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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
10Q
For Quarter Ended: September 30, 1997
Commission File Number 0-14983
AMBI INC.
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(Exact name of registrant as specified in its charter)
New York 11-2653613
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation of organization)
771 Old Saw Mill River Road, Tarrytown, New York 10591
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(Address of principal executive offices) (Zip Code)
(914) 347-5767
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO _______
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, Par Value $.005 19,288,950 shares as of November 10, 1997
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AMBI INC. & SUBSIDIARY
INDEX
PART I FINANCIAL INFORMATION PAGE
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Item 1 Financial Statements
Condensed Consolidated Balance
Sheets at September 30, 1997
and June 30, 1997 3-4
Condensed Consolidated Statements of
Operations for the three months
ended September 30, 1997 and
September 30, 1996 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity
for the three months ended
September 30, 1997 6
Condensed Consolidated Statements of
Cash Flows for the three months
ended September 30, 1997 and
September 30, 1996 7
Notes to Condensed Consolidated
Financial Statements 8-11
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-14
PART II OTHER INFORMATION
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Item 6 Exhibits and Reports on Form 8K 15
2
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AMBI INC. & SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 June 30
1997 1997
(Unaudited)
$000 $000
------ ------
ASSETS
Current assets:
Cash and cash equivalents 2,351 8,615
Trade accounts receivable less allowance for doubtful
accounts of $104,000 at September 30 and at June 30 3,718 390
Inventories 828 606
Prepayments and other current assets 1,114 404
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Total current assets 8,001 10,015
Property and equipment at cost less accumulated
depreciation of $511,000 at September 30 and $382,000
at June 30 1,064 1,082
Patent costs, licensed technology and other intangible
assets at cost less accumulated amortization of
$962,000 at September 30 and $862,000 at June 30
9,222 1,584
Goodwill at cost less accumulated amortization of
$6,000 at September 30 and $0 at June 30 793
Other assets 311 73
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TOTAL ASSETS 19,401 12,754
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See notes to condensed consolidated financial statements
3
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AMBI INC. & SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
September 30 June 30
1997 1997
(Unaudited)
$000 $000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 922 1,283
Accrued expenses 1,970 1,181
Term loan 3,300
Revolving line of credit facility 2,455
Current portion of note payable and lease obligation 125 156
Preferred dividends payable 454 340
Contingent payments payable - N21 acquisition 61
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Total current liabilities 9,287 2,960
Note payable and lease obligation 155 184
Long term debt 2,000 2,000
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TOTAL LIABILITIES 11,442 5,144
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STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, authorized
5,000,000; Series C convertible preferred,
222 shares outstanding at September 30 and
June 30 respectively (aggregate liquidation
value Series C $2,565,955) Series D * *
convertible preferred, 45,000 shares issued
and outstanding at September 30 and June 30
respectively (aggregate liquidation value
Series D $4,607,260) * *
Common stock, $0.005 par value,
authorized 65,000,000 shares.
Issued and outstanding 19,283,342
at September 30 and 18,783,342 at June 30 96 94
Additional paid-in capital 52,894 51,416
Accumulated deficit (45,031) (43,900)
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TOTAL STOCKHOLDERS' EQUITY 7,959 7,610
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 19,401 12,754
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*Value less than $500
See notes to condensed consolidated financial statements
4
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AMBI INC. & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30
1997 1996
$000 $000
---- ----
Net sales 3,118 4,235
Other operating revenues 125 131
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TOTAL REVENUES 3,243 4,366
Cost of sales (655) (2,489)
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GROSS PROFIT 2,588 1,877
Selling, general and administrative expenses (2,658) (4,605)
Research expenses (495) (1,400)
Depreciation and amortization (172) (242)
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OPERATING LOSS (737) (4,370)
Interest income 44 67
Interest expense (24) (37)
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LOSS BEFORE INCOME TAX EXPENSE (717) (4,340)
INCOME TAX EXPENSE (7) (45)
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NET LOSS (724) (4,385)
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LOSS PER SHARE $(0.06) $(0.21)
See notes to condensed consolidated financial statements
5
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AMBI INC. & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
Common Additional Accumulated
Stock Paid In Deficit
Capital
$000 $000 $000
---- ---- ----
Balance at June 30, 1997 94 51,416 (43,900)
Common stock issued in connection with
the acquisition of Nutrition 21 2 1,185
Preferred stock dividend (114)
Conversion discount on preferred stock 293 (293)
Net loss for the period (724)
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Balance at September 30, 1997 96 52,894 (45,031)
See notes to condensed consolidated financial statements
6
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AMBI INC. & SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30
1997 1996
$000 $000
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Cash flows from operating activities:
Net loss (724) (4,385)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 172 242
Changes in assets and liabilities net of the acquisition
of Nutrition 21:
(Increase)/decrease in trade accounts receivable (721) 299
Decrease in inventories (234) 253
Increase in other current assets (331) (152)
(Decrease)/Increase in accounts payable
and accrued expenses (227) 322
Increase/decrease in preferred dividends payable 114 (240)
Increase in contingent payments payable 61 __
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Net cash used in operating activities (1,217) (3,661)
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Cash flows from investing activities:
Acquisition of Nutrition 21 (10,000)
Acquisitions of property and equipment (14) (344)
Patent costs (95) (41)
Increase in other assets (519)
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Net cash used in investing activities (10,628) (385)
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Cash flows from financing activities:
Borrowings under term loan 3,300
Borrowings under revolving line of credit 2,455
Capital lease obligation repayments (60) (73)
Dividends paid (114)
Proceeds from issuance of common stock __ 287
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Net cash provided by financing activities 5,581 214
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Net (decrease) in cash and cash equivalents (6,264) (3,832)
Cash and cash equivalents at beginning of period 8,615 8,431
Effect of exchange rate movement 7
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Cash and cash equivalents at end of period 2,351 4,606
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Supplementary disclosure of cash flow information:
Interest paid 24 2
Tax paid 7 4
On August 11, 1997 the Company acquired the net assets of N21 in exchange for
$10,000,000 in cash and 500,000 shares of the Company's common stock. In
connection with the acquisition; liabilities were assumed as follows
Fair value of asset acquired $11,644
Cash purchase price 10,000
Stock issued 1,187
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Liabilities assumed $457
See notes to condensed consolidated financial statements
7
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AMBI INC. & SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
Note A Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial statement
reporting and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all
the information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
three month period ended September 30, 1997 are not
necessarily indicative of the results that may be expected for
the year ending June 30, 1998. For further information, refer
to the consolidated financial statements and notes thereto,
included in the Company's annual report on Form 10-K as
amended for the year ended June 30, 1997.
Note B Acquisition of Nutrition 21
On August 11, 1997, the Company acquired the entire beneficial
interest in Nutrition 21 ("N21"), a limited partnership, by
way of the acquisition of Selene Systems, Inc. ("Selene"),
which was the general partner of N21, J. Bie Enterprises,
Inc. ("J. Bie"), which was a limited partner of N21, and the
limited partnership interests owned by all other limited
partners of N21, pursuant to a Purchase Agreement.
N21 is engaged in the business of developing, producing and
marketing proprietary nutrition products and dietary
supplements. N21 has its products manufactured and formulated
to its specifications by contract manufacturers as bulk raw
materials. N21 then sells the raw materials to customers who
incorporate them into over nine hundred finished products such
as vitamin/mineral formulas, dietary supplements, baked goods,
beverages and other products. These products are sold by
customers under a variety of brands throughout the world
through natural/health food stores, supermarkets, drug stores
and direct mail catalogs. Currently N21's primary product is
chromium picolinate, which is marketed under the registered
trademark "Chromax." N21 has an exclusive license from the
USDA for the duration of a patent which covers the composition
of chromium picolinate and its uses, which patent expires
August 8, 2000. The USDA license grants N21 the exclusive
right to manufacture use, and sell chromium picolinate in the
United States. N21 also owns U.S. Patents expiring in 2009,
relating to chromium picolinate treatments for reducing
hyperglycemia and stabilizing the level of serum glucose, for
undesirable levels of blood serum lipids, and increasing lean
body mass, and other patents relating to, among other things,
magnesium taurate treatments of cardiac conditions.
The purchase price for the acquisition was $10,000,000 in cash
plus 500,000 restricted shares of common stock of the Company.
The Purchase Agreement also provides for annual contingent
payments for each of the next four years of $2.5 million
adjusted for the achievement of certain sales levels, and
royalties of 2.5% to 5.0% on set sales of products recommended
for certain patented uses. These contingent payments, which
will be made to former partners of N21, will be recorded as an
addition to the purchase price as the amounts are earned and
amortized over the remaining life of the acquired assets.
Based on sales through September 30, 1997, a contingent
payment of $61,000 has been accrued. The acquisition was
accounted for under the purchase method. As such, the Company
recorded approximately $735,000 of goodwill and $7,913,000 of
other intangible assets, consisting primarily of patents and
trademarks, in connection with the acquisition. The Company is
amortizing the goodwill over fifteen years and amortizing the
other intangible assets over their useful economic lives,
which range from three to fifteen years. During the three
months ended September 30, the Company recorded approximately
$72,000 in amortization expense related to the goodwill and
other intangible assets described above.
8
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As part of the acquisition agreement the Company is required
to pay royalties to the former owners of N21 based upon sales
of certain products recommended for certain patented uses. The
Company has also retained the former chief executive officer
of N21 as a consultant.
Approximately $3,300,000 of the purchase price was provided as
a term loan pursuant to a Revolving Credit and Term Loan
Agreement ("Loan Agreement") with State Street Bank and Trust
Company ("State Street"). Loans earn interest at the bank's
prime rate plus one percent and are due February 1, 1998.
Approximately $6,700,000 of the purchase price was provided
from internal working capital.
Note C Inventories
All inventory consists of finished goods at September 30 and
June 30, respectively.
9
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AMBI INC. & SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
Note D Loss per share
Loss per share for the three months ended September 30, 1997
and September 30, 1996 is computed based on the weighted
average number of shares actually outstanding. No common stock
equivalents are included in the computation of average shares
outstanding because the effect of such inclusion would be to
decrease the loss per share.
Three Months Ended
September 30
1997 1996
$000 $000
---- ----
Net loss (724) (4,385)
Preferred stock dividend (114) (94)
Conversion discount on
preferred stock (293)
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Net income attributable to common
stockholders (1,131) (4,479)
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Average shares outstanding 19,055,081 20,590,860
Loss per share of common stock $(0.06) $(0.21)
In accordance with the March 1997 SEC Staff announcement, the
conversion discount on the Company's preferred stock has been
recognized as additional preferred dividends. The conversion
discount on preferred stock in the table above represents the
amortized discount of $293,000 on the Series D preferred stock
in fiscal 1998.
Note E Pro Forma Financial Information
The following represents the proforma consolidated results of
operations as if the Company and N21 had been combined for
the entire three months ended September 30, 1997 and 1996
respectively. The proforma results of operations reflect
amounts adjusted to their accounting basis as if the
acquisition had occurred at the beginning of the respective
periods. The proforma information is not necessarily
indicative of the results of operations as they may be in
the future or as they would have been had the acquisition
been effected on the assumed dates.
Three Months Ended
September 30
1997 1996
$000 $000
---- ----
Revenues 4,566 8,438
Net loss (365) (2,678)
Loss per share $(0.04) $(0.13)
10
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Note F Liquidity Matters
As discussed in Note B, the $3,300,00 term loan used to
finance a portion of the N21 acquisition is due on February 1,
1998. Also, as discussed in Note B, the Company is required to
make certain contingent payments to the former partners of N21
based on the performance of N21. The Purchase Agreement
requires the first contingent payment to be made no later than
September 11, 1998. These current obligations have caused a
working capital deficit as of September 30, 1997. In light of
these matters the Company is currently exploring various
financing alternatives. The Company is in discussions with
State Street regarding extending the term of the Loan
Agreement. The Company is also considering other financing
options as it relates to the term loan and the contingent
payments. The Company believes that it will be able to extend
the term of the State Street loan or obtain other financing to
satisfy the State Street obligation. The Company also believes
that it will be able to use cash generated from operations or
its short term revolving line of credit to satisfy the
contingent payment obligation. The extension or refinancing of
the term loan and the ability to satisfy the contingent
payment obligation will be significant factors in the
Company's ability to maintain an adequate level of cash flow.
Note G Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standard Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) number 128, "Earnings Per Share" and SFAS No. 129,
"Disclosure of Information about Capital Structure." SFAS No.
128 specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with
publicly held common stock or potential common stock. SFAS No.
128 replaces the presentation of primary EPS and fully diluted
EPS with basic EPS and diluted EPS. It also requires dual
presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital
structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. SFAS No. 129
was issued in connection with SFAS No. 128 and specifies the
required disclosures about capital structure.
In April 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS
No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of
general purpose financial statements. SFAS No. 131 supersedes
SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise", but retains the requirement to report
information about major customers.
All of these statements are effective for financial statements
for both interim and annual periods ending after December 31,
1997. It is not expected that the adoption of any of these
statements will have a material impact on the Company's
financial position or operating results.
11
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Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes thereto of the Company included elsewhere
herein.
General
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The Company's historical revenues have been primarily attributable to sales of
its own products. The Company has acted in the past as selling agent for certain
products of both affiliated as well as unaffiliated companies. Effective July 1,
1995, the Company assumed responsibility for selling products in the US on
behalf of an affiliated company, Burns Philp & Company Ltd. ("Burns Philp").
This relationship was discontinued effective September 11, 1996. The Company
also receives royalty income from users of its patented technology and milestone
payments from research partners.
The Company completed the sale of its UK-based food preservative business, Aplin
& Barrett Ltd. ("A&B"), to Burns Philp on December 12, 1996. As a result, the
operations of A&B are included in the financial statements through that date.
The decision to sell A&B to Burns Philip was made by the Company's Board of
Directors in 1996. At that time directors unaffiliated with Burns Philp
constituted a majority of the Board of Directors. The Board's decision was based
upon its view that the Company's resources would be more profitably employed in
pursuing the development and/or acquisition of other products or businesses and
that such development and acquisitions would be facilitated by the cash proceeds
of the sale of A&B. After the sale, Burns Philip owns approximately 40% of the
Company's Common Stock.
On August 11, 1997, the Company acquired the entire beneficial interest in
Nutrition 21, a limited partnership. Nutrition 21 is engaged in the business of
developing, producing, and marketing proprietary nutrition products and dietary
supplements.
Cost of sales includes both direct and indirect manufacturing costs. Research
expenses include internal expenditures as well as expenses associated with third
party collaborators. Selling, general and administrative expenses include
salaries and overheads, third party fees and expenses, and costs associated with
the selling of the Company's products. The Company capitalizes patent costs and
amortizes them over periods of nine months to fifteen years.
Results of Operations
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Revenues
- --------
Revenues decreased 26% to $3.2 million for the quarter ended September 30, 1997
from $4.4 million for the quarter ended September 30, 1996. The decline is
primarily due to the divestiture of the Company's A&B subsidiary which occurred
December 12, 1996 and accounted for $2.7 million in sales in the quarter ended
September 30, 1996, as well as declines in revenues from sales of other smaller
products. These decreases are partially offset by revenues generated by N21,
which in the period since the August 11, 1997 acquisition date had revenues of
$2.5 million.
Cost of Sales
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Gross profit for the Company as a percentage of net revenues was 83% for the
quarter ended September 30, 1997, compared to 44% for the quarter ended
September 30, 1996. This increase in gross profit reflects a sales mix which
includes the higher margin N21 products for the quarter ended September 30, 1997
compared to a sales mix which included the lower margin A&B products for the
quarter ended September 30, 1996. N21 products had a gross profit percentage of
net revenues of approximately 90% for the quarter ended September 30, 1997,
while A&B had a gross profit as a percentage of net revenues of approximately
28% for the quarter ended September 30, 1996.
Selling, General and Administrative Expenses (SG&A)
- ---------------------------------------------------
SG&A expenses decreased $1.9 million or 42% for the quarter ended September 30,
1997, compared to the quarter ended September 30, 1996. The decrease is
primarily due to the absence of A&B for the quarter (a decrease of $0.7
million), and the lower marketing investment spending on Cardia Salt Alternative
(a decrease of $1.8 million) and Wipe Out Dairy Wipes (a decrease of $0.5
million). This decrease in spending was partially offset by the addition of N21
which incurred SG&A expenses of $0.7 million in the quarter.
12
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Research Expenses
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Research costs decreased $0.9 million or 64% for the quarter ended September 30,
1997, compared to the quarter ended September 30, 1996. This decrease is due to
the Company's decision to only fund research activities that are focused on
achieving drug development milestones.
Operating Loss
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The operating loss decreased 83% to $0.7 million for the quarter ended ended
September 30, 1997 from $4.4 million for the quarter ended September 30, 1996.
This decrease in the operating loss was caused by the decrease in selling,
general and administrative expenses, the decrease in research costs and the
increase in gross profit attributable to the acquisition of N21.
Loss Before Income Taxes
- -------------------------
The Company's loss before income taxes was caused by the same factors described
above.
Income Tax Expense
- ------------------
The Company's provision for income taxes for the three months ended September
30, 1997 consists of various state and local taxes. The Company has net
operating loss carryforwards for federal income tax purposes of approximately
$17,000,000 which are available to offset future federal taxable income, if any,
through 2012.
Quarterly Variations
- --------------------
On a quarter-to-quarter basis, the Company's sales and income may vary widely,
as a result of various factors, including, for example, customers placing orders
in anticipation of a price increase and customers adjusting finished goods
inventory levels. As a result, the Company may report sales increases or
declines and/or income gains or losses for a particular quarter that may not
reflect end-customer usage of the Company's products.
Liquidity and Capital Resources
- -------------------------------
As of September 30, 1997, the Company had a working capital defidcit of $1.6
million, which included cash and cash equivalents of $2.3 million. On June 30,
1997, working capital was $7.1 million, which included cash and cash equivalents
of $8.6 million.
The Company borrowed $5.8 million during the quarter ended September 30, 1997 as
a result of loans from State Street. $3.3 million of the loans from State Street
was used to fund the acquisition of N21, while the remaining $2.5 million was
used to provide working capital. Existing working capital was used to fund the
remaining $6.7 million of the purchase price of N21 and the net loss of $0.7
million.
As a result of the sale of A&B, the Company experienced a significant decline in
revenues during the latter part of fiscal 1997. This loss of revenues also
contributed to the increase in operating loss to $15.6 million in fiscal 1997,
compared with an operating loss of $4.6 million in fiscal 1996. A&B generated
cash flows of $0.5 million and $3.1 million in fiscal 1997 and fiscal 1996,
respectively. 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 $16.3 million and net income
of $6.0 million 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.
In connection with the sale of A&B, Burns Philt provided the Company with a
revolving credit line of up to $2.5 million that could be forgiven under certain
circumstances related to the performance of the Nisaplin food preservative
business through June 30, 1999. Borrowings under this credit line will accrue
interest at a rate equal to the prime rate set from time to time by Citibank. To
date the Company has not borrowed any monies against this credit line nor is it
determinable at this time whether the future performance of the food
preservative business would result in a forgiveness.
13
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The Company anticipates a decline in research and SG&A expenditures as it seeks
to find pharmaceutical partners to fund research. In addition, the Company is
eliminating expenditures that are not critical to the process of generating
sales or meeting drug development milestones. The Company may report operating
income during the fiscal year ending June 30, 1998 as a result of the
aforementioned expense reduction combined with operating income provided from
the recent acquisition of Nutrition 21 in August 1997.
The acquisition of Nutrition 21 was funded in part by a loan from State Street,
which bears interest at State Street's prime rate plus one percent and is due
February 1, 1998. Also, as discussed in Note B, the Company is required to make
certain contingent payments to the former partners of N21 based on the
performance of N21. The Purchase Agreement requires the first contingent payment
to be made no later than September 11, 1998. These current obligations have
caused a working capital deficit as of September 30, 1997. In light of these
matters the Company is considering financing options with respect to the term
loan and the contingent payments. The Company believes that it will be able to
extend the State Street loan or obtain other financing to satisfy the State
Street obligation. The Company also believes that it will be able to use cash
generated from operations or its short term revolving line of credit to satisfy
the contingent payment obligation. The extension or refinancing of the term loan
and the ability to satisfy the contingent payment obligation will be significant
factors in the Company's ability to maintain an adequate level of cash flow.
After the acquisition of N21, the Company's two primary sources of financing are
cash generated from continuing operations and a revolving line of credit. The
revolving line of credit was obtained from State Street as part of the financing
for the acquisition. The availability under this revolving line of credit is
based on the Company's accounts receivable and inventory. At September 30, 1997
approximately $2,500,000 had been drawn down on this line. If the State Street
loans discussed above are extended or additional financing is obtained to
satisfy the State Street obligations, the Company believes that cash generated
from operations or the amounts available under the line of credit will provide
sufficient liquidity to fund operations.
Inflation and Prevailing Economic Conditions
- --------------------------------------------
The Company does not believe inflation has had a significant impact on the
Company's operations.
The Company does not believe exchange rates have had a significant impact on the
Company's operations.
Seasonality
- -----------
The Company does not believe there is any significant seasonal effect on the
Company's operations. There may be variations between quarters due to other
factors. See "Quarterly Variations."
Recently Issued Accounting Standards
- ------------------------------------
In February 1997, the Financial Accounting Standard Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) number 128, "Earnings Per
Share" and SFAS No. 129, "Disclosure of Information about Capital Structure."
SFAS No. 128 specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with publicly held common
stock or potential common stock. SFAS No. 128 replaces the presentation of
primary EPS and fully diluted EPS with basic EPS and diluted EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. SFAS No. 129 was
issued in connection with SFAS No. 128 and specifies the required disclosures
about capital structure.
In April 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general
purpose financial statements. SFAS No. 131 supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise", but retains the requirement to
report information about major customers.
All of these statements are effective for financial statements for both interim
and annual periods ending after December 31, 1997. It is not expected that the
adoption of any of these statements will have a material impact on the Company's
financial position or operating results.
14
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PART II - OTHER INFORMATION
Item 6 - Exhibits and Report on Form 8-K
Exhibit 27 - Financial Data Schedule
The Company filed reports on Form 8-K and 8-KA relating to the purchase of
Nutrition 21 on August 25 and October 22, respectively.
The Company has filed a report on Form 8-KA relating to the sale of its Aplin
and Barrett subsidiary on November 6, 1997.
<PAGE>
AMBI INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMBI INC.
----------
Registrant
Date: November 14, 1997 By: /S/ Fredric D. Price
--------------------
Fredric D. Price
President and Chief Executive Officer
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