<PAGE>
As filed with the Securities and Exchange Commission on May 28, 1999
Registration Statement No. 333-73397
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2 to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AMBI INC.
(Exact name of registrant as specified in its charter)
New York 5122 11-2653613
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation) Industrial Classification Identification No.)
Code Number)
AMBI Inc. Fredric D. Price,
4 Manhattanville Road President, CEO
Purchase, New York 10577 AMBI Inc.
(914) 701-4500 4 Manhattanville Road
(Address, including zip code, Purchase, New York 10577
and telephone number, (914) 701-4500
including area code, of (Name, address, including
registrant's principal zip code, and telephone
executive offices) number, including area
code, of agent for service)
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Copies To:
Oscar D. Folger, Esq.
521 Fifth Avenue
New York, New York 10175
(212) 697-6464
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/
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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.
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SUBJECT TO COMPLETION, DATED MAY 28, 1999
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PROSPECTUS
AMBI INC.
1,304,347 Shares of Common stock
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Three shareholders of AMBI Inc. are offering and selling 1,304,347
shares of their AMBI common stock under this prospectus. These shareholders are
Dean Radetsky, Cheryl Radetsky, and Marvin L. Segel. The selling shareholders
may offer their AMBI stock through public or private transactions, on or off the
Nasdaq Stock Market, at prevailing market prices, or at privately negotiated
prices.
AMBI's common stock is traded on the Nasdaq National Market System
under the symbol AMBI. As reported by Nasdaq for May 25, 1999, the last sale
price for AMBI's common stock was $2.34375.
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These securities involve a high degree of risk. See "Risk Factors" beginning on
Page 3.
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Neither the SEC nor any State securities commission has approved these
securities or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
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The date of this prospectus is May __, 1999.
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THE COMPANY
We are a New York corporation that was incorporated on June 29, 1983.
We develop and commercialize nutrition and pharmaceutical products. Our
executive offices are located at 4 Manhattanville Road, Purchase, New York 10577
and our telephone number at that address is 914-701-4500.
RISK FACTORS
An investment in the offered shares involves a high degree of risk.
Prospective investors should understand that they may lose their investment and
should consider carefully the following risk factors in making their investment
decision. This prospectus contains and incorporates by reference forward-looking
statements which are intended to fall within the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Examples include 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, 1998. These statements are based on current expectations that
involve a number of uncertainties including those set forth in the following
risk factors. Actual results could differ materially from those results
projected in these forward-looking statements.
If revenues from our newly-acquired businesses do not meet and/or exceed the
revenues derived from the business that we sold, we may not remain profitable.
In December 1996, we sold our subsidiary, Aplin & Barrett Limited.
Substantially all of our earnings through the date of sale came from this
subsidiary. Primarily as a result of the sale, revenues decreased 30% in the
fiscal year ended June 30, 1997 from the fiscal year ended June 30, 1996. In
August 1997, we reinvested the proceeds from the sale of Aplin & Barrett
Limited, as well as used funds from additional loans, to acquire Nutrition 21,
L.P. We also acquired in January 1999 substantially all of the assets of Optimum
Lifestyle, Inc. The businesses of Nutrition 21 and Optimum Lifestyle and sales
of our other products may not continue to generate revenues, cash flow, and
earnings equal to those that would have come from Aplin & Barrett Limited.
Nutrition 21 and Optimum Lifestyle will probably continue to provide a majority
of our revenues at least through the next fiscal year. The Nutrition 21 and
Optimum Lifestyle businesses are relatively new to us and we may be unable to
effectively integrate these businesses with our other businesses or maintain
their profitability,
Our ability to maintain profitability depends, in part, on our ability
to successfully market Cardia Salt(Registered) and Nutrition 21's principal
products, chromium picolinate and selenium. Chromium picolinate and selenium are
minerals used as dietary supplements. Chromium picolinate helps control blood
sugar levels and promotes healthy body
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composition and selenium can help reduce the occurrence of certain cancers. Our
management is relatively new to the Nutrition 21 and Optimum Lifestyle
nutritional supplement businesses and may be unable to operate them
successfully.
While certain of Nutrition 21's previous personnel have continued with
the business, we do not have and do not plan to obtain employment agreements
with Nutrition 21's personnel. Nutrition 21's current personnel may not remain
with us, and it may be difficult to replace them should they leave. If we are
unable to retain or replace this experienced personnel, and our management is
unable to successfully operate the Nutrition 21 and Optimum Lifestyle
businesses, we may no longer be profitable.
We have become profitable only recently, and may be unable to remain profitable
due to other factors in addition to the problem of absorbing our new businesses.
We have had net operating losses from our inception as a company in
1983 through the fiscal quarter ended December 31,1997. At June 30, 1998 our
accumulated deficit was approximately $44.7 million. Our current sales are from
the Nutrition 21 and Optimum Lifestyle businesses, Cardia Salt and animal
healthcare products. While one strategy to expand our revenues includes the
continued acquisition of nutrition products, we may be unable to conclude any
further acquisitions. It may be several years before we generate revenues from
the products we are currently developing. Other factors important to our
continued profitability include:
- - entering into new agreements for development,
- - commercializing new products,
- - developing additional manufacturing and marketing capacity, and
- - obtaining any required regulatory approvals for products.
We may fail to develop, commercialize, manufacture and market new products,
continue to achieve profitability, or obtain required regulatory approvals.
Since we depend on a limited number of products for our revenues a decline in
the sales of only one product could harm our business.
Since the sale of Aplin & Barrett Limited and the subsequent purchase
of the Nutrition 21 and Optimum Lifestyle businesses, our revenues are primarily
derived from the sale of nutrition products and dietary supplements, which are
the principal products of the Nutrition 21 and Optimum Lifestyle businesses.
While we are working to acquire or develop additional products or businesses, at
the present time a decline in chromium picolinate, selenium or nutrition bar
sales would harm our business.
We may need additional financing and do not know if additional funding would be
available on reasonable terms which do not substantially dilute our existing
shareholders.
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We may require additional funds in the future for:
- - continued marketing of existing products,
- - research and development,
- - the acquisition of products and/or companies,
- - filing, prosecuting and enforcing patent claims,
- - completing technological and market developments,
- - establishing collaborative arrangements for manufacturing and
marketing,
- - product licensing,
- - pre-clinical and clinical trials, and
- - obtaining regulatory approvals.
We intend to seek other additional funding through arrangements with corporate
collaborators, public or private sales of our securities, or bank financing
arrangements. However, we currently have no arrangements in place for additional
financing and thus do not know if it would be available or if the terms would be
reasonable. Additional financing will dilute the holdings of our existing
shareholders. The inability to obtain required financing on reasonable terms
could harm our business. An example of our need for additional funds is that we
had to borrow money from State Street Bank and Trust Company for part of the
purchase business acquired from Optimum Lifestyle.
If we are not able to meet the regulatory requirements that apply to our
products, we will not be able to market them.
The government extensively regulates products that are intended to
treat disease in humans or animals. The main regulatory agency is the U. S. Food
and Drug Administration, or FDA. Our proposed products may not prove to be safe
and effective under the FDA=s regulatory procedures, or be marketable even after
approval. Products must undergo thorough preclinical and clinical evaluations of
performance as to safand efficacy. It may take several years to take a product
from the discovery stage through research and preclinical development to the
point where we or our partners can make the necessary U.S. and international
filings to conduct human clinical trials. Regulatory requirements to conduct
clinical trials are substantial, depend upon a variety of factors, vary by
country, and significantly add to the time necessary to determine whether a
product candidate can be approved for human use.
While all of the products that we are currently selling are in business
areas that do not require FDA approval for marketing, they are subject to
monitoring by the FDA. The FDA may make inquiries or take other action
concerning these products in the future. Any limitations imposed by the FDA on
the marketing of our current products could cause our business to suffer.
Since the sale of Aplin & Barrett Limited, we do not have any
pharmaceutical products that have completed this process. All of our potential
pharmaceutical products are in various stages of
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preclinical and clinical development. The failure of any of these products to
obtain FDA approval would prevent us from selling them and may harm our
business.
In addition to FDA regulations, the Federal Trade Commission , or FTC,
regulates product advertising claims. In November 1996, after an FTC inquiry,
Nutrition 21, without any admission that any laws had been violated, entered
into a settlement agreement with the FTC. This agreement limits our ability to
make claims about our Nutrition 21 products without "competent and reliable
scientific evidence."
We may be liable for damages not covered by our insurance if our products have
harmful side effects.
Harmful side effects may occur in both human and animal patients during
clinical testing of a new drug. These side effects may delay FDA approval and
cause a company to terminate its efforts to develop a drug for commercial use.
In addition, harmful side effects that develop after the FDA has approved a drug
could result in legal action against a company. We may face substantial
liability in the event of harmful side effects or product defects occurring when
our products are used in clinical tests or after sale to the public. If we fail
to defend ourselves successfully in any suit that may be brought against us, our
business could be harmed. Also, the defense of such a lawsuit is likely to be
expensive and a significant drain on our financial resources. We have product
liability insurance for the products we currently market and intend to obtain
product liability insurance for products we will market in the future. However,
we may not sobtaining additional insurance or obtaining insurance sufficient to
cover all possible liabilities.
Our future success depends on the continued services of Fredric D. Price.
Our business depends heavily upon the participation of Mr. Fredric D.
Price, President and Chief Executive Officer. Loss of his services would harm
our operations.
If we are unable to defend our market position from larger, better-financed
competitors, our business could suffer.
We are evaluating proprietary nutrition products in the areas of
cardiovascular disease, diabetes, infectious disease, and gastrointestinal
disorders. We have limited experience in marketing products and providing
marketing licenses to others in these areas. Compared to us, there are many
larger food and pharmaceutical companies with substantially greater financial
resources or relevant marketing experience. These companies could acquire or
develop products that may compete with our current or future products. Our
failure to successfully defend our market position would harm our business.
We are developing drugs for the treatment of serious bacterial
infections. Many other corporate and research organizations are developing
similar drugs to treat these and similar
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bacterial infections. Success by competitors with other anti-bacterial or
germicidal products may harm our prospects. Many of the large corporations that
are involved in, or we expected will enter, the field of biotechnology have
substantially greater financial, marketing and human resources than we do.
The nutrition supplement industry is fragmented with many competitors
and potential competitors that are larger and have greater financial resources
than we do. Although we hold exclusive rights to the United States patent for
chromium picolinate, foreign producers compete on price with us in foreign
markets. We also face price competition from illegal imports into the United
States.
Our products may become obsolete due to technological advances.
We are developing products in areas that are undergoing rapid
technological advances and we may be unable to take advantage of these advances.
In addition, the successful application of these technological advances by
competitors may render our products obsolete. In the pharmaceutical market, many
companies are developing products for treatment of diseases caused by antibiotic
resistant bacteria. We are also developing products, nisin and lysostaphin, to
treat diseases caused by serious bacterial infections. Our potential products
may become obsolete due to the products being developed by other companies for
treating antibiotic resistant bacteria. In the nutrition supplement market there
are numerous products for which claims are made similar to those we make for
chromium picolinate. Research supporting competitors' claims in the nutrition
supplement market is not subject to mandatory review by any government agency.
Therefore, new products can appear and be brought to market rapidly and with
little advance notice. A product competitive with chromium picolinate may appear
or be supported by new research before we are able to respond with new product
development or countervailing research. If competing products are developedthat
customers believe are superior to our products, sales of our products could
decline and our business would be harmed.
If we are unable to make adequate marketing arrangements or control how well our
products are sold our business could suffer.
We rely on agreements with collaborative partners to develop, test and
market our products. We may be unable to obtain agreements needed for our
business, or agreements may not be available on terms that are acceptable to us.
If we are not able to enter into these agreements, we could encounter delays in
marketing our new products into the market, or find that development,
manufacture or sale of our products will be limited.
For example, Orion Corporation, the largest pharmaceutical company in
Finland, granted
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to us an exclusive license to make, have made, use and sell in the United States
Orion's patented salt blend. This product is currently being sold in the United
States by us as Cardia Salt and is being sold in countries outside the United
States by Orion and its licensees. In October 1998, we granted American Home
Products Corporation's Whitehall-Robins Healthcare Division an exclusive license
to sell Cardia Salt in the U.S. retail market. Also in October 1998,we entered
into an exclusive agreement with Cultor Food Science, Inc. to market Cardia Salt
as a food ingredient to the U.S. processed food industry. We are dependent on
the license from Orion and the marketing efforts of American Home Products
Corporation's Whitehall-Robins Healthcare Division and Cultor Food Science, Inc.
for the success of this product.
If we are unable to make adequate manufacturing arrangements or control how well
our products are made our business could suffer.
We currently have no facilities to manufacture chromium picolinate,
selenium, nutrition bars, and our other products and must rely on third parties
to manufacture our products. These manufacturers may not meet our requirements,
and we may not be able to find substitute manufacturers, if necessary.
If we are unable to protect our technology, we will be subject to increased
competition.
We rely on patent and trade secret protection for our biotechnology and
pharmaceutical products. In addition, we rely on intellectual property to
protect our investment in the nutrition products business. Our success will
depend, in part, on our ability to obtain patent protection for our products and
manufacturing processes, preserve our trade secrets, and operate without
infringing the proprietary rights of third parties. If we cannot secure
intellectual property protection, our competitors could sell products similar to
ours at lower prices. Competitors could undercut our prices because they did not
pay to develop or obtain licenses to the technology in these products. Any
current or future patent applications relating to our products or technology may
not result in patents being issued or, if issued, these patents may not afford
adequate protection or may be challenged, invalidated or infringed. Competitors
may independently develop similar products and processes, duplicate our products
or, if patents are issued to us, design around these patents. In addition, we
could incur substantial costs in defending ourselves in suits brought against us
or in suits we bring to assert our patents against others. The loss of any
litigation could harm our business.
We may also be required to obtain licenses to patents or other
proprietary rights of third parties. These licenses may not be available on
terms acceptable to us, if at all. If we do not obtain required licenses, we
could be delayed in marketing new products while we attempt to design around the
proprietary rights held by third parties, or we may be unable to develop,
manufacture or sell new products.
We also seek to protect our proprietary technology in part by
confidentiality and
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inventors' rights agreements with our collaborators, advisors, employees, and
consultants. These agreements may be breached and we may not have adequate
remedies for any breach. Also, our trade secrets may be disclosed in some manner
not covered by these agreements.
Currently, we hold exclusive rights to the United States patent for
chromium picolinate, which expires in August 2000. We also hold patents on
various uses of chromium picolinate which expire in 2009. We expect to seek
additional patents in the future, but we may not succeed in obtaining any
patents. Any patents that we do obtain may be inadequate as to the breadth or
degree of protection. In addition, Orion Corporation, the University of
Maryland, New York University Medical Center, and the McGuire Veterans
Administration Hospital have exclusively licensed some patents and patent
applications to us. Our future performance is partly dependent upon these patent
rights.
If we market pharmaceutical products, we may be unable to qualify these new
products for third party reimbursement which could reduce our revenues for those
products.
If and when they become available, a significant portion of the sales
of our pharmaceutical products will depend on the availability of reimbursement
from third-party payers, such as government and private insurance plans. These
third-party payers are a major source of payment for pharmaceutical products. We
will have to comply with many requirements and procedures imposed by these
government and private payers before they will reimburse health care providers
for using our pharmaceutical products. If we are unable to qualify these
products for reimbursement from these third party payers our revenues products
would be reduced.
The growth of our business has depended on acquisitions and we may be unable to
continue to find new acquisitions to maintain our growth.
Almost all of our current revenues come from businesses that we have
acquired, like Nutrition 21 and Optimum Lifestyle, rather than from products
that we have developed. We intend to continue to grow our business in part by
seeking acquisitions of complementary products and businesses. However, we may
be unable to find suitable acquisition candidates. We may be unable to
effectively integrate acquired businesses into our operations. The process of
integration is costly and could harm our operating results, particularly in the
periods immediately following the acquisition.
Our stock price may decline if we are unable to maintain a Nasdaq listing for
our securities.
Our common stock is quoted on the Nasdaq National Market System. If our
securities fail to maintain a Nasdaq listing, the market value of our common
stock would likely decline and purchasers of our common stock would likely find
it more difficult to sell our common stock, or to obtain accurate quotations as
to its market value. In addition, if we fail to maintain a Nasdaq listing for
our 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 our securities would be required to provide any customer with a risk
disclosure document, disclosure of market
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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 our 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 our
securities, they would become less willing to engage in these transactions,
which will make it more difficult for purchasers of our common stock to dispose
of their shares.
In order to maintain our Nasdaq listing we must continue to be
registered under the Exchange Act and have:
- - net tangible assets of at least $4,000,000,
- - at least 750,000 shares outstanding held by non-affiliates 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.
We believe that we currently comply with all of the requirements for continued
listing. In the future we may not continue to meet the requirements for
continued listing on the Nasdaq National Market System in which event our
business would be harmed.
The sale of shares eligible for future sale may depress the price of our stock.
Sales of a substantial number of shares of common stock in the public
market could harm the market price for our common stock. Among other securities,
we currently have outstanding 1,500 shares of our Series E Convertible Preferred
Stock that currently are convertible into 1,200,000 shares of common stock, an
undetermined additional number of shares of common stock because of
anti-dilution adjustments, 528,937 warrants issued in connection with the Series
D Preferred Stock, and 401 shares of Series F Preferred Stock. We have
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 under to
various other warrants and stock options. The conversion and sale of these
shares of common stock would dilute the holdings of current shareholders and may
reduce the price of our common stock.
The volatility of AMBI's stock price may make it difficult to obtain financing.
The market prices for securities issued by small health care related
companies such as AMBI have been volatile. Announcements of technological
innovations for new commercial products by our competitors, adverse developments
concerning regulatory review, proprietary rights, corporate plans, the
introduction of new products, and changes in general conditions in the industry
may have a significant negative impact on our business and on the market
prcommon stock. Potential investors may decline to invest in AMBI due to the
past volatility of its stock price. Also, in part to protect themselves from
this volatility, investors have insisted on receiving a discount from the market
price for securities that AMBI has sold to raise funds.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the offered shares by
the selling shareholders.
SELLING SECURITY HOLDERS
The following table sets forth the names of the selling shareholders,
the number of shares of common stock beneficially owned by them, and the number
of offered shares which may be offered for sale by to this prospectus by each
selling shareholder. None of the selling shareholders has held any position or
office or has had any other material relationship with AMBI or any of its
affiliates within the past three years other than as a result of his or her
ownership of shares of common stock. The offered shares may be offered from time
to time by the selling shareholders named below. However, the selling
shareholders are not obligated to sell any offered shares immediately under this
prospectus. All information with respect to share ownership has been furnished
by the selling shareholders. Because the selling shareholders are not obligated
to sell any offered shares, no estimate can be given as to the number of shares
of common stock that will be held by any selling shareholder upon termination of
any offering using this prospectus. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities and includes any securities which the person
has the right to acquire within 60 days of the date of this prospectus through
the conversion or exercise of any security or right. The table assumes that all
of the offered shares held by the selling shareholders are sold, and that the
selling shareholders acquire no additional shares of common stock before the
completion of this offering.
Securities to be
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Securities Owned Securities Owned after
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Name Before Offering to be Sold Offering
- ---- --------------- ---------- --------
Dean Radetsky 591,956 586,956 5,000
Cheryl Radetsky 591,956 586,956 5,000
Marvin L. Segel 130,435 130,435 0
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PLAN OF DISTRIBUTION
The common stock offered by this Registration Statement is being
offered on behalf of the selling shareholders. This common stock may be sold or
distributed from time to time by the selling shareholders, or by others who
received the offered shares from selling shareholders. These sales may be
directly to one or more purchasers or through brokers, dealers or underwriters
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who may act solely as agents or may acquire the common stock as principals, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed.
The sale of the common stock offered by this prospectus may be effected in one
or more of the following methods:
- - ordinary brokers' transactions;
- - transactions involving cross or block trades or otherwise on the Nasdaq
National Market;
- - purchases by brokers, dealers or underwriters as principal and resale
by purchasers for their own accounts by this prospectus;
- - "at the market" to or through market makers or into an existing market
for the common stock; - in other ways not involving market makers or
established trading markets, including direct sales to purchasers or
sales effected through agents;
- - through transactions in options, swaps or other derivatives which may
or may not be listed on an exchange;
- - in privately negotiated transactions;
- - to cover short sales; or
- - any combination of the foregoing.
From time to time, one or more of the selling shareholders may pledge,
hypothecate or grant a security interest in some or all of the offered shares
owned by them, and the pledgees, secured parties or persons to whom the
securities have been hypothecated shall, upon foreclosure in the event of
default, be deemed to be selling shareholders. The number of selling
shareholder's offered shares beneficially owned by those selling shareholders
who so transfer, pledge, donate or assign selling shareholders' offered shares
will decrease as and when they take these actions. The plan of distribution for
selling shareholders' offered shares sold will otherwise remain unchanged,
except that the transferees, pledgees, donees or other successors will be
selling shareholders. In addition, a selling shareholder may, from time to time,
sell short the common stock of AMBI, and then this prospectus may be delivered
in connection with the short sales and the offered shares may be used to cover
the short sales.
A selling shareholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the common
stock in the course of hedging the positions they assume with a selling
shareholder, including, without limitation, in connection with distributions of
the common stock by broker-dealers. A selling shareholder may also enter into
option or other transactions with broker-dealers that involve the delivery of
the offered shares to the broker-dealers, who may then resell or otherwise
transfer the offered shares. A selling shareholder may also loan or pledge the
offered shares to a broker-dealer and the broker-dealer may sell the offered
shares so loaned or upon a default may sell or otherwise transfer the pledged
offered shares.
Brokers, dealers, underwriters or agents participating in the
distribution of the offered shares as agents may receive compensation in the
form of commissions, discounts or concessions from the selling shareholders
and/or purchasers of the common stock for whom these broker-dealers may act as
agent, or to whom they may sell as principal, or both. Compensation as to a
<PAGE>
particular broker-dealer may be less than or in excess of customary
commissions. The selling shareholders and any broker-dealers who act in
connection with the sale of the offered shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, or the
Securities Act, and any commissions they receive and proceeds of any sale of
the offered shares may be deemed to be underwriting discounts and commissions
under the Securities Act. Neither AMBI nor any selling shareholder can
presently estimate the amount of this compensation. AMBI knows of no existing
arrangements between any selling shareholders or any other stockholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the
offered shares.
AMBI will pay substantially all of the expenses incident to the
registration, offering and sale of the offered shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents. AMBI has
also agreed to indemnify the selling shareholders and certain related persons
against certain liabilities, including liabilities under the Securities Act.
If indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of AMBI, AMBI
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore,
unenforceable.
AMBI has advised the selling shareholders that while they are engaged
in a distribution of the offered shares included in this prospectus they are
required to comply with Regulation M promulgated under the Exchange Act. With
certain exceptions, Regulation M precludes any selling shareholder, any
affiliated purchasers, and any broker-dealer or other person who participates
in such distribution from bidding for or purchasing, or attempting to induce
any person to bid for or purchase any security which is the subject of the
distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security. All of the
foregoing may affect the marketability of the offered shares.
This offering will terminate on the earlier of (a) two years from the
date of this prospectus or (b) the date on which all shares offered by this
prospectus have been sold by the selling shareholders.
EXPERTS
The consolidated financial statements of AMBI Inc. and subsidiary as
of June 30, 1998 and 1997, and for each of the years in the three-year period
ended June 30, 1998, have been incorporated by reference in this Prospectus and
elsewhere in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference in
this prospectus, and upon the authority of said firm as experts in accounting
and auditing.
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LEGAL MATTERS
Certain legal matters in connection with this offering are being passed
upon for AMBI by Oscar D. Folger, Esq., 521 Fifth Avenue, New York, New York
10175. Mr. Folger's wife owns 29,775 shares of the common stock of AMBI.
MATERIAL CHANGES
There have been no material developments since the filing on February
11, 1999 of AMBI's Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of June 30, 1998, Burns Philp & Company Limited owned 7,763,837
shares of common stock, and continues this common stock ownership as of the
date of this prospectus.
On December 12, 1996, AMBI completed the sale of its UK-based
subsidiary, Aplin & Barrett Limited to Burns Philp & Company Limited in
accordance with the terms of a Share Purchase Agreement. As part of the
transaction, Burns Philp & Company Limited has provided AMBI 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
prospectus, no amount has been drawn under this line of credit.
In connection with the sale of Aplin & Barrett Limited, AMBI and Aplin
& Barrett Limited entered into two License Agreements. Under the first License
Agreement, AMBI is exclusively licensed by Aplin & Barrett Limited for the use
of nisin in pharmaceutical products and animal healthcare products. Under the
second License Agreement, Aplin & Barrett Limited is exclusively licensed by
AMBI for the use of nisin as a food preservative and for food preservation. In
addition, AMBI entered into a Supply Agreement with Aplin & Barrett Limited
under which Aplin & Barrett Limited was required to sell nisin to AMBI while
AMBI was establishing its own source of supply. AMBI established its own source
of supply for nisin, and sent notice of termination of the Supply Agreement
effective September 26, 1997.
AMBI and Burns Philp & Company Limited also entered into an Investors'
Rights Agreement under which Burns Philp & Company Limited agreed until
December 11, 1998 not to acquire, directly or indirectly, AMBI's securities,
and to refrain from selling AMBI's common stock. So long as Burns Philp &
Company Limited owns at least 10% of AMBI's outstanding common stock, Burns
Philp & Company Limited will vote its shares in favor of Fredric D. Price and
one nominee of Fredric D. Price for election to AMBI's Board of Directors. So
long as Burns Philp & Company Limited owns at least 20% of AMBI's outstanding
common stock, Burns Philp & Company Limited is entitled to nominate one member
for election to AMBI's Board of Directors.
<PAGE>
As of the date of sale, two of AMBI's Board members were
representatives of Burns Philp & Company Limited. Burns Philp & Company
Limited's Board representatives did not participate in the vote of AMBI's Board
which approved the sale of Aplin & Barrett Limited to Burns Philp & Company
Limited. As a result of the sale, Burns Philp & Company Limited's
representation on AMBI's Board of Directors was reduced from two members to one
member. Currently, Burns Philp & Company Limited has not nominated a member for
election to AMBI's Board. The amount of consideration for the sale was arrived
at through arms-length negotiation and a fairness opinion was obtained.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, or SEC. You may
read and copy any document we file at the SEC's public reference rooms at Room
1024, 450 Fifth Street, N.W., Washington, D.C., and at the SEC'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 these materials can be obtained from the Public Reference Section of
the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates,
and can also be accessed electronically through the SEC's Web site at
http://www.sec.gov. You may get information on the operation of the SEC=s
Public Reference Room by calling 1-800-SEC-0330. AMBI'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.
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in
this prospectus. The SEC allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. This prospectus also does not contain all the
information set forth in the registration statement. For further information,
you can obtain the complete registration statement and the documents
incorporated herein by reference from the SEC offices listed above.
We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the SEC by AMBI,
are
<PAGE>
incorporated in this prospectus by reference and made a part of it. The SEC
file number for all documents which are incorporated by reference is 1-12106.
(1) Annual Report on Form 10-K/A for the fiscal year ended June 30,
1998.
(2) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1998.
(3) Quarterly Report on Form 10-Q for the fiscal quarter ended December
31, 1998.
(4) Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1999.
(5) Current Report on Form 8-K filed December 11, 1998.
(6) Current Report on Form 8-K filed February 3, 1999.
(7) The section entitled "Description of Securities" in AMBI's
registration statement on Form S-1 (Registration No. 33-4822),
declared effective on August 28, 1986.
In addition, any amendments to these document and all other reports,
proxy statements and other documents of AMBI hereafter filed with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, 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 of it by reference from the
date of filing of each of these documents. Statements in this prospectus modify
and supersede statements contained in all earlier documents incorporated by
reference in this prospectus. Further, all future documents incorporated by
reference will modify and supersede this prospectus.
AMBI undertakes to provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request, a copy of any and
all of the information that has been incorporated by reference in the
prospectus. Exhibits to the information that is incorporated by reference will
be included only if the exhibits are specifically incorporated by reference
into the information that the prospectus incorporates. Requests should be
directed to the Secretary, AMBI Inc., 4 Manhattanville Road, Purchase, New York
10577.
INDEMNIFICATION
AMBI's by-laws provide that AMBI will indemnify its directors and
officers to the fullest extent permitted by law. 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 the director or officer is adjudged
to have breached his duty to the corporation. In addition, the New York
Business Corporation Law 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 the
director or officer acted in good faith,
<PAGE>
for a purpose which he reasonably believed to be in the best interests of the
corporation and, in criminal actions or proceedings, had no reasonable cause to
believe that his conduct was unlawful.
If indemnification for liabilities arising under the Securities Act is
permitted to directors, officers or persons controlling AMBI under the
foregoing provisions, or otherwise, AMBI has been advised that in the opinion
of the SEC that indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
<PAGE>
AMBI INC.
1,304,347 Shares of Common stock
----------------------
PROSPECTUS
----------------------
May ___, 1999
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in
this prospectus. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
TABLE OF CONTENTS
The Company .................................. 2
Risk Factors ................................. 2
Use of Proceeds .............................. 9
Selling Security Holders ..................... 9
Plan of Distribution ......................... 10
Experts ...................................... 12
Legal Matters ................................ 13
Material Changes ............................. 13
Certain Relationships ........................ 13
Available Information ........................ 14
Incorporation by Reference ................... 15
Indemnification .............................. 15
<PAGE>
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.... $ 488
Nasdaq National Market listing fee........ 17,500
Legal Fees and expenses................... 14,000
Accountant's fees and expenses............ 5,000
Miscellaneous............................. 1,012
-------
Total................... $38,000
Item 15. Indemnification of Directors and Officers.
Section 5.04 of AMBI's by-laws provides that AMBI 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, had no reasonable
cause to believe that his conduct was unlawful.
<PAGE>
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 AMBI for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of AMBI under the foregoing provisions, or otherwise, AMBI
has been advised that in the opinion of the Securities and Exchange Commission
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 is asserted by such director, officer or controlling person in
connection with the securities being registered, AMBI 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 AMBI may, however, pay expenses incurred or paid by a
director, officer or controlling person of AMBI in the successful defense of any
action, suit or proceeding.
Item 16. Exhibits.
Exhibit No. Description
- ----------- -----------
2(a) Agreement of Purchase and Sale of Assets made on January 19, 1999 by
and among Dean Radetsky and Cheryl Radetsky, Optimum Lifestyle, Inc., a
California corporation, and AMBI Inc., a New York corporation.*
10(a) Amended and Restated Revolving Credit and Term Loan Agreement dated as
of January 21, 1999 between the Bank as Lender and AMBI as Borrower.*
(5) Opinion of Oscar D. Folger**
(23)(a) Consent of Oscar D. Folger (included in Exhibit 5)**
(23)(b) Consent of KPMG LLP
o * Incorporated by reference from AMBI's Current Report on Form 8-K
filed February 3, 1999.
o ** Previously filed.
<PAGE>
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-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
<PAGE>
be the initial bona fide offering thereof.
<PAGE>
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 Purchase, New York on
the 27th day of May 1999.
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.
Signature Title Date
- --------- ----- ----
/s/
- -------------------------
Robert E. Flynn Chairman of the Board May 27, 1999
/s/
- -------------------------
Fredric D. Price President, CEO and Director May 27, 1999
/s/
- -------------------------
Gerald A. Shapiro CFO (Principal Accounting and
Financial Officer) May 27, 1999
/s/
- -------------------------
P. George Benson Director May 27, 1999
/s/
- -------------------------
Audrey T. Cross Director May 27, 1999
/s/
- -------------------------
Marvin Moser Director May 27, 1999
/s/
- -------------------------
Robert E. Pollack Director May 27, 1999
<PAGE>
Exhibit 23(b)
Consent of Independent Auditors
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 LLP
Stamford, Connecticut
May 28, 1999
