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- -- Access Pharmaceuticals
-- ACTV -- Advanced Tissue Sciences, Inc. -- AMBI
Inc. -- ARIAD Pharmaceuticals, Inc. -- Cubist Pharmaceuticals, Inc. -- CytRx Corp. -- Exigent International, Inc. |
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AMBI Inc. (NASDAQ: AMBI) RECOMMENDATION: BUY
Market Data:
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AMBI Corporate Information:
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Summary Investment Considerations
On Friday morning, AMBI Inc. announced that it had acquired Optimum Lifestyle, Inc., a company that develops and sells nutrition bars called Lite Bites®, for $6.0 million in cash and 1.3 million shares of AMBI stock. With 1998 sales of about $5.5 million and an EBITDA of approximately $1.3 million, we believe the purchase of Optimum Lifestyle's assets to be extremely attractive to AMBI. In addition, since Optimum has been marketing Lite Bites® successfully over the QVC television network, we believe this may open up another marketing channel for AMBI's other nutrition products, which we feel are quite synergistic to the nutrition bars. The bars may also provide a new vehicle to incorporate AMBI's current products, which include chromium picolinate, selenium and zinc. We believe that this acquisition is another example of AMBI management's ability to seek out and complete quality acquisitions. We are therefore maintaining our BUY recommendation and will revisit our earnings model after AMBI reports its second fiscal quarter results in mid-February.
Lite Bites®--the Lite Bites® products are designed to be used as part of a fat-fighting system for people concerned with weight control and fat intake. The bars contain a custom blend of vitamins and minerals, and according to our in-house taste test, are quite enjoyable as a snack or a meal supplement, similar to a granola bar but with more flavor. According to a recent article in TIME magazine, industry experts predict that energy bar sales are expected to hit $500 million in 1998, up 40% from the year before. The article also indicated that "industry optimists" are hoping that the market will eventually match the $2.0 billion-a-year sports drink market.
The Deal -- AMBI has acquired the assets of Optimum Lifestyle from Cheryl and Dean Radetsky, the creators of the product who will consult with AMBI on the product line into the future, for $5.5 million in cash, 1.3 million in stock, and future undisclosed payments that are contingent upon the achievement of sales milestones. We think this is remarkable, as AMBI only paid a little more than one times current sales in cash.
Comments on Strategy -- We believe that this acquisition follows AMBI's 1997 acquisition of Nutrition 21 very nicely. As mentioned previously, not only does it open up an additional marketing channel through QVC and provide an additional vehicle to incorporate AMBI's other nutritional products, but it increases AMBI's EBITDA and is added evidence of management's commitment to expansion by acquiring quality, growing, profitable businesses. We believe the QVC channel is an interesting angle for AMBI to pursue. Through AMBI's recent deal with American Home Products, AMBI has access to one of the premier retail marketing organization; through its agreement with Cultor Food, AMBI has gained better access to the food ingredient business; through its catalog, Heart's Content, AMBI reaches individuals and physicians with print media, and at its website www.CardiaNutrition.com, AMBI reaches out to the internet community. Television may provide AMBI with the boost it needs to grow its products to the next level.
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
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| 212-327-2038 | Chromium Information Bureau, Inc.
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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 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 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 © 1999 by SmallCaps Online LLC. All rights reserved.