<PAGE>
As filed with the Securities and Exchange Commission on March 5, 1999
Registration Statement No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
AMBI INC.
(Exact name of registrant as specified in its charter)
New York 5122 11-2653613
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)
AMBI Inc. Fredric D. Price, President, CEO
4 Manhattanville Road AMBI Inc. 4 Manhattanville Road
Purchase, New York 10577 Purchase, New York 10577
(914) 701-4500 (914) 701-4500
(Address, including zip code, (Name, address, including zip code,
and telephone number, including and telephone number, including area
area code, of registrant's principal code, of agent for service)
executive offices)
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/
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount Being Offering Price Aggregate Amount of
Securities Being Registered Registered per Share (1) Offering Price Registration Fee
- --------------------------- ------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Common Stock 1,304,347 $1.34375 $1,752,716 $487.26
</TABLE>
(1) Estimated for purposes of computing the registration fee pursuant to Rule
457(c) at $1.34375 per share based upon the average of the high and low prices
of $1.375 and $1.3125 on March 3, 1999, respectively.
-----------------------
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 MARCH 5, 1999
PROSPECTUS
AMBI INC.
1,304,347 Shares of Common Stock
--------------------------------
The shareholders of AMBI Inc. (the "Company" or "AMBI") listed below
(the "Selling Security Holders") are offering and selling 1,304,347 shares of
Common Stock, par value $.005 per share, (the "Common Stock") under this
prospectus (the "Offered Shares"). These shares were issued in January 1999 as
part of the consideration for the acquisition of the business of Optimum
Lifestyle, Inc., which is in the business of developing, manufacturing, and
marketing dietary supplements, primarily nutrition bars which are marketed
under the trademark "Lite-Bites" through the QVC television network.
Some or all of the Selling Security Holders expect to sell their
Offered Shares. 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. All net proceeds
from the sale of the Offered Shares will go to the shareholders who offer and
sell their shares. Accordingly, the Company will not receive any proceeds from
sales of the AMBI shares.
The Company's Common Stock is traded on the Nasdaq National Market
System under the symbol AMBI. As reported by Nasdaq for March 3, 1999, the
last sale price for the Company's Common Stock was $1.3125.
---------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
---------------------
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.
---------------------
The date of this Prospectus is March __, 1999.
<PAGE>
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission ("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 such 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. 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.
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.
2
<PAGE>
THE COMPANY
We are a New York corporation and were 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, 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. Please see particularly
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, 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. Actual
results could differ materially from those projected in such forward-looking
statements.
Sale of Subsidiary, Acquisition of New Business
In December 1996, we sold our Aplin & Barrett Limited subsidiary
("A&B"). 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 ("fiscal 1997") from the fiscal year ended
June 30, 1996 ("fiscal 1996"). In August 1997, we reinvested the proceeds from
the sale of A&B, as well as used funds from additional loans, to acquire
Nutrition 21, L.P. ("Nutrition 21"). Revenues in the fiscal year ended June
30, 1998 ("fiscal 1998") increased 84% from fiscal 1997 primarily due to
revenues from Nutrition 21, which revenues more than fully replaced the
revenues formerly derived from the A&B business. Nutrition 21 will probably
continue to provide a majority of our revenues at least through the next
fiscal year. We operate Nutrition 21 as a separate business located in San
Diego, California. Our management does not have significant experience in
Nutrition 21's nutritional supplement business. 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. Furthermore, the Nutrition 21
business remains relatively new to us. The Nutrition 21 business and sales of
our other products may not continue to generate revenues, cash flow, and
earnings equal to those that would have come from A&B. Also, our earnings may
not be sufficient to make our operations profitable on a continuing basis. We
have also acquired in January 1999 substantially all of the assets of Optimum
Lifestyle, Inc. ("Optimum") relating to the business of developing,
manufacturing, and marketing dietary supplements, primarily nutrition bars
that are marketed under the trademark "Lite-Bites" through the QVC television
network. The business we acquired from Optimum is also relatively new to us
and we may not be able to effectively integrate the acquired business with our
other businesses or maintain the profitability of the new business. See also
"Need for Additional Funding" and "Dependence on Patents and Proprietary
Technology."
History of Operating Losses
We have had net operating losses from our inception as a company in
1983 through the first quarter of fiscal 1998. At June 30, 1998 our
accumulated deficit was approximately $44.7 million. In fiscal 1998, operating
profit was approximately $1.5 million compared to operating losses in fiscal
1997 of approximately $16.6 million. All of our revenues to date have come
from sales of non-therapeutic products, development agreements, licensing
agreements, and research grants. Our current sales are from the Nutrition 21
business, Cardia(Registered)Salt and animal healthcare products. While we are
looking to expand our revenues through, among other things, the continued
acquisition of nutrition products, we may not successfully conclude any further
acquisitions. Further, it may be several years before we generate revenues from
the products we are currently developing. Our ability to maintain profitability
depends, in part,
3
<PAGE>
on our ability to successfully market Nutrition 21's principal products,
chromium picolinate and selenium, and Cardia(TM) Salt. Other factors important
to our profitability will include:
- - integrating the business acquired from Optimum into ours,
- - entering into new agreements for product development and acquisitions,
- - commercialization of new products,
- - developing additional manufacturing and marketing capacity, and
- - obtaining regulatory approval, if and as required, for products.
We may not successfully develop, commercialize, manufacture and market new
products, continue to achieve profitability, or obtain required regulatory
approvals.
Need for Additional Funding
Our future capital requirements will depend on many factors. These
factors include expenses 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,
- - the establishment of collaborative arrangements for manufacturing and
marketing,
- - product in-licensing or acquisition,
- - pre-clinical and clinical trials, and
- - obtaining regulatory approvals.
We expect our existing resources to be sufficient to fund our foreseeable
operations for the next 12 months. However, any increase in the level of
acquisitions and research and development could require additional funds. For
example, we had to borrow money from State Street Bank and Trust Company
("State Street") for part of the purchase price for the business acquired from
Optimum. On January 21, 1999, we entered into an Amended and Restated
Revolving Credit and Term Loan Agreement ("Term Loan") with State Street to
finance the Optimum acquisition. Borrowings from State Street bear interest at
the prime rate plus one percent and are due February 1, 2002. The principal
amount of the Term Loan as of March 2, 1999 was approximately $5.25 million
and is subject to monthly payments. The revolving credit line provides up to
$4,000,000 based on certain of our assets. We intend to seek other additional
funding through arrangements with corporate collaborators, public or private
sales of our securities, or bank financing arrangements. We do not currently
have any specific arrangements for additional financing and additional funding
may not be available at all or on reasonable terms. Also, such financings may
substantially dilute our existing shareholders.
Government Regulation
The government extensively regulates products that are intended for
application in the area of disease in humans or animals. The main regulatory
agency is the U. S. Food and Drug Administration ("FDA"). The FDA regulates
products like these for quality assurance, toxicology, safety, and efficacy.
Such products must undergo thorough preclinical and clinical evaluations of
performance as to safety and efficacy under approved protocols.
All of the products that we are currently selling are in business
areas that do not require FDA approval for marketing, but are subject to
monitoring by the FDA. The FDA may make inquiries or take other actions
concerning these products at some point in the future.
We may pursue regulatory approval for the pharmaceutical and related
uses of certain of our products. Our proposed pharmaceutical products, for
both human and animal use, will be subject to the regulatory approval
4
<PAGE>
processes for new drugs. In the United States, these products must be approved
by the FDA, and other developed countries also have equivalent regulatory
agencies. 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. Since the sale of A&B, we do not have
any pharmaceutical products that have completed this process. All of our
potential pharmaceutical products are in various stages of preclinical and
clinical development. We made our 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 us that we could proceed under
the IND with a clinical trial. Our proposed products may not prove to be safe
and effective under these regulatory procedures, or be marketable even after
approval.
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 our ability to make claims about our Nutrition 21 products
without "competent and reliable scientific evidence." The agreement also
mandates that we maintain records relating to advertising materials and notify
customers and employees that certain advertising is no longer to be used
unless substantiated by competent and reliable scientific evidence.
Drug Related Risks
Adverse 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 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 our company, may face substantial
liability in the event of adverse side effects or product defects when 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 and
finances could suffer material adverse effects. Also, any such defense is
likely to be expensive and a significant drain on our financial resources.
Further, we may not be able to satisfy any claim for which we may be held
liable without significant loss to our resources and business.
Dependence on Key Executive and Skilled Personnel
Our business depends heavily upon the participation of Mr. Fredric D.
Price, President and Chief Executive Officer. Loss of his services would
adversely affect our operations. In addition, both our long-term and
short-term success depend in large part upon our continued ability to attract
and retain skilled scientific and managerial employees. As a result of the
highly competitive demand for such persons, we might not continue to be able
to attract the necessary qualified staff.
Competition
We are evaluating certain 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 with relevant marketing experience in these areas. These other
companies could acquire or develop products that may compete with our current
or future products. We may not be able to develop or acquire other nutrition
products that have a substantial market presence.
We are developing a class of bacteriocins/antimicrobial peptides
known as lanthocins as drugs for the treatment
5
<PAGE>
of serious bacterial infections. Many other corporate and research
organizations are developing other bacteriocins and antimicrobial peptides as
drugs to treat these and similar bacterial infections. Success by competitors
with other anti-bacterial or germicidal products may substantially and
adversely affect our 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 we do.
The nutrition supplement manufacturing 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. See also "Dependence on Patents and
Proprietary Technology."
Technological Obsolescence
We are developing products in areas that are undergoing rapid
technological advances and we may not be able to take advantage of such
advances. In addition, the successful application of such technological
advances by competitors may render our products obsolete. In the nutrition
supplement market there are numerous products for which claims are made
similar to those made by us 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. See also "Government Regulation."
Product Liability Claims and Uninsured Risks
Even if we are successful in developing and marketing new products,
we may be exposed to liability resulting from the use of such products. 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 succeed in obtaining additional insurance or
obtaining insurance sufficient to cover all possible liabilities.
Dependence on Others
A division of Orion Corporation ("Orion"), the largest pharmaceutical
company in Finland, granted 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(TM) Salt and is
being sold in countries outside the United States by Orion and its licensees.
The product has significantly less sodium than regular salt and contains
potassium and magnesium, essential minerals that may help individuals
concerned about salt intake as it affects overall cardiovascular risk. In
October 1998, we granted American Home Products Corporation's Whitehall-Robins
Healthcare Division an exclusive license to sell Cardia(TM) 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(TM) 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.
In order to develop, test and market our products, it may be
necessary for us to obtain other licenses to patents or other proprietary
rights of third parties, or enter into other agreements with collaborative
partners. We may not be able to obtain any such licenses or agreements or
their terms may not be acceptable to us. If we are not able to obtain such
licenses or enter into such agreements, we could encounter delays in
introducing our products into the market, or find that development,
manufacture or sale of our products will be limited.
6
<PAGE>
No Manufacturing Experience and Reliance on Third Parties for Manufacturing
We currently have no facilities to manufacture our pharmaceutical
products in accordance with Good Manufacturing Practices prescribed by the FDA
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.
Dependence on Patents and Proprietary Technology
Patent and trade secret protection for new technologies, products and
processes is very important in the biotechnology and pharmaceutical
industries. In addition, we rely on such 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. 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 such patents and any patents that we do obtain may be
inadequate as to the breadth or degree of protection. In addition, Orion
Corporation and the University of Maryland have exclusively licensed their
rights in certain patents and patent applications to us. Our future
performance is partly dependent upon these patent rights. Our reliance on
patent protection is subject to the risks in relying on patent protection
described below.
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, any current or future patent applications relating to our
products or technology may not result in patents being issued or, if issued,
such patents may not afford adequate protection or may be challenged,
invalidated or infringed. Furthermore, competitors may independently develop
similar products and processes, duplicate our products or, if patents are
issued to us, design around such patents. In addition, we could incur
substantial costs in defending ourselves in suits brought against us or in
suits in which we may assert our patents against others. The negative outcome
of any such litigation could adversely affect our business. We may also have
to participate in interference proceedings declared by the United States
Patent and Trademark Office at substantial cost in order to assert the
priority of our inventions.
We may also desire or be required to obtain licenses to patents or
other proprietary rights of third parties. Such licenses may not be available
on terms acceptable to us, if at all. If we do not obtain such licenses, we
could either be delayed in marketing new products while we attempt to design
around such patents or other rights, or be unable to develop, manufacture or
sell such products.
We also seek to protect our proprietary technology, including
technology which may not be patented or patentable, in part by confidentiality
and inventors' rights agreements with our collaborators, advisors, employees,
and consultants. These agreements may be breached and we may not have adequate
remedies for any such breach. Also, our trade secrets may be disclosed in some
manner not covered by these agreements.
Dependence on Limited Number of Products
Since the divestiture of A&B and the subsequent purchase of Nutrition
21, our revenues have been primarily derived from the sales of our nutrition
products; primarily chromium picolinate and selenium, which are the principal
products of the Nutrition 21 business. While we are working to acquire or
develop additional products, at the present time a decline in the sales of
chromium picolinate or selenium for whatever reason could have a material
adverse impact on our results of operations and financial condition.
7
<PAGE>
Sales Dependent in Part on Third Party Reimbursement
If and when they become available, sales of our pharmaceutical products
may depend to some extent on the availability of reimbursement from third-party
payers, such as government and private insurance plans. Such reimbursement may
not be available.
Dependence on Acquisitions
We intend to grow our business in part by seeking and closing
acquisitions of complementary businesses. However, suitable acquisition
candidates may not be found or effectively integrated into our operations.
Furthermore, future acquisitions may have an adverse effect upon our operating
results, particularly in the quarters immediately following the acquisition
when the operations of the acquired businesses are being integrated into our
operations.
Maintenance Criteria for Nasdaq Securities; Penny Stock Rules
Our Common Stock is quoted on the Nasdaq National Market System. In
order to maintain such listing we must continue to be registered under Section
12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and have:
(1) net tangible assets of at least $4,000,000,
(2) at least 750,000 shares outstanding held by non-affiliates with a
market value of at least $5,000,000,
(3) at least 400 shareholders,
(4) a minimum bid price of $1.00 per share, and
(5) 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. 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 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 such transactions, thereby making it
more difficult for purchasers of our Common Stock to dispose of their shares.
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 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 (subject to anti-dilution adjustments), 528,937
Warrants issued in connection with the Series D Preferred Stock, and 457
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 pursuant to various other warrants and stock
options. The conversion and sale of these shares of Common Stock would dilute
the shareholdings of current shareholders and may reduce the price of our
Common Stock.
8
<PAGE>
Dividends Not Likely
We have never paid any dividends on our Common Stock. The payment of
dividends is also restricted by provisions of the Preferred Stock. When we
become legally able to pay dividends, such payment will be subject to the
discretion of our Board of Directors, which will take into account earnings,
financial requirements, and other factors deemed relevant by the Board of
Directors. For the foreseeable future, we anticipate that any earnings that
may be generated from our operations will be used to finance our growth and that
we will not pay cash dividends to holders of Common Stock.
Volatility of Stock Price
The market prices for securities issued by small health care related
companies 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 price of our
Common Stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Offered Shares
by the Selling Security Holders. Accordingly, we will not receive any proceeds
from sales of the Offered Shares.
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 or office or has
had any other material relationship with the Company 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 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.
<TABLE>
<CAPTION>
Securities to
Securities Owned Securities be Owned
Name Before Offering (1) to be Sold (2) after Offering
- ---- --------------------- -------------- --------------
<S> <C> <C> <C>
Dean Radetsky 591,956 586,956 5,000
Cheryl Radetsky 591,956 586,956 5,000
Marvin L. Segel 130,435 130,435 0
</TABLE>
- --------------------
(1) 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.
9
<PAGE>
(2) Assumes that all of the Offered Shares held by the Selling Security
Holders are sold, and that the Selling Security Holders acquire no
additional shares of Common Stock before the completion of this
offering.
PLAN OF DISTRIBUTION
The Common Stock offered by this Registration Statement is being
offered on behalf of the Selling Security Holders. Such Common Stock may be sold
or distributed from time to time by the Selling Security Holders, or by donees
or transferees of, or other successors in interest to, the Selling Security
Holders, directly to one or more purchasers or through brokers, dealers or
underwriters who may act solely as agents or may acquire such Common Stock as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices, or at fixed prices,
which may be changed. The sale of the Common Stock offered hereby may be
effected hereby in one or more of the following methods: (i) ordinary brokers'
transactions; (ii) transactions involving cross or block trades or otherwise on
the Nasdaq National Market; (iii) purchases by brokers, dealers or underwriters
as principal and resale by such purchasers for their own accounts 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, swaps or
other derivatives (whether exchange-listed or otherwise); (vii) in privately
negotiated transactions; (viii) to cover short sales; or (ix) any combination of
the foregoing.
From time to time, one or more of the Selling Security Holders 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
such securities have been hypothecated shall, upon foreclosure in the event of
default, be deemed to be Selling Security Holders hereunder. The number of
Selling Security Holder's Offered Shares beneficially owned by those Selling
Security Holders who so transfer, pledge, donate or assign Selling Security
Holders' Offered Shares will decrease as and when they take such actions. The
plan of distribution for Selling Security Holders' Offered Shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be Selling Security Holders
hereunder. In addition, a Selling Security Holder may, from time to time, sell
short the Common Stock of the Company, and in such instances, this Prospectus
may be delivered in connection with such short sales and the Offered Shares
offered hereby may be used to cover such short sales.
A Selling Security Holder 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 such Selling
Security Holder, including, without limitation, in connection with
distributions of the Common Stock by such broker-dealers. A Selling Security
Holder 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 such Offered Shares. A Selling Security
Holder 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 Security
Holders and/or purchasers of the Common Stock for whom such broker-dealers may
act as agent, or to whom they may sell as principal, or both (which
compensation as to a particular broker-dealer may be less than or in excess of
customary commissions). The Selling Security Holders and any broker-dealers
who act in connection with the sale of the Offered Shares hereunder may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (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 the Company nor
any Selling Security Holder can presently estimate the amount of such
compensation. The Company knows of no existing arrangements between any
Selling Security Holders or any other stockholder, broker, dealer, underwriter
or agent relating to the sale or distribution of the Offered Shares.
10
<PAGE>
The Company 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. The
Company has also agreed to indemnify the Selling Security Holders and certain
related persons against certain liabilities, including liabilities under the
Securities Act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company, the Company 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.
The Company has advised the Selling Security Holders that during such
time as they may be engaged in a distribution of the Offered Shares included
herein they are required to comply with Regulation M promulgated under the
Exchange Act. With certain exceptions, Regulation M precludes any Selling
Security Holder, 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) the date on which
the shares are eligible for resale without restrictions pursuant to Rule
144(k) under the Securities Act or (b) the date on which all shares offered
hereby have been sold by the Selling Security Holders.
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 herein and elsewhere
in the registration statement in reliance upon the report of KPMG 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 29,775 shares of the Common Stock of the
Company.
MATERIAL CHANGES
There have been no material developments since the filing on February
11, 1999 of the Company'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 ("BP") owned
7,763,837 shares of Common Stock, and continues such Common Stock ownership as
of the date hereof.
On December 12, 1996, the Company completed the sale of its UK-based
subsidiary, Aplin & Barrett Limited ("A&B") to BP in accordance with the terms
of a Share Purchase Agreement. As part of the transaction, BP has provided the
Company with a revolving line of credit of up to $2.5 million. Any borrowings
under this line of credit
11
<PAGE>
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 A&B, 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 in pharmaceutical products
and animal healthcare products. Pursuant to the second License Agreement, A&B
is exclusively licensed by the Company 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.
The Company and BP also 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. 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 of
Directors. 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 of Directors.
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 the Company's Board of Directors was
reduced from two members to one member. Currently, BP has not nominated a
member for election to the Company's Board. The amount of consideration for
the sale was arrived at through arms-length negotiation and a fairness opinion
was obtained.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the SEC by the
Company, are incorporated herein by reference and made a part hereof. 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) Current Report on Form 8-K filed December 11, 1998.
(5) Current Report on Form 8-K filed February 3, 1999.
(6) 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
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities 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 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
12
<PAGE>
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., 4 Manhattanville Road,
Purchase, New York 10577.
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, 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 SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
13
<PAGE>
AMBI INC.
1,304,347 Shares of Common Stock
----------------------
PROSPECTUS
----------------------
March ___, 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
Available Information ............... 2
The Company ......................... 3
Risk Factors ........................ 3
Use of Proceeds ..................... 9
Selling Security Holders ............ 9
Plan of Distribution ................ 10
Experts ............................. 11
Legal Matters ....................... 11
Material Changes .................... 11
Certain Relationships ............... 11
Incorporation by Reference .......... 12
Indemnification ..................... 13
14
<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................... 10,000
Accountant's fees and expenses............ 5,000
Miscellaneous............................. 1,012
--------
Total................... $ 34,000
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, 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 (the "Act") 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 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
15
<PAGE>
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
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 the Company 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
- -------------------------------------
* Incorporated by reference from the Company's Current Report on Form 8-K
filed February 3, 1999.
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.
16
<PAGE>
(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 be the initial
bona fide offering thereof.
17
<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 4th day of March 1999.
AMBI Inc.
By: /s/ Fredric D. Price
---------------------
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/ Robert E. Flynn Chairman of the Board March 4, 1999
- -----------------------------
Robert E. Flynn
/s/ Fredric D. Price President, CEO and Director March 4, 1999
- -----------------------------
Fredric D. Price
/s/ Gerald A. Shapiro CFO (Principal Accounting and March 4, 1999
- ----------------------------- Financial Officer)
Gerald A. Shapiro
/s/ P. George Benson Director March 4, 1999
- -----------------------------
P. George Benson
/s/ Audrey T. Cross Director March 4, 1999
- -----------------------------
Audrey T. Cross
/s/ Marvin Moser Director March 4, 1999
- -----------------------------
Marvin Moser
/s/ Robert E. Pollack Director March 4, 1999
- -----------------------------
Robert E. Pollack
</TABLE>
<PAGE>
Exhibit 5
LAW OFFICES OF OSCAR D. FOLGER
521 Fifth Avenue
New York, New York 10175
March 4, 1999
AMBI Inc.
4 Manhattanville Road
Purchase, New York 10577
Re: Form S-3 Registration Statement
Gentlemen:
We have acted as counsel for AMBI Inc., a New York corporation (the
"Company"), in connection with the registration by the Company of 1,304,347
shares of Common Stock, par value $0.005 per share (the "Securities"), which
are the subject of a Registration Statement on Form S-3 under the Securities
Act of 1933, as amended (the "Act"). As counsel to the Company we have
examined and relied upon the original or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary in order to render the following
opinion.
On the basis of and subject to the foregoing, it is our opinion that
the Securities to be issued and sold by the Company have been duly authorized
and, when issued and sold, will be duly issued and fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the
Rules and Regulations of the Securities and Exchange Commission thereunder.
This opinion is to be used only in connection with the offer and sale
of the Securities as variously referred to herein while the Registration
Statement is in effect.
Very truly yours,
/s/ Oscar D. Folger
<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
March 5, 1999
