<PAGE>

                       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, 2003

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, 2003 Ambient Corporation had outstanding 70,765,884, shares
of common stock, par value $.001 per share.

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

<PAGE>

                                      Index
                                                                          Page
                                                                          ----
PART I -- FINANCIAL INFORMATION

Forward Looking Statements                                                (ii)

Item 1 - Financial Statements*

     Consolidated Balance Sheet
      March 31, 2003 (Unaudited) and December 31, 2002                    (1)

     Unaudited Consolidated Statements of Operations
      for the three months ended March 31, 2003 and 2002                  (2)

     Unaudited Consolidated Statements of Cash Flows
      for the three months ended March 31, 2003 and 2002                  (3)

     Notes to Consolidated Financial Statements                           (4)

Item 2 - Plan of Operations                                               (7)

Item 3 - Controls and Procedures                                          (9)

PART II--OTHER INFORMATION


Item 1-- Legal Proceedings                                                (10)

Item 2-- Changes in Securities and Use of Proceeds                        (10)

Item 3-- Defaults upon Senior Securities                                  (10)

Item 4-- Submission of Matters to a vote of Security Holders              (10)

Item 5-- Other Information                                                (10)

Item 6-- Exhibits and Reports on Form 8-K                                 (10)

Signatures                                                                (11)

Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act          (12)


*The Balance Sheet at December 31, 2002 has been derived from audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. All other financial statements are unaudited.

<PAGE>

                           FORWARD LOOKING STATEMENTS

     The following discussion and explanations should be read in conjunction
with the financial statements and related notes contained elsewhere in this Form
10-QSB. 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.

                                      (ii)
<PAGE>
<TABLE>
<CAPTION>

                                             AMBIENT CORPORATION
                                        (A Development Stage Company)
                                         CONSOLIDATED BALANCE SHEETS

                                                                            March 31,          December 31,
                                                                              2003                 2002
                                                                              ----                 ----
                                                                          (Unaudited)
<S>                                                                       <C>                  <C>
ASSETS
CURRENT ASSETS
     Cash and  cash equivalents                                           $     22,278         $     75,251
     Receivables and prepaid expenses                                           45,340               28,540
                                                                          ------------         ------------

               Total current assets                                             67,618              103,791

Property and equipment, net                                                     66,957               81,583
                                                                          ------------         ------------

               Total assets                                               $    134,575         $    185,374
                                                                          ============         ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
     Accounts payable                                                     $    640,826         $    654,460
     Accrued expenses and other current liabilities                            198,719              126,500
     Convertible promissory note                                                10,000                  -
     Advances                                                                  325,000              325,000
                                                                          ------------         ------------

               Total current liabilities                                     1,174,545            1,105,960
                                                                          ------------         ------------

STOCKHOLDERS' DEFICIT
     Convertible Preferred Stock, $.001 par value;
       5,000,000 shares authorized; none issued and outstanding                      -                    -
     Common stock, $.001 par value;
       200,000,000 shares authorized; 71,648,384 and 63,718,384
       issued; 70,648,384 and 63,718,384 outstanding, respectively              71,649               63,719
     Additional paid-in capital                                             61,837,629           61,497,304
     Deficit accumulated during the development stage                      (62,710,083)         (62,229,370)
     Less: Note receivable - stockholder                                             -             (200,000)
     Less: Deferred compensation                                               (39,165)             (52,239)
     Less: Treasury stock; 1,000,000 shares at cost                           (200,000)                   -
                                                                          ------------         ------------

               Total stockholders' deficit                                  (1,039,970)            (920,586)
                                                                          ------------         ------------

               Total liabilities and stockholders' deficit                $    134,575         $    185,374
                                                                          ============         ============



                          See Notes to Unaudited Consolidated Financial Statements.
                                                      1
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                   AMBIENT CORPORATION
                                              (A Development Stage Company)
                                          CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                             Cumulative
                                                                            Three Months                   From Inception
                                                                               Ended                             to
                                                                              March 31,                       March 31,
                                                                   2003                    2002                 2003
                                                                   ----                    ----                 ----
                                                                (Unaudited)             (Unaudited)          (Unaudited)
<S>                                                            <C>                     <C>                  <C>
Revenues                                                       $     80,000            $          -         $     80,000

Expenses
     Research and Development (1)                                   200,449                 282,533            6,217,675
     Less - Participation by the Office of the
       Chief Scientist of the State of Israel                             -                       -              558,195
                                                               ------------            ------------         ------------
                                                                    200,449                 282,533            5,659,480

Operating, general and administrative expenses (1)                  309,013                 710,512           13,250,093
Stock based compensation - net                                       51,329                 573,012           17,317,993
                                                               ------------            ------------         ------------

Total expenses                                                      560,791               1,566,057           36,227,566
                                                               ------------            ------------         ------------

Operating loss                                                     (480,791)             (1,566,057)         (36,147,566)

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                                  -                       -           (5,801,333)
Interest income                                                          78                      89              321,322
Write-off of convertible note receivable                                  -                       -             (490,000)
Company's share in net losses of affiliate                                -                       -           (1,352,207)
                                                               ------------            ------------         ------------

Loss before minority interest and extraordinary item               (480,713)             (1,565,968)         (51,136,057)

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

Loss before extraordinary item                                     (480,713)             (1,565,968)         (51,111,057)

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

Net loss                                                           (480,713)             (1,565,968)         (60,889,224)

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

Net loss attributable to common stockholders                   $   (480,713)           $ (1,565,968)        $(62,710,083)
                                                               ============            ============         ============

Basic and diluted loss per share:
         Net loss before  extraordinary item                   $      (0.01)           $      (0.06)
         Extraordinary loss from extinguishment of debt                   -                       -
                                                               ------------            ------------

      Net loss                                                 $      (0.01)           $      (0.06)
                                                               ============            ============

Weighted average number of shares outstanding                    68,315,412              26,177,384
                                                               ============            ============

(1)  Excludes non-cash, stock based compensation
       expense as follows:
     Research and development, net                             $     23,855            $    259,497         $  1,454,192
     Operating, general and administrative, net                      27,474                 313,515           15,863,801
                                                               ------------            ------------         ------------

                                                               $     51,329            $    573,012         $ 17,317,993
                                                               ============            ============         ============


                                See Notes to Unaudited Consolidated Financial Statements.
                                                            2
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                                                                                        Cumulative
                                                                                             Three Months             From Inception
                                                                                                 Ended                      to
                                                                                                March 31,                March 31,
                                                                                          2003            2002             2003
                                                                                          ----            ----             ----
                                                                                      (Unaudited)      (Unaudited)      (Unaudited)
<S>                                                                                  <C>              <C>              <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                           $   (480,713)    $ (1,565,968)    $(62,710,083)
  Adjustments to reconcile net loss to net cash used by operating activities:
      Depreciation and amortization                                                        16,126           22,212          430,571
      Amortization of note discount                                                             -                -        5,156,462
      Cancellation of Officer loans in settlement of employment 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                                           51,329          573,012       30,661,871
      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                                               -                -        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                                               (16,800)           8,001           43,890
           Accounts payable                                                               (13,634)         201,679          782,120
           Other current liabilities                                                       72,219          205,960          349,375
                                                                                     ------------     ------------     ------------

Net cash used in operating activities                                                    (371,473)        (485,104)     (15,918,663)
                                                                                     ------------     ------------     ------------

CASH FLOWS FROM  INVESTING ACTIVITIES
     Loan provided to another company                                                           -                -         (835,000)
     Purchase of convertible promissory note                                                    -                -         (400,000)
     Investment in affiliated company                                                           -                -         (375,000)
     Additions to property and equipment                                                   (1,500)          (7,345)        (694,964)
     Proceeds from disposal of fixed assets                                                     -                -           42,100
     Loans to Officers                                                                          -                -       (2,137,677)
     Repayment of loans to Officer                                                              -                -        1,431,226
                                                                                     ------------     ------------     ------------

Net cash used in investing activities                                                      (1,500)          (7,345)      (2,969,315)
                                                                                     ------------     ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net proceeds from issuance of share capital                                          310,000                -        6,054,567
     Proceeds from loans and advances                                                           -          325,000          690,000
     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                                                         -                -          (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                                                         10,000                -          284,038
     Loans to affiliate                                                                         -                -         (977,207)
                                                                                     ------------     ------------     ------------

Net cash provided by financing activities                                                 320,000          325,000       18,910,256
                                                                                     ------------     ------------     ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          (52,973)        (167,449)          22,278

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                            75,251          177,340                -
                                                                                     ------------     ------------     ------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                            $     22,278     $      9,891     $     22,278
                                                                                     ============     ============     ============

                                      See Notes to Unaudited Consolidated Financial Statements.
                                                                  3
</TABLE>

<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 S-B.
     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,
     2003, are not necessarily indicative of the results that may be expected
     for the year ending December 31, 2003. 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, 2002, 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, has
     sustained losses since its inception. As shown in the accompanying
     financial statements, the Company incurred a net loss of $480,713 for the
     three months ended March 31, 2003 and has a working capital deficit of
     approximately $1.1 million as of March 31, 2003. 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. The Company anticipates that it will continue to incur significant
     operating costs and losses in connection with the development of its
     products.

                                        4
<PAGE>

     In September 2002, the Company and Consolidated Edison, Inc. ("ConEd"), an
     affiliate of Consolidated Edison Company of New York, Inc. ("CECONY"),
     entered into a stock purchase agreement whereby ConEd undertook to invest
     $1.4 million in the Company over the succeeding six months, in
     consideration of the issuance of 35 million shares of common stock, par
     value $0.001 (the "Common Stock"). In connection with ConEd's investment,
     the Company's repayment obligation relating to $265,000 previously advanced
     to the Company by CECONY for the purpose of furthering the design,
     development and testing of the Company's proposed solution was cancelled.
     As of March 31, 2003, ConEd has paid into the Company $1.4 million
     (including the $265,000 previously advanced by CECONY) of which $310,000
     was received in January and February 2003, and the Company issued
     35,000,000 shares of Common Stock.

     The Company needs to raise on an immediate basis at least $200,000 in order
     to remain in business. Management is continuing to actively seek additional
     capital that will provide funds needed to maintain the Company's operations
     and fund the research and development in order to fully implement it's
     business plans. The Company currently has no financing commitments. There
     is no assurance that additional capital will be available to the Company on
     commercially reasonable terms and the inability to obtain such financing
     will 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 - NET LOSS PER SHARE

     Basic earnings (loss) per share EPS is computed by dividing net income
     (loss) applicable to common shares by the weighted-average of common shares
     outstanding during the period. Diluted earnings (loss) per share adjusts
     basic earnings (loss) per share for the effects of convertible securities,
     stock options and other potentially dilutive instruments, only in the
     periods in which such effect is dilutive. The following securities have
     been excluded from the calculation of net loss per share, as their effect
     would be antidilutive.

                                           2003           2002
                                           ----           ----
                Stock options            11,162,000       9,707,000
                Warrants                 14,660,308       11,410,802

NOTE 3 - CONVERTIBLE PROMISSORY NOTE

     In March 2003, the Company issued a six month convertible note in the
     amount of $10,000, due September 30, 2003. The note is convertible into
     100,000 shares of the Company's Common Stock and 100,000 two year warrants
     to purchase an additional 100,000 shares of Common Stock. The warrants are
     issued upon conversion of the note and are exercisable at the rate of $0.20
     per share. Under the terms of the note, if the Company completes an
     offering of its Common Stock prior to September 30, 2003, the note holder
     has the right to convert the note under the same terms as the offering. If
     the Company's publicly traded stock price closes at or above $1 for a
     consecutive 20 trading day period on the market or exchange on which it is
     then traded or quoted, then the exercise period is reduced to 60 days
     following the end of such period.

NOTE 4 - TREASURY STOCK

     In December 2001, in connection with the amendment and restatement of an
     employment agreement, the Company issued 1 million shares of its Common
     Stock to its Chief Engineer for a $200,000 non-recourse promissory note.
     The shares were pledged as collateral for the note which was to become due
     in three equal installments in February, March and April 2003. Under the
     agreement, in lieu of repaying the principal, the employee is entitled to
     require the Company to repurchase the shares at the rate of $.20 per share.
     In March 2003, the shares were returned to treasury and the note receivable
     was cancelled.

                                        5
<PAGE>

NOTE 5 - STOCK BASED COMPENSATION PLANS

     The Company accounts for stock-based employee and outside directors
     compensation under Accounting Principles Board ("APB") Opinion No. 25,
     "Accounting for Stock Issued to Employees", and related interpretations.
     The Company has adopted the disclosure-only provisions of Statement of
     Financial Accounting Standards ("SFAS") No. 123, "Accounting for
     Stock-Based Compensation" and SFAS No. 148, "Accounting for Stock-Based
     Compensation - Transition and Disclosure", which was released in December
     2002 as an amendment of SFAS No. 123. The following table illustrates the
     effect on net income and earnings per share if the fair value based method
     had been applied to all awards:

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                     MARCH 31,
                                                              2003              2002
                                                       -----------------  ----------------
<S>                                                    <C>                <C>
NET LOSS, AS REPORTED                                        ($480,713)      ($1,565,968)
ADD: STOCK BASED COMPENSATION
           EXPENSE, AS REPORTED                                      -                 -
DEDUCT: TOTAL STOCK-BASED COMPENSATION
           EXPENSE DETERMINED UNDER THE FAIR
           VALUE BASED METHOD FOR ALL AWARDS                  (158,838)         (222,993)
                                                       -----------------  ----------------

PRO FORMA NET LOSS                                           ($639,551)      ($1,788,961)
                                                       =================  ================

BASIC AND DILUTED LOSS PER SHARE, AS REPORTED                   ($0.01)           ($0.06)
BASIC AND DILUTED LOSS PER SHARE, PRO FORMA                     ($0.01)           ($0.07)
</TABLE>

     The weighted average per share fair value of options granted during the
     three months ended March 31, 2003 and 2002 was $.09 and $.34, respectively.
     The fair value of each option granted in 2003 and 2002 was estimated using
     the Black-Scholes option-pricing model with a volatility of 150% and 133%,
     expected life of options of 8 and 7.2 years, risk free interest rate of
     3.88% and 3% and a dividend yield of 0% and 0%, respectively.

NOTE 6 - LITIGATION

     On March 27, 2003, the Company's former Chief Financial Officer and a
     former director filed a complaint against the Company in State Court in
     Massachusetts. The action alleges, among other things, that the Company
     breached the termination and settlement agreement relating to his
     resignation from the Company and seeks damages of $205,000, along with
     interest, costs and attorney's fees. The Company filed its answer on April
     23, 2003 wherein it denied all allegations. The Company believes it has
     meritorious defenses to this lawsuit and believes that under the terms of
     the agreement with the plaintiff there is an executed release for most of
     these claims. However, at this stage of the proceedings, it is not possible
     to estimate the liability, if any, of the Company in connection with this
     matter.

                                        6
<PAGE>

ITEM 2. PLAN OF OPERATIONS

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 used for low speed data
communication, existing electrical power lines have not historically been used
for high-speed data transmission, due to certain technological and
infrastructure limitations. Ambient has designed and developed proprietary
patent protected and patent pending technologies designed to overcome these
limitations and has positioned itself as a systems integrator for powerline
communication. The Company's proposed powerline communication technology
solution entails partnering arrangements with leading utilities, their
affiliates and other technology companies in order to complete the design,
development, testing and commercialization of its proposed solution. The Company
is currently working with technology and utility companies in the design,
development and testing of its proposed solution and its various
components/technologies.

     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 development business since March 2000. The Company's
prospects must therefore be evaluated in light of the problems, expenses, delays
and complications associated with a development stage company.

     On September 30, 2002, the Company and Consolidated Edison, Inc. ("ConEd"),
an affiliate of Consolidated Edison Company of New York, Inc. ("CECONY"),
entered into a stock purchase agreement whereby ConEd undertook to invest $1.4
million in the Company over the succeeding six months, in consideration of the
issuance of 35 million shares of Common Stock. In connection with ConEd's
investment, the Company's repayment obligation relating to $265,000 previously
advanced by CECONY to the Company for the purpose of furthering the design,
development and testing of the Company's proposed solution was cancelled. As of
March 31, 2003, ConEd has paid into the Company $1.4 million (including the
$265,000 previously advanced by CECONY) in respect of which the Company issued
35,000,000 shares of Common Stock.

     As of March 31, 2003, the Company had an accumulated deficit of
approximately $63 million and for the three months ended March 31, 2003, the
Company incurred net losses aggregating $480,713 (which includes $51,329 of
stock based compensation) reflecting principally general and administrative
expenses and research and development expenses. The Company expects to incur
significant additional development 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. No assurance can be given that the
Company will be able to obtain such financing on terms acceptable to it.

     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. 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.

                                        7
<PAGE>

     The Company is in the process of designing, developing and testing its
proposed high-speed powerline communication solution. In the course of 2001 and
2002, 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. As of July 2002 the
Company concluded successful results and a significant initial phase of the
demonstration of Ambient's proposed powerline communication solution on the
overhead electrical distribution system of CECONY and is currently planning for
the expansion of the demonstration into a small field trial. In addition, in
February 2003 the Company entered into a limited licensing agreement with
Compania Americana de Multiservicios Ltda., a Chile-based provider of electrical
power and an affiliate of Endesa, the largest utility in Spain, to test and
evaluate Ambient's power line communication technology.

     In February 2002, the Company and 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, it 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, which advance is to become subsumed into the
royalty discussed below upon (and subject to) the successful completion of the
Small Field Trial Phase (as defined in the agreement). 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, will be payable quarterly, in arrears, and do not accrue from one
quarter to another during periods of negative cash flow. As of July 2002 the
Company concluded successful results and a significant initial phase of the
demonstration of Ambient's proposed powerline communication solution on the
overhead electrical distribution system and is actively planning for the
expansion of the demonstration into a small field trial. The Company's immediate
objective is to expand the scope of the demonstration system to include
additional premises and services and expand the distance achieved from base to
farthest consumer.

     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 capable of being commercially
deployed. As the Company's proposed solution approaches commercialization, if
ever, the Company may be required to increase the number of employees.
Management does not, however, anticipate a significant investment in plant or
equipment.

LIQUIDITY

     During the three months ended March 31, 2003, the Company earned fees in
the aggregate approximate amount of $80,000 in connection with the testing and
deployment of its proposed technology and related equipment. Additionally, ConEd
completed the investment contemplated under the Investment Agreement between
September 2002 and February 2003, pursuant to which the Company received net
proceeds of approximately $1.2 million in cash. ConEd's investment included the
contribution into equity of the Company (and the cancellation of the repayment
obligation) of approximately $265,000 owing to CECONY, an affiliate of ConEd.

                                        8
<PAGE>

     The Company will need to raise additional capital on an immediate basis in
order to continue in business through the second quarter of 2003. If the Company
is unable to raise at least $200,000 on an immediate basis, the Company will
likely cease to operate as a going entity within the second quarter of 2003.
Assuming that the Company successfully raises the minimum amount that it
believes is necessary to maintain operations through the second quarter of 2003,
management believes that the Company will need to raise an additional $2.4
million in order to realize its business plan as contemplated and complete the
design, development, and testing of the Company's proposed powerline
communication architecture for commercial deployment.

     While the Company is actively seeking to raise additional capital, at the
present time it has no commitments for any such financing, and there can be no
assurance that additional capital will be available to the Company on
commercially acceptable terms. The financial statements accompanying this report
for the year ended December 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.
Additionally, under the terms of the Investment Agreement with ConEd, so long as
ConEd continues to hold, in the aggregate, 25% of the issued and outstanding
shares of the Company's Common Stock, the Company has undertaken to notify ConEd
of the terms of any proposed equity or debt financing in an amount exceeding
$500,000 and to afford ConEd the opportunity to approve or reject such
subsequent investment, provided, that following June 30, 2003, the minimum
amount per subsequent investment requiring notification is increased to $750,000
and should ConEd not approve the proposed financing, ConEd has undertaken to
complete such financing on substantially similar terms.

     Furthermore, it is anticipated that any successful financing will have a
significant 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.

ITEM 3. CONTROLS AND PROCEDURES

     The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and that such information is accumulated and communicated to the Company's
management, including its Chief Executive Officer and Principal Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

     Within the 90 days prior to the filing date of this report on Form 10-QSB,
the Company carried out an evaluation, under the supervision and with the
participation of the Company's Chief Executive and Principal Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14).
Based upon that evaluation, the Chief Executive and Principal Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company required to
be included in the Company's periodic SEC filings. Subsequent to the date of
that evaluation, there have been no significant changes in internal controls or
in other factors that could significantly affect internal controls.

                                        9
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     On March 27, 2003, the Company's former Chief Financial Officer and a
former director filed a complaint against the Company in State Court in
Massachusetts. The action alleges, among other things, that the Company breached
the terms of the Settlement Agreement, dated as of April 1, 2002 (the
"Settlement Agreement"), entered into by the Company and Mr. Kopelowitz in
connection with Mr. Kopelowitz's resignation from all offices held in the
Company and its affiliates and seeks damages of $205,000, along with interest,
costs and attorney's fees. The Company filed its answer on April 23, 2003,
wherein it denied all allegations. The Company believes it has meritorious
defenses to this lawsuit and believes that under the terms of the Settlement
Agreement, there is an executed release for most of these claims. Given the
early stage of this proceeding, it is not possible to estimate the Company's
liability, if any, in connection with this matter.

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 March 31, 2003. The
issuances by the Company of the securities sold in the transactions referenced
below were not registered under the Securities Act of 1933, as amended, pursuant
to the exemption contemplated by Section 4(2) thereof for transactions not
involving a public offering.

     1. During January-February 2003, the Company issued to ConEd 7,750,000
shares of Common Stock for $310,000.

     2. In March 2003, the Company issued to an accredited investor a six month
convertible promissory note in the face amount of $10,000, convertible into
100,000 shares of the Company's Common Stock and 100,000 two year warrants to
purchase an additional 100,000 shares of Common Stock, at per share exercise
price of $0.20, provided, that the exercise period is subject to reduction upon
the occurrence of certain events.

     3. During January-March 2003 the Company issued 180,000 shares of Common
Stock to the landlord of its offices in respect of a reduction in rent owed for
the period aggregating approximately $14,000 and issued to such party two year
warrants to purchase an additional 485,000 shares of Common Stock at a per share
price of $0.25, provided, that the exercise period is subject to reduction upon
the occurrence of certain events.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

     99.1 Certification of the Company's Chief Executive Officer and Principal
Financial Officer

(b) Reports on Form 8-K

     none

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<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, 2003                        AMBIENT CORPORATION

                                          /s/ JOHN J. JOYCE
                                          ------------------
                                          JOHN J. JOYCE
                                          CHIEF EXECUTIVE OFFICER
                                          (AND PRINCIPAL FINANCIAL OFFICER)



                                       11
<PAGE>

     CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John J. Joyce, Chief Executive and Principal Financial Officer of Ambient
Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Ambient Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the period presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:

a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to me by others within the
registrant, particularly during the period in which this quarterly report is
being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report my conclusions and about the effectiveness
of the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;

5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
fulfilling the equivalent function):

a) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of the most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Date: May 15, 2003

                               /s/ JOHN J. JOYCE
                               ---------------------------------
                               JOHN J. JOYCE
                               CHIEF EXECUTIVE OFFICER
                               (AND PRINCIPAL FINANCIAL OFFICER)

                                       12