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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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Recent Financial Results
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 financials 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 — be it 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.
Risk Considerations
This section of the document is provided to remind potential investors to undertake a prudent level of due diligence prior to making an investment in the securities of AMBI Inc. For a complete description of risks and uncertainties to AMBI’s business, see the "Risk Factors" section in AMBI’s Registration Statement and Prospectus dated May 12, 1998, which can be accessed directly from the SEC Edgar filings at www.SEC.gov on the internet. Other potential risks include:
- Market risk: Investors should consider technical risks common to many small-cap or micro-cap stock investments, including liquidity levels, small float, risk of dilution, dependence upon key personnel, dependence upon single products or technologies, and the strength of competitors that may be larger, better capitalized and hold dominant market positions.
- Business risk: AMBI has limited experience in the manufacturing, marketing, and the distribution of nutritional products. Many of its products are in the early stage of commercialization, and in early-stage development. Additionally, AMBI intends to grow its business through acquisition of products and businesses. There can be no assurance that these acquisitions will materialize, be completed, be successfully integrated and/or achieve the desired levels of revenues or profitability as expected.
- Regulatory risk: The regulatory environment of the nutritional products business is evolving. Although most view these changes as beneficial to the industry in general, certain Federal regulations, including the DSHEA, and state regulations could impose manufacturing and marketing practices (such as GMP or additional labeling requirements) that could add additional costs, be difficult to comply with, and negatively impact margins.
- Competitive risk: The nutritional industry is extremely competitive, and many perceive the barriers to entry to be low. Added competition could lead to price competition and lower margins.
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.