<PAGE>
As filed with the Securities and Exchange Commission on December 19, 1997
Registration Statement No. 333-35897
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
AMENDMENT NO. 2
to
FORM S-3
REGISTRATION STATMENT
Under
THE SECURITIES ACT OF 1933
--------------------
AMBI INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
New York 2083 11-2653613
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of lassification Code Number) Identification No.)
incorporation)
AMBI Inc. Fredric D. Price
771 Old Saw Mill River Road 771 Old Saw Mill River Road
Tarrytown, New York 10591 Tarrytown, New York 10591
(914) 347-5767 (914) 347-5767
(Address, including zip code, (Name, address, including
and telephone number, zip code, and telephone
including area code, of number, including area code,
registrant's principal of agent for service)
executive offices)
----------
Copies To:
Oscar D. Folger, Esq.
521 Fifth Avenue
New York, New York 10175
Approximate date of commencement of proposed sale to public: From time to time
after the effective date of this Registration Statement depending on market
conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /__/
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.
/X/
<PAGE>
CALCULATION OF REGISTRATION FEE
</TABLE>
<TABLE>
<CAPTION>
Proposed Proposed Amount of
Title of Each Class of Securities Being Amount Being Maximum Offering Maximum Registration Fee
Registered Registered Price per Share (1) Aggregate Offering
Price
<S> <C> <C> <C> <C>
Common Stock 500,000 $2.5625 $1,281,250 $388.26 (2)
======================================= ================= =================== ==================== ====================
</TABLE>
(1) Estimated for purposes of computing the registration fee pursuant to Rule
457(c) at $2.5625 per share based upon the average of the high and low prices
which were both $2.5625 on September 15, 1997.
(2) Previously paid.
-----------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
----------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 19, 1997
PROSPECTUS
AMBI INC.
500,000 Shares of Common Stock
--------------------------------
This Prospectus relates to an aggregate of 500,000 shares of Common
Stock (the "Offered Shares") of AMBI Inc. (the "Company"), par value $.005 per
share (the "Common Stock") issued in August 1997 as part of the consideration
for the acquisition of Nutrition 21, a privately-held partnership which
develops, produces, and markets proprietary nutrition products and dietary
supplements. See "Material Changes." This Prospectus does not relate to the sale
or issuance by the Company of any securities. Any shares of Common Stock which
are offered will be offered for the respective accounts of the Selling Security
Holders. The Company will not receive any proceeds from the sale of the shares
of Common Stock by the Selling Security Holders. The Company will pay
substantially all of the expenses with respect to the offering and sale of the
Offered Shares to the public, including the costs associated with registering
the Offered Shares under the Securities Act of 1933, as amended (the "Securities
Act"), and preparing and printing this Prospectus. Normal underwriting
commissions and broker fees, however, as well as any applicable transfer taxes,
are payable individually by the Selling Security Holders. See "Selling Security
Holders."
The Company has been advised by the Selling Security Holders that the
Offered Shares may be offered for sale from time to time by or for the account
of such Selling Security Holders in the open market, on the Nasdaq National
Market, in privately negotiated transactions, in an underwritten offering, or a
combination of such methods, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Offered Shares are intended to be sold through one or more broker-dealers or
directly to purchasers. Such broker-dealers may receive compensation in the form
of commissions, discounts or concessions from the Selling Security Holders
and/or purchasers of the Offered Shares for whom such broker-dealer may act as
agent, or to whom they may sell as principal, or both (which compensation as to
a particular broker-dealer may be in excess of customary concessions). The
Selling Security Holders and any broker-dealers who act in connection with the
sale of Offered Shares hereunder may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions received by them and proceeds
of any resale of the Offered Shares may be deemed to be underwriting discounts
and commissions under the Securities Act. The Selling Security Holders have
agreed not to sell or dispose of their Offered Shares until various dates
commencing November 10, 1997. See "Seling Security Holders" and "Plan of
Distribution."
The Company's Common Stock is traded on the Nasdaq National Market
System under the symbol AMBI. As reported by Nasdaq for December 15, 1997, the
last sale price for the Company's Common Stock was $2.125.
---------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
---------------------
THESE SECUITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is December __,
1997.
1
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Reports, registration statements, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C., and at the Commission's Regional
Offices: Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois; 7 World Trade Center, New York, New York, and Suite 500, 5757
Wilshire Boulevard, Los Angeles, California, and with respect to registration
statements, Suite 788, 1375 Peachtree Street, Atlanta, Georgia. Copies of such
materials can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates, and can
also be accessed electronically through the Commission's Web site at
http://www.sec.gov. The Company's securities are traded on the Nasdaq National
Market System and reports and proxy statements can also be obtained from The
Nasdaq Stock Market, Inc. at 1735 K Street NW, Washington, D. C. 20006.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the Offered
Shares. This Prospectus is part of the Registration Statement and does not
contain all the information set forth in the Registration Statement, certain
portions of which have been omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made to the
Registration Statement and the documents incorporated herein by reference and
attached hereto. Such additional information may be obtained from the
Commission's principal office in Washington, D.C.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN
OFFERING OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO
WHICH IT RELATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER
OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY THAT THE INFORMATION
PROVIDED HEREIN OR INCORPORATED HEREIN BY REFERENCE IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
2
<PAGE>
THE COMPANY
AMBI Inc., (the "Company") is a New York corporation which was
incorporated on June 29, 1983. The Company develops and commercializes
pharmaceutical and dietary products. The executive offices of the Company are
located at 771 Old Saw Mill River Road, Tarrytown, New York 10591 and its
telephone number at that address is 914-347-5767.
RISK FACTORS
An investment in the Offered Shares offered hereby involves a high
degree of risk. Prospective investors should understand that they may sustain a
total loss of their investment and should consider carefully the following risk
factors, among others, in making their investment decision. This Prospectus
contains and incorporates by reference forward looking statements within the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Reference is made in particular to the discussion under "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Form 10-K/A for the year ended June 30, 1997, which is
incorporated in this Prospectus by reference. Such statements are based on
current expectations that involve a number of uncertainties including those set
forth in the following risk factors and actual results could differ materially
from those projected in such forward-looking statements.
Recent Sale of Subsidiary
In December 1996, the Company sold its Aplin & Barrett Limited subsidiary
("A&B"). Substantially all of the Company's earnings through the date of sale
had been generated by this subsidiary. Primarily as a result of the divestiture,
revenues decreased 30% to $11.3 million in the fiscal year ended June 30, 1997
("fiscal 1997") from $16.0 million in the fiscal year ended June 30, 1996
("fiscal 1996"). Sales as a percentage of total revenues attributable to A&B
were 53% and 81% of total revenues in fiscal 1997 and fiscal 1996, respectively.
In turn, this loss of revenue contributed to an operating loss of $15.6 million
in fiscal 1997, compared with an operating loss of $4.6 million in fiscal 1996.
The sale of A&B did generate cash proceeds of $13.5 million which provided
adequately for the Company's short-term capital requirements following the sale.
The Company has only recently reinvested the proceeds from this sale into the
acquisition of Nutrition 21, which may replace the potential to generate
revenues. Nutrition 21 reported sales of $16,273,227 in 1996. However, there can
be no assurance that the Nutrition 21 business and sales of the Company's other
products will generate revenues, cash flow, and earnings equal to those which
would have come from A&B or that they will be sufficient to make the Company's
operations profitable. See "Acquisition of New Business" and "Material Changes."
Acquisition of New Business
The Company acquired Nutrition 21 in August 1997. It is likely that Nutrition 21
will provide a majority of the Company's revenues at least through the next
fiscal year. The Company currently intends to operate Nutrition 21 as a separate
business located at Nutrition 21's current facilities in San Diego, California.
Although the Company does not believe that extensive integration of Nutrition
21's operations with those of the Company may be necessary, there can be no
assurance that the Company will be able to smoothly accomplish such coordination
as will be necessary, or that the Company will be able to successfully manage
the Nutrition 21 business. The Company's management does not have significant
experience in Nutrition 21's nutritional supplement business. While Nutrition
21's current personnel have indicated their intention to continue with the
business, the Company does not have and does not plan to obtain employment
agreements with Nutrition 21's current personnel. There can be no assurance that
Nutrition 21's current personnel will remain with the Company, nor that they can
be readily replaced should they leave the Company. See also "Need for Additional
Funding," "Government Regulation," "Competition," "Technological Obsolescence,"
"Dependence on Patents and Proprietary Technology," and "Dependence on Limited
Number of Products."
3
<PAGE>
Continuing Operating Losses
The Company has had net operating losses since its inception in 1983. At June
30, 1997 the Company's accumulated deficit was approximately $42.4 million and
in fiscal 1997, such operating losses were approximately $15.6 million. The
Company's revenues have been generated to date solely from sales of
non-therapeutic products, development agreements, and research grants. The
Company is currently generating sales from its medical food product, Cardia(TM)
Salt Alternative, animal healthcare products, its new Nutrition 21 business, and
development agreements. While the Company is looking to expand its revenues
through, among other things, the continued acquisition of pharmaceutical and
dietary products, it is not certain that any further acquisitions will be
concluded. The Company does not expect to generate revenues from the products
currently in its R&D pipeline for several years. The Company's ability to
achieve profitability depends, in part, on its ability to successfully penetrate
the market with Cardia(TM) Salt Alternative and Nutrition 21's principal
product, chromium picolinate. Profitability will depend, in addition, upon the
Company's ability to obtain regulatory approval for products, to enter into
agreements for product development and/or commercialization, or to develop the
capacity to manufacture and/or market its products. There can be no assurance
that the Company will obtain required regulatory approvals, successfully
develop, commercialize, manufacture and market its products or achieve
profitability.
Need for Additional Funding
The Company's future capital requirements will depend on many factors, including
expenses associated with the continued marketing of existing products, expenses
associated with research and development, and funds required for the acquisition
of products and/or companies. Progress with pre-clinical and clinical trials,
the time and costs involved in obtaining regulatory approvals, the costs
involved in filing, prosecuting and enforcing patent claims, competing
technological and market developments, the establishment of collaborative
arrangements, the cost of manufacturing facilities and of commercialization
activities and arrangements, the cost of product in-licensing and possible
acquisitions may impact the Company. The Company's existing resources are
expected to be sufficient to fund the Company's foreseeable operations for the
next 12 months. However, acquisition activities and any increased research and
development expenses over the present level will require additional funds.
Specifically, the Company is obligated to repay borrowings in the principal
amount of $3.3 million by February 1, 1998 to State Street Bank and Trust
Company. These borrowings were used to fund part of the purchase price for
Nutrition 21. The Company is currently negotiating an extension of this
financing. The Company intends to seek other additional funding through
arrangements with corporate collaborators, through public or private sales of
its securities, including equity securities, or through bank financing
arrangements. The Company does not currently have any specific arrangements for
additional financing and there can be no assurance that additional funding will
be available at all or on reasonable terms. Moreover, any of such financings may
result in substantial dilution to the Company's existing equity holders.
Government Regulation
Products which are intended for use in the diagnosis, cure, mitigation,
treatment or prevention of disease in humans or animals are subject to extensive
governmental regulation. All such products are subject to regulation for quality
assurance, toxicology, safety, and efficacy. Products containing such agents
must undergo thorough preclinical and clinical evaluations of performance as to
safety and efficacy under approved protocols.
The Company intends to pursue regulatory approval for the pharmaceutical and
related uses of its products. The Company's proposed pharmaceutical products,
for both human and animal use, will be subject to the regulatory approval
processes for new drugs. They are subject to approval in the U.S. by the Food
and Drug Administration ("FDA"), and by other developed countries' regulatory
agencies. To take a product from the discovery stage through research and
preclinical development to the point where the Company and/or its partners can
make the necessary filing (to the FDA and governmental agencies outside the
U.S.) to conduct human clinical trials may take several years. Regulatory
requirements to conduct clinical trials are substantial, depend upon a variety
of factors, vary by country, and will further add to the time necessary to
determine whether a product candidate can be approved for
4
<PAGE>
human use. Since the sale of A&B, the Company does not have any pharmaceutical
products which have completed this process. All of these products are in various
stages of preclinical and clinical development. There can be no assurance that
the Company's proposed products will prove to be safe and effective under these
regulatory procedures, or will continue to be marketable even after approval.
All of the Company's products which are currently being marketed are in medical
food or dietary supplement business areas which do not require FDA approval for
marketing, but are subject to monitoring by the FDA. No assurances can be given
that FDA interactions on these products will not occur at some point in the
future. With respect of the Company's products currently in development, in
1996, Nutrition 21 obtained approval from the FDA for chromium picolinate for
use as a supplement in animal feed for swine. The Company made its first
regulatory submission with the FDA in October 1997 for approval of an
Investigational New Drug Application ("IND") for nisin colonic-release tablets
for the treatment of bacterial infections of the colon. In November 1997, the
FDA advised the Company that it could proceed under the IND with a clinical
trial.
In addition to FDA regulations, the Federal Trade Commission ("FTC") regulates
product advertising claims. From 1993 to 1996, Nutrition 21 was subject to an
FTC inquiry regarding certain advertising claims made from 1989 to 1992. In
November 1996, Nutrition 21, without any admission that any laws had been
violated, entered into a settlement agreement with the FTC. This agreement
limits the Company's ability to make claims about its Nutrition 21 products
without "competent and reliable scientific evidence." The agreement also
mandated the maintenance of records relating to advertising materials and the
notification of customers and employees that certain advertising was no longer
to be used unless substantiated by competent and reliable scientific evidence.
Drug Related Risks
Adverse side effects from the treatment of diseases and disorders in both human
and animal patients may occur during clinical testing of a new drug on humans
and animals. Such effects may delay FDA approval, and even cause a company to
terminate its efforts to develop a drug for commercial use. In addition, adverse
side effects that develop after the FDA has approved a drug could result in
legal action against a company. Drug developers and manufacturers, including the
Company, may face substantial liability for damages in the event of adverse side
effects or product defects identified with their products used in clinical tests
or marketed to the public. There can be no assurance that the Company will be
able to defend itself successfully in any suit that may be brought against it
and any such defense is likely to require the utilization of significant Company
resources. Further, there can be no assurance that the Company will be able to
satisfy any claim for which it may held liable resulting from the use or misuse
of products which it has developed, manufactured or sold.
Dependence on Key Executive and Skilled Personnel
The business of the Company depends heavily upon the participation of Mr.
Fredric D. Price, President and Chief Executive Officer of the Company. Loss of
his services would adversely affect the operations of the Company. In addition,
both the long-term and short-term success of the Company depend in large part
upon its continued ability to attract and retain skilled scientific and
managerial employees. There can be no assurance that the Company will at all
times be able to attract such qualified individuals as a result of the highly
competitive nature of the market for such persons.
Competition
The Company is evaluating certain proprietary dietary food products in the areas
of cardiovascular disease, diabetes, infectious disease, and gastrointestinal
disorders. Special Dietary Foods are foods that supply particular dietary needs
or that may aid in the dietary management of disease and are sometimes known as
medical foods, functional foods, or nutraceuticaIs.
5
<PAGE>
The Company was granted an exclusive license by a division of Orion Corporation
("Orion"), the largest pharmaceutical company in Finland, to make, have made,
use and sell in the United States Orion's patented salt alternative. This
product, currently being sold in Finland and Japan by Orion and its licensee,
has significantly less sodium than regular salt and contains potassium and
magnesium, essential minerals that may help in the dietary management of blood
pressure. The Company is marketing this product directly to hypertensive
patients and to medical professionals (physicians. pharmacists and dietitians)
for recommendation to hypertensive patients and to those at risk of developing
hypertension.
The Company has not previously marketed products in this manner. Other larger
food and pharmaceutical companies (with substantially greater financial
resources and/or with relevant marketing experience) could acquire or develop
products that may compete with the Company's salt alternative and with other
special dietary food products that the Company may acquire in the future. There
can be no assurance that the Company's salt alternative will be successful, or
that the Company will be able to develop or acquire other special dietary foods
that have a substantial market presence.
The Company is developing a class of bacteriocins/antimicrobial peptides known
as lanthocins as drugs for the treatment of bacterial infections such as ulcer
disease, diseases of the colon, and hospital-acquired systemic infections. The
Company understands that there are many corporate and research organizations
that are seeking to develop other bacteriocins and other antimicrobial peptides
as drugs to treat these and similar bacterial infections. Success by competitors
in work with other anti-bacterial or germicidal products may substantially and
adversely affect the Company's prospects. Many of the large corporations that
are involved in, or are expected to enter, the field of biotechnology have
substantially greater financial, marketing and human resources than the Company
and have the capability of providing significant long-term competition.
The dietary supplement manufacturing industry is very fragmented with many
competitors and potential competitors which are larger than the Company and
which have greater financial resources than the Company. The Company holds
exclusive rights to the United States patent for chromium picolinate. However,
foreign producers compete on price with the Company in foreign markets. The
Company also faces competition on price from illegal imports.
See also "Dependence on Patents and Proprietary Technology."
Technological Obsolescence
The fields in which the Company's products are being developed are undergoing
rapid technological advances. There is no assurance that the Company will be in
a position to take advantage of such advances. In addition, there can be no
assurance that some of the Company's products will not be rendered obsolete as a
result of the successful application of such technology by competitors. In the
dietary supplement market there are numerous products for which claims are made
similar to those made by the Company for chromium picolinate. Research
supporting competitors' claims in the dietary supplement market is not subject
to mandatory review by any government agency, and new products can appear and be
brought to market rapidly and with little advance notice. While the Company
believes that its current research provides strong substantiation for its claims
for chromium picolinate, there can be no assurance that a competitive product
will not appear or be supported by new research before the Company is able to
respond with new product development or countervailing research. See also
"Government Regulation."
Product Liability Claims and Uninsured Risks
To the extent that the Company is successful in developing and marketing new
products, it will be exposed to liability resulting from the use of such
products. The Company has obtained product liability insurance for the products
it currently markets and intends to obtain product liability insurance for
products it will market in the future. Although the Company may apply for
product liability insurance, there is no assurance that it will receive
insurance or that such insurance will be sufficient to cover all possible
liabilities.
6
<PAGE>
Dependence on Others
In order to develop, test and market its products, it may be necessary for the
Company to obtain licenses to patents or other proprietary rights of third
parties, or enter into agreements with collaborative partners. There can be no
assurance that any such licenses or agreements would be available, if at all, on
terms acceptable to the Company. If AMBI is not able to obtain such licenses or
enter into such agreements, it could encounter delays in introducing its
products into the market, or find that development, manufacture or sale of its
products will be limited.
No Manufacturing Experience and Reliance on Third Parties for Manufacturing
The Company currently has no facilities to manufacture its products in
accordance with Good Manufacturing Practices ("GMP") prescribed by the FDA and
must rely on third parties to manufacture its products. There can be no
assurance that these manufacturers will meet the Company's requirements for
quality, quantity and timeliness, or that the Company would be able to find
substitute manufacturers, if necessary.
Dependence on Patents and Proprietary Technology
The biotechnology and pharmaceutical industries place considerable importance on
obtaining patent and trade secret protection for new technologies, products and
processes. The Company's success will depend, in part, on its ability to obtain
patent protection for its products and manufacturing processes, preserve its
trade secrets and operate without infringing the proprietary rights of third
parties. In addition to the Company's own patents and patent applications, Orion
Corporation and the University of Maryland have exclusively licensed their
rights in certain patents and patent applications to the Company. The Company's
new Nutrition 21 business also holds exclusive rights to the United States
patent for chromium picolinate. The Company's future performance is partly
dependent upon these license agreements. The Company's rights under these
agreements are also subject to the risks inherent in relying on patent
protection described below.
The Company is conducting research and expects to seek additional patents in the
future, but there can be no assurance as to its success or the timeliness in
obtaining any such patents or as to the breadth or degree of protection, which
any such patents will afford the Company. The patent position of biotechnology
and pharmaceutical firms is often highly uncertain and usually involves complex
legal and factual questions. There is a substantial backlog of biotechnology
patent applications at the United States Patent and Trademark Office. No
consistent policy has emerged regarding the breadth of claims covered in
biotechnology patents. Accordingly, there can be no assurance that any current
or future patent applications relating to the Company's products or technology
will result in patents being issued or that, if issued, such patents will afford
adequate protection to the Company or not be challenged, invalidated or
infringed. Furthermore, there can be no assurance that others will not
independently develop similar products and processes, duplicate any of the
Company's products or, if patents are issued to the Company, design around such
patents. In addition, the Company could incur substantial costs in defending
itself in suits brought against it or in suits in which the Company may assert
its patents against others. If the outcome of any such litigation is adverse to
the Company, the Company's business could be adversely affected. To determine
the priority of inventions, the Company may also have to participate in
interference proceedings declared by the United States Patent and Trademark
Office, which could result in substantial cost to the Company.
In addition, the Company may be required to obtain licenses to patents or other
proprietary rights of third parties. No assurance can be given that any licenses
required under any such patents or proprietary rights would be made available on
terms acceptable to the Company, if at all. If the Company does not obtain such
licenses, it could encounter delays in product market introductions while it
attempts to design around such patents or other rights, or be unable to develop,
manufacture or sell products.
The Company also seeks to protect its proprietary technology, including
technology which may not be patented or patentable, in part by confidentiality
agreements and, if applicable, inventors' rights agreements with its
collaborators,
7
<PAGE>
advisors, employees and consultants. There can be no assurance that these
agreements will not be breached, or that the Company will have adequate remedies
for any breach or that the Company's trade secrets will not otherwise be
disclosed.
Dependence on Limited Number of Products
Following the divestiture of A&B, the Company's revenues are primarily derived
from the sales of two new products launched in the 1996 fiscal year, Cardia Salt
Alternative ($3.6 million in fiscal 1997) and Wipe Out Dairy Wipes ($1.2 million
in fiscal 1997), and from sales of chromium picolinate, the principal product of
the newly acquired Nutrition 21 business. While the Company is endeavoring to
acquire or develop additional products, at the present time a decline in the
sales of Cardia Salt Alternative, Wipe Out Dairy Wipes, or chromium picolinate
for whatever reason could have a material adverse impact on the Company's
results of operations and financial condition.
Sales Dependent in Part on Third Party Reimbursement
When they become available, sales of the Company's pharmaceutical products may
depend to some extent on the availability of reimbursement from third-party
payers, such as government and private insurance plans. No assurance can be
given that such reimbursement will be available.
Dependence on Acquisitions
The Company intends to expand in part by pursuing a strategy of seeking
acquisitions. There can be no assurance that suitable acquisition candidates can
be found or effectively integrated into the Company. There can be no assurance,
that future acquisitions will not have an adverse effect upon the Company's
operating results, particularly in the fiscal quarters immediately following the
consummation of such transactions during which the operations of the acquired
businesses are being integrated into the Company's operations.
Maintenance Criteria for Nasdaq Securities; Penny Stock Rules
The Common Stock is quoted on the Nasdaq National Market System. In order to
maintain such listing the Company must continue to be registered under Section
12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and have
either net tangible assets of at least $4,000,000, there must be at least
750,000 shares outstanding not held by affiliates of the Company with a market
value of at least $5,000,000, at least 400 shareholders, a minimum bid price of
$1.00 per share, and at least two market makers. The Company believes that it
currently complies with all of the requirements for continued listing. There can
be no assurance that in the future the Company will continue to meet the
requirements for continued listing on the Nasdaq National Market System. If the
Company's securities fail to maintain a Nasdaq listing, the market value of the
Common Stock would likely decline and purchasers thereof would likely find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Common Stock.
In addition, if the Company fails to maintain a Nasdaq listing for its
securities, and no other exclusion from the definition of a "penny stock" under
the Exchange Act is available, then any broker engaging in a transaction in the
Company's securities would be required to provide any customer with a risk
disclosure document, disclosure of market quotations, if any, disclosure of the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market values of the Company's securities
held in the customer's accounts. The bid and offer quotation and compensation
information must be provided prior to effecting the transaction and must be
contained on the customer's confirmation. If brokers become subject to the
"penny stock" rules when engaging in transactions in the Company's securities,
they would become less willing to engage in such transactions, thereby making it
more difficult for purchasers of the Common Stock to dispose of their shares.
8
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Shares Eligible for Future Sale
Sales of a substantial number of shares of Common Stock in the public market
could adversely affect the market price for the Common Stock. The Company
currently has outstanding 222 shares of its Series C Convertible Preferred Stock
which as of December 15, 1997 are convertible into 1,391,943 shares of
Common Stock (subject to anti-dilution adjustments), 22,500 shares of Series D
Preferred Stock, and 528,937 Warrants issued in connection with the Series D
Preferred Stock. The Company has registered the sale of all of the Common Stock
underlying the Preferred Stock and Warrants as well as 4,342,467 shares of
Common Stock issuable pursuant to various other warrants and stock options.
Dividends Not Likely
The Company has never paid any dividends on its Common Stock. The payment of
dividends is also restricted by provisions of the Preferred Stock. When the
Company becomes legally able to pay dividends, such payment shall be subject to
the discretion of the Board of Directors, which will take into account earnings,
financial requirements of the Company, and other factors deemed relevant by the
Board of Directors. For the foreseeable future, it is anticipated that any
earnings, which may be generated from operations of the Company, will be used to
finance the growth of the Company, and that cash dividends will not be paid to
holders of Common Stock.
Volatility of Stock Price
The market prices for securities issued by small health care companies have been
volatile. Announcements of technological innovations for new commercial products
by the Company's competitors, adverse developments concerning regulatory review,
proprietary rights, corporate plans, the introduction of new products, and
changes in general conditions in the pharmaceutical industry may have a
significant impact on the Company's business and on the market price of the
Common Stock.
9
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Offered
Shares by the Selling Security Holders.
SELLING SECURITY HOLDERS
The following table sets forth the names of the Selling Security Holders,
the number of shares of Common Stock beneficially owned by such Selling Security
Holder and the number of Offered Shares which may be offered for sale pursuant
to this Prospectus by each such Selling Security Holder. None of the Selling
Security Holders has held any position, office or other material relationship
with the Company or any of its affiliates within the past three years other than
as a result of his or its ownership of shares of Common Stock. The Offered
Shares may be offered from time to time by the Selling Security Holders named
below. However, such Selling Security Holders are not obligated to sell any such
Offered Shares immediately under this Prospectus. All information with respect
to share ownership has been furnished by the Selling Security Holders. Because
the Selling Security Holders are not obligated to sell any such Offered Shares,
no estimate can be given as to the number of shares of Common Stock that will be
held by any Selling Security Holder upon termination of any offering made
hereby.
Securities to
Securities Owned Securities be Owned
Name and Address Before Offering to be Sold (1) after Offering
- ---------------- ----------------- -------------- --------------
Alice Barnhart 7,000 7,000 -0-
James Bie, trustee Bie
Family Trust 30,000 30,000 -0-
Herbert H. Boynton or 240,000 240,000 -0-
Donna P. Boynton,
co-trustees under
Declaration of Trust
dated June 22, 1978,
as amended
Diana Chubbic 25,000 5,000 20,000
Joel Cornish 27,500 27,500 -0-
Patty Jo Cornish 7,000 7,000 -0-
Melissa Cunningham 5,000 5,000 -0-
Stephanie Dutton 2,500 2,500 -0-
Mary Erwin 17,500 17,500 -0-
April Johnson 1,250 1,250 -0-
Howden King 18,500 17,500 1,000
Angelique Mambelli 35,000 35.000 -0-
Scot A. Morris 10,500 10,500 -0-
Patricia P. Ortleib 4,650 4,650 -0-
10
<PAGE>
Laurence Rivkin, trustee L.N.R. 47,500 47,500 -0-
Family Trust
Brett Smithers 2,650 2,350 300
Al Smithson 3,500 3,500 -0-
Hayley Wade 1,250 1,250 -0-
Jack M. and Mary G. 35,000 35,000 -0-
Williams, trustees,
The Williams Family Trust
- --------------------
(1) Assumes sale of all Offered Shares.
PLAN OF DISTRIBUTION
The securities are being offered for the respective accounts of the
Selling Security Holders. The Company will not receive any proceeds from the
sale of any securities by the Selling Security Holders. Pursuant to this
Prospectus, the Offered Shares may be sold by the Selling Security Holder from
time to time while the Registration Statement to which this Prospectus relates
is effective on the Nasdaq National Market System ("NNM") or otherwise at prices
and terms prevailing at the time of sale, at prices and terms related to such
prevailing prices and terms, in negotiated transactions or at fixed prices. The
Selling Security Holder may choose to sell all or a portion of such Offered
Shares from time to time in any manner described herein. The methods by which
the Offered Shares may be sold by the Selling Security Holder include, without
limitation: (i) ordinary brokerage transactions, which may include long or short
sales, (ii) transactions which involve cross or block trades or any other
transactions permitted by the NNM, (iii) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus, (iv) "at the market" to or through market makers or into an existing
market for the Common Stock, (v) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents, (vi) through transactions in options or swaps or other
derivatives (whether exchange-listed or otherwise), or (vii) any combinations of
any such methods of sale. In addition, the Selling Security Holder may enter
into hedging transactions with broker-dealers which require the delivery to such
broker-dealers of the Offered Shares offered hereby, which Offered Shares such
broker-dealers may resell pursuant to this Prospectus.
In effecting sales, brokers and dealers engaged by the Selling Security
Holder may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Security Holder to
sell a specified number of Offered Shares at a stipulated price per share, and,
to the extent such a broker or dealer is unable to do so acting as agent for the
Selling Security Holder, may purchase as principal any unsold Offered Shares at
the price required to fulfill such broker or dealer commitment to the Selling
Security Holder. Brokers or dealers who acquire Offered Shares as principals may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other brokers or dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise,
at market prices and terms prevailing at the time of sale, at prices and terms
related to such prevailing prices and terms, in negotiated transactions or at
fixed prices, and in connection with the methods as described above. The Offered
Shares held by the Selling Security Holder may also be sold hereunder by
brokers, dealers, banks or other persons or entities who receive such Offered
Shares as a pledgee of the Selling Security Holder. The Selling Security Holder
and brokers and dealers through whom sales of Offered Shares may be effected may
be deemed to be "underwriters," as defined under the Securities Act, and any
profits realized by them in
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<PAGE>
connection with the sale of the Offered Shares may be considered to be
underwriting compensation.
The agreement between the Company and the Selling Security Holders,
dated as of August 11, 1997 (the "Agreement"), provides that the Company and the
Selling Security Holders will enter into agreements indemnifying each other
against certain liabilities, including civil liabilities under the Securities
Act respecting this Registration Statement. The Agreement also provides that the
Selling Security Holders will not sell or dispose of their Offered Shares for
various periods. Selling Security Holders holding an aggregate of 85,000 shares
agreed not to sell or dispose of their Offered Shares until November 10, 1997,
Selling Security Holders holding an aggregate of 175,000 shares have agreed not
to sell or dispose of their Offered Shares until February 7, 1998, and Mr.
Boynton has agreed not to sell or dispose of his Offered Shares until August 11,
1998.
EXPERTS
The consolidated financial statements of the Company as of June 30,
1996 and 1995, and for each of the years of the three-year period ended June 30,
1996, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering are being passed
upon for the Company by Oscar D. Folger, Esq., 521 Fifth Avenue, New York, New
York 10175. Mr. Folger's wife owns 5,000 shares of the Common Stock of the
Company.
MATERIAL CHANGES
There have been no material developments since the filing on September
26, 1997 of the Company's annual report on Form 10-K for the fiscal year ended
June 30, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From 1989 through 1992, the Company issued an aggregate of 11,583,837
shares of Common Stock to Burns Philp & Company, Limited ("BP") in connection
with various transactions. The issuances consisted of (1) a sale to BP of
1,000,000 shares of Common Stock in 1989, (2) 9,648,837 shares of Common Stock
issued as payment for the purchase of A&B pursuant to an Agreement for the
Purchase and Sale of Stock dated as of June 30, 1992 (the "1992 Purchase
Agreement"), and (3) the issuance in July 1993 of an additional 935,000 shares
of Common Stock to BP pursuant to terms of the 1992 Purchase Agreement. During
July 1996, BP sold 1,400,000 shares of Common Stock, and during December 1996 BP
transferred 2,420,000 shares of Common Stock to the Company as part of the
purchase price of A&B. As a result of the issuances in 1989, 1992, and 1993 and
the sales of Common Stock in July and December 1996, BP currently owns 7,763,837
shares of Common Stock.
Under the 1992 Purchase Agreement, the Company and BP entered into the
following arrangements and understandings with respect to election of directors
and related matters:
The by-laws of the Company were amended to provide, among other things,
that until September 1, 1996 the Board of Directors shall consist of seven
directors. The by-laws further provided that David Guttmann, Peter Blackburn and
Benjamin Sporn were designated "Prior Directors," and that the Board of
Directors was to nominate
12
<PAGE>
three persons designated by the Prior Directors as the Board's nominees for
election as directors at meetings of shareholders. In September 1994, the
Company hired Fredric D. Price as President and Chief Executive Officer. In
connection with this hiring, four directors: Peter Blackburn, Alan English,
Colin Kop and Benjamin Sporn resigned from the Board. Mr. Price was elected to
the Board and designated a Prior Director by the remaining Prior Director, Mr.
Guttmann. The Board then authorized Mr. Price to propose three new directors to
fill the remaining vacancies. In January 1995, Drs. Audrey T. Cross, Douglas A.
Cotter and Robert E. Pollack were proposed by Mr. Price and elected to the
Board. In October 1995, David Guttmann resigned from the Board and Dr. Sheldon
G. Gilgore was elected to the Board. In May 1996, Ian Clack resigned from the
Board and Colin Kop was elected to the Board. In July 1996, Dr. Cotter resigned
from the board. See "Directors and Executive Officers of the Registrant--
Arrangements Regarding the Election of Directors."
The amended by-laws also provide that the following actions by the
Company shall require the prior favorable vote of not less than six directors:
termination of the Company's chief executive officer, or a change in his or her
responsibilities or compensation, or the retention of any chief executive
officer; removal of the Company's chairman or the election of any person as
chairman other than the person last elected to such position; the issuance of
any shares of capital stock or of securities convertible or exercisable into
shares of capital stock except as to outstanding warrants, options and other
convertible securities; the grant of options to any officer or director; any
merger, or any acquisition or disposition of assets in excess of $250,000; the
incurrence of a commitment or obligation in excess of $650,000; any change in
the Company's charter or by-laws; any transaction with any affiliate of BP,
including any overhead charge or any other intercompany charge or allocation,
but excluding the continuation of certain current agency agreements; any
dividend or other distribution except on the 1992 Redeemable Preferred; any
purchase by BP (whether in the public market or in private transactions, or
otherwise) of any shares of the Company's Common Stock which would increase BP's
percentage ownership of the outstanding Common Stock beyond the percentage
ownership of such stock owned by BP on August 31, 1992 subject to certain
increases provided for in the Agreement.
BP also agreed that:
BP and its affiliates will for a four-year period vote all shares of
the Company stock from time to time owned by them in favor of election
as directors of the Prior Directors and their nominees.
BP and its affiliates will for a four-year period be entitled to
purchase shares of Common Stock (in the public market or in private
transactions, or otherwise) only as permitted in the Company's by-laws.
So long as BP and its affiliates shall have control of the Company, BP
will not sell, in a single transaction or in a series of transactions
occurring within a period of up to 18 months, to any single purchaser
or to any "group," a block of the Company shares owned by BP or its
affiliates which shall be sufficient in itself both to (i) divest BP
and its affiliates of control of the Company and (ii) vest control of
the Company in the purchaser or purchasers, unless BP shall cause the
purchaser to tender for the purchase of all shares of the Company which
are owned by all shareholders of the Company on the same terms and
conditions as those which apply to the sale by BP. The term "control"
has the meaning assigned to it in Rule 405 of Regulation C under the
Securities Act, and "group" has the meaning assigned to in Rule 13D of
the Securities Exchange Act. However, BP is permitted to sell, without
compliance with this provision, a block of shares to an underwriter for
the purposes of a broad distribution of the shares. An affiliate of BP
will, if required by the Company, for a four-year period maintain its
bank comfort letter in respect of not more than GBP 300,000 of bank
borrowings by the Company.
So long as BP or its affiliates owns at least 50% of the Company's
total voting power and for five years after BP and its affiliates
ceases to own at least 50% of the Company's total voting power, neither
BP nor any of its affiliates will manufacture, sell or otherwise deal
in or with nisin or Nisaplin (or any derivative products) except under
distribution agreements with the Company on terms equivalent to those
in effect on
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<PAGE>
June 30, 1992. At such time after the five-year period aforesaid that
BP shall be permitted to engage in the businesses aforesaid, BP will
nevertheless continue to refrain from using trade secrets and other
confidential information which are the property of the Company.
BP has certain demand and "piggyback" registration rights for its
shareholdings.
On December 12, 1996, the Company completed the sale of its UK-based
subsidiary, A&B to BP in accordance with the terms of a Share Purchase Agreement
(the "1996 Purchase Agreement") for $13.5 million in cash and the transfer to
the Company of 2.42 million shares of the Company's Common Stock held by BP. In
addition, BP has provided the Company with a revolving line of credit of up to
$2.5 million. Any borrowings under this line of credit can be forgiven under
certain circumstances. As of the date of filing this Form 10-K, no amount has
been drawn under this line of credit. In accordance with the 1996 Purchase
Agreement, the cash purchase price was paid in two installments: an initial
payment of $8 million to the Company was made on December 11, 1996; and a final
payment of $5.5 million was made to the Company on June 12, 1997.
In connection with the transaction, the Company and A&B entered into
two License Agreements. Pursuant to the first License Agreement, the Company is
exclusively licensed by A&B for the use of nisin generally in pharmaceutical
products and animal healthcare products. Pursuant to the second License
Agreement, A&B is exclusively licensed by the Company generally for the use of
nisin as a food preservative and for food preservation. In addition, the Company
entered into a Supply Agreement with A&B pursuant to which A&B was required to
sell nisin to the Company while the Company was establishing its own source of
supply. The Company established its own source of supply for nisin, and sent
notice of termination of the Supply Agreement effective September 26, 1997.
In connection with the transaction, the Company and BP entered into an
Investors' Rights Agreement pursuant to which BP agreed until December 11, 1998,
not to acquire, directly or indirectly, the Company's securities, and to refrain
from selling the Company's Common Stock, except under certain circumstances
through underwritten public offerings and private placement transactions. Until
December 11, 1998 and so long as BP owns at least 10% of the Company's
outstanding common stock, BP will vote its shares in favor of Fredric D. Price
and one nominee of Fredric D. Price for election to the Company's Board. So long
as BP owns at least 20% of the Company's outstanding common stock, BP is
entitled to nominate one member for election to the Company's Board.
As of the date of sale, two of the Company's Board members were
representatives of BP. BP's Board representatives did not participate in the
vote of the Company's Board which approved the sale of A&B to BP. As a result of
the sale, BP's representation on Registrant's Board of Directors is reduced from
two members to one member. Colin Kop is currently serving as the Director
designated by BP. The amount of consideration for the sale was arrived at
through arms-length negotiation and a fairness opinion was obtained.
During the fiscal year ended June 30, 1995, the Company's A&B
subsidiary made sales of approximately $2,117,000 to Mauri Laboratories Pty
Limited ("Mauri"). In addition, it purchased approximately $832,000 of goods
from Mauri. During the fiscal year ended June 30, 1996, the Company's A&B
subsidiary made sales of approximately $1,939,000 to Mauri and purchased
approximately $1,430,000 of goods from Mauri. Mauri was, until June 14, 1996, a
wholly-owned subsidiary of BP. On June 14, 1996, Mauri was sold to Gist-brocades
N.V. of the Netherlands and ceased to be an affiliate.
Certain of A&B's U.K. based staff provided accounting and administrative
services for other U.K. based subsidiaries of BP. During the fiscal year ended
June 30, 1995, A&B, as a result of these activities, received income from Burns
Philp (U.K.) plc. of approximately $75,000. During the fiscal year ended June
30, 1996, A&B, as a result of these activities, received income from Burns Philp
(U.K.) plc. of approximately $74,000.
A&B manufactured certain products on a contract basis for Imperial
Biotechnology Limited ("IBT") at its
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<PAGE>
U.K. production site. IBT was, until December 12, 1995, a 50% owned affiliate of
BP. On December 12, 1995, IBT was sold to Protein Technologies International of
the USA and ceased to be an affiliate. During the fiscal year ended June 30,
1995, A&B received income of approximately $77,000 as a result of these
activities. During the fiscal year ended June 30, 1996, A&B received no income
as a result of sales to IBT prior to IBT ceasing to be an affiliate.
From time to time, the Company advanced funds to Burns Philp Inc., a
wholly owned subsidiary of BP. During the fiscal year ended June 30, 1995, the
Company received interest income of approximately $63,000 in respect of such
advances. During the fiscal year ended June 30, 1996, the Company received
interest income of approximately $79,000 in respect of such advances.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission by
the Company are incorporated herein by reference and made a part hereof. The
Commission file number for all documents which are incorporated by reference is
1-12106.
(1) Annual Report on Form 10-K for the fiscal year ended
June 30, 1997, as amended.
(2) Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1997.
(3) Current Report on Form 8-K filed December 27, 1996,
as amended November 6, 1997 and December 19, 1997.
(4) Current Report on Form 8-K filed August 25, 1997,
as amended October 22, 1997 and December 19, 1997.
(5) The section entitled "Description of Securities"
in the Company's registration statement on Form S-1
(Registration No. 33-4822), declared effective on
August 28, 1986.
In addition, any amendments to such document and all other reports,
proxy statements and other documents of the Company hereafter filed with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the termination of the offering of the securities
covered by this Prospectus, shall be deemed to be incorporated in this
Prospectus and made a part hereof by reference from the date of filing of each
such document. Any statement contained in an earlier document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in the Prospectus (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically incorporated by
reference into the information that the Prospectus incorporates). Such request
should be directed to the Secretary, AMBI Inc., 771 Old Saw Mill River Road,
Tarrytown, New York 10591.
15
<PAGE>
INDEMNIFICATION
The Company's by-laws provide that the Company will indemnify its
directors and officers to the fullest extent permitted by law. The New York
Business Corporation Law (the "BCL") provides that a corporation may indemnify a
director or officer, made a party to a derivative action, against reasonable
expenses actually and necessarily incurred by him in connection with the defense
of such action, except in relation to matters as to which such director or
officer is adjudged to have breached his duty to the corporation. In addition,
the BCL provides that a corporation may indemnify a director or officer, made,
or threatened to be made, a party to any action other than a derivative action
on behalf of the indemnifying corporation, whether civil or criminal, against
judgments, fines, amounts paid in settlement and reasonable expenses actually
and necessarily incurred as a result of such action, if such director or officer
acted in good faith, for a purpose which he reasonably believed to be in the
best interests of the corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his conduct was unlawful.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ADDITIONAL INFORMATION
This Prospectus contains certain information concerning the Company
and its securities, but does not contain all the information set forth in the
Registration Statement and the Exhibits thereto filed with the Commission under
the Securities Act, to which reference is made. Any summary from the Exhibits
contained in this Prospectus is necessarily incomplete and must not be
considered as a full statement of the provisions of such instruments.
16
<PAGE>
AMBI INC.
500,000 Shares of Common Stock
----------------------
PROSPECTUS
----------------------
December ___, 1997
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus, and if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This Prospectus
does not constitute an offer to sell or a solicitation of any offer to buy any
securities in any jurisdiction in which such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof.
TABLE OF CONTENTS
Available Information ....... 2
The Company ................. 3
Risk Factors ................ 3
Use of Proceeds ............. 10
Selling Security
Holders ..................... 10
Plan of Distribution ........ 11
Experts ..................... 12
Legal Matters ............... 12
Material Changes ............ 12
Incorporation by Reference .. 15
Indemnification ............. 16
Additional Information ...... 16
17
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PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered under this Registration Statement are estimated as
follows:
Securities and Exchange Commission fee.... $ 389
Nasdaq National Market listing fee........ 10,000
Legal Fees and expenses................... 10,000
Accountant's fees and expenses............ 5,000
Miscellaneous............................. 611
-------
Total................... $26,000
Item 15. Indemnification of Directors and Officers.
Section 5.04 of the Company's by-laws provides that the Company will
indemnify its directors and officers to the fullest extent permitted by law.
Section 722 of the New York Business Corporation Law provides that a
corporation may indemnify a director or officer, made a party to a derivative
action, against reasonable expenses actually and necessarily incurred by him in
connection with the defense of such action, except in relation to matters as to
which such director or officer is adjudged to have breached his duty to the
corporation. Such indemnification does not include amounts paid in settling or
otherwise disposing of a threatened or pending action which is settled or
otherwise disposed of without court approval.
Section 722 of the Business Corporation Law further provides that a
corporation may indemnify a director or officer, made, or threatened to be made,
a party to any action other than a derivative action on behalf of the
indemnifying corporation, whether civil or criminal, against judgments, fines,
amounts paid in settlement and reasonable expenses actually and necessarily
incurred as a result of such action, if such director or officer acted in good
faith, for a purpose which he reasonably believed to be in the best interests of
the corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
Section 723 specifies the manner in which payment of such indemnification
may be authorized by the corporation. It provides that indemnification by a
corporation is mandatory in any case in which the director or officer has been
completely successful, whether on the merits or otherwise, in defending an
action referred to in Section 722. In the event that the director or officer has
not been wholly successful or the action is settled, indemnification must be
authorized by the appropriate corporate action as set forth in Section 723.
Section 724 provides that upon application by a director or officer,
indemnification may be awarded by a court to the extent authorized under
Sections 722 and 723. Section 725 provides that no indemnification agreement in
any Certificate of Incorporation or By-Laws is valid unless consistent with the
statute. In addition, Section 725 contains certain other miscellaneous
provisions affecting the indemnification of directors and officers.
Insofar as indemnification by the Company for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission
18
<PAGE>
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 16. Exhibits.
Exhibit No. Description
(5) Opinion of Oscar D. Folger *
(23)(a) Consent of Oscar D. Folger *
(23)(b) Consent of KPMG Peat Marwick LLP
* Previously filed.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any fact or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in the volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the high and low and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-
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<PAGE>
effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That for purposes of determining any liability under the Securities
Act of 1933, each filing of Registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
20
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Signatures
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Tarrytown, New York on
the 17th day of December 1997.
AMBI Inc.
By: /s/
---------------------------
Fredric D. Price, President, CEO and Director
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Fredric D. Price as his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3 and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission under the
Securities Act of 1933.
--------------------
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/
- ------------------------
Sheldon G. Gilgore Chairman of the Board December 17, 1997
/s/
- -------------------------
Fredric D. Price President, CEO and Director December 17, 1997
(Principal Accounting and
Financial Officer)
/s/
- -------------------------
Audrey T. Cross Director December 17, 1997
/s/
- -------------------------
Robert E. Flynn Director December 17, 1997
/s/
- -------------------------
Colin Kop Director December 17, 1997
/s/
- -------------------------
Robert E. Pollack Director December, 1997
</TABLE>
21
<PAGE>
Exhibit 23(b)
Independent Auditors' Consent
The Board of Directors
AMBI Inc.:
We consent to the use of our report incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
New York, New York
December 19, 1997
22
