGE>

                                      Index

PART I -- FINANCIAL INFORMATION

Item 1 -- Financial Statements*

         Consolidated Balance Sheet
                  March 31, 2002 and December 31, 2001                         1

         Consolidated Statement of Operations
                  For the three months ended March 31, 2002 and 2001           2

         Consolidated Statement of Cash Flows
                  For the three months ended March 31, 2002 and 2001           3

         Notes to Consolidated Financial Statements                            4

Item 2--Plan of Operations                                                     5

PART II--OTHER INFORMATION

Item 1--  Legal Proceedings                                                    7

Item 2--  Changes in Securities                                                7

Item 3--  Defaults upon Senior Securities                                      7

Item 4--  Submission of Matters to a vote of Security Holders                  7

Item 5--   Other Information                                                   7

Item 6--  Exhibits and Reports on Form 8-K                                     7

Signatures                                                                     8

      *The Balance Sheet at December 31, 2001 has been taken from audited
financial statements at that date. All other financial statements are unaudited.


<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    March 31,     December 31,
                                                                      2002            2001
                                                                  ------------    ------------
ASSETS                                                             (Unaudited)
<S>                                                               <C>             <C>
CURRENT ASSETS
     Cash and  cash equivalents                                   $      9,891    $    177,340
     Receivables and prepaid expenses                                   55,589          63,590
                                                                  ------------    ------------

               Total current assets                                     65,480         240,930


Loan receivable, Officer                                                    --          70,000
Property and equipment, net                                            138,787         153,654
                                                                  ------------    ------------

               Total assets                                       $    204,267    $    464,584
                                                                  ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable                                             $    633,180    $    431,501
     Accrued expenses and other current liabilities                    417,215         211,255
     Advances (NOTE 2)                                                 325,000              --
                                                                  ------------    ------------

               Total current liabilities                             1,375,395         642,756
                                                                  ------------    ------------

STOCKHOLDERS' DEFICIT
     Convertible Preferred Stock, $.001 par value;
       5,000,000 shares authorized; none issued and outstanding             --              --
    Common stock, $.001 par value;
      100,000,000 shares authorized; 26,177,384
        issued and outstanding                                          26,178          26,178
     Additional paid-in capital                                     59,939,702      59,317,682
     Deficit accumulated during the development stage              (60,314,965)    (58,748,997)
      Less: Note receivable - stockholder                             (200,000)       (200,000)
      Less: deferred compensation                                     (622,043)       (573,035)
                                                                  ------------    ------------

               Total stockholders' deficit                          (1,171,128)       (178,172)
                                                                  ------------    ------------

               Total liabilities and stockholders' deficit        $    204,267    $    464,584
                                                                  ============    ============
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       -1-
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                        Cumulative
                                                                                  Three               From Inception
                                                                               Months Ended                 to
                                                                                 March 31,               March 31,
                                                                           2002            2001            2002
                                                                       ------------    ------------    ------------
Expenses                                                                (Unaudited)     (Unaudited)     (Unaudited)
<S>                                                                    <C>             <C>             <C>
Research and Development (1)                                           $    282,533    $  1,602,473    $  5,324,223
Less - Participation by the Office of the
       Chief Scientist of the State of Israel                                    --              --         558,195
                                                                       ------------    ------------    ------------
                                                                            282,533       1,602,473       4,766,028

Operating, general and administrative expenses (1)                          710,512         817,388      12,263,619
Stock based compensation - net                                              573,012        (137,721)     16,771,725
                                                                       ------------    ------------    ------------

Total expenses                                                            1,283,524         679,667      29,035,344
                                                                       ------------    ------------    ------------

Operating loss                                                           (1,566,057)     (2,282,140)    (33,801,372)

Legal settlement                                                                 --              --      (1,512,500)
Interest expense                                                                 --              --        (675,513)
Noncash financing expense                                                        --              --      (1,600,000)
Beneficial conversion feature of convertible debt                                --              --      (3,878,260)
Amortization of deferred financing costs                                         --              --      (5,752,015)
Interest income                                                                  89          68,200         320,928
Write-off of convertible note receivable                                         --              --        (490,000)
Company's share in net losses of affiliate                                       --        (151,522)     (1,352,207)
                                                                       ------------    ------------    ------------

Loss before minority interest and extraordinary item                     (1,565,968)     (2,365,462)    (48,740,939)

Minority interest in subsidiary loss                                             --              --          25,000
                                                                       ------------    ------------    ------------

Loss before extraordinary item                                           (1,565,968)     (2,365,462)    (48,715,939)

Extraordinary item - loss on extinguishment of debt                              --              --      (9,778,167)
                                                                       ------------    ------------    ------------

Net loss                                                                 (1,565,968)     (2,365,462)    (58,494,106)

Deemed dividends on convertible preferred stock                                  --              --      (1,820,859)
                                                                       ------------    ------------    ------------

Net loss attributable to common stockholders                           $ (1,565,968)   $ (2,365,462)   $(60,314,965)
                                                                       ============    ============    ============

Basic and diluted loss per share:
         Net loss before  extraordinary item                           $      (0.06)   $      (0.11)
         Extraordinary loss from extinguishment of debt                          --              --
                                                                       ------------    ------------

      Net loss                                                         $      (0.06)   $      (0.11)
                                                                       ============    ============

Weighted average number of shares outstanding                            26,177,384      21,950,238
                                                                       ============    ============

(1) Excludes non-cash,  stock based compensation expense as follows:
    Research and development                                           $    259,497    $         --    $  1,102,791
    Operating, general and administrative, net                              313,515        (137,721)     15,668,934
                                                                       ------------    ------------    ------------

                                                                       $    573,012    $   (137,721)   $ 16,771,725
                                                                       ============    ============    ============
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       -2-
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                        Cumulative
                                                                                                   Three              From Inception
                                                                                                Months Ended                to
                                                                                                  March 31,              March 31,
                                                                                             2002           2001           2002
                                                                                         ------------   ------------   ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          (Unaudited)    (Unaudited)    (Unaudited)
<S>                                                                                      <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                            $ (1,565,968)  $ (2,365,462)  $(60,314,965)
     Adjustments to reconcile net loss to net cash used by operating activities:
         Depreciation and amortization                                                         22,212         14,910        349,796
         Amortization of note discount                                                             --             --      5,107,144
         Cancellation of Officer loans in settlement of emplyment contract                     70,000             --        724,447
         Loss on sale of fixed assets                                                              --             --         20,135
         Beneficial conversion feature of convertible debt                                         --             --      3,878,260
         Deemed dividends on convertible preferred stock                                           --             --      1,820,859
         Financing,  consulting and other expenses paid via the
                  issuance of common stock and warrants                                       573,012       (141,823)    30,115,603
         Increase (decrease) in net liability for severance pay                                    --             --         15,141
         Accrued interest on loans and notes payable                                               --             --        210,016
         Company's share in net losses of affiliates                                               --        151,522      1,352,207
         Minority interest in subsidiary loss                                                      --             --        (25,000)
        Write-off of convertible note receivable                                                   --             --        400,000
         Write-down of long term investment                                                        --             --        835,000
         Write-off of fixed assets                                                                 --             --        136,066
          Increase (decrease) in cash attributable to changes in assets and liabilities
              Receivables and prepaid expenses                                                  8,001        (26,253)        33,641
              Prepaid research and development                                                     --       (700,000)
              Accounts payable                                                                201,679            853        435,034
              Other current liabilities                                                       205,960       (302,100)       507,871
                                                                                         ------------   ------------   ------------

Net cash used in operating activities                                                        (485,104)    (3,368,353)   (14,398,745)
                                                                                         ------------   ------------   ------------

CASH FLOWS FROM  INVESTING ACTIVITIES
         Loan provided to another company                                                          --             --       (835,000)
         Purchase of convertible promissory note                                                   --       (150,000)      (400,000)
         Investment in affiliated company                                                          --             --       (375,000)
         Additions to property and equipment                                                   (7,345)       (35,392)      (686,019)
         Proceeds from disposal of fixed assets                                                    --             --         42,100
         Loans to Officers                                                                         --             --     (2,137,677)
         Repayment of loans to Officer                                                             --             --      1,431,226
         Decrease in restricted cash                                                               --             --             --
                                                                                         ------------   ------------   ------------

Net cash used in investing activities                                                          (7,345)      (185,392)    (2,960,370)
                                                                                         ------------   ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
         Net proceeds from issuance of share capital                                               --        312,605      4,888,317
         Proceeds from advances                                                               325,000                       325,000
         Proceeds from issuance of notes payable                                                   --             --      1,000,000
         Net proceeds from issuance of convertible debentures                                      --             --      9,148,262
         Repayment of notes payable                                                                --             --       (400,000)
         Proceeds of loans from shareholders, net                                                  --             --        919,600
         Repayment of loans from shareholders                                                      --             --       (968,000)
         Proceeds from long-term bank credit                                                       --             --         95,969
         Repayment of long-term bank credit                                                        --        (10,243)       (87,996)
         Increase (decrease) in short term bank credit                                             --             --        (32,004)
         Public offering of common stock                                                           --             --      3,433,027
         Repayment of short-term debt                                                              --             --       (250,000)
         Proceeds from short-term debt                                                             --             --        274,038
         Loans to affiliate                                                                        --             --       (977,207)
                                                                                         ------------   ------------   ------------

Net cash provided by financing activities                                                     325,000        302,362     17,369,006
                                                                                         ------------   ------------   ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                             (167,449)    (3,251,383)         9,891

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                               177,340      7,052,929             --
                                                                                         ------------   ------------   ------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                                $      9,891   $  3,801,546   $      9,891
                                                                                         ============   ============   ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
</TABLE>


                 See Notes to Consolidated Financial Statements.


                                       -3-
<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1 - Basis of Presentation

      The accompanying unaudited consolidated financial statements of Ambient
      Corporation, and its Subsidiaries (collectively "the Company") have been
      prepared in accordance with generally accepted accounting principles for
      interim financial information and with Item 310(b) of Regulation SB.
      Accordingly, they do not include all of the information and footnotes
      required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary for a fair
      presentation have been included. Operating results for the three months
      ended March 31, 2002, are not necessarily indicative of the results that
      may be expected for the year ending December 31, 2002. These unaudited
      consolidated financial statements should be read in conjunction with the
      audited consolidated financial statements and footnotes thereto included
      in the Company's Form 10-KSB/A for the year ended December 31, 2001, as
      filed with the Securities and Exchange Commission

      Going Concern

      The accompanying financial statements have been prepared assuming that the
      Company will continue as a going-concern which contemplates the
      realization of assets and the satisfaction of liabilities in the normal
      course of business. The Company has a limited operating history and has
      sustained losses since its inception. As shown in the accompanying
      financial statements, the Company incurred a net loss of $1,565,968 for
      the three months ended March 31, 2002. The future of the Company is
      dependent upon future profitable operations from the commercial success of
      its proposed comprehensive communication infrastructure utilizing the
      electrical power distribution grid as a high-speed telecommunication
      medium. Management is actively seeking additional capital that will
      provide funds needed to fund the research and development in order to
      fully implement its business plans. In addition, management has
      established and implemented plans designed to reduce the monthly level of
      operating expenditures.

      In April through May 2002, in connection with a potential financing, the
      Company was advanced $100,000, which must be repaid by September 2002 if
      such financing is not successful.

      There is no assurance, however, that additional capital will be available
      to the Company and the inability to obtain such financing would have a
      material adverse effect on the Company. The consolidated financial
      statements do not include any adjustments that might result from the
      outcome of this uncertainty and these adjustments may be material.

Note 2 - Research and Development Agreement

      Effective February 7, 2002 the Company and Consolidated Edison Company of
      New York, Inc. ("CECONY"), entered into a Research and Development
      Agreement to further develop and test the Company's proposed high speed
      powerline communications technology. Pursuant to the agreement, CECONY
      advanced $325,000 to the Company which will only be repayable if the Small
      Field Trial Phase, as defined, is deemed unsuccessful. In connection with
      this advance, the Company granted a first priority security interest and
      lien on all of its assets. The Company will have sole rights to any
      jointly developed intellectual property; however CECONY will be entitled
      to a 2.5% royalty, based on the Company's total net revenues, for a
      ninety-nine year period beginning from the date of agreement. Royalty
      payments are only due if the Company has positive cash flow and will be
      payable quarterly, in arrears, and do not accrue from one quarter to
      another during periods of negative cash flow.

Note 3 - Termination Agreement

      The Company entered into an agreement with its Chief Financial Officer and
      a director pursuant to which such officer resigned from all positions held
      with the Company. Under the agreement, in consideration of the waiver by
      such officer of certain payments due to him under the employment agreement
      with the Company the Company forgave the a loan previously granted in the
      amount of $70,000, and agreed to remit to him up to $35,000, subject to
      the Company realizing net proceeds of $500,000 to $1 million from future
      financings. The Company also agreed to extend the life on a total of
      165,000 vested employee stock options and to grant an additional 80,000
      options exercisable at $.50 per share.


                                       -4-
<PAGE>

Item 2. Plan of Operation

      The following discussion and expositions should be read in conjunction
with the financial statements and related notes contained elsewhere in this form
10-ksb/a. certain statements made in this discussion are "forward-looking
statements" within the meaning of the private securities litigation reform act
of 1995. Forward-looking statements can be identified by terminology such as
"may", "will", "should", "expects", "intends", "anticipates", "believes",
"estimates", "predicts", or "continue" or the negative of these terms or other
comparable terminology and include, without limitation, statements below
regarding: the company's intended business plans; expectations as to product
performance; intentions to acquire or develop other technologies; and belief as
to the sufficiency of cash reserves. Because forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to, the
competitive environment generally and in the company's specific market areas;
changes in technology; the availability of and the terms of financing,
inflation, changes in costs and availability of goods and services, economic
conditions in general and in the company's specific market areas, demographic
changes, changes in federal, state and /or local government law and regulations;
changes in operating strategy or development plans; the ability to attract and
retain qualified personnel; and changes in the company's acquisitions and
capital expenditure plans. Although the company believes that expectations
reflected in the forward-looking statements are reasonable, it cannot guarantee
future results, performance or achievements. Moreover, neither the company nor
any other person assumes responsibility for the accuracy and completeness of
these forward-looking statements. The company is under no duty to update any
forward-looking statements after the date of this report to conform such
statements to actual results.

Overview

      Ambient Corporation ("Ambient" or the "Company") is a development stage
company engaged in the architecture, design, development and implementation of a
proposed comprehensive high-speed communication infrastructure that is designed
to utilize existing electrical power distribution lines as a high-speed
communication medium, thereby enabling existing electrical distribution systems
to function as 'broadband pipelines'. Although historically used for low speed
data communication, existing electrical power lines have not been used for
high-speed data transmission, due to certain technological and infrastructure
limitations. Ambient has designed and developed proprietary and patent pending
technologies designed to overcome these limitations. The Company's proposed
powerline communication technology solution entails partnering arrangements with
leading telecommunication and other technology companies in order to complete
the design, development, testing and commercialization of its proposed solution.

      As a development stage company, Ambient has a limited operating history
upon which an evaluation of its prospects can be made. The Company has been in
the powerline technology business since March 2000. The Company's prospects must
therefore be evaluated in light of the problems, expenses, delays and
complications associated with a new business.

      For the three months ended March 31, 2002, the Company incurred net losses
aggregating $1.6 million (which includes $573,000 of stock based compensation)
reflecting principally general and administrative expenses and research and
development expenses. The Company expects to incur significant up-front
expenditures and operating losses are expected to continue for the foreseeable
future. There can be no assurance that Ambient can be operated profitably in the
future. The Company's continuation as a going-concern is dependent upon, among
other things, its ability to obtain additional financing when and as needed, and
to generate sufficient cash flow to meet its obligations on a timely basis.

      A portion of the Company's operating expenses are attributable to non-cash
charges associated with the compensation of consultants and senior personnel
through the issuance of stock options and stock grants. Certain employee stock
options, which were subject to variable accounting treatment and unvested
non-employee stock options, which are re-measured periodically, may result in
unpredictable stock-based compensation dependent on fluctuations in quoted
prices for the Company's common stock. Stock-based compensation is non-cash and
will therefore have no impact on the Company's cash flows or liquidity.

      The Company is in the process of designing, developing and testing its
proposed high-speed powerline communication solution. The Company intends that
its proposed solution will utilize proprietary patent-pending technology
designed and developed by the Company as well as the design and development by
third-party telecommunications and other technology of integral components and
other technologies used in the solution. In the course of 2001, the Company has
entered into a series of development and testing agreements with leading
technology companies and utilities for the purpose of furthering the design,
development, testing and commercialization of primary components and
technologies included in its solution. Subject to raising capital in amounts
sufficient to realize its business plans, the Company intends to focus its
efforts in the next twelve months to completing the design, development and
testing of its proposed powerline communications solution such that such
solution is


                                       -5-
<PAGE>

capable of being commercially deployed.

      In February 2002, the Company and Consolidated Edison Company of New York,
Inc. ("CECONY"), entered into a research and development agreement whereby
Ambient and CECONY have agreed to cooperate in the further research and
development of high-speed communication via electric power lines. Expanding upon
the informal research and development arrangement that has existed between the
Company and CECONY from mid 2000, the agreement contemplates that CECONY and
Ambient will pool their efforts to further develop and test the feasibility of
Ambient's proposed high-speed powerline communications technology with the goal
of commercialization of this technology. Under the Agreement with CECONY, they
advanced $325,000 to the Company in February 2002 in order to commence a
demonstration of the Company's proposed solution. The Company has agreed to
grant to CECONY a first priority lien on all of its assets to secure the
repayment of the advance. The Company will hold sole title to all jointly
developed technology. CECONY will be entitled to a 2.5% royalty, based on net
revenues from powerline equipment and related services for a ninety-nine year
period, commencing on the date on which the agreement was signed. Royalty
payments are only due if the Company has positive cash flow and will be payable
quarterly, in arrears, and do not accrue from one quarter to another during
periods of negative cash flow.

      In December 2001, the Company entered into an agreement with Southern
Telecom ("STI"), a subsidiary of Southern Company, to develop certain hardware,
identify and design the communications and utility systems architecture and the
conduct of field trials. As additional consideration for the licenses granted,
in January 2002, the Company issued to STI, warrants to purchase up to 2,684,000
shares of the Company's Common Stock, exercisable through December 31, 2004 at a
per share exercise price of $.20. The terms of the warrant provide that the if
the Company's Common Stock closes at or above $1.50 for 10 consecutive trading
days, then the warrant exercise period is reduced and the warrant may be
exercised only through the 90th day following such time.

Liquidity

      The Company will need to raise additional capital on an immediate basis in
order to continue in business. If it is unable to raise at least $1.0 million on
an immediate basis, the Company will likely cease to operate as a going entity.
Management believes that the Company will need to raise at least $3 million
dollars in order to complete the design, development, and testing of the
Company's proposed powerline communication such that the solution can be ready
to be deployed.

      The Company is actively seeking additional capital in the form of private
sales of equity or debt with equity features necessary to fund the Company's
research and development activities, including its current obligations pursuant
to development agreements with third parties, in order to continue operations
and implement its business plans. In April through May 2002, in connection with
a potential financing, the Company was advanced $100,000, which amount the
Company is required to repay by September 2002 if such financing effort is not
successful. No assurance can be provided that any funds will in fact be raised
through such efforts. The financial statements accompanying this report for the
three-month period ended March 31, 2002, includes an explanatory paragraph
relating to the uncertainty of the Company's ability to continue as a going
concern, which may make it more difficult for the Company to raise additional
capital. At the present time, the Company has no commitments for any such
financing, and there can be no assurance that additional capital will be
available to the Company on terms acceptable to it. Furthermore, it is
anticipated that any such financing will have a dilutive effect on existing
stockholders. The inability to obtain such financing will have a material
adverse effect on the Company, its operations and future business prospects.


                                       -6-
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

      On November 9, 2001, an alleged shareholder of the Company, commenced a
derivative lawsuit in the Court of Chancery of the State of Delaware against
certain of the Company's current and former directors as well as its former
chief executive officer, and the Company as a nominal defendant. The complaint
alleges that the individual defendants breached their fiduciary duties with
respect to certain transactions identified in the complaint, resulting in
damages to the Company. The complaint seeks rescission of certain transactions,
unspecified damages and recovery of plaintiff's fees and costs. On April 1,
2002, all defendants moved to dismiss the complaint for failure to state a claim
upon which relief may be granted and for failure to adequately plead demand
futility. The Company does not believe the lawsuit will have a material adverse
effect on its financial condition or operations.

Item 2. Changes in Securities

Sale of Unregistered Securities

      There were no issuances for sale of any unregistered securities by the
Company during the first quarter of 2002.

Item 3. Defaults Upon Senior Securities.

      None.

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

      None.

Item 5. Other Information.

      None.

Item 6. Exhibits and Reports on Form 8-K.

      (a) Exhibits

            None.

      (b) Reports on Form 8-K

            (i) Report on Form 8-K filed on February 14, 2002

            (ii) Report on Form 8-K filed on January 15, 2002


                                       -7-
<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: May 15, 2002                        AMBIENT CORPORATION


                                          /s/ John J. Joyce
                                          -----------------

                                          Chief Executive and Financial Officer


                                      -8-