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, 2001

                                       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
  incorporation or organization)                           Identification No.)

              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, 2001, Ambient Corporation had outstanding 23,125,794 shares
of common stock, par value $.001 per share.

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

<PAGE>

                               AMBIENT CORPORATION
                          (A Development Stage Company)
                                      Index

PART I - FINANCIAL INFORMATION:

Item 1.  Financial Statements *
         Consolidated Balance Sheet
                  March 31, 2001 and December 31, 2000                        1

         Consolidated Statement of Operations
                  For the three months ended March 31, 2001 and 2000          2

         Consolidated Statement of Cash Flows
                  For the three months March 31, 2001 and 2000                3

         Notes to Consolidated Financial Statements                           4

Item 2.  Plan of Operation                                                    7

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                    11

Item 2. Changes in Securities                                                11

Item 3. Defaults upon senior securities                                      11

Item 4. Submission of Matters to a Vote of Security Holders                  11

Item 5. Other Information                                                    11

Item 6. Exhibits and Reports on Form 8-k                                     11

Signatures                                                                   13

* The Balance Sheet at December 31, 2000 has been taken from the 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,
                                                                        2001              2000
                                                                        ----              ----
ASSETS                                                              (Unaudited)        (Audited)
<S>                                                                 <C>               <C>
CURRENT ASSETS
     Cash and cash equivalents                                      $  3,801,546      $  7,052,929
     Convertible note receivable                                         400,000           250,000
     Prepaid research and development                                    700,000                --
     Receivables and prepaid expenses                                    270,995           244,742
                                                                    ------------      ------------

               Total current assets                                    5,172,541         7,547,671

Long-term loan and investment                                            155,677           155,677
Investment in affiliate                                                  865,320         1,016,842
Property and equipment, net                                              164,749           144,267
                                                                    ------------      ------------

               Total assets                                         $  6,358,287      $  8,864,457
                                                                    ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Short term borrowings                                          $         --      $     10,243
     Accounts payables                                                   231,323           201,888
     Accrued expenses and other current liabilities                      327,217           657,899
                                                                    ------------      ------------

               Total current liabilities                                 558,540           870,030
                                                                    ------------      ------------

STOCKHOLDERS' EQUITY
     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; 22,775,794 and 21,375,794
        issued and outstanding, respectively                              22,776            21,376
     Additional paid-in capital                                       61,444,378        61,133,173
     Deficit accumulated during the development stage                (51,084,876)      (48,719,414)
      Less: deferred compensation                                     (4,582,531)       (4,440,708)
                                                                    ------------      ------------

               Total stockholders' equity                              5,799,747         7,994,427
                                                                    ------------      ------------

               Total liabilities and stockholders' equity           $  6,358,287      $  8,864,457
                                                                    ============      ============
</TABLE>

                 See Notes to Consolidated Financial Statements.


                                      -1-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                               Cumulative
                                                                    Three Months             From Inception
                                                                       Ended                        to
                                                                      March 31,                  March 31,
                                                                2001              2000             2001
                                                                ----              ----             ----
Expenses                                                    (Unaudited)       (Unaudited)       (Unaudited)
<S>                                                         <C>               <C>               <C>
Research and Development                                    $  1,602,473      $     69,030      $  3,787,348
Less - Participation by the Office of the
       Chief Scientist of the State of Israel                         --                --           558,195
                                                            ------------      ------------      ------------

                                                               1,602,473            69,030         3,229,153

Operating, general and administrative
    expenses (excludes $831,358 and $1,031,227
    of stock based compensation in 2001
    and 2000, respectively)                                      817,388           109,113         7,023,533
Stock based compensation - net                                  (137,721)        1,031,227        15,647,341
                                                            ------------      ------------      ------------

Total expenses                                                   679,667         1,140,340        22,670,874
                                                            ------------      ------------      ------------

Operating loss                                                (2,282,140)       (1,209,370)      (25,900,027)

Legal settlement                                                      --        (1,512,500)       (1,512,500)
Interest expense                                                      --           (20,652)         (674,628)
Noncash financing expense                                             --                --        (1,600,000)
Beneficial conversion feature of convertible debt                     --          (285,417)       (3,878,260)
Amortization of deferred financing costs                              --          (115,305)       (5,752,015)
Interest income                                                   68,200                --           293,467
Company's share in net losses of affiliate                      (151,522)          (15,378)         (486,887)
                                                            ------------      ------------      ------------

Loss before minority interest and extraordinary item          (2,365,462)       (3,158,622)      (39,510,850)

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

Loss before extraordinary item                                (2,365,462)       (3,158,622)      (39,485,850)

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

Net loss                                                      (2,365,462)      (12,936,789)     $(49,264,017)

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

Net loss attributable to common stockholders                $ (2,365,462)     $(12,936,789)      (51,084,876)
                                                            ============      ============      ============

Basic and diluted loss per share:
         Net loss before  extraordinary item                $      (0.11)     $      (0.54)
         Extraordinary loss from extinguishment of debt               --             (1.66)
                                                            ------------      ------------

      Net loss                                              $      (0.11)     $      (2.20)
                                                            ============      ============

Weighted average number of shares outstanding                 21,950,238         5,892,386
                                                            ============      ============
</TABLE>

                 See Notes to Consolidated Financial Statements.


                                      -2-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                                       Cumulative
                                                                                             Three Months            From Inception
                                                                                                 Ended                     to
                                                                                               March 31,                March 31,
                                                                                          2001           2000             2001
                                                                                          ----           ----             ----
<S>                                                                                   <C>             <C>             <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                       (Unaudited)    (Unaudited)      (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                            $ (2,365,462)   $(12,936,789)   $(51,084,876)
  Adjustments to reconcile net loss to net cash used by operating activities:
     Depreciation and amortization                                                          14,910          35,712         219,388
     Amortization of note discount                                                              --              --       5,107,144
     Loss on sale of fixed assets                                                               --              --          16,299
     Beneficial conversion feature of convertible debt                                          --         285,417       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                                       (141,823)     12,124,894      28,987,117
     Increase (decrease) in net liability for severance pay                                     --         (15,334)         15,141
     Accrued interest on loans and notes payable                                                --              --         210,016
     Company's share in net losses of affiliates                                           151,522           15,378        486,887
     Minority interest in subsidiary loss                                                       --              --         (25,000)
     Write-down of long term investment                                                         --              --         745,000
     Write-off of fixed assets                                                                  --              --         136,066
      Increase (decrease) in cash attributable to changes in assets and liabilities
          Receivables and prepaid expenses                                                 (26,253)        (40,146)       (163,769)
          Prepaid research and development                                                (700,000)             --        (700,000)
          Accounts payable                                                                     853         (40,238)         36,015
          Other current liabilities                                                       (302,100)         53,466         415,035
                                                                                      ------------    ------------    ------------

Net cash used in operating activities                                                   (3,368,353)       (517,640)     (9,900,418)
                                                                                      ------------    ------------    ------------

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                                                           --        (150,000)       (375,000)
     Additions to property and equipment                                                   (35,392)         (1,520)       (577,737)
     Proceeds from disposal of fixed assets                                                     --              --          42,100
     Decrease in restricted cash                                                                --          (2,747)             --
                                                                                      ------------    ------------    ------------

Net cash used in investing activities                                                     (185,392)       (154,267)     (2,145,637)
                                                                                      ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net proceeds from issuance of share capital                                           312,605              --       3,757,589
     Proceeds from issuance of notes payable                                                    --              --       1,000,000
     Net proceeds from issuance of convertible debentures                                       --         857,500       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                                                         --          (1,549)        (87,996)
     Increase (decrease) in short term bank credit                                         (10,243)        (73,173)        (32,004)
     Public offering of common stock                                                            --              --       3,433,027
     Repayment of short-term debt                                                               --        (250,000)       (250,000)
     Proceeds from short-term debt                                                              --         250,000         274,038
     Increase in long-term loans and investment                                                 --              --         (65,677)
     Loans to affiliate                                                                         --              --        (977,207)
                                                                                      ------------    ------------    ------------

Net cash provided by financing activities                                                  302,362         782,778      15,847,601
                                                                                      ------------    ------------    ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        (3,251,383)        110,871       3,801,546

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                          7,052,929           8,071              --
                                                                                      ------------    ------------    ------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                             $  3,801,546    $    118,942    $  3,801,546
                                                                                      ============    ============    ============
</TABLE>

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Noncash financing andinvesting activities for the three months ended March 31,
2000
      (a)   Issuance of common stock with fair value of $10,470,000 in respect
            of extinguishment of outstanding note payable resulting in an
            extraordinary charge of $9,778,167 .
      (b)   Waiver of liability due to related party in the amount of $75,328.

                 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 2001, are not necessarily indicative of the results that
      may be expected for the year ending December 31, 2001. 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 for the year ended December 31, 2000, as
      filed with the Securities and Exchange Commission

      Reclassification

      Certain prior period amounts have been reclassified to conform with
      current period presentation.

Note 2 - Convertible Note Receivable

      In July 2000, the Company invested in a $250,000 convertible promissory
      note of a privately-held Company active in the development of high-speed
      chips. The note is due in July 2001 and bears interest at the rate of 6%
      per annum. The note is convertible into common stock based on the price
      per share of a future financing of this company. Additionally, the Company
      received warrants to purchase common stock of this company in connection
      with this investment. In February 2001, The Company purchased an
      additional $150,000 convertible note under the same terms.

Note 3 - Stock Based Compensation

      During 2000, the Company granted a total of 1.59 million stock options
      with a weighted average exercise price of $1.09 to certain employees with
      anti-dilution rights and exercise price adjustment provisions. Since the
      number of options and the associated exercise prices are subject to
      adjustment and not fixed at the grant date, they are subject to variable
      accounting treatment and are periodically re-valued until they are either
      exercised, cancelled or expire.

      The Company also has outstanding unvested options granted to
      non-employees, which are periodically re-measured as the options vest, in
      accordance with EITF 96-18.


                                      -4-
<PAGE>

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

Note 3 - Stock Based Compensation- continued

      The variable accounting treatment of the employee stock options and the
      re-measurement of unvested non-employee stock options, may result in
      unpredictable stock-based compensation dependent on fluctuations in quoted
      prices for the Company's common stock. These unpredictable fluctuations in
      stock-based compensation may result in material non-cash fluctuations in
      our results of operations.

      During the first quarter of 2001, the Company recorded negative expense to
      stock-based compensation in the amount of $137,721.

Note 4 - Stockholders' Equity

      Stock Purchase and Merger Agreement

      On January 1, 2001, the Company entered into an agreement for the purchase
      of the 9.9% minority interest held in its subsidiary, PLT Solutions, Inc
      (PLT). Under the agreement the Company issued 400,000 shares of its common
      stock to the minority shareholder, to be held in escrow. On April 1, 2001,
      200,000 shares were released from escrow and on April 1, 2002 the
      remaining 200,000 shares will be released if the minority shareholder is
      still employed by the Company.

      The Company recorded a charge to deferred compensation from this issuance
      in the amount of $862,400 and is amortizing it over the related vesting
      period.

      Private Placement

      During the first quarter of 2001, the Company realized gross proceeds of
      $350,000 from the sale of 350,000 shares of its common stock in a private
      placement. In April and May 2001, the Company realized an additional
      $375,000 from the sale of 375,000 shares of common stock.

      Financial consulting agreements

      The Company entered into two financial consulting agreements in March
      2001. Accordingly, the Company issued a total of 650,000 shares of common
      stock. The Company recorded a charge to stock based compensation in the
      amount of $993,000 relating to the issuance of these shares.


                                      -5-
<PAGE>

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

Note 5 - Development and License Agreement

      In January 2001, the Company entered into a Development and License
      agreement with Cisco Systems, Inc. (Cisco). Pursuant to the agreement, the
      Company is obligated to pay a total of $6.5 over the development period as
      milestones are reached. To date, the Company has expended $2 million of
      which $1.3 million has been charged to operations. The Company has been
      granted the exclusive right in the United States to sell the developed
      product for a period of six months after the successful field-tested
      demonstrations.

Note 6 - Subsequent event

      Officer Loan

      In connection with the proposed relocation of the Company's headquarters,
      in April 2001, the Company advanced Mark Isaacson, the Chief Executive
      Officer, $2 million to be used for the purchase of a home in the New York
      Metropolitan area. The loan will be partially repaid out of the net
      proceeds from the sale of Mr. Isaacson's existing home in Massachusetts,
      at which time it is anticipated that Mr. Isaacson will apply for a
      mortgage of approximately $900,000 on his new home, the entire net
      proceeds of which will be used to repay a portion of the loan. No
      assurance can however be provided that Mr. Isaacson will secure a mortgage
      on the new home on acceptable terms. Upon the repayment of a portion of
      the loan from the net proceeds from the sale of Mr. Isaacson's existing
      home and the obtaining of a mortgage, it is anticipated that the remaining
      outstanding loan to Mr. Isaacson will be approximately $500,000. The loan
      is non-interest bearing and for a term not exceeding 10 years. As
      collateral for the loan, the Company holds a first mortgage on the new
      home, as well as a security interest in Mr. Isaacson's existing home.


                                      -6-
<PAGE>

      Item 2. Plan of Operation

      Some of the information in this section contains forward looking
      statements that involve substantial risks and uncertainties. You can
      identify these statements by forward looking words such as "expect",
      "anticipate", "believe", "seek", estimate" and similar words. Statements
      that we make in this section that are not statements of historical fact
      also may be forward looking statements. Forward looking statements are not
      guarantees of our future performance, and involve risks, uncertainties and
      assumptions that may cause our actual results to differ materially from
      the expectations we describe in our forward looking statements. There may
      be events in the future that we are not accurately able to predict, or
      over which we have no control. You should not place undue reliance on
      forward looking statements. We do not promise to notify you if we learn
      that our assumptions or projections are wrong for any reason. We disclaim
      any obligation to update our forward looking statements.

      We are engaged in the architecture, design, development, implementation
      and marketing of a proposed comprehensive communication infrastructure
      which uses the electrical power distribution grid as a high-speed
      telecommunication medium. The use of conventional electrical power grids
      for high speed data transmission is referred to as "powerline
      telecommunication technology". Our proposed powerline telecommunication
      solution is based on our establishing and maintaining partnership
      relationships with utilities and electrical power distribution companies,
      as well as developing and maintaining business relations with
      telecommunication service and technology companies.

      Although historically used for low speed data communication, existing
      electrical power grids have not been used for high-speed data transmission
      due to certain technological and infrastructure limitations. Our current
      activities are focused on the implementation and marketing of our proposed
      powerline telecommunications technology solutions and system architectures
      for use on low and medium voltage systems. With carriage on low and medium
      voltage, we believe that powerline telecommunication technology should be
      available worldwide. The proposed solution is designed to facilitate the
      provision of powerline telecommunication technology solutions to virtually
      any building and premise, overcoming existing infrastructure limitations.

      The proposed powerline telecommunications technology solution utilizes our
      proprietary technology and contemplates the design and development of
      certain integral components by our existing and prospective technology
      partners. We entered into an agreement with Cisco Systems, Inc. to
      collaborate in the development of a head-end Router and a Customer Premise
      Equipment (CPE) unit, as well as ancillary products, designed to be used
      for the low voltage system. The Router is intended to be placed at the
      pole-top or pad-mounted and is designed to facilitate the transfer of high
      speed data-carrying signals to the CPE Unit which is intended to be
      connected to the standard electrical outlets in the


                                      -7-
<PAGE>

      home or business. The CPE unit is intended to enable the transport of data
      and voice between the Router and the home or business user. Our agreement
      with Cisco contemplates that we be granted an initial limited period of
      exclusivity with respect to the design, development and marketing of the
      products under development. Beyond such period, the agreement contemplates
      that we will negotiate the terms of the license and manufacturing rights,
      as well as other matters, relating to the products under development.

      We believe that electric utilities and power companies to be our natural
      partners. We believe that powerline telecommunications technology affords
      not only an advantage to the consumer but should allow our prospective
      utility partners to significantly enhance their service offerings to their
      industrial, commercial and residential customers. We envision the utility
      basket of services to include features such as automatic meter reading
      (AMR), real time outage reporting and load balancing/switching. We
      envision that the consumer basket of services will include, initially,
      internet access and telephony, with such features as streaming video alarm
      monitoring and others to follow. We believe that these and other features
      should render the proposed powerline telecommunications solution an
      attractive proposition to utilities.

      To date, most of the concepts underlying our technology have been
      validated in first phase alpha demonstration in joint testing and field
      trials with Consolidated Edison Company of New York, one of the larger
      investor owned utility companies in the United States and with certain
      other utilities. In these demonstrations, our proposed solution
      successfully carried streaming video, video conferencing and internet
      connectivity over standard electrical power lines in point-to-point,
      limited distance demonstrations. In January 2001, the first alpha testing
      of our solution in a residential setting in Hong Kong was successfully
      concluded. These tests represent the first stage alpha tests of our
      proposed solution and additional alpha testing and demonstrations are
      expected.

      Since our founding as a Delaware company in June 1996, we had been engaged
      in the design and development of technologies and products, initially
      focused on the enhancement of smart card applications. Owing to a
      fundamental reassessment of general market developments in the field of
      powerline telecommunications technology and the smart card business
      environment, we elected to redirect our business focus to the field of
      powerline telecommunications technology. We have subsequently ceased all
      design and development efforts in the smart card area.

      During 2000, we established a subsidiary, PLT Solutions, Inc., in which we
      held a 90.01% interest, to promote our powerline telecommunications
      technology. The remaining 9.9% interest was held by Dr Yehuda Cern, one of
      our key employees. In January 2001, Dr. Cern transferred his 9.9 percent
      shareholdings in PLT Solutions, Inc in return for 400,000 shares of our
      common stock, subject to certain lock-ups and other restrictions. The
      Company recorded a non-cash charge to deferred compensation from this
      issuance in the amount of $862,400 and is amortizing it over the related
      vesting period. The company is in the process of merging PLT into our


                                      -8-
<PAGE>

      company with our company as the surviving entity. The term "PLT" continues
      to be used by us as a trade name for our powerline telecommunications
      technology.

      As a development stage company, we have a limited operating history upon
      which an evaluation of our prospects can be made. We have been in the
      powerline technology business, which is the field in which we engage,
      since March 2000. Our prospects must therefore be evaluated in light of
      the problems, expenses, delays and complications associated with a new
      business.

      From the date of inception through March 31, 2001, we expended $3.2
      million on research and development activities (net of $558,195 received
      by Ambient Ltd., our Israeli subsidiary, as government participation in
      its smart card development, from the Office of Chief Scientist of the
      Israeli Ministry of Industry and Trade).

      As of March 31, 2001, we incurred net losses aggregating $51 million
      (which includes $40 million in non-cash charges primarily related to the
      issuance of securities, charges for beneficial conversion features, and
      the extinguishment of debt), reflecting principally net general and
      administrative expenses and net research and development 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
      our 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.

      A substantial portion of our 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.
      We believe that these compensation levels were necessary to retain the
      services of qualified individuals. Certain employee stock options which
      are 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. For the quarter ended March 31,
      2001 the Company recorded negative stock- based compensation expense in
      the amount of $137,721. Stock-based compensation is non-cash and will
      therefore have no impact on our cash flows or liquidity.

      In January 2001, pursuant to our joint development agreement with Cisco
      Systems, Inc., we expended $2,000,000 for the products under joint
      development. Upon the achievement of certain specified development and
      testing milestones, we anticipate an additional $4,500,000 over the next
      eighteen months.

      During January - May 12, 2001, we privately placed 725,000 shares of our
      common stock for aggregate consideration of $725,000. We anticipate that
      we will receive additional gross proceeds of at least $1.5 million by June
      30, 2001 from the private placement of additional shares of our common
      stock though no


                                      -9-
<PAGE>

      assurance can be provided that such amount (or any lesser amount), if any,
      will in fact be received.

      In conection with the proposed relocation of our headquarters from
      Brookline, Massachusetts to New York City, in April 2001 we advanced to
      Mark Isaacson, a director and our Chief Executive Officer, a interest free
      loan for a term not exceeding 10 years of $2 million to be used for the
      purchase of a home in the New York Metropolitan area. We hold a first
      mortgage on that home, as well a security interest in his existing home.
      The loan will be partially repaid out of the net proceeds from the sale of
      Mr. Isaacson's existing home in Massachusetts, at which time it is
      anticipated that Mr. Isaacson will apply for a mortgage of approximately
      $900,000 on his new home, the entire net proceeds of which will be used to
      repay a portion of the loan. No assurance can however be provided that Mr.
      Isaacson will secure a mortgage on the new home on acceptable terms. Upon
      the repayment of a portion of the loan from the net proceeds from the sale
      of Mr. Isaacson's existing home and the obtaining of a mortgage, it is
      anticipated that the remaining outstanding loan to Mr. Isaacson will be
      approximately $500,000.

      We anticipate that cash on hand will allow us to maintain operations as
      presently conducted at least through the next twelve months. However, we
      will need additional financing in order to fully execute our design,
      development and commercialization plans including the completion of the
      design, development and testing of the products under joint development
      with Cisco Systems, Inc. Additionally, if we expand our current
      operations, including strategic partnerships or mergers or acquisitions,
      then we will require additional financing to realize such mergers or
      acquisitions. We are currently reviewing possible further 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 be able to obtain
      additional financing when needed or that any such additional financing
      will not have a dilutive effect on current stockholders.


                                      -10-
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

        NONE

Item 2. Changes in Securities and Use of Proceeds

Sale of Unregistered Securities

      Set forth below is certain information concerning sales by the Company of
      unregistered securities during the three months ended on March 31, 2001.
      The issuances by the Company of the securities sold in the transactions
      referenced below were not registered under the Securities Act of 1933,
      pursuant to the exemption contemplated by Section 4(2) thereof for
      transactions not involving a public offering.

1. In January 2001, Ambient issued 400,000 shares of its common stock to a key
employee in consideration for the transfer of such employee's 9.9 percent
shareholdings in Ambient's majority owned subsidiary PLT Solutions, Inc. (such
shareholding representing the entirety of non-Ambient holdings in such
subsidiary).

2. During January - March 2001, the Company privately placed 350,000 shares of
common stock for aggregate consideration of $350,000.

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

      10.1 Stock Purchase Agreement between Ambient Corporation and Dr. Yehuda
Cern dated as of January 1, 2001.(1)


                                      -11-
<PAGE>

      10.2 Agreement between Ambient Corporation and Cisco Systems Inc. dated as
of January 3, 2001. (1)

      10.3 Corrected Purchase Money Mortgage Note date as of April 5, 2001 in
favor of the Company executed by Mark S. Isaacson, Linda J. Isaacson and The
Rashi Realty Trust. (1)

      10.4 Mortgage and Security Agreement dated April 3, 2001 executed in favor
of Ambient Corporation relating to real property in Brookline, Massachussets.
(1)

      10.5 Mortgage Agreement dated April 16, 2001 executed in favor of Ambient
Corporation relating to real property in Nassau County, New York. (1)

      (1) Filed as an Exhibit to the Company's Registration Statement on Form
SB-2 (N0. 333-56764), and pre-effective amendments thereto.

      (b)   Reports on Form 8-K for the three months ended March 31, 2001

            Report on Form 8-K dated February 2, 2001


                                      -12-
<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, 2001                                  AMBIENT CORPORATION


                                                   /s/ Wilfred Kopelowitz
                                                   -----------------------------

                                                   Chief Financial Officer


                                      -13-