Download this document:
  • Microsoft Word
  • MS Word 6 (older)
    		•

     




    AMERITRADE
    DATEK
    Discover Brokerage
    DLJDirect
    E-Trade
    Schwab




    To receive immediate notification of research updates, enter your e-mail address here (ex: name@domain.com):


    		   November 30, 1998

    AMBI Inc. (NASDAQ: AMBI)       RECOMMENDATION: BUY
    AMBI "Cleans Up" Series C & D Convertible Preferred Shares


    Market Data:

    
Exchange Symbol.....................AMBI (NASDAQ)
Price of Common Stock (11/27/98)............$1.56
30-Day Average Trading Volume.............180,000
Shares Outstanding.........................26.5mm
52-Week High/Low......................$2.75/$0.62
    AMBI Corporate Information:

    
Address.....................4 Manhattanville Road
..............................Purchase, NY  10577
Telephone............................914-701-4500
President & CEO..................Fredric D. Price
VP Finance & Admin., CFO........Gerald A. Shapiro

    Summary Investment Considerations

    AMBI announced that it has revised agreements with the holders of its convertible Series C and D preferred stock. Under the original agreements, the conversion prices of the shares were floating, thus creating an overhang of stock for sale, which we believe has negatively impacted the share price appreciation of AMBI stock. As a result of the new agreements, AMBI has exchanged $1.5 million of its Series C preferred stock for a newly issued Series E preferred stock that has a fixed conversion price of $1.25. The remainder of the Series C was redeemed for $1.0 million cash and 300,000 shares of AMBI common stock. AMBI's Series D preferred stock (now worth $575,000) will be exchanged for a new Series F preferred stock, which will also have a fixed conversion price of $1.25. At this price, which was a 29% premium to the price of AMBI stock when the agreements were reached, the Series E and F preferred shares can be converted to a maximum of 1.66 million shares of common stock.

    We think this is a very positive event for AMBI, as investors had been concerned with the potentially significant dilution that could have occurred upon conversion of the Series C and D preferreds. The new agreements remove this negative technical factor, and we believe could act as a catalyst for new (and renewed) interest both institutionally and among the retail community. We continue to believe that AMBI stock is undervalued at current levels, and are maintaining our 12- to 18-month price target of $4 to $5 per share. We continue to recommend purchase of AMBI stock for those investors tolerant of the risks associated with higher-risk, micro-cap equity investments.

    • So What Does This Mean? By redeeming and restructuring these two series of preferred stock, AMBI has reduced the number of preferred shares outstanding, as well as successfully limited the number of shares issuable upon conversion of the preferreds. The potential dilution for AMBI investors has been reduced and quantified. Combined with AMBI's growing sales, and plans for additional product launches and corporate partnerships, we believe this announcement provides further evidence of AMBI management's focus on enhancing shareholder value.

    • Commentary on Valuation: Despite recent gains in the AMBI share price, AMBI stock still trades at less than 7 times prospective net income and about 6 times prospective EBITDA. We believe these multiples are extremely low for a company with the revenue and earnings growth we are projecting for AMBI (see our October 14th and November 16th reports).



    Company Description


    AMBI is executing an innovative and profitable growth strategy: developing and commercializing nutritional products for cardiovascular, diabetic and other medical conditions. Its products are proprietary, and are put through pharmaceutical-like clinical trials to demonstrate efficacy and safety. The Company has recently announced two "transforming" strategic alliances with American Home Products and Cultor Food Science, Inc. that validate AMBI's strategy, provide the Company with national retail and ingredient distribution for its products, strengthen the balance sheet, and position the Company for future growth. We believe AMBI's strategic and financial turnaround is completed and the company is poised for growth.



    For Additional Information


    Contact SmallCaps Online LLC --  212-554-4158
    Website: www.SmallCapsOnline.com



    Sources for Additional Information


    The following are website addresses offering related information, and links to other sources of information.

    www.AMBIinc.com AMBI's corporate website
    www.CardiaNutrition.com AMBI's internet commerce site, currently under construction
    www.SmallCapsOnline.com SmallCaps Online's site for company information and research
    www.FDA.gov US Food and Drug Administration homepage
    www.WHO.int World Health Organization homepage
    www.Diabetes.org American Diabetes Association homepage
    www.AmHrt.org American Heart Association National Center homepage
    www.AMA-Assn.org American Medical Association homepage
    www.ASH-US.org American Society of Hypertension homepage
    www.SEC.gov U.S. Securities and Exchange Commission, with links to EDGAR filings
     
    212-327-2038    		  
    Chromium Information Bureau, Inc.


    The information in this report has been obtained from sources that we believe to be reliable, but we do 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 may have performed investment banking, consulting or other services for or 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 this report is in circulation or posted on the SmallCaps Online LLC website 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 © 1998 by SmallCaps Online LLC. All rights reserved.