<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______________to________________
Commission file number 0-11969
MEHL/BIOPHILE INTERNATIONAL CORPORATION
______________________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Delaware 22-2408186
______________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) identification No.)
4020 Newberry Road, Gainesville, Florida, 32607
______________________________________________________________________________
(Address of principal executive offices)
(Zip Code)
Issuer's telephone number (352) 373-2565
______________________________
______________________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ___
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of August 31, 1996
41,097,057 shares of common stock, $.01 par value
______________________________________________________________________________
Page 1 of 16 pages
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
Index
PAGE
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed consolidated balance sheet as
of August 31, 1996 3
Condensed consolidated statements of
operations for the three months ended
August 31, 1996 and 1995 4
Condensed consolidated statements of
cash flows for the three months ended
August 31, 1996 and 1995 5-6
Notes to condensed consolidated financial
statements 7-9
Item 2. Management's discussion and analysis of
financial condition and results of operations 10-11
PART II. OTHER INFORMATION 12
Signature 13
Exhibit 11 Statement Re: Computation of net income
per common share 14-15
* * * *
<PAGE> 3
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
MEHL/BIOPHILE INTERNATIONAL COPRORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AUGUST 31, 1996
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 9,208,168
Accounts receivable, net of allowance for doubtful
accounts of $343,000 567,699
Inventories 984,008
Note receivable, current portion 50,000
Other current assets 477,791
Total current assets 11,287,666
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $997,112 300,260
PATENTS AND PATENT RIGHTS, net of accumulated amortization
of $1,027,591 5,059,261
NOTE RECEIVABLE - RELATED PARTY, net of current portion 100,000
OTHER ASSETS
Investment in non-marketable securities 750,000
Other 356,415
$17,853,602
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,055,690
Accrued expenses 464,776
Other current liabilities 47,372
Total current liabilities 1,567,838
MINORITY INTEREST IN SLS BIOPHILE LTD 529,709
STOCKHOLDERS' EQUITY:
Serial preferred stock, $10 par value,
authorized-200,000 shares:
Series C, 5% cumulative convertible,
$1,000 stated value, 9,850 shares
issued and outstanding 9,850,000
Common stock, $.01 par value,
authorized-20,000,000 shares:
Issued-43,572,016 shares 435,720
Additional paid-in capital 13,353,834
Accumulated deficit (6,927,401)
Unrealized loss on marketable securities (3,152)
Foreign currency translation adjustment 2,653
16,711,654
Treasury stock, at cost, 2,474,959 common shares (955,599)
Total stockholders' equity 15,756,055
$17,853,602
See notes to condensed consolidated financial statements.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
AUGUST 31,
1996 1995
OPERATING REVENUES $1,505,691 $ 751,234
COST OF REVENUES 798,586 412,388
GROSS MARGIN 707,105 338,846
OPERATING EXPENSES:
Selling, general and administrative 1,522,883 212,481
Research and development 307,803 0
Interest 14,277 0
1,844,963 212,481
(1,137,858) 126,365
INVESTMENT INCOME 173,713 32,831
MINORITY INTEREST IN NET LOSS OF SUBSIDIARY 93,763
NET INCOME (LOSS) $ (870,382) $ 159,196
NET INCOME (LOSS) PER COMMON SHARE $ (.02) $ .01
INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (995,382) $ 144,646
WEIGHTED AVERAGED NUMBER OF COMMON SHARES AND
DILUTIVE COMMON EQUIVALENT SHARES OUTSTANDING
DURING PERIOD 40,097,057 13,854,026
WEIGHTED AVERAGED NUMBER OF COMMON SHARES ASSUMING
FULL DILUTION DURING PERIOD 40,097,057 14,630,026
See notes to condensed consolidated financial statements.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
AUGUST 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (870,382) $ 159,196
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Minority interest in net loss of subsidiary (93,763) 0
Depreciation and amortization 248,695 34,321
Changes in operating assets and liabilities:
Accounts receivable 453,585 155,324
Inventories (390,543) (115,588)
Other operating assets (293,515) (80,306)
Accounts payable 376,650 115,332
Accrued expenses (27,668) (3,982)
Net cash provided (used) by operating activities (596,941) 264,297
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment acquisitions (92,581) 0
Increase in loans receivable (352,838) 112,500
Proceeds from sale of marketable securities
held to maturity 477,690 0
Net cash provided by investing activities 32,271 112,500
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (53,499) 0
Preferred stock dividends (147,339) (14,100)
Treasury stock acquisition 0 (2,301)
Issuance of common stock 128,591 0
Net cash used by financing activities (72,247) (16,401)
EFFECT OF EXCHANGE RATE ON CASH 6,087 0
INCREASE (DECREASE) IN CASH FOR THE PERIOD (630,830) 360,396
CASH, beginning of period 9,838,998 633,509
CASH, end of period $ 9,208,168 $ 993,905
See notes to condensed consolidated financial statements.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NON-CASH ACTIVITIES:
THREE MONTHS ENDED
AUGUST 31,
1996 1995
Existing business acquisition costs:
Issuance of common stock $ 543,292
Loans and advances applied
towards purchase price 1,946,380
$2,489,672
Components of acquired businesses, in
aggregate, are as follows:
Accounts receivable $ 534,448
Inventories 204,748
Property and equipment 222,952
Patents and patent rights 5,183,180
Other assets 4,188
Accounts payable and accrued expenses (1,028,515)
Current portion of notes and loans (1,119,838)
Long-term debt (804,885)
Other liabilities (83,134)
3,113,144
Less minority interest (623,472)
$2,489,672
Notes, loans and advances used to
retired debt of acquired business $1,253,620
Issuance of common stock:
Conversion of debt, net of unamortized
issue costs of $35,022 $ 714,978
Payment of accrued interest $ 16,439
Conversion of preferred stock $ 150,000
Receipt of non-marketable securities
as payment of note receivable $750,000
Receipt of stock into treasury
in payment of note receivable $ 37,500
See notes to condensed consolidated financial statements.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S.B. Accordingly, they do not include all of 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 months ended August 31, 1996
are not necessarily indicative of the results that may be expected for the
year ending May 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended May 31, 1996.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements in the 1995 Mehl/Biophile International
Corporation and Subsidiaries Annual Report on form 10-KSB for the year ended
May 31, 1996.
2. BUSINESS ACQUISITIONS:
On June 4, 1996, the Registrant completed the purchase of capital stock
representing in the aggregate of 81% interest in SLS (Wales) Limited, a
privately held Welsh company ("SLS") engaged in developing, manufacturing and
selling lasers primarily in the field of hair removal. The consideration for
the acquisition of the SLS shares consisted of a cash payment of 1,255,000
pounds sterling (approximately $1.9 million) and the issuance of 25,044 shares
of he Company's Common Stock. SLS holds patents pending in the field of laser
depilation. In accordance with the terms of the agreement, funds of
approximately $1,300,000, advanced by the Company to SLS, were used to retire
existing SLS debt.
Additionally, on June 4, 1996, Classy Lady by Mehl of Puerto Rico, Inc. a
privately-held Puerto Rico company ("Classy Lady"), merged with and into a
wholly-owned subsidiary of the Company (the "Merger"). As consideration for
the Merger, the Company issued an aggregate of 25,000,000 shares of Common
Stock, $.01 par value per share, to the shareholders of Classy Lady.
In exchange for the issuance of the shares of the Company issued pursuant to
the Merger, the Company obtained all of the stock of Class Lady, which owns
the exclusive licensing rights granted to Classy Lady by Thomas L. Mehl, Sr.,
for a multiple hair removal technology and by Dr. Nardo Zaias for a laser hair
removal technology.
3. INCOME TAXES:
For the three months ended August 31, 1996 the Company's deferred tax asset
valuation allowance increased by approximately $170,000 as a result of current
period losses. The Company recognized a reduction in its deferred tax asset
valuation allowance of approximately $69,000 for the three months ended August
31, 1995 which was primarily attributable to the utilization of net operating
loss carryforwards.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. INVENTORIES:
At August 31, 1996,inventories are comprised primarily of finished goods.
5. COMMON STOCK ISSUANCES:
In addition to the common shares issued related to the business acquisitions
(see Note 2), during the three months ended August 31, 1996, the Company
issued 261,583 Common shares upon retirement of $750,000 convertible debenture
and related accrued interest of $16,383 and 50,000 shares upon conversion of
150 shares of Series C, 5% cumulative convertible preferred stock.
Unamortized debt issue costs of $35,022 were charged to paid in capital.
Additionally, 102,873 Common shares were issued during the period at $1.25 per
share ($128,591 in aggregate) upon the exercise of outstanding stock purchase
warrants. At August 31, 1996 warrants to purchase 268,773 shares of Common
stock at $1.25 were outstanding. The expiration date of these warrants is
December 7, 1996.
6. RECENT EVENTS:
On June 7, 1996 the Company entered into a Letter of Intent with Converting
Laboratories, Inc. (CLI), a Wisconsin corporation, located in Fond du Lac,
Wisconsin. CLI will be the primary manufacturer of the Company's consumer
multiple hair removal patch and is presently manufacturing, on an OEM basis,
consumer product and devices primarily related to the medical field, which it
will continue to do. Subject to entering a definitive agreement, the intent
of the parties is for the Company to purchase eighty-one percent (81%) of the
stock of CLI in exchange for one hundred five thousand (105,000) of the common
shares of the Company. An additional two hundred thousand shares (200,000)
will be issued to the owners of CLI according to certain performance
milestones to be included in the definitive agreement. To date,
the Company has advanced in the form of 6% interest bearing notes a total
of $370,000 to enable CLI to expand its facilities and acquire the
necessary equipment to ramp up and expand its manufacturing capabilities. The
Company anticipates its total cash investment in CLI will be $600,000.
Through CLI's existing contracts and new clients, it is anticipated by the
Company that CLI will be able to finance further expansion and capital
expenditures substantially out of its own operating profits during 1997.
On July 12, 1996 the Company entered into a Letter of Intent with Anton H.
Clemens ("Clemens"), a director of the Company, and Victor M. Haughton, M.D.
("Haughton"). The intent of the parties, subject to a definitive agreement,
is to have the Company form a new subsidiary, of which Clemens will be
president, having the exclusive worldwide license rights for the development,
manufacturing and marketing of a new and novel retractable needle and catheter
technology for the medical field protected by issued United States and
International Patents and by patents pending. As consideration for the
Company's entering into the Letter of Intent, the Company agreed to 1) pay the
sum of sixty-three thousand nine hundred dollars ($63,900) to cover related
patent fees for the intellectual property, 2) have the subsidiary pay
Clemens and Haughton additional compensation in the form of license fees or
other monies to be set forth in the definitive agreement and 3) invest such
additional funds necessary for the development, manufacture and marketing of
the intellectual property as set forth in the definitive agreement.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. RECENT EVENTS: (continued)
On July 25, 1996 the Company entered into a Letter of Intent with G.K.S.
Technologies, Inc. (GKS), a Puerto Rico corporation together with Gunner K.
Svanberg ("Svanberg"). Svanberg holds several patents and patents pending
worldwide for a new dental curret and curret sharpening machine. The intent
of the parties, subject to a definitive agreement, is to develop, manufacture
and market Svanberg's new curret devices within the worldwide dental market.
As consideration for the Company entering into this Letter of Intent with
Svanberg and GKS, the Company agreed to (1) subscribe to One Hundred Thousand
Shares (100,000) of GKS common stock at $.50 per share for the sum of Fifth
Thousand Dollars ($50,000) upon the execution of the Letter of Intent; and (2)
invest such additional funds necessary for the development, manufacture and
marketing of the Patent Applications according to the terms set forth in the
definitive agreement. Through August 31, 1996, the Company had advanced
$23,565 to be applied towards the purchase of of GKS common stock under the
terms outlined above. Thomas L. Mehl, Sr., President and Chairman of the
Company, personally owns twelve and one-half percent (12.5%) of GKS as a
result of his working with Svanberg on patent applications over the past two
years without any prior compensation. M.C.M. Group, Inc., a Florida
corporation owned by Thomas L. Mehl, Sr., also owns twelve and one-half
percent of GKS as a result of providing management and consulting services to
GKS and Svanberg over the past two years without prior compensation.
On July 25, 1996 the company entered into a Letter of Intent with Applied
Genetics, Inc. (AGI), a New York Corporation. AGI has a patented liposome
delivery system for skin and hair. The intent of the parties is to
enter into definitive agreement for the express purpose of (1) the Company
retaining the services of AGI to prove the efficacy of those certain delivery
systems developed by Thomas L. Mehl, Sr. and Nardo Zaias, M.D. and (2) MEHL's
future strategic alliance with AGI for the purpose of obtaining additional
funding for AGI through private placement, initial offering or other mezzanine
funding. As of August 31, 1996, the Company had advanced to AGI the sum of
$50,000 for the provision of services pertaining to the efficacy of those
certain delivery systems discussed above.
Advances to CLI and GKS of $309,000, in aggregate at August 31, 1996 are
included in other assets. The advance to AGI of $50,000 at August 31,1996 is
included in other current assets. Payments related to the pending arrangement
with Clemens and Haughton were charged to operations.
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PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MEHL/BIOPHILE INTERNATIONAL CORPORATION
BUSINESS ACQUISITIONS:
On June 4, 1996, Classy Lady by Mehl of Puerto Rico, Inc., a privately-held
Puerto Rico company ("Classy Lady'), merged with and into a wholly-owned
subsidiary of the Company (the "Merger"). In consideration for the Merger,
the Company issued an aggregate of 25,000,000 shares of Common Stock, $.01 par
value per share, to the shareholders of Classy Lady. As a result of the
Merger, the former Classy Lady shareholders own, in the aggregate
approximately 60.8% of the outstanding Common Stock of the Company, thereby
resulting in a change of control of the Company. Loans and advances by the
Company to Classy Lady and related accrued interest at May 31, 1996 had been
$860,491, in aggregate. Classy Lady owns the exclusive rights which were
granted by Dr. Nardo Zaias for laser hair removal technology and Thomas L.
Mehl, Sr. for radio frequency and direct current multiple hair removal
technology.
On June 4,1996, the Company completed the purchase of capital stock
representing in the aggregate, an 81% interest in SLS (Wales) Limited, a
privately held Welsh company which has been renamed SLS (Biophile) Ltd.
("SLS"), engaged in developing, manufacturing and selling lasers for
dermatological use, including hair removal. The consideration for the
acquisition of the SLS shares consisted of a cash payment of approximately
$1.9 million and 25,044 shares of the Company's Common Stock. In accordance
with the terms of the purchase agreement, funds which had been advanced by the
Company to SLS of approximately $1.3 million, were used to retire SLS debts
and related accrued interest.
LIQUIDITY AND CAPITAL RESOURCES:
At August 31, 1996, the Company had available funds of $9,200,000 representing
a decrease of $631,000 from May 31,1996.
Cash required to fund the Company's operating loss were primarily attributable
to losses resulting from the start up and realignment of operations at the
Florida administrative facilities and Welsh production and administrative
facilities. Proceeds from redemption of the Company investment in a U.S.
Treasury note and from issuances of common stock resulting from exercise of
outstanding stock purchase warrants were used to offset, in part, cash
requirements for the quarter including the aforementioned operating loss,
preferred stock dividend payments, the purchase of property and equipment
(primarily for use in SLS production) and for loans and advances to
prospective acquisition candidates (see Note 6 to the financial statements).
Finally Free inventories increased in excess of 100% for the quarter to
accommodate a recent increase in demand for the product in Japan, the
product's principal market.
While Finally Free inventories are expected to return to their previous level
during the remainder of the current fiscal year, management anticipates
increased production of SLS laser products and a corresponding increase in
their stock inventory. Production facilities at SLS are considered adequate
to meet the next years anticipated increased production. The Company's
present resources will be used to finance the expected increased SLS
production labor costs and inventory.
The Company anticipates that it will continue to apply significant portions of
its cash reserves in order to carry out its planned Research and Development
activity, to manufacture and market its technologies and products primarily in
the laser (professional) and consumer hair removal fields and provide the
necessary working cash to its subsidiaries. SLS/Biophile and Converting
Laboratories are expected to generate sufficient funds during fiscal 1997 from
their existing sales activity to sustain themselves out of their own retention
of profits.
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PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MEHL/BIOPHILE INTERNATIONAL CORPORATION
LIQUIDITY AND CAPITAL RESOURCES: (continued)
It is felt by the Company that its present level of cash reserves and working
capital will be sufficient to enable it to carry out its near and mid range
plans but does anticipate that it will require additional funds to complete
its long range business plan. It is also felt that additional funds will be
necessary in order to accelerate the ramp up and deployment of the laser and
consumer technologies and is currently exploring the possibilities of raising
other funds through either private or public offerings of equity and debt.
During the current fiscal quarter, the remaining outstanding convertible
debentures and related accrued interest were converted into common stock as
were 150 shares of the Company's 5% cumulative convertible, Series C preferred
stock. At August 31,1996, warrants to purchase 268,773 shares of the
Company's common stock were outstanding. While management anticipates
additional preferred stock conversions and exercise of all or part of the
outstanding stock purchase warrants, there can be no assurance in this regard.
RESULTS OF OPERATIONS:
Operations for the three months ended August 31, 1996 resulted in a loss of
$870,000 ($.02 per share) compared to a profit of $159,000 ($.01 per share)
for the same period in 1995. The current period loss was primarily attributed
to start up and transition costs related to the business acquisitions during
the period and related increase overhead attributable to the acquired
businesses. As revenues are realized from the licensing agreements for laser
hair removal and the concurrent sale of its CHROMOS 694 ruby laser, the
Company anticipates that losses will diminish and that they will be profitable
on a monthly basis by the end of fiscal 1997.
Sales for the three months ending August 31, 1996 increased $754,000 or 100%
over the same period of 1995. This gain is largely attributable (71%) to
sales of lasers by the Company's newly acquired subsidiary, SLS/Biophile. The
remaining sales increase (29%) was attributable to increased sales of the
Company's existing consumer hair removal product, the Finally Free-Ultra to
its Japanese distributor. Sales of lasers are expected to rise sharply during
the second quarter as the Company also begins to realize revenues from its
licensed partners outside of the United States. The Company should also
continue to enjoy moderate increases in the sales of its consumer hair removal
products during the next quarter.
Gross margin as a percentage of sales increased from 45.1% in 1995 to 47% in
The increase is again attributable to the inclusion of the sales of laser
products from the Company's foreign subsidiary, SLS/Biophile in Wales. The
Company is anticipating further improvement in gross margin as they begin to
take advantage of the economies of scale inherent with the scheduled ramp up
of laser manufacturing.
Selling, general and administrative expenses for the three months ending
August 31, 1996 were up $1,321,000 or 622% over the respective period of 1995.
Subsequent to the merger on June 4, 1996 the Company went from being
essentially a single consumer product company with declining sales to a
multifaceted technology company engaged in laser hair removal on a global
basis. This, combined with the acquisition of SLS has necessitated an
increased investment in administrative employees, legal expenses,
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PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MEHL/BIOPHILE INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS: (continued)
patent fees, travel and increased depreciation and amortization which is not
directly comparable to the like period of 1995.
Research and Development expense which were not significant in the previous
year, increased to $308,000 for the first quarter of 1996. This is a result
of the Company's transformation into a technology based entity that will
continue to incur R & D expenses in order to insure that it maintains
technological superiority in the fields of laser and consumer hair removal.
Interest income was $141,000 higher through August 31, 1996 than in the same
period in 1995 directly resulting from the investment of funds raised in the
later part of fiscal 1996 from private debt and equity placements.
The Company expects its future success will largely be dependent on its laser
hair removal licensing arrangements with prospective licensees, the sales of
its lasers from its foreign subsidiary SLS and from the sales of its consumer
multiple hair removal patch (slated for deployment in 1997).
The Company's consumer hair removal division realized a profit of $376,000 for
the first quarter of the current year which was a 126% increase over that for
the corresponding period in 1995. This increase was primarily attributable to
the Company's new management being able to negotiate a new and lucrative
purchase agreement for the Finally Free product with its Japanese distributor
and the shifting of the Company's corporate office and related administrative
overhead cost to its Florida location. SLS as it began to ramp up for the
manufacturing and deployment of the Chromos 694 Ruby Laser, generated a loss
for the quarter. The Company's interest in such loss was $400,000. Operations
of the division including the former Classy lady activities and the newly
aligned corporate offices generated a loss of $846,000. This was primarily
attributable to costs associated with creating the infrastructure necessary
for the worldwide launch of its laser technology as well as continued
significant research and development, cost related to relocation of the
corporate offices and those related to the recent merger.
As a result of the merger between Selvac Corporation and Classy Lady on June
4, 1996 and the acquisition by the Company of SLS, of the Company has
substantially changed the focus of its operations. The Company went from
being a single consumer product company dependent upon Mr. Mehl's earlier
consumer hair removal product (which was experiencing a declining sales trend
over the past several years) to a international company established to
develop, manufacture, sell and license sophisticated laser technology and
other products on a global scale.
Classy Lady had no prior operating history but held significant intellectual
property in the field of laser (professional) and consumer hair removal
technologies. Classy Lady had no prior history of financial performance to
form a meaningful financial comparison between like operating periods. SLS
has recently made the transformation from primarily a research and development
company to a manufacturer and distributor of lasers.
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PART II. OTHER INFORMATION
MEHL/BIOPHILE INTERNATIONAL CORPORATION
ITEM 5. OTHER INFORMATION
Pending business acquisitions - See Note 6 to financial statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibit is included herein:
Exhibit 11: Statement re: computation of net income per common share
(b) Reports on Form 8-K:
In its report on Form 8-K dated June 4, 1996 and filed June 19, 1996, the
Registrant reported the merger with Class Lady by Mehl of Puerto Rico, Inc.
(the Merger), the acquisition of controlling interest in SLS (Wales) LTD (Item
2) and the change in control of the Registrant resulting from the Merger (Item
1). Additionally, the Company reported the issuance of 10,000 shares of
5%cumulative convertible Series C Preferred stock (Item 5).
Financial Statements filed on August 19,1996 with Form 8-KA dated June 4, 1996
were:
Audited Financial Statements of SLS (Wakes) LTD:
Balance Sheets as of May 31, 1996 and September 30, 1995 and 1994
Profit Loss Account for the eight months ended May 31, 1996 and for the
years ended September 30, 1995 and 1994
Cash Flow Statements for eight months ended May 31, 1996 and for the
years ended September 30, 1995 and 1994
Pro forma unaudited Financial information:
Condensed Consolidated Balance sheets as of May 31, 1996
Condensed Consolidated Statements of operations for the years ended May
31, 1996 and 1995
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SIGNATURE
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.
MEHL/BIOPHILE INTERNATIONAL CORPORATION
DATE: BY: (s) Thomas L. Mehl, Sr.
Thomas L. Mehl, Sr.
Chairman of the Board and
Chief Executive Officer
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MEHL/BIOPHILE INTERNATION CORPORATION
(11) Statement re: Computation of New Income Per Common Share
(Unaudited)
Computation of average number of shares outstanding used in determining
primary and fully diluted earnings per share:
THREE MONTHS ENDED
AUGUST 31,
1996 1995
PRIMARY:
Weighted average number of shares outstanding 40,097,057 13,854,026
Assumed exercise of common stock warrants and
certain stock options based on average market
value 0 0
Weighted average number of shares used in primary
per share computations 40,097,057 13,854,026
FULLY DILUTED:
Weighted average number of shares outstanding 40,0797,057 13,854,026
Assumed conversion of cumulative
convertible preferred stock:
Series A 384,000
1985 Series 392,000
Series C *
Assumed exercise of common stock warrants and
certain options based on higher of average
or closing market price -0- -0-
Weighted average number of shares used in fully
diluted per share computations 40,097,057 14,630,026
* Not considered as the effect of conversion on earnings (loss) per share
* would be antidilutive.
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<PAGE> 16
MEHL/BIOPHILE INTERNATIONAL CORPORATION
(11) Statement re: Computation of New Income Per Common Share
(Unaudited)
(Continued)
THREE MONTHS ENDED
AUGUST 31,
1996 1995
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 40,097,057 13,854,026
Fully diluted 40,097,057 14,630,026
PRIMARY:
Net income (loss) $ (870,382) $ 159,196
Paid and cumulative undeclared preferred
stock dividends (125,000) (14,550)
Net income (loss) applicable to common stock $ (995,382) $ 144,646
Net income (loss) per share $ (.02) $ .01
FULLY DILUTED:
Net (loss) income $ (995,382) $ 159,196
NET INCOME (LOSS) PER SHARE $ (.02) $ .01
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND INCOME STATEMENT INCLUDED IN PART I, ITEM 1 OF
THE REGISTRANT'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED
AUGUST 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 9,208,168
<SECURITIES> 0
<RECEIVABLES> 910,699
<ALLOWANCES> 343,000
<INVENTORY> 984,008
<CURRENT-ASSETS> 11,287,666
<PP&E> 1,297,373
<DEPRECIATION> 997,112
<TOTAL-ASSETS> 17,853,602
<CURRENT-LIABILITIES> 1,567,838
<BONDS> 0
<COMMON> 435,720
0
9,850,000
<OTHER-SE> 5,470,335
<TOTAL-LIABILITY-AND-EQUITY> 17,853,602
<SALES> 1,505,691
<TOTAL-REVENUES> 1,679,404
<CGS> 798,586
<TOTAL-COSTS> 798,586
<OTHER-EXPENSES> 1,844,963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,277
<INCOME-PRETAX> (870,382)
<INCOME-TAX> 0
<INCOME-CONTINUING> (870,382)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (870,382)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
