SmallCaps Online LLC Comments on AMBI’s Fiscal Third Quarter Results; Reiterates BUY Recommendation

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New York, NY, May 13, 1999 -- SmallCaps Online LLC released comments today on AMBI Inc. (Nasdaq: AMBI) following the release of AMBI’s fiscal third quarter results. The full text of this report can be accessed at SmallCaps' web site, at www.SmallCapsOnline.com.

Excerpts from the report follow:

Earlier this week, AMBI reported very strong financial results: $7.4 million in revenues (38% quarter-over-quarter growth), $1.2 million in net income (128% quarter-over-quarter growth), and $2.1 million in EBITDA. The increase in EBITDA and net income is particularly impressive given increased SG&A expenses in support of the planned launches of AMBI’s CardiaNutrition e-commerce business and the Heart’s Content catalog business later this year. Despite six consecutive quarters of revenue and earnings growth, and a strong track-record of delivering on corporate milestones (be they corporate partnerships, strategic acquisitions, new products, etc.), we believe AMBI is still significantly undervalued versus its peer group, and we are reiterating our BUY recommendation.

• Strong Financial Results: AMBI has consistently posted solid growth in revenues, cash flow and earnings. We believe that the Company is well positioned to continue this trend in its last fiscal 1999 quarter (ending June 30, 1999) and in fiscal 2000. To supplement strong growth through current distribution channels for its products (including the QVC shopping channel), AMBI is preparing to launch its e-commerce website, www.CardiaNutrition.com, and its Heart’s Content catalog business later this year. We think AMBI’s products are particularly well suited for the Internet, and expect strong interest and business generation through this channel.

• Outperforming the Nutritional Foods/Products Sector: AMBI’s ability to post quarter after quarter of strong financial results is a significant achievement — particularly in the nutritional foods/products sector which has been underperforming recently. We attribute AMBI’s success to several factors: (1) truly proprietary products (i.e. patented products), addressing significant nutritional needs in cardiovascular and diabetic markets, (2) clinical trials demonstrating safety and efficacy, and (3) a management team that delivers (see below). And don’t forget that AMBI has been able to attract strong corporate partners - American Home Products and QVC - that validate the Company’s strategy.

• Strong Management Team: AMBI’s management team delivers on milestones. SmallCaps Online has covered AMBI since October 14, 1998 when we initiated coverage with a BUY recommendation at $0.81. Since that time, AMBI’s management has delivered on every corporate milestone that it said it would — corporate partnerships (American Home Products, Cultor Food Science), acquisitions (Lite Bites — which also included a relationship with QVC, on the heels of the very successful Nutrition 21 acquisition), financial milestones (smartly financing acquisitions, cleaning up outstanding convertible preferred shares) and achieving consistent growth in revenues and earnings. AMBI’s management is now saying it will (1) launch an e-commerce business, (2) launch a catalog business, (3) continue to post strong growth in revenue and earnings, and (4) evaluate additional accretive acquisitions. Based on past achievements, we have reason to believe AMBI’s management will continue to deliver.

• Momentum Is Building: AMBI’s stock has performed well recently, with daily turnover increasing, and we believe it’s poised for continued appreciation. The stock was recently picked up by a leading investment bank with a highly regarded research analyst covering the nutritional products sector, and we believe that this undervalued stock will now attract some of the more aggressive institutional investors.

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SmallCaps Online LLC is a registered investment advisor 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.

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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 AMBI and may solicit investment banking, consulting or other business from any company mentioned in this report. 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.