<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                                    FORM 10-Q

For Quarter Ended:                                            September 30, 2000


Commission File Number 0-14983


                                    AMBI INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



           New York                                    11-2653613
--------------------------------------------------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation of organization)


  4 Manhattanville Road, Purchase, NY                            10577
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)


                                 (914) 701-4500
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                          YES  __X__       NO _____


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock, Par Value $.005           31,266,019 shares as of October 31, 2000
-----------------------------           ----------------------------------------


<PAGE>


                            AMBI INC. & SUBSIDIARIES

                                      INDEX


PART I    FINANCIAL INFORMATION                                           PAGE
------    ---------------------                                           ----

ITEM 1    Consolidated Financial Statements (unaudited)


          Consolidated Balance Sheets at September 30, 2000
             and June 30, 2000                                              3


          Consolidated Statements of Operations for the three
             months ended September 30, 2000 and l999                       5


          Consolidated Statement of Stockholders' Equity for
             the three months ended September 30, 2000                      6


          Consolidated Statements of Cash Flows for the three
             months ended September 30, 2000 and 1999                       7


          Notes to Consolidated Financial Statements                        8


ITEM 2    Management's Discussion and Analysis of
             Financial Condition and Results of Operations                 11


PART II   OTHER INFORMATION
-------   -----------------

ITEM 1    Legal Proceedings                                                15

ITEM 2    Changes in Securities and Use of Proceeds                        15

ITEM 6    Exhibits and Reports on Form 8-K                                 15

ITEM 7a   Quantitative and Qualitative Disclosures
          About Market Risk                                                15



                                       2

<PAGE>


                            AMBI INC. & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>


                                                                             September 30,          June 30,
                                                                                 2000                 2000
                                                                             -------------          --------
                                                                              (unaudited)
<S>                                                                            <C>                  <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                   $ 8,456              $ 8,488
   Accounts receivable (less allowance for doubtful
      accounts of $93 at September 30, 2000 and $134 at
      June 30, 2000)                                                             3,935                4,587
   Other receivables                                                               694                  464
   Inventories                                                                   1,272                1,382
   Prepaid expenses and other current assets                                       607                  717
                                                                               -------              -------

          Total current assets                                                  14,964               15,638

Property and equipment, net                                                        750                  734
Patents and trademarks (net of accumulated
   amortization of $8,845 at September 30, 2000
   and $7,843 at June 30, 2000)                                                 21,767               21,711
Goodwill (net of accumulated amortization of
   $543 at September 30, 2000 and $449 at
   June 30,  2000)                                                               2,615                2,640
Other assets                                                                     1,027                  362
                                                                               -------              -------
TOTAL ASSETS                                                                   $41,123              $41,085
                                                                               =======              =======

</TABLE>


See accompanying notes to consolidated financial statements.



                                       3

<PAGE>


                            AMBI INC. & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                             September 30,        June 30,
                                                                                 2000               2000
                                                                             -------------       ---------
                                                                              (unaudited)
<S>                                                                           <C>                <C>
LIABILITIES, REDEEMABLE PREFERRED STOCK
  AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                            $ 1,500            $ 1,500
  Accounts payable and accrued expenses                                          3,425              4,039
  Contingent payments payable                                                    4,640              3,584
  Preferred dividends payable                                                       29                 29
                                                                               -------           --------
        Total current liabilities                                                9,594              9,152

Long-term debt                                                                     750              1,125

Other long-term obligations                                                        147                153
                                                                               -------           --------

TOTAL LIABILITIES                                                               10,491             10,430
                                                                               -------           --------
Commitments and contingent liabilities

REDEEMABLE PREFERRED STOCK:

Series E convertible preferred, 1,500 shares issued: 476
   shares outstanding at September 30, 2000
   and June 30, 2000, respectively (aggregate liquidation
   value Series E $488)                                                            389                389

Series F convertible preferred, 575 shares issued: 343 shares
   outstanding at September 30, l999 and June 30, 2000,
   respectively (aggregate liquidation value Series F $352)                        287                287

STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value, authorized 5,000,000 shares

Series G convertible preferred, 828 shares issued, 663 shares
   outstanding at September 30, 2000 and June 30, 2000
   (aggregate liquidation value $671)                                             663                663

Common stock, $0.005 par value, authorized 65,000,000
   shares; and 31,581,427 shares issued and outstanding at
   September 30, 2000 and June 30, 2000, respectively                             158                158

Additional paid-in capital                                                     62,291             62,291

Accumulated deficit                                                           (33,156)           (33,133)
                                                                              -------           --------

TOTAL STOCKHOLDERS' EQUITY                                                    $29,956            $29,979
                                                                              -------            -------
TOTAL LIABILITIES, REDEEMABLE PREFERRED
   STOCK AND STOCKHOLDERS' EQUITY                                             $41,123            $41,085
                                                                              =======            =======
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4

<PAGE>


                            AMBI INC. & SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (unaudited)
<TABLE>
<CAPTION>


                                                                Three Months Ended
                                                                   September 30,
                                                             2000                1999
                                                            -------            --------
<S>                                                          <C>                 <C>
Net sales                                                   $ 5,256             $ 8,297
Other revenues                                                1,647                 127
                                                            -------             -------

REVENUES                                                      6,903               8,424

Cost of goods sold                                            1,432               1,530
                                                            -------             -------

GROSS PROFIT                                                  5,471               6,894

Selling, general & administrative expense                     3,319               3,450
Research and development expense                              1,053                 293
Depreciation and amortization                                 1,175                 929
                                                            -------             -------

OPERATING INCOME (LOSS)                                         (76)              2,222

Interest income                                                 134                  68
Interest expense                                                 76                 121
Other income, net                                                27                  --
                                                            -------             -------

INCOME BEFORE INCOME TAXES                                        9               2,169

Income taxes                                                      3                 165
                                                            -------             -------

NET INCOME                                                     $  6             $ 2,004
                                                             ======             ========

Basic earnings (loss) per share                              $(0.00)              $0.07
                                                             =======              =====

Diluted earnings (loss) per share                            $(0.00)              $0.06
                                                             ======               =====

Weighted average number of common shares - basic         31,581,427          30,459,294
                                                         ==========          ==========

Weighted average number of common shares and
   equivalents - diluted                                 31,581,427          32,116,198
                                                         ==========          ==========

</TABLE>


See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

                           AMBI INC. & SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>


                                                                              Additional
                                     Preferred Stock                            Paid-In       Accumulated
                                         Series G           Common Stock        Capital         Deficit           Total
                                    Shares        $       Shares         $         $               $                $
                                    ------      ----      ------       ----    --------       -----------         ------
<S>                                 <C>         <C>       <C>           <C>     <C>           <C>                 <C>
Balance at June 30, 2000              663        663    31,581,427      158      62,291         (33,133)          29,979

Preferred stock dividends
declared                               --         --            --       --          --             (29)             (29)

Net income for the period              --         --            --       --          --               6                6
                                    -----      -----    ----------     ----     -------        --------          -------

Balance at Sept. 30, 2000             663       $663    31,581,427     $158     $62,291        $(33,156)         $29,956
                                    =====      =====    ==========     ====     =======        ========          =======

</TABLE>


          See accompanying notes to consolidated financial statements.






                                       6


<PAGE>


                            AMBI INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>


                                                                                    Three Months Ended
                                                                                       September 30,
                                                                                  2000               1999
                                                                                --------           --------
<S>                                                                             <C>                <C>
Cash flows from operating activities:
  Net income                                                                    $      6            $ 2,004
  Adjustments to reconcile net income to net cash provided
  by operating activities:
     Depreciation and amortization                                                 1,175                929
     Nutrition 21 consulting expense                                                  --                 51
     Changes in assets and liabilities
       Decrease/(increase) in accounts receivable                                    652               (574)
       (Increase) in other receivables                                              (230)              (119)
       Decrease in inventories                                                       110                376
       Decrease in prepaid and other current assets                                  110                 73
       (Increase) in other assets                                                   (665)              (138)
       (Decrease) in accounts payable and accrued expenses                          (620)            (1,267)
                                                                                --------            -------
          Net cash provided by operating activities                                  538              1,335
                                                                                --------            -------

Cash flows from investing activities:
  Contingent payments for acquisitions                                                --             (3,434)
  Purchases of property and equipment                                                (85)               (22)
  Payments for patents and trademarks                                                (81)              (127)
                                                                                --------            -------
          Net cash (used in) investing activities                                   (166)            (3,583)
                                                                                --------            -------

Cash flows from financing activities:
  Capital lease obligation repayments                                                 --                (34)
  Debt repayments                                                                   (375)              (382)
  Proceeds from exercise of options & warrants                                        --                219
  Preferred stock dividends paid                                                     (29)                --
                                                                                --------            -------
          Net cash (used in) financing activities                                   (404)              (197)
                                                                                --------            -------

Net decrease in cash and cash equivalents                                            (32)            (2,445)
Cash and cash equivalents at beginning of period                                   8,488              4,458
                                                                                --------            -------
Cash and cash equivalents at end of period                                      $  8,456            $ 2,013
                                                                                ========            =======

</TABLE>



See accompanying notes to consolidated financial statements.


                                       7

<PAGE>


                            AMBI INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1   BASIS OF PRESENTATION
         ---------------------

         The accompanying unaudited interim consolidated financial statements
         have been prepared in accordance with generally accepted accounting
         principles for interim financial statement reporting and in accordance
         with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
         Accordingly, they do not include all the information and footnotes
         required by generally accepted accounting principles for complete
         financial statements. In the opinion of management, all adjustments
         (consisting of normal recurring accruals) considered necessary for a
         fair presentation have been included. Operating results for the
         three-month period ended September 30, 2000 are not necessarily
         indicative of the results that may be expected for the fiscal year
         ending June 30, 2001. For further information, refer to the
         consolidated financial statements and notes thereto, included in the
         Company's annual report on Form 10-K for the year ended June 30, 2000.

         Certain reclassifications have been made to the prior period balances
         in order to conform to the current period presentation.



Note 2   INVENTORIES
         -----------

         The components of inventories at September 30, 2000 and June 30, 2000
         were:

                                                 September 30,      June 30,
                                                    2000              2000
                                                 -------------      ---------
                      Raw materials                $   269           $   493
                      Finished goods                 1,003               889
                                                   -------           -------
                      Total inventories            $ 1,272           $ 1,382
                                                   =======           =======



Note 3   REDEEMABLE PREFERRED STOCK
         --------------------------

         During the quarter ended September 30, 2000, there were no conversions
         of the Company's Series E, F or G Preferred Stock.






                                       8


<PAGE>


                            AMBI INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 4   EARNINGS PER SHARE
         ------------------

         Basic and diluted earnings per share:

                                                          Three Months Ended
                                                             September 30,
                                                          2000           1999
                                                          ----           ----

             Net income                                   $    6         $2,004
             Preferred stock dividends                       (29)           (21)
                                                          ------         ------
             Net income (loss) attributable to
                common stockholders                       $  (23)        $1,983
                                                          ======         ======

             Basic earnings (loss) per share              $(0.00)         $0.07
                                                          ======         ======

             Weighted average number of common
               shares                                 31,581,427     30,459,294
                                                      ==========     ==========

             Net income (loss) attributable to
                common shareholders                         $(23)        $1,983
             Preferred stock dividends                        --             21
                                                          ------         ------
             Net income (loss) available to common
               shareholders after giving effect to
               dilution                                     $(23)        $2,004
                                                           =====         ======

             Diluted earnings (loss) per share            $(0.00)         $0.06
                                                          ======          =====

             Weighted average number of common
                shares and equivalents                31,581,427     32,116,198
                                                      ==========     ==========

         Diluted loss per share for the quarter ended September 30, 2000, does
         not reflect the incremental shares from the assumed conversion of the
         preferred stock, as the effect of such inclusion would be to reduce the
         loss per share. The weighted average shares of dilutive securities that
         would have been used to calculate diluted EPS had their effect not been
         anti-dilutive is as follows:

                                                         2000           1999
                                                        ------         ------

             Convertible preferred stock               919,396           --



Note 5   COMPREHENSIVE INCOME
         --------------------

         Effective July 1, 1998, the Company adopted Statement of Financial
         Accounting Standards No. 130 "Reporting Comprehensive Income." This
         Statement requires that companies disclose comprehensive income, which
         includes net income, foreign currency translation, minimum pension
         liability adjustments and unrealized gains and losses on marketable
         securities classified as available for sale. For the Company,
         comprehensive income is the same as net income.


                                       9

<PAGE>


                            AMBI INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 6   SEGMENT REPORTING
         -----------------

         A summary of business data for the Company's reportable segments is as
         follows:

         Information by business segment (in thousands):

                                                      Three Months Ended
                                                         September 30,
                                                      2000           1999
                                                      ----           ----
                 Revenues
                 --------
                 Nutritional Products               $ 6,840        $ 8,203
                 Pharmaceutical Products                 63            221
                                                    -------        -------

                                                    $ 6,903        $ 8,424
                                                    =======        =======
                 Operating Income (Loss)
                 -----------------------
                 Nutritional Products                 $ (92)       $ 2,172
                 Pharmaceutical Products                 16             50
                                                      -----        -------

                                                      $ (76)       $ 2,222
                                                      =====        =======

         The operations of the Company are principally in the United States.



Note 7   SUPPLEMENTAL CASH FLOW INFORMATION
         ----------------------------------

                                                              Three Months Ended
                                                                 September 30,
                                                              2000          1999
                                                              ----          ----

           Supplemental disclosure of cash flow
            information:
              Cash paid for interest                           $ 71        $  80
              Cash paid for income taxes                         80          247

           Supplemental schedule of non-cash financing
            activities:
              Obligation for purchase of property &
                equipment                                      $192        $209
              Issuance of warrants                               --        $ 63
              Obligation for N21 contingent payment            $804        $999
              Obligation for Lite Bites contingent payment     $252        $252
              Issuance of common stock for series E
                conversion                                     $ --        $249




                                       10

<PAGE>


Item 2  -  Management's Discussion and Analysis of Financial Condition and
           Results of Operations

           The following discussion should be read in conjunction with the
           consolidated financial statements and related notes thereto of the
           Company included elsewhere herein.

           General

           The Company's revenues have been primarily derived from the sale of
           nutrition products to manufacturers of vitamin and mineral
           supplements and sales of nutrition bars and other related dietary
           supplement products marketed under the trademark "Lite Bites" (the
           "Lite Bites Business"). The Company has, in addition, received
           royalty income from users of its patented technology.

           Cost of goods sold includes both direct and indirect manufacturing
           costs. Research expenses include internal expenditures as well as
           expenses associated with third party collaborators. Selling, general
           and administrative expenses include salaries and overheads, third
           party fees and expenses, royalty expenses for licenses and
           trademarks, and costs associated with the selling of the Company's
           products. The Company capitalizes patent costs and
           acquisition-related goodwill and intangible assets, and amortizes
           them over periods of one to twenty years.


           Results of Operations

           Revenues
           --------

           Net sales for the three months ended September 30, 2000 were $5.3
           million, a decrease of $3.0 million when compared to $8.3 million for
           the same period a year ago. The decrease in net sales is due
           primarily to reductions in the selling price of chromium picolinate
           subsequent to the expiration of a composition-of-matter patent in
           August 2000.

           Other revenues of $1.6 million for the three months ended September
           30, 2000, were comprised of license and royalty revenues of $0.1
           million earned from the Whitehall-Robins Healthcare division of
           American Home Products Corporation in accordance with the License,
           Option and Marketing Agreement entered into on October 8, l999, as
           well as $1.5 million of license fees earned from Biosynexus
           Incorporated in accordance with the License Agreements entered into
           on August 2, 2000.

           Cost of goods sold
           ------------------

           Cost of goods sold for the three months ended September 30, 2000 were
           $1.4 million, a slight decrease when compared to $1.5 million in the
           same period a year ago. The decrease in cost of goods sold is
           attributable to cost improvements in nutrition products. Gross margin
           of 72.8% for the three months ended September 30, 2000 was 8.8
           percentage points lower than the comparable period a year earlier.
           The decrease in the gross margin percentage is due to the decrease in
           selling price of chromium picolinate.

           Selling, general and administrative expenses (SG&A)
           ---------------------------------------------------

           SG&A expense for the three-month period ended September 30, 2000, was
           $3.3 million, compared to $3.5 million for the same period a year
           earlier. The decrease is due to reductions in marketing and
           administrative expenses of $0.7 million offset by a non-recurring
           charge of $0.5 million related to the departure of the Company's
           previous CEO.



                                       11

<PAGE>


                                                             15
Item 2  -  Management's Discussion and Analysis of Financial Condition and
           Results of Operations (Continued)

           Research and development expenses
           ---------------------------------

           Research costs of $1.1 million for the three-month period ended
           September 30, 2000, increased $0.7 million compared to $0.3 million
           for the same period a year earlier. The increase is primarily
           attributable to $0.6 million of expense for NutritionU.com, the
           Company's online nutrition education internet company, as well as
           additional research costs of $0.2 million related to the Lite Bites
           Business.

           Operating Income
           ----------------

           The Company's operating loss of $76 thousand for the three-month
           period ended September 30, 2000, was $2.3 million less than the
           operating income of $2.2 million for the same period a year earlier.
           The price reductions offered to the Company's chromium picolinate
           customers, the continued funding of NutritionU.com and the
           non-recurring charges recorded in the quarter were the contributing
           factors. Partially offsetting the contributing factors were license
           fees of $1.5 million earned from Biosynexus Incorporated in
           accordance with the License Agreements entered into on August 2,
           2000.

           Interest income, net
           --------------------

           Interest income, net of interest expense, of $58 thousand for the
           three-month period ended September 30, 2000, was $0.1 million higher
           than the comparable period a year ago. The increased level of funds
           invested in interest-bearing deposits in the quarter ended September
           30, 2000 was the contributing factor.

           Income taxes
           ------------

           Income taxes for the three-month period ended September 30, 2000 were
           $3 thousand compared to $0.2 million in the comparable period a year
           earlier. For the quarter ended September 30, 2000, the Company
           applied an effective tax rate of 35.5%, which is greater than the
           comparable period a year earlier due to the utilization of all its
           federal tax loss carry forwards in earlier periods.

           Quarterly Variations
           --------------------

           On a quarter-to-quarter basis, the Company's sales and income may
           vary widely as a result of various factors. Such factors may include
           customers placing orders in anticipation of a price increase,
           customers adjusting finished goods inventory and planned variations
           in product pricing, marketing, promotion and product development
           expenses. As a result, the Company may report sales increases or
           declines and/or income gains or losses for a particular quarter that
           may not reflect end-customer usage of the Company's products.

           Business Segments
           -----------------

           The Company operates in two business segments - Nutritional Products
           and Pharmaceutical Products.

           Nutritional Products
           --------------------

           Nutritional product revenues were $6.8 million for the quarter ended
           September 30, 2000, a decrease of $1.4 million when compared to the
           same period a year ago. The decrease in revenues is primarily due to
           price reductions offered to our ingredient product customers
           partially offset by license fees earned from Biosynexus Incorporated
           in accordance with the License Agreements entered into on August 2,
           2000.



                                       12
<PAGE>


Item 2  -  Management's Discussion and Analysis of Financial Condition and
           Results of Operations (Continued)


           Nutritional Products operating loss for the quarter ended September
           30, 2000 was $92 thousand, a decrease of $2.3 million compared to
           $2.2 million of operating income for the same period a year ago. The
           decrease in net sales of the ingredient products, the continued
           funding of NutritionU and non-recurring charges, were the
           contributing factors. Partially offsetting these decreases were
           license fees earned in the quarter.

           Pharmaceutical Products
           -----------------------

           Pharmaceutical products revenues were $63 thousand for the quarter
           ended September 30, 2000, a decrease of $0.2 million compared to the
           same period a year ago. The decrease is attributable to reduced
           animal health related sales.

           Pharmaceutical products operating income was $16 thousand for the
           quarter ended September 30, 2000, compared to $50 thousand for the
           same period a year ago. The decline is primarily due to reduced sales
           of nisin-based animal health products.

           Liquidity and Capital Resources

           Cash and cash equivalents at September 30, 2000 were $8.5 million
           compared to $8.5 million at June 30, 2000. As of September 30, 2000,
           the Company had a working capital surplus of $5.4 million compared to
           a $6.5 million surplus as of June 30, 2000.

           During the three month period ended September 30, 2000, cash provided
           by operations was $0.5 million, compared to $1.3 million for the
           three-month period ended September 30, 1999. The decrease is due
           primarily to lower profitability.

           Cash used in investing activities for the three months ended
           September 30, 2000 was $0.2 million compared to $3.6 million for the
           comparable period a year ago. Contingent payments for acquisitions,
           which were due September 30, 2000 of $3.6 million, will be disbursed
           in the second quarter of fiscal 2001.

           Cash used in financing activities for the three-month period ended
           September 30, 2000 was $0.4 million compared to cash provided by
           financing certificates of $0.2 million for the comparable period a
           year ago. The lack of proceeds from the exercise of options and
           warrants in the quarter ended September 30, 2000, accounted for the
           decrease.

           The Company's primary sources of financing are cash generated from
           continuing operations and a $4.0 million revolving line of credit
           with Citizens Bank of Massachusetts (successor in interest to loans
           originally issued to the Company by State Street Bank and Trust
           Company). At September 30, 2000, the availability under the revolving
           line of credit was $2.6 million. At September 30, 2000, the Company
           had no borrowings under this line.

           The Company believes that cash generated from operations and cash
           available under the line of credit will provide sufficient liquidity
           to fund operations for the next twelve months.

           Future acquisition activities and any increases in marketing and
           research and development expenses over the present levels may require
           additional funds. Also, the Company intends to seek any necessary
           additional funding through arrangements with corporate collaborators,
           through public or private sales of its securities, including equity
           securities, or through bank financing arrangements. The Company does
           not currently have any specific arrangements for additional financing
           and there can be no assurance that additional funding will be
           available at all or on reasonable terms.



                                       13
<PAGE>


Item 2  -  Management's Discussion and Analysis of Financial Condition and
           Results of Operations (Continued)


           Year 2000 Readiness Disclosure


           The Company completed the implementation of Year 2000 readiness of
           its critical operational and administrative software during the month
           of August 1999. As of September 30, 2000, the Company has not
           experienced any disruptions due to Year 2000 issues.


           Recently Issued Accounting Standards
           ------------------------------------

           In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
           Instruments and Hedging Activities." SFAS No. 133 requires companies
           to recognize all derivatives as assets or liabilities measured at
           their fair value. Gains or losses resulting from changes in the
           values of those derivatives would be accounted for depending on the
           use of the derivative and whether it qualified for hedge accounting.

           In June 2000, the FASB issued SFAS No. 137, "Accounting for
           Derivative Instruments and Hedging Activities - Deferral of the
           Effective Date of FASB Statement No. 133, an Amendment of FASB
           Statement No. 133". SFAS No. 137 defers the effective date of SFAS
           No. 133, "Accounting for Derivative Instruments and Hedging
           Activities" for one year. SFAS No. 133, as amended, is now effective
           for all fiscal quarters of all fiscal years beginning after June 15,
           2000. The Company applied the provisions of SFAS No. 133 during the
           quarter ended September 30, 2000. The implementation had no impact on
           financial position or results of operations during the quarter.

           The Securities and Exchange Commission (SEC) released Staff
           Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
           Statements" on December 3, 1999, SAB No. 101A on March 24, 2000, SAB
           No. 101B on June 26, 2000 and a document issued on October 12, 2000
           responding to frequently asked questions (FAQ) regarding accounting
           standards related to revenue recognition and SAB No. 101. SAB No. 101
           sets forth the views of the issues as well as certain
           industry-specific guidance. We are required to report the impact of
           SAB No. 101, as amended by SAB No. 101A and SAB No. 101B no later
           than the fourth fiscal quarter of the fiscal year 2001. The effect of
           the change would be recognized as a cumulative effect of a change in
           accounting principle as of July 1, 2000. Prior year financial
           statements will not be restated. We have not yet made a determination
           of the impact of this accounting guidance on our financial position
           or results from operations, and are considering guidance from the
           SEC's recently issued FAQ on SAB No. 101.





                                       14
<PAGE>



                           PART II - OTHER INFORMATION





Item 1  -  Legal Proceedings

            The company in the ordinary course of its business has brought
            several patent infringement actions against companies that it
            believes have sold chromium picolinate in violation of the Company's
            patent rights. As of this date, various actions are ongoing, and the
            Company intends to vigorously protect its proprietary rights.




Item 6  -  Exhibits and Reports on Form 8-K

           (a) Exhibits

               Exhibit 27 - Financial Data Schedule

           (b) Reports

               There were no reports on Form 8-K filed by the Company during
               this fiscal quarter.



Item 7a  -  Quantitative and Qualitative Disclosures About Market Risk


            Market risk represents the risk of changes in value of a financial
            instrument, derivative or non-derivative, caused by fluctuations in
            interest rates, foreign exchange rates and equity prices. The
            Company has no financial instruments that give it exposure to
            foreign exchange rates or equity prices. The Company's existing term
            loan with Citizens Bank of Massachusetts bears interest at a rate
            equal to the prime lending rate plus one percent. As a result, the
            Company does have exposure to changes in interest rates. For
            example, if interest rates increase by one percentage point from
            current levels, the Company would incur incremental interest expense
            of $15 thousand through the scheduled maturity of the term loan on
            February 1, 2002.






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                             AMBI INC.& SUBSIDIARIES

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                AMBI INC.
                                                ----------
                                                Registrant





Date:  November 7, 2000          By:  /S/ Gail Montgomery
                                      ------------------------------------------
                                      Gail Montgomery
                                      President and Chief Executive Officer
                                      (Principal Executive Officer)


                                      /S/ Gerald A. Shapiro
                                      ------------------------------------------
                                      Vice President and Chief Financial Officer
                                      (Principal Financial Officer)






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