<PAGE> 1
As filed with the Securities and Exchange Commission
on September 26, 1997
Registration No. 333-24231
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
MEHL/BIOPHILE INTERNATIONAL CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 2844 22-2408186
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
THOMAS L. MEHL, SR.
MEHL/BIOPHILE INTERNATIONAL CORPORATION
4127 N.W. 27TH LANE
GAINESVILLE, FLORIDA 32606
(352) 373-2565
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
ALAN J. BERNSTEIN
MARKS & MURASE L.L.P.
399 PARK AVENUE
NEW YORK, NEW YORK 10020
(212) 318-7700
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective. [x]
<PAGE> 2
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 this Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
maximum Proposed
Title of each class of offering maximum Amount of
securities to Amount to price per aggregate registration
be registered be registered unit(3) offering price fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par 6,211,180(2) $1.9375 $12,034,161 $3,647
value(1) (3,220)(4)
Current Fee Payment $ 427
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</TABLE>
(1) Receivable upon conversion of 5% Cumulative Convertible Preferred
Stock, Series E ("Series E Preferred Stock"). The shares of Series E Preferred
Stock held by the persons named herein as Selling Stockholders were received in
an exchange on a one-for-one basis of all shares of 5% Cumulative Convertible
Preferred Stock, Series D held by such persons on July 30, 1997 and with respect
to which the Registrant filed a Registration Statement on Form S-3 on March 31,
1997, which is being amended hereby.
(2) There are being registered hereunder the number of shares of Common
Stock receivable upon conversion of the Series E Preferred Stock of the
Registrant at the conversion price in effect as of September 22, 1997. This
Registration Statement, pursuant to Rule 416 of the Securities Act of 1933, also
covers the sale of any and all shares of Common Stock issuable with respect to
the Series E Preferred Stock as a result of stock splits, stock dividends and
anti-dilution provisions (including by reason of reductions in the conversion
price of the Series E Preferred Stock in accordance with the terms thereof).
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(3) Pursuant to Rule 457(c), the offering price and amount of registration
fee have been calculated based upon the last sale price of the Registrant's
Common Stock as reported on the Nasdaq SmallCap Market on September 19, 1997.
(4) Amount of fee paid on March 31, 1997 in connection with original
filing of Registration Statement on Form S-3.
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MEHL/BIOPHILE INTERNATIONAL CORPORATION
Cross-Reference Sheet Pursuant to Rule 404(a)
and Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-3 Item Number and Caption Caption in Prospectus
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<S> <C>
1. Forepart of the Registration Statement Cover Page
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside Back Cover
Pages of Prospectus Pages of Prospectus; Available
Information
3. Summary Information, Risk Factors The Company; Risk Factors
and Ratio of Earnings to Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Cover Page, Plan of Distribution
9. Description of Securities to be Not Applicable
Registered
10. Interests of Named Experts and Legal Matters, Experts
Counsel
11. Material Changes Recent Developments
12. Incorporation of Certain Information Incorporation of Certain Information
by Reference by Reference
13. Disclosure of Commission Position on Not Applicable
Indemnification
</TABLE>
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<PAGE> 5
Subject to Completion, Dated September 26, 1997
PROSPECTUS
MEHL/BIOPHILE INTERNATIONAL CORPORATION
6,211,180 SHARES
COMMON STOCK (par value of $.01 per share)
---------
Issuable on Conversion of 5% Cumulative Convertible
Preferred Stock, Series E
The 6,211,180 shares (the "Shares") of Common Stock, par value $.01
per share (the "Common Stock"), of MEHL/Biophile International Corporation (the
"Company"), offered by this Prospectus are issuable upon the conversion of
shares of the Company's 5% Cumulative Convertible Preferred Stock, Series E, par
value $10 per share ("Series E Preferred Stock"), issued by the Company on July
30, 1997 in exchange for shares of 5% Cumulative Convertible Preferred Stock,
Series D, and may be sold from time to time by the persons named herein as
selling stockholders (the "Selling Stockholders"). The Company will not receive
any proceeds from the sale of the Common Stock offered hereby.
AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
This Prospectus also covers, pursuant to Rule 416 of the Securities Act of
1933, as amended (the "Securities Act"), the offer and sale by the Selling
Stockholders listed herein of any and all shares of Common Stock issued with
respect to the Company's Series E Preferred Stock as a result of stock splits,
stock dividends and anti-dilution provisions (including by reason of reductions
in the conversion price of the Series E. Preferred Stock in accordance with the
terms thereof). Sales may be made from time to time in the over-the-counter
market at prices prevailing at the time of sale, or in private transactions at
negotiated prices, and any commissions paid or discounts given will be those
customary in the type of transaction involved. See "Plan of Distribution."
Any brokers and dealers through whom sales of the Common Stock are made
may be deemed "underwriters" within the meaning of the Securities Act of 1933
with respect to the Common Stock, and any profits realized or commissions
received may be deemed underwriting compensation.
Expenses of this offering (other than brokerage commissions) are payable
by the Company and estimated not to exceed $20,000.00.
The closing bid price of the Common Stock quoted on the Nasdaq SmallCap
Market under the symbol MEHL on September 19, 1997 was $1.9375.
<PAGE> 6
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY MISREPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ________, 1997.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
AVAILABLE INFORMATION...................................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................... 3
THE COMPANY................................................................ 4
RISK FACTORS............................................................... 4
RECENT DEVELOPMENTS........................................................ 12
PLAN OF DISTRIBUTION...................................................... 14
SELLING STOCKHOLDERS...................................................... 15
LEGAL MATTERS............................................................. 17
EXPERTS................................................................... 17
</TABLE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY
PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY
THAT THE INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
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AVAILABLE INFORMATION
This Prospectus does not contain all of the information set forth in
the Registration Statement of which this Prospectus is a part and which is filed
with the Securities and Exchange Commission (the "Commission"). The Company is
subject to the informational requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and, in accordance therewith, files reports, proxy
statements and other information with the Commission. For further information
with respect to the Company, reference is made to such Registration Statement
and the exhibits thereto, and to such reports, proxy statements and other
information filed with the Commission. Such Registration Statement, reports,
proxy statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Room 1400, 75 Park Place, New York, New York 10007 and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. In
addition, periodic reports, proxy and information statements and other
information regarding the Company may be found on the World Wide Web site
maintained by the Commission at the address http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended May 31, 1997 filed on September 11, 1997.
All documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Shares shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a 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 or is deemed to be
incorporated by reference herein 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.
Copies of any and all documents that have been incorporated by
reference herein, other than exhibits to such documents, may be obtained upon
oral or written request without charge from the Company's Corporate Secretary,
MEHL/Biophile International Corporation, 4127 N.W. 27th Lane, Gainesville,
Florida 32606, telephone number (352) 373-2565.
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<PAGE> 9
THE COMPANY
The Company was organized under the laws of Delaware on June 28,
1982. In connection with the merger in June 1996 of its wholly-owned subsidiary
with Classy Lady by Mehl of Puerto Rico, Inc., the Company changed its name from
"Selvac Corporation" to "MEHL/Biophile International Corporation". The Company
has its principal executive office at 4127 N.W. 27th Lane, Gainesville, Florida
32606. The telephone number is (352) 373-2565.
RISK FACTORS
IN EVALUATING AN INVESTMENT IN THE COMPANY, PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING CONSIDERATIONS IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS.
Uncertain Impact of Merger and Results of New Business Operations.
On June 4, 1996, the Company completed a merger transaction whereby Classy Lady
by Mehl of Puerto Rico, Inc. ("Classy Lady") has been merged with and into a
wholly-owned subsidiary of the Company in exchange for an aggregate of 25
million shares of Common Stock. Pursuant to such merger, the Company obtained
exclusive patent rights to certain multiple hair removal and laser hair removal
technologies. The Company has only recently commenced marketing the laser hair
removal technology exclusively licensed by Classy Lady and there can be no
assurance that such hair removal technologies can be commercially marketed and
sold profitably.
History of Losses and Accumulated Deficit; Doubt as to Ability to
Continue as a Going Concern. Due to the significant capital requirements to
expand the Company's manufacturing, distribution and administrative operations
after the merger described above, the Company's net loss was $13,349,455 for the
year ended May 31, 1997, as compared with net loss of $1,623,872 for the prior
year. As of May 31, 1997, the Company's accumulated deficit was $22,640,205,
increased from $8,170,579 as of May 31, 1996. The Company anticipates continued
significant losses due to expenses principally associated with the
manufacturing, distribution and marketing of laser hair removal products and
services, which may vary from quarter to quarter, until such time as the Company
receives substantial revenues from the distribution of laser hair removal
services. There can be no assurance that the Company will be able to
successfully market and sell such products and services or otherwise generate
revenues in sufficient amount to allow the Company to operate profitably. Due to
the Company's substantial losses, the Report of Independent Accountants prepared
in connection with the audit of the Company's financial statements for the year
ended May 31, 1997 included in the Company's Annual Report on Form 10-KSB states
that there is substantial doubt about the Company's ability to continue as a
going concern.
Risk of Inability to Repay Borrowed Funds. In August 1997, the
Company borrowed an aggregate of $7,000,000 from Clearwater Fund IV, LLC
("Clearwater" and such borrowing being the "Clearwater Loan"), a principal
shareholder of the Company and
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<PAGE> 10
one of the Selling Stockholders. Repayment is secured by the pledge of
substantially all of the Company's assets. The Clearwater Loan bears interest at
a rate of 15% per annum, payable monthly, and is due to be repaid in full on
January 15, 1998. Based upon the Company's present and anticipated revenues, it
is likely that the Company will not have sufficient cash on hand to repay such
debt when due. Although the Company is presently investigating obtaining
additional debt or equity financing, there can be no assurance that such
financing may be obtained under terms and conditions which would be acceptable
to the Company or at all. If the Company is unable to repay the Clearwater Loan
when due, Clearwater would have the right to take possession of substantially
all of the Company's assets, which would have a substantial material adverse
effect on the Company's ability to continue its business operations.
Risk of Dilution Upon Conversion of Series E Preferred Stock. In
connection with the Clearwater Loan, the Company agreed to exchange, on a
one-for-one basis, all of the issued and outstanding shares of 5% Cumulative
Convertible Preferred Stock, Series C ("Series C Preferred Stock") and 5%
Cumulative Convertible Preferred Stock, Series D ("Series D Preferred Stock")
for an aggregate of 12,231 shares of Series E Preferred Stock. The number of
shares receivable upon conversion of the Series E Preferred Stock is calculated
based on a discount of 20% to the five day average trading price of the
Company's Common Stock prior to conversion, subject to certain further
adjustments. Therefore, decreases in the market price of the Company's Common
Stock will result in a greater number of shares issuable upon conversion of the
Series E Preferred Stock. In addition, the discount to the rate of conversion is
subject to further increases, computed at the rate of 2% per month, to the
extent the Registration Statement of which this Prospectus forms a part is filed
after August 31, 1997 and is not declared effective by October 15, 1997. The
Series E Preferred Stock does not contain a provision stipulating a minimum
"floor" price at which the shares may be converted into shares of Common Stock,
unlike the Series C Preferred Stock (which contained a floor conversion price of
$3.00) or the Series D Preferred Stock (which contained a floor conversion price
of $4.00, which the Company subsequently agreed to reduce to $3.00).
Accordingly, decreases in the market price of the Company's Common Stock may
result in substantial additional dilution to investors as a greater number of
shares of Common Stock become issuable upon conversion of the Series E Preferred
Stock.
Potential Need to Authorize Additional Capital. As of September 22,
1997 there were issued and outstanding 43,993,301 shares of Common Stock. In
addition, the Company has issued warrants to purchase two million shares of
Common Stock and may under certain circumstances be required to issue warrants
to purchase 1.5 million additional shares. The Company has reserved an
additional four million shares of Common Stock issuable pursuant to grants made
under its 1997 Incentive Plan. The Company presently has authorized 60 million
shares of Common Stock. As noted above in the preceding Risk Factor, a greater
number of shares is issuable upon conversion of the Series E Preferred Stock as
the market price of the Company's Common Stock decreases. Therefore, decreases
in the market price of the Company's Common Stock could result in the Company
being obligated to issue more shares of Common Stock upon conversion than are
presently authorized and which are not reserved for other uses. In such event,
the
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shareholders of the Company would be required to authorize an amendment to the
Company's Certificate of Incorporation to increase the authorized amount of
Common Stock. Although management believes that the shareholders would approve a
necessary increase of authorized capital, there can be no assurance that such
approval would be obtained in a timely manner or at all. Delays in obtaining
such shareholder approval could subject the Company to an action for damages
from the holders of the Series E Preferred Stock.
Risk of Disapproval of Expenditures. In connection with the
Clearwater Loan, the Company agreed to use the proceeds from such loan only for
placing in service the Company's laser hair removal devices and that, prior to
repayment in full of the Clearwater Loan, Clearwater would have the right to
approve all expenditures made with the loan proceeds before such expenditures
are made. Although the Company anticipates that Clearwater will approve all
reasonable expenditure requests initiated by the Company, the failure by
Clearwater to give such approval in a timely manner or the disapproval of such
expenditures could materially adversely affect the Company's business
operations.
Future Need for Capital. Management of the Company anticipates that
commercial exploitation of Classy Lady's and SLS' patent rights will require
substantial additional capital. There can be no assurance that additional
capital requirements will be available on acceptable terms or at all. Future
financings could have a dilutive effect on the Company's shares.
Uncertain Impact of SLS Acquisition. On June 4, 1996, the Company
completed the acquisition of an 81% interest in SLS (Wales) Limited ("SLS"), a
privately-held company in Wales engaged in the development, manufacturing and
marketing of lasers. Although the Company believes that SLS has very valuable
patent and technology rights and has a number of projects under development
which can be commercially exploited, to date SLS has not generated substantial
income and has operated at a loss. There can be no assurance that SLS will be
able to develop, market and sell its products profitably.
Uncertain Impact of Dispute with Laser Industries Ltd. On December
5, 1996, the Company's wholly-owned subsidiary, Selvac Acquisition Corp.
("SAC"), commenced an arbitration with the American Arbitration Association
("AAA") in New York, New York to terminate a joint venture with Laser Industries
Limited ("Laser"). The joint venture was formed in December 1995 when Laser and
Classy Lady by Mehl of Puerto Rico, Inc. ("Classy Lady"), which merged with and
into SAC and is now 100% owned by the Company, entered into an agreement to
exploit patented laser hair removal technology exclusively licensed to Classy
Lady. The joint venture, Sharplan 2000, Inc. ("Sharplan 2000"), is 50% owned by
SAC and 50% by Laser and is managed exclusively by Laser. SAC commenced the
arbitration to terminate the license granted to Sharplan 2000 and unwind the
joint venture. SAC is basing this action on a dispute concerning the nature of
technological and financial contributions that were to be made to the joint
venture by Laser and an additional dispute concerning whether Laser utilized
technology within the joint venture which was in fact developed by SLS prior to
the purchase by the Company of a controlling interest in SLS.
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On December 23, 1996, Laser asserted two counterclaims in the
arbitration proceedings, claiming that the Company has breached an alleged
fiduciary duty owed to Laser and Sharplan 2000 and seeking a declaration that
SAC may not grant a sublicense of certain patent rights to SLS. The Company has
filed a response to these counterclaims requesting dismissal on the grounds that
neither claim is arbitrable. On April 7, 1997, Laser filed an amendment to its
original counterclaim to permanently enjoin the Company and SLS from selling
lasers for hair removal in the United States.
In a separate action filed in England on October, 1996, SLS
commenced an action against Laser, a laser manufacturer, Spectron Laser Systems
Ltd. ("Spectron") and related parties, for orders preventing Laser from using
SLS's technology and stopping Spectron from supplying SLS's technology to Laser.
Management believes that the actions commenced by its subsidiaries
and described above are well-founded. However, there can be no assurance that
the Company's subsidiaries will be successful in these proceedings. In the event
that Laser prevails in the AAA arbitration described above, the Company and SAC
could potentially face monetary liabilities for damages and attorneys' fees and
be subject to certain restrictions on its ability to sublicense its laser hair
removal technology which could have a material adverse effect on the business of
the Company and its subsidiaries.
Dependence on Key Personnel. The Company's success is dependent on
certain key management personnel, in particular, Thomas L. Mehl, Sr., Chairman,
President and Chief Executive Officer, Nardo Zaias, Director and Mark Clement,
Director and Chairman of SLS. The Company has not entered into Employment
Agreements with any of these individuals or any agreement restricting the
ability of such individuals to compete with the Company after termination of
their services with the Company. Competition for qualified employees is intense,
and the loss of such key personnel, or the inability to attract and retain the
additional highly skilled employees required for the Company's activities, could
adversely affect its business.
Dependence on FDA Pre-Market Clearance. The Company's laser hair
removal technologies to which Classy Lady holds an exclusive license and which
are held by SLS require 510(k) pre-market clearance from the U.S. Food and Drug
Administration ("FDA") prior to the manufacture or sale in the United States. In
May 1996, Classy Lady filed a 510(k) request for clearance for the Chromos 694
laser for hair removal, and such clearance was received in March 1997. If the
Company desires to modify such technologies or to attempt to market other
technologies requiring 510(k) pre-market clearance, there can be no assurance
that
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<PAGE> 13
the Company would receive FDA clearance on a timely basis or at all.
Failure to obtain such clearance may adversely affect the Company's business and
its financial prospects.
Uncertain Market Acceptance of Laser Hair Removal. Historically,
hair removal technologies have utilized electric current, radio frequency,
depilatory cremes and other methods. There can be no assurance that consumers of
hair removal products will accept the use of lasers for hair removal.
Risk of Competition with Competitors Having Substantially Greater
Resources. There are several companies that offer the hair removal products sold
and anticipated to be sold by the Company and its subsidiaries which compete
with the Company. Many of such other companies have established markets, product
history, and substantially larger sales and service organizations and financial
strength than the Company. There can be no assurance that the Company will be
able to compete successfully with such other companies.
Risk of Product Liability. The Company may be subject to claims for
personal injuries or other damages resulting from its products or services.
There can be no assurance that the Company's product liability insurance will be
sufficient to protect the Company against liability that could have a material
adverse effect on the Company.
Uncertainty of Protection of Patents and Proprietary Information.
There can be no assurance that the patents and patents pending relating to
depilation and other technologies owned or licensed by the Company and its
subsidiaries will not be challenged. The issuance of a patent to the Company or
a licensor is not conclusive as to validity or as to the enforceable scope of
claims therein. The validity and enforceability of a patent can be challenged by
litigation after its issuance; and, if the outcome of such litigation is adverse
to the owner of the patent, the owner's rights could be diminished or withdrawn.
In March 1997, Palomar Medical Technologies Inc. ("Palomar") served the Company
with a lawsuit seeking to declare the patent embodying the laser hair removal
technology exclusively licensed by SAC to be declared invalid. Although
management of the Company is confident that the validity of its patent will be
upheld, there can be no assurance that the outcome of this litigation would not
be adverse to the Company and its subsidiaries. The patent laws of other
countries may differ from those of the United States. There can be no assurance
that any patents will provide substantial protection or be of commercial benefit
to the Company. The absence of patents and patent applications for the Company's
hair removal technology may adversely affect the Company's prospects. In
addition, the technologies used by the Company could be subject to claims of
infringement of patents or proprietary technology of others.
In March 1997, SAC filed suit against Palomar and its subsidiaries,
Spectrum Medical Technologies, Inc., Spectrum Financial Services LLC, and a New
Jersey dermatologist for patent infringement and unfair competition. The suit
was filed in the United States District Court for the District of New Jersey and
alleges that the defendants infringe on the patented method of laser hair
removal owned by Dr. Nardo Zaias and exclusively licensed to SAC and that the
defendants have improperly marketed laser hair removal products before receiving
FDA approval. The plaintiff is seeking monetary damages and injunctive relief to
restrain Palomar from marketing its laser hair removal products in the United
States. While management is
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confident that the actions brought against the above defendants are
well-founded, there can be no assurance that SAC will prevail in this
proceeding. The cost of enforcing the patent rights in lawsuits that the Company
and its subsidiaries have brought and may bring against infringers or defending
itself against infringement charges by other patent holders may be high and
could interfere with the Company's operations.
Trade secrets and confidential know-how may be important to the
Company's scientific and commercial success. Although the Company seeks to
protect its proprietary information through confidentiality agreements and
appropriate contractual provisions, there can be no assurance that others will
not develop independently the same or similar information or gain access to
proprietary information of the Company.
Control by Principal Shareholders; No Cumulative Voting. There is no
cumulative voting for the election of directors of the Company. Accordingly, the
beneficial owners of a majority of the Company's outstanding Common Stock voting
in an election of directors, may elect all directors nominated for election, if
they choose to do so, and the owners of the remaining shares will not be able to
elect any directors. Thomas L. Mehl, Sr., Nardo Zaias and Pichit Suvanprakorn
beneficially own in the aggregate 21,210,000 shares of Common Stock of the
Company, which as of September 22, 1997 represented 48.2% of the issued and
outstanding shares of Common Stock of the Company, and accordingly such
individuals may be deemed to have effective voting control of any matter voted
on by the Company's shareholders.
Prior Dependence on Single Product; Declining Sales. For the year
ended May 31, 1997, approximately 58% of the Company's revenues were derived
from the sale of its Finally Free hair removal products and in preceding years
virtually all of the Company's revenues have been derived from the sale of such
products. Revenues derived from the sale of the Company's consumer hair removal
products, virtually all of which consist of sales of Finally Free products, have
been declining from $2,744,620 in the 1995 fiscal year, to $2,351,945 in the
1996 fiscal year to $2,087,909 in the 1997 fiscal year. Although the Company has
commenced marketing and selling its laser hair removal products, there can be no
assurance that its products will be successfully developed and sold and
contribute to the Company's revenues and profits or that sales of the Finally
Free product will not continue to decline.
Dependence on Principal Customers. For the years ending May 31,
1997, 1996 and 1995, sales to the Company's principal customer, Ikeda
Corporation ("Ikeda") represented approximately 50%, 89% and 76% of the
Company's total sales, respectively. The Company has already commenced receiving
revenues from the sale of the Classy Lady laser hair removal technologies and
expects to continue to develop a substantial customer base for the Classy Lady
and SLS hair removal technologies; however, until such revenues increase, the
loss or reduction of sales to Ikeda, would have a material adverse effect on the
financial condition of the Company. Although Ikeda provides the Company with
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projections of future anticipated purchases, there is no agreement between the
Company and Ikeda requiring Ikeda to purchase any of the Company's products.
Shares Eligible for Future Sale. As of September 22, 1997, the
Company has issued and outstanding 43,993,301 shares of Common Stock. 25,443,674
of these shares are deemed "restricted securities" as defined by Rule 144 under
the Securities Act of 1933, as amended. In general, under Rule 144, a person or
persons whose shares are aggregated, and who has satisfied a one-year holding
period may, under certain circumstances, sell within any three-month period a
number of restricted securities which does not exceed the greater of one percent
(1%) of the shares outstanding or the average weekly trading volume during the
four calendar weeks preceding the notice of sale required by Rule 144. In
addition, Rule 144 permits, under certain circumstances, the sale of restricted
securities by a person who is not an affiliate of the Company and who has
satisfied a two-year holding period, without any quantity limitations. Any sales
of shares by shareholders pursuant to Rule 144 may have a depressive effect on
the price of the Common Stock. All of the shares of Common Stock deemed to be
restricted securities were issued more than one year ago, and, other than shares
which may have been purchased directly from an officer, director or other person
who may be deemed to be an affiliate of the Company within the one-year period
preceding the date of the Prospectus, are currently eligible for sale in
compliance with Rule 144.
The Board of Directors of the Company has authorized the 1997
Incentive Plan pursuant to which 4,000,000 shares of Common Stock have been
reserved for issuance under grants of stock options, deferred stock or other
forms of stock-based compensation. As of the date of this Prospectus, no grants
have been made under the 1997 Incentive Plan. There is outstanding a warrant to
purchase 500,000 shares of Common Stock held by an employee of the Company which
is presently exercisable as to 200,000 shares. The Company has also issued
warrants to purchase 1,500,000 shares of Common Stock to Clearwater Fund IV LLC,
and, under certain circumstance may be obligated to issue additional warrants to
purchase an aggregate of 1,500,000 shares of Common Stock. See "Recent
Developments - Clearwater Loan and Exchange for Series E Preferred Stock.
In connection with the shares of Common Stock receivable upon the
conversion of the Series E Preferred Stock, the Company agreed to register all
such shares for resale and the holders thereof have agreed not to sell or
otherwise transfer any stock securities prior to February 28, 1998. See "Recent
Developments - Clearwater Loan and Exchange for Series E Preferred Stock.
No Dividends on Common Stock. The Company anticipates that for the
foreseeable future, all earnings, if any, will be retained for the operation and
expansion of the Company's business, and it will not pay cash dividends on the
Common Stock. The Company presently has outstanding 12,231 shares of Series E
Preferred Stock. Each share of the Series E Preferred Stock has a stated value
of $10,000 per share and the holder of each such share is entitled to receive a
dividend at the rate of 5% per annum on its stated value before any dividend may
be declared by the Company with respect to the Common Stock.
-10-
<PAGE> 16
Penny Stock Regulations - Restrictions on Marketability. The
Commission has adopted regulations which generally define a "penny stock" to be
any equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. The Company's securities are covered by the penny stock rules, which
impose additional sales practice requirements on broker-dealers who sell such
securities to person other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse). For transactions covered by the rule, the
broker-dealers must make a special suitability determination for the purchase
and receive the purchaser's written agreement of the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the Company's securities and also may affect the ability of purchasers in this
offering to sell their shares in the secondary market.
-11-
<PAGE> 17
RECENT DEVELOPMENTS
Issuance of Series D Preferred Stock
On February 28, 1997, the Company completed a private placement
offering exempt under Regulation D promulgated under the Securities Act of 1933
of 10,000 shares of 5% Cumulative Convertible Preferred Stock, Series D, par
value $10 per share (the "Series D Preferred Stock"), for an aggregate purchase
price of $10,000,000. Holders of the Series D Preferred Stock are entitled to
receive dividends payable at the annual rate of 5% per annum. As described
below, all shares of the Series D Preferred Stock have been exchanged for shares
of Series E Preferred Stock.
Clearwater Loan and Exchange for Series E Preferred Stock. As of August 5, 1997,
the Company completed a loan agreement with Clearwater Fund IV, LLC
("Clearwater"), allowing the Company to borrow up to $7 million to be used in
connection with the manufacture and delivery of laser hair removal systems and
for general working capital purposes. The loan is executable in two steps, with
$4 million borrowed upon execution of the loan documents and the remaining $3
million was borrowed on September 4, 1997 upon delivery by the Company of fifty
lasers under effective license agreements with a third party physician, clinic
or hospital. The loan bears interest at 15% per annum payable in arrears on a
monthly basis and is due on January 15, 1998. The loan is secured by all of the
Company's assets and approval must be obtained from Clearwater for all
expenditures made with the loan proceeds. Repayment of the Clearwater Loan has
been guaranteed by Thomas L. Mehl, Sr., the Company's President and Chief
Executive Officer, and Mr. Mehl has pledged all
-12-
<PAGE> 18
shares of Common Stock owned by him to secure repayment of the loan. As
additional consideration for the loan, the Company agreed to issue common stock
purchase warrants according to the following schedule:
<TABLE>
<CAPTION>
Date Shares Price Expiration
---- ------ ----- ----------
<S> <C> <C> <C>
08/05/97 750,000 $2.50 08/05/02
Date of second 750,000 $2.50 5 years from date of
borrowing second borrowing
10/02/97 1,000,000 $2.50 07/15/02
12/02/97 500,000 $2.50 07/15/02
</TABLE>
In connection with the loan agreement, on July 30, 1997, the Company
agreed to exchange all 2,231 shares of 5% Cumulative Convertible Preferred
Stock, Series C ("Series C Preferred Stock") and all 10,000 shares of Series D
Preferred Stock for an aggregate of 12,231 shares of 1,000 stated value Series
E, 5% cumulative Convertible Preferred Stock ("Series E Preferred Stock").
Each share of Series E Preferred Stock is convertible into Common
Stock of the Company at 80% of the average market price on the five trading days
prior to conversion with no minimum conversion price but in no event shall the
conversion price be greater than $3.125. The Company agreed to file a
registration statement covering the public sale of the shares of common stock
receivable upon conversion of the Series E Preferred Stock and the holders of
the Series E Preferred Stock agreed not to sell or transfer any such shares on
or before February 28, 1998. Dividends are to be paid quarterly beginning August
31, 1997.
The conversion price of the Series E Preferred Stock into Common
Stock is subject to adjustment at the rate of an increase in the discount
percentage of 2% per month if the registration statement described above is not
filed by August 31, 1997 or is not declared effective by the SEC on or before
October 15 1997, or if a stop order has been issued regarding such registration
statement or if the Company's Common Stock is not listed for quotation on the
Nasdaq SmallCap Market.
-13-
<PAGE> 19
PLAN OF DISTRIBUTION
This Prospectus relates to the sale by the Selling Stockholders of
the Shares. The Shares may be sold from time to time, in whole or in part, by
the Selling Stockholders, or their pledges, donees, transferees, or other
successors in interest, in the over-the-counter market at then prevailing market
prices or in privately negotiated transactions. Although the Company ultimately
expects that all Shares may be sold, the actual number of Shares that will be
sold cannot be determined.
In offering the Shares, the Selling Stockholders and any selling
broker or dealer may be deemed to be statutory "underwriters" within the meaning
of Section 2(11) of the Securities Act in connection with such sales. The
Company has advised the Selling Stockholders that they, because they may be
deemed to be statutory underwriters, will be subject to the Prospectus delivery
requirements under the Securities Act.
The Company will pay all the expenses, estimated to be $20,000 in
connection with this offering, other than underwriting commissions and
discounts, if any.
-14-
<PAGE> 20
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
of the Company beneficially owned by the Selling Stockholders on September 22,
1997, (which number represents the number of shares of Common Stock issuable
upon the Conversion of Preferred Stock as of such date), the number of Shares
covered by this Prospectus and the amount retained by the Selling Stockholders
after the offering. All shares set forth as owned on the date hereof are
beneficially owned and the sole voting and investment power is held by the
person named.
<TABLE>
<CAPTION>
Number of Shares Number of
Beneficially Shares
Owned on Covered by Number of
September 22, this Shares to be
Name 1997(1) Prospectus(1) Retained Percentage
----- ----- ----------- -------- ----------
<S> <C> <C> <C> <C>
Clearwater Fund IV, LLC 6,581,944(2,3) 4,968,944 1,613,000(2,3) 3.5%
Clearwater Offshore Fund Ltd. 1,242,236 1,242,236 0 0
</TABLE>
In addition to being the holder of 8,000 shares of Series E
Preferred Stock, Clearwater Fund IV, LLC owns 113,600 shares of Common Stock of
the Company and warrants to purchase 1,500,000 shares of Common Stock of the
Company. Additionally, Clearwater entered into a loan agreement dated as of
August 5, 1997 with the Company providing for the loan of $7 million by
Clearwater to the Company. The loan is secured by all of the Company's assets
and all expenditures from proceeds of the loan must be
- --------
(1) As described above under "Recent Developments - Clearwater Loan and
Exchange for Series E Preferred Stock," all shares of Series E Preferred
Stock were received by the Selling Stockholders in exchange for the Series
D Preferred Stock on a one-for-one basis. The number of shares receivable
upon conversion of the Series E Preferred Stock held by the Selling
Stockholders cannot be fixed until actual conversion, since the conversion
rate fluctuates based on the average market price of the Common Stock on
the five trading days prior to conversion. If converted on September 22,
1997, the total number of shares of Common Stock receivable would be
6,211,180.
(2) Does not include 2,000,000 shares of Common Stock held by Clearwater Fund
IV, Ltd. (formerly GFL Performance Fund Ltd. ("Clearwater Ltd.") or 2,231
shares of Series E Preferred Stock held by Clearwater Ltd, and received on
July 30, 1997 in exchange for 2,231 shares of Series C Preferred Stock,
which, if converted as of September 22, 1997, would be convertible into
1,385,714 shares of Common Stock. The Company has been advised that
Clearwater Ltd. is under the control of Clearwater Fund IV, LLC.
(3) Includes 1,500,000 shares which may be purchased upon exercise of
presently exercisable warrants at a purchase price of $2.50 per share.
Does not include warrants to purchase an additional 1,500,000 shares of
Common Stock which may become issuable in the future. See "Recent
Developments - Clearwater Loan and Exchange for Series E Preferred Stock."
-15-
<PAGE> 21
approved by Clearwater. Thomas L. Mehl, Sr. has guaranteed repayment of the
Clearwater Loan and has pledged all shares of the Company's Common Stock owned
by him to secure repayment. See "Recent Developments - Clearwater Loan and
Exchange for Series E Preferred Stock."
-16-
<PAGE> 22
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon
for the Company by Marks & Murase L.L.P., 399 Park Avenue, New York, New York
10022.
EXPERTS
The financial statements of the Company for the year ended May 31,
1997 appearing in the Company's Annual Report on Form 10-KSB for the year ending
May 31, 1997 and incorporated herein by reference in this Prospectus and
Registration Statement have been audited by Joseph Decosimo and Company LLP,
and the financial statements of the Company for the year ending May 31, 1996
appearing in the Company's Annual Report on Form 10-KSB and incorporated herein
by reference in this Prospectus and Registration Statement have been audited by
Bond, Andiola & Company, as set forth in their respective reports thereon
included therein and incorporated by reference herein and in the Registration
Statement, and are included in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
-17-
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee $ 3,647
Legal Fees and Expenses* $13,000
Accountants' Fees* $ 2,500
Miscellaneous $ 853
Total Expenses $20,000.00
* Estimated
</TABLE>
- --------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation may indemnify any director made a party to any
proceeding by reason of service in that capacity if the director acted in good
faith, and if the director reasonably believed, in the case of conduct in the
director's official capacity with the corporation, that the conduct was in the
best interests of the corporation; in all other cases, that the conduct was at
least not opposed to the best interests of the corporation; and in any criminal
proceeding, had no reason to believe the conduct was unlawful.
The Company's Certificate of Incorporation provides that:
No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (i) for any
breach of the Director's duty of loyalty to the Corporation or its
Stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law;
(iii) for the payment of unlawful dividends or unlawful stock
repurchases or redemptions under Section 174 of the Delaware General
Corporation Law; or (iv) for any transactions from which the
Director derived an improper/personal benefit.
II-1
<PAGE> 24
Section VI of the By-laws of the Company contains the following
provisions:
SECTION 1. General. The Corporation shall indemnify any person who
is or was a party to or is threatened to be made a party to any
threatened, pending, or contemplated action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses, including reasonable attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding,
to the extent, and subject to the conditions prescribed by statute
and by such rules and regulations, not inconsistent with statute, as
the Board of Directors may in its discretion impose in general or
particular cases or classes of cases.
SECTION 2. Rights Not Exclusive. The indemnification provided by
this Article VI shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any law,
by-law, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 3. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted by him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under
the provisions of this Article VI.
ITEM 16. EXHIBITS.
3(a) Amended and Restated Certificate of Incorporation of the
Corporation (incorporated by reference to Annual Report on
Form 10-KSB for year ended May 31, 1996 filed on August 29,
1996).
II-2
<PAGE> 25
3(b) Certificate of Designation of 5% Cumulative Convertible
Preferred Stock, Series E.
(incorporated by reference to Annual Report on Form 10-KSB for year ended May
31, 1997 filed on September 11, 1997).
3(c) By-laws of the Corporation (incorporated by reference to
Annual Report on Form 10-KSB for year ended May 31, 1996 filed
on August 29, 1996).
5 Opinion of Marks & Murase L.L.P.
10.1 Securities Purchase Agreement dated as of February 28, 1996 by
and between the Registrant and Clearwater Fund IV, LLC and
Clearwater Offshore Fund Ltd. (Incorporated by reference to
Registration Statement on Form S-3 filed on March 31, 1997)
10.2 Registration Rights Agreement dated as of May 15, 1996 by and
between the Registrant and Clearwater Fund IV, LLC and
Clearwater Offshore Fund Ltd. (Incorporated by reference to
Registration Statement on Form S-3 filed on March 31, 1997)
10.3 Loan Agreement dated as of August 5, 1997 with Clearwater Fund
IV, LLC. (Incorporated by reference to Annual Report on Form
10-KSB for year ended May 31, 1997 filed on September 11,
1997)
23(a) Consent of Joseph Decosimo and Company
23(b) Consent of Bond, Andiola & Company
23(c) Consent of Marks & Murase L.L.P. (the consent of counsel is
contained in their opinion)
ITEM 17. UNDERTAKINGS.
(a) 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 facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof)
II-3
<PAGE> 26
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 volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end 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% 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 (a)(1)(i) and (a)(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 the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities 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) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Section 210.3-19 of this chapter at the start of any
delayed offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act of Section 210.3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Form F-3.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 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 herein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant 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
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant 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 registrant 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 will be
governed by the final adjudication of such issue.
II-4
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement or amendments thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York on September 25, 1997.
MEHL/BIOPHILE INTERNATIONAL CORPORATION
(Registrant)
By: /s/ THOMAS L. MEHL. SR.
--------------------------------
Thomas L. Mehl, Sr., Chairman of
the Board, President
and Chief Executive Officer
The undersigned hereby appoint Thomas L. Mehl, Sr. as the proxy,
agent and attorney-in-fact to execute and sign any and all amendments to this
Registration Statement in the capacities set forth after their respective names
below.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature and Title Date
- ------------------- ----
<S> <C>
/s/Thomas L. Mehl, Sr. September 25, 1997
- ----------------------------------
Thomas L. Mehl, Sr.
Chairman of the Board,
President and Chief Executive
Officer
/s/AnnMarie Mehl September 25, 1997
- ----------------------------------
AnnMarie Mehl
Director
/s/Nardo Zaias September 25, 1997
- ----------------------------------
Nardo Zaias
Director
</TABLE>
II-5
<PAGE> 28
<TABLE>
<S> <C>
/s/ September __, 1997
- ----------------------------------
Pichit Suvanprakorn
Director
/s/Mark Clement September 25, 1997
- ----------------------------------
Mark Clement
Director
/s/Paul W. Hartloff, Jr. September 25, 1997
- ----------------------------------
Paul W. Hartloff, Jr.
Director
/s/Timothy Chapple September 25, 1997
- ----------------------------------
Timothy Chapple
and Chief Financial Officer
(Principal Accounting and
Financial Officer)
</TABLE>
II-6
<PAGE> 29
- ------------------ COMPARISON OF FOOTNOTES ------------------
- -FOOTNOTE 1-
As described above under "Recent Developments - Clearwater Loan and Exchange
for Series E Preferred Stock," all shares of Series E Preferred Stock were
received by the Selling Stockholders in exchange for the Series D Preferred
Stock on a one-for-one basis. The number of shares receivable upon conversion of
the Series E Preferred Stock held by the Selling Stockholders cannot be fixed
until actual conversion, since the conversion rate fluctuates based on the
average market price of the Common Stock on the five trading days prior to
conversion. If converted on September 22, 1997, the total number of shares of
Common Stock receivable would be 6,211,180.
- -FOOTNOTE 2-
Does not include 2,000,000 shares of Common Stock held by Clearwater Fund IV,
Ltd. (formerly GFL Performance Fund Ltd. ("Clearwater Ltd.") or 2,231 shares of
Series E Preferred Stock held by Clearwater Ltd, and received on July 30, 1997
in exchange for 2,231 shares of Series C Preferred Stock , which, if converted
as of September 22, 1997, would be convertible into 1,385,714 shares of Common
Stock. The Company has been advised that Clearwater Ltd. is under the control of
Clearwater Fund IV, LLC.
- -FOOTNOTE 3-
Includes 1,500,000 shares which may be purchased upon exercise of presently
exercisable warrants at a purchase price of $2.50 per share. Does not include
warrants to purchase an additional 1,500,000 shares of Common Stock which may
become issuable in the future. See "Recent Developments - Clearwater Loan and
Exchange for Series E Preferred Stock."
- ------------------ COMPARISON OF FOOTERS ------------------
- -FOOTER 1-
- -#-
- -FOOTER 2-
034666 001 191693 2
- -FOOTER 3-
- -#-
- -FOOTER 4-
Footer Discontinued
- -FOOTER 5-
II-#
II-8
<PAGE> 30
EXHIBIT INDEX
Item No. Description
-------- -----------
3(a) Amended and Restated Certificate of Incorporation of the
Corporation (incorporated by reference to Annual Report on
Form 10-KSB for year ended May 31, 1996 filed on August 29,
1996).
3(b) Certificate of Designation of 5% Cumulative Convertible
Preferred Stock, Series E.
(incorporated by reference to Annual Report on Form 10-KSB for year ended May
31, 1997 filed on September 11, 1997).
3(c) By-laws of the Corporation (incorporated by reference to
Annual Report on Form 10-KSB for year ended May 31, 1996 filed
on August 29, 1996).
5 Opinion of Marks & Murase L.L.P.
10.1 Securities Purchase Agreement dated as of February 28, 1996 by
and between the Registrant and Clearwater Fund IV, LLC and
Clearwater Offshore Fund Ltd. (Incorporated by reference to
Registration Statement on Form S-3 filed on March 31, 1997)
10.2 Registration Rights Agreement dated as of May 15, 1996 by and
between the Registrant and Clearwater Fund IV, LLC and
Clearwater Offshore Fund Ltd. (Incorporated by reference to
Registration Statement on Form S-3 filed on March 31, 1997)
10.3 Loan Agreement dated as of August 5, 1997 with Clearwater Fund
IV, LLC. (Incorporated by reference to Annual Report on Form
10-KSB for year ended May 31, 1997 filed on September 11,
1997)
23(a) Consent of Joseph Decosimo and Company LLP
23(b) Consent of Bond, Andiola & Company
23(c) Consent of Marks & Murase L.L.P. (the consent of counsel is
contained in their opinion)
<PAGE> 1
[MARKS & MURASE LETTERHEAD]
Exhibit 5
September 25, 1997
MEHL/Biophile International
Corporation
4127 N.W. 27th Lane
Gainesville, Florida 32606
Dear Sirs:
We have acted as counsel to MEHL/Biophile International Corporation
(the "Company") in connection with the Amendment No. 1 to Registration
Statement on Form S-3 (the "Registration Statement") being filed with the
Securities and Exchange Commission on September 25, 1997 covering the resale of
up to 6,211,180 shares of the Company's Common Stock (the "Shares") issuable
upon the conversion of 10,000 shares of 5% Cumulative Convertible Preferred
Stock, Series E (the "Preferred Shares").
We are of the opinion that upon the issuance of the Shares in
accordance with the terms of conversion of the Preferred Shares, the Shares
will when sold be legally issued, fully paid and non-assessable.
We hereby consent to the inclusion of our name under the caption "Legal
Matters" in the Prospectus which is included in the Registration Statement.
Very truly yours,
MARKS & MURASE L.L.P.
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the Registration Statement on
Form S-3 and related Prospectus filed with the Securities and Exchange
Commission in Registration No. 333-24231 of our report, dated July 10, 1997,
except for note 18, as to which the date is August 5, 1997, with respect to the
consolidated financial statements of Mehl/Biophile International Corporation
and subsidiaries included in its Annual Report on Form 10-K for the year ended
May 31, 1997, filed with the Securities and Exchange Commission.
/s/ Joseph Decosimo and Company, LLP
JOSEPH DECOSIMO AND COMPANY
A TENNESSEE REGISTERED LIMITED LIABILITY PARTNERSHIP
Chattanooga, Tennessee
September 24, 1997
<PAGE> 1
Exhibit 23(b)
[LETTERHEAD OF BOND, ANDIOLA & COMPANY]
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No.1 to the Registration Statement on
Form S-3 and related Prospectus filed with the Securities and Exchange
Commission in Registration No. 333-24231 of our report, dated July 11, 1996,
with respect to the consolidated financial statements of Mehl/Biophile
International Corporation and subsidiary included in its Annual Report on Form
10-KSB for the year ended May 31, 1996, filed with the Securities and Exchange
Commission.
/s/ Bond, Andiola and Co.
--------------------------
BOND, ANDIOLA AND COMPANY
Raritan, New Jersey
September 25, 1997
