Excerpts from the report follow:

We continue to be impressed with AMBI management's ability to deliver on their promises. As expected, AMBI reported strong fiscal second quarter results yesterday. When we first considered recommending AMBI, management had publicly announced that several transforming events should occur over the next six months or so: a major strategic partnership, continued financial turnaround, and one or more product/business acquisitions. AMBI has delivered on all these in a very short period of time.

This second quarter was particularly indicative of AMBI's ability to deliver on its promises:

• AMBI closed its deal with American Home Products (AHP) for the U.S. retail distribution of AMBI's CARDIA® Salt Alternative. As a result of the agreement, AHP made a $4.0 million equity investment in AMBI and paid a $1.0 million one-time license fee that is reflected in AMBI's fiscal 2Q99 results. AMBI management has indicated that AHP is planning a national launch of CARDIA Salt in July/August of this year. We believe that the increased brand awareness that should result from the AHP promotion of this CARDIA product should prove invaluable to AMBI as it rolls out additional CARDIA brand products.

  
  

• At the end of November, AMBI announced that it had revised its agreements with the holders of its convertible Series C and D preferred stock to redeem a portion and convert the remainder to Series E and F preferred stock. Where the Series C and D had been at a floating conversion price, the newly issued Series E and F shares are both fixed at $1.25 and are convertible into a maximum of 1.66 million shares of AMBI common stock. We continue to believe this to be a very important event for AMBI, as it removed a negative technical factor as well as assuaged investor concerns about dilution.

  
  

• We found it impressive that in its recent announcement of Optimum Lifestyle, Inc., it was mentioned that AMBI had repaid all of its debt associated with the August 1997 acquisition of Nutrition 21. This fact seems to have gone unnoticed.

  
  

• Operating margins at AMBI have improved dramatically, up from 11% in fiscal 2Q98 to 26% in fiscal 2Q99. In addition, at the end of the second fiscal quarter, AMBI had generated $2.1 in EBITDA (ex the $1.0 million one-time payment from AHP).

  Although they may prove conservative, we are maintaining our current sales and earnings estimates for the fiscal year 1999 of $28 million in sales and $0.16 per share. (N.B. Our EPS estimate is fully diluted and fully taxed, although AMBI has NOLs remaining.) As AMBI stock is currently trading at only 1.4 times projected sales, just 4.5 times projected EBITDA and at a P/E multiple of 5 times projected Net Income, we continue to believe that AMBI shares are grossly undervalued. By taking advantage of the multitude of distribution channels (retail, wholesale, Internet, television and media), we believe AMBI is well positioned to launch additional nutrition products over the coming year, as well as being able to continue its success in the acquisition of growing nutritional businesses and products. We recommend purchase of AMBI shares for those investors tolerant of the risks associated with higher-risk, micro-cap equity investments.

  ###
  
  SmallCaps Online LLC is focused on identifying emerging growth companies in the healthcare and information technology sectors that offer compelling investment opportunities over the long term. By providing comprehensive financial services, including corporate finance, M&A advisory, strategic partnering and communications consulting, the company positions itself to provide a fully integrated package of value-added services to emerging growth companies.
  
  ###
  
  The information in this press release has been obtained from sources that SmallCaps Online LLC believes to be reliable, but the Company does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by SmallCaps Online LLC for the purchase or sale of any securities. SmallCaps Online LLC has performed investment banking, consulting or other services for or may solicit investment banking, consulting or other business from, AMBI Inc. SmallCaps Online LLC or persons associated with SmallCaps Online LLC may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while the Company's reports are in circulation or posted on the SmallCaps Online LLC web site at www.SmallCapsOnline.com. This material, or any portion thereof, may not be reproduced without prior permission from SmallCaps Online LLC. SmallCaps Online LLC is not responsible for the contents of this document that is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright 1999 by SmallCaps Online LLC. All rights reserved.