<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1997
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-11969
MEHL/BIOPHILE INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-2408186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4127 N.W. 27th Lane
Gainesville, Florida 32606
(Address or principal executive offices)
Registrant's telephone number, including area code: (352) 373-2565
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
The number of shares outstanding of the Registrant's class of common stock, as
of August 31, 1997 is 43,993,301 shares of common stock, $.01 par value.
<PAGE> 2
MEHL/BIOPHILE INTERNATIONAL CORPORATION
Index
Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed consolidated balance sheet as
of August 31, 1997 3
Condensed consolidated statements of
operations for the three months ended
August 31, 1997 4
Condensed consolidated statements of
cash flows for the three months ended
August 31, 1997 5
Notes to condensed consolidated financial
Statements 7
Item 2. Management's discussion and analysis of
financial condition and results of operations 9
PART II. OTHER INFORMATION:
Item 2. Changes in Securities 12
Item 3. Exhibits and Reports on Form 8-K 12
Signature
2
<PAGE> 3
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
MEHL/BIOPHILE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AUGUST 31, 1997
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and equivalents $ 755,497
Accounts Receivable, net of allowance for doubtful accounts of $685,086 705,801
Inventories 616,757
Current portion of note receivable 30,372
Other current assets 398,657
------------
Total current assets 2,507,084
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $1,400,446 9,673,127
PATENTS AND PATENT RIGHTS, net of accumulated amortization
of $1,839,932 4,768,300
NOTES AND LOANS RECEIVABLE, net of current portion 400,000
OTHER ASSETS 13,722
DEFERRED LOAN COSTS net of accumulated amortization of $34,933 184,067
------------
$ 17,546,300
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short Term Loan $ 4,000,000
Accounts payable 2,542,786
Accrued expenses 1,268,017
Other current liabilities 231,578
------------
Total current liabilities 8,042,381
============
STOCKHOLDERS' EQUITY:
Serial preferred stock, $10 par value, $1,000 stated value, authorized -
200,000 shares:
Series E, 5% cumulative convertible;
issued and outstanding - 12,231 shares 12,231,000
Common stock, $.01 par value, 60,000,000 shares
Authorized - 46,468,260 shares issued 464,683
Additional paid-in-capital 25,842,331
Accumulated deficit (27,936,411)
Foreign currency translation adjustment (142,085)
------------
10,459,518
Treasury stock, at cost, 2,474,959 common shares (955,599)
------------
Total stockholders' equity 9,503,919
------------
$ 17,546,300
============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
MEHL/BIOPHILE INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
1997 1996
----------- -----------
(AS RESTATED)
<S> <C> <C>
REVENUES $ 852,718 1,505,691
COST OF REVENUES 691,736 798,586
----------- -----------
GROSS MARGIN 160,982 707,105
----------- -----------
OPERATING EXPENSES:
Selling, general and administrative 4,549,343 1,522,883
Research and development 283,037 307,803
----------- -----------
TOTAL OPERATING EXPENSES 4,832,380 1,830,686
OPERATING LOSS (4,671,398) (1,123,581)
----------- -----------
OTHER INCOME (EXPENSES)
Investment income 31,586 173,713
Interest Expense (47,387) (14,277)
NET LOSS (4,687,199) (964,145)
----------- -----------
NET LOSS PER COMMON SHARE $ (0.13) $ (0.03)
LOSS APPLICABLE TO COMMON STOCK $(5,296,206) $(1,245,395)
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE> 5
MEHL/BIOPHILE INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
1997 1996
----------- -----------
(AS RESTATED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,687,199) (964,145)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Provision for bad debts 14,389 0
Provision for notes and loans receivable 216,509 0
Depreciation and amortization 482,175 248,695
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable (373,227) 453,585
Inventories (59,575) (390,543)
Other operating assets 470,051 (293,515)
Accounts payable (1,164,817) 376,650
Accrued expenses (237,278) (27,668)
Other operating liabilities 106,578 0
----------- -----------
Net cash provided (used) by operating activities (5,232,412) (596,941)
CASH FLOWS FROM INVESTING ACTIVITIES:
Notes receivable repayments 103,000 0
Increase in notes and loans receivable (144,652) (352,838)
Property and equipment acquisitions (2,526,246) (92,581)
Purchase of held to maturity marketable securities 0 477,690
----------- -----------
Net cash used by investing activities (2,567,898) 32,271
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock, net of issuance costs 0 128,591
Loans received 4,000,000 0
Note repayments 0 (53,499)
Preferred stock dividends paid (27,887) (147,339)
----------- -----------
Net cash from financing activities 3,972,113 (72,247)
----------- -----------
EFFECT OF EXCHANGE RATE ON CASH (105,613) (63,830)
----------- -----------
INCREASE (DECREASE) IN CASH FOR THE PERIOD (3,933,810) 9,205,489
----------- -----------
CASH AND EQUIVALENTS, beginning of period 4,689,307 9,838,998
----------- -----------
CASH AND EQUIVALENTS, end of period $ 755,497 $ 9,208,168
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
MEHL/BIOPHILE INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
1997 1996
----------- -----------
AS RESTATED
<S> <C> <C>
SUPPLEMENTAL SCHEDULES OF NON-CASH, INVESTING AND FINANCING ACTIVITIES
EXISTING BUSINESS ACQUISITION COSTS:
Issuance of common stock $ 0 $ 543,292
Loans and advances applied toward purchase price 1,946,380
-----------
2,489,672
-----------
COMPONENTS OF ACQUIRED BUSINESSES, IN AGGREGATE, ARE AS FOLLOWS:
Accounts receivable $ 0 534,448
Inventories 0 204,748
Property and equipment 0 222,952
Patents and patent rights 0 5,183,180
Other assets 0 4,188
Accounts payable and accrued expenses 0 (1,028,515)
Current portion of notes and loans 0 (1,119,838)
Long-term debt 0 (804,885)
Other liabilities 0 (83,134)
----------- -----------
$ 3,113,144
Less minority interest (623,472)
-----------
$ 0 $ 2,489,672
NOTES, LOANS AND ADVANCES USED TO RETIRE DEBT OF ACQUIRED BUSINESS $ 0 $ 1,253,620
ISSUANCE OF COMMON STOCK:
Conversion of debt, net of unamortized issue costs $ 0 714,978
----------- -----------
Payment of accrued interest 0 16,439
----------- -----------
Conversion of preferred stock 0 150,000
----------- -----------
PREFERRED STOCK DIVIDEND EQUAL TO INTRINSIC VALUE
OF BENEFICIAL CONVERSION FEATURES $ 456,119 $ 156,250
----------- -----------
VALUATION OF DEFERRED LOAN COSTS ISSUED IN CONJUNCTION WITH DEBT $ 219,000 $ 0
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE> 7
MEHL/BIOPHILE INTERNATIONAL CORPORATION
AND SUBSIDIARIES
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, 1997 are not
necessarily indicative of the results that may be expected for the year
ending May 31, 1998. 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, 1997.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 1997 MEHL/Biophile
International Corporation and Subsidiaries Annual Report on form 10-KSB
for the year ended May 31, 1997.
2. CAPITAL TRANSACTIONS
On 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 to be
borrowed at any time after the Company has delivered fifty (50) lasers
under effective license agreements with a third party physician, clinic
or hospital. To qualify these lasers must have been delivered after
July 15, 1997. 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. 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
borrowing of second borrowing
10/02/97 1,000,000 $2.50 07/15/02
12/02/97 500,000(1) $2.50 07/15/02
</TABLE>
These cost of these warrants, as valued using the Black Scholes model,
is included as a deferred loan cost and is amortized over the period of
the loan.
Included as part of the loan agreement, the Company agreed to exchange
all 2,231 shares of $1,000 stated value Series C, 5% cumulative
preferred stock and all 10,000 shares of $1,000 stated value Series D,
5% cumulative convertible preferred stock for 12,231 shares of $1,000
stated value Series E, 5% cumulative convertible preferred stock.
Each share of Series E 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 price, but in no event shall the
conversion price be greater than $3.125. The Company has filed a
registration statement covering the public sale of the shares of common
stock receivable upon conversion of the Series E stock and the
- ----------
(1) If loan remains unpaid by December 2, 1997
7
<PAGE> 8
holders 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.
In connection with the Loan Agreement dated as of August 5, 1997
between the Company and Clearwater Fund IV,LLC ("Clearwater"). Thomas
L. Mehl, Sr., the Company's President and Chairman, guaranteed the
repayment to Clearwater of all amounts borrowed by the Company and
pledged all of the shares of Common Stock of the Company owned by him
as security for repayment of such borrowed amounts.
3 RECENT EVENTS
The Company has entered into a letter of intent to purchase capital
stock representing in the aggregate of 81% interest in Converting
Laboratories, Inc. ("CLI"), a Wisconsin corporation. CLI is a
manufacturing company which will produce the Bandeze and some of the
other radio frequency hair removal products for the Company. The
Company has paid to CLI a total of $909,865 of which $96,865 has been
paid in the quarter to August 31, 1997. The whole amount has been
written off.
8
<PAGE> 9
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BUSINESS ACQUISITIONS
On June 4, 1996, Classy Lady merged with and into a subsidiary of the
Company. The Merger has been accounted for as a non-monetary exchange.
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 a majority of the outstanding Common Stock
of the Company, thereby resulting in a change of control of the
Company.
On June 4, 1996, in a transaction accounted for as a purchase, the
Company completed the purchase of capital stock representing in the
aggregate of 81% interest in SLS (Wales) Limited, a privately held
Welsh company which has been renamed SLS Biophile Limited ("SLS"),
engaged in developing, manufacturing and selling lasers for
dermatologic use, including 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 the Company's Common Stock.
On March 13, 1997, in a transaction accounted for as a purchase, the
Company completed the purchase of capital stock representing in the
aggregate of 75% interest in Integrated Technologies Research (Wales)
Limited, a privately held Welsh company which will be renamed ITR
Biophile Limited ("ITR"). The shareholders of ITR received 250,000
shares of the common stock of the Company for the 75% interest in ITR.
RESULTS OF OPERATIONS:
GENERAL OPERATING COMMENTS
During the period, the Company has continued its transition 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 change has necessitated an increase in
administrative employees, legal expenses, patent fees and travel
expense. Additionally, the Company has incurred substantial expenses to
increase its sales and marketing capabilities in order to support the
global introduction of the hair removal lasers. At the same time the
Company, through its subsidiary Mehl Group Marketing Inc ("MGMI"), has
commenced a program to license its lasers to revenue sharing partners
wherein physicians will oversee the hair removal services.
The licensing program began internationally in October 1996 but could
not begin in the United States until marketing clearance was received
from the Food and Drug Administration. The market clearance was
received March 13, 1997. Under the licensing arrangements, MGMI will
provide its partners with the use of a laser, training and maintenance
and will receive a percentage of the gross revenue generated by the
laser hair removal treatments.
MGMI first delivered hair removal lasers into the United States in July
1997. As of October 10, 1997 the company has delivered 60 systems under
revenue sharing agreements into the United States out of a total of 120
lasers in all countries. MGMI has continued to renegotiate revenue
sharing contracts with customers who were initially sold lasers by SLS.
Although the laser clinic revenues have commenced, significant revenues
are not expected until the second half of the current fiscal year.
The Company has had significant losses to date and expects these losses
to continue for the near future. Therefore, the Company must continue
to secure additional financing to commercialize its current laser hair
removal plan and fund ongoing operations. The Company continues to
investigate several financing alternatives, including strategic
partnerships, bank financing, private debt and equity
9
<PAGE> 10
financing and other sources. The Company believes it will be successful
in obtaining additional financing in order to fund current operations
in the future.
RESULTS OF OPERATIONS
Total net sales in the quarter to August 31, 1997 were $852,718,
representing a reduction 43.36% from the $1,505,691 in the quarter to
August 31, 1996. Consumer products division sales were down from
$962,298 to $588,610 largely due to its major Japanese customer phasing
out the current model of the Finally Free Ultra personal care product
pending the introduction of its replacement, the Finally Free
Ultra-Plus. Consumer product sales are expected to show improvements on
the current quarter as the Ultra-Plus comes on stream in November 1997.
The overall decline in revenues is also attributable to the changing
business generally described above. Whereas in the previous period SLS
generated external revenues, the majority of SLS sales of laser
products are now made to the Company. Although the revenues from the
group's laser hair removal license agreements have commenced, the bulk
of the lasers now installed were not in place throughout the three
month period to August 31, 1997. MGMI earned laser clinic revenues of
$121,541 for the quarter. This is expected to increase in the
forthcoming months as the company undertakes advertising and marketing
support programs as part of its agreement with its customers.
The total gross margin percentage decreased from 47% in 1996 to 18.9%
in 1997. The gross margin percentage for the consumer products division
decreased from 41.4% in 1996 to 32.5% in 1997 as a result of continued
pricing pressure from competition. The laser hair removal business has
yet to generate significant revenues but has incurred costs of sales
due to the expense of installing and initial servicing. This has
contributed to the low gross margin for the period.
Selling, general and administrative expenses ("SG&A") for the quarter
were $4,549,343 compared to $1,522,883 in 1996. This is attributable to
the change in the business structure and the cost of continuing to
develop the laser hair removal business. The company has continued to
incur legal costs in relation to its litigation actions in the US and
the UK described in the Company's 10-KSB for the year to May 31, 1997.
The major components of SG&A in the quarter to August 31, 1997 were
payroll ($903,416), marketing ($712,226), depreciation and amortization
($482,346), travel ($386,682), legal ($320,643) and shipping and
installations ($317,165).
Research and development in the company's laser hair removal products
and other future products continued with costs of $283,037 compared to
$306,803 in 1996. The company will continue to incur research and
development costs in order to insure that it maintains technological
superiority in its products.
Investment income for the quarter was $31,586 compared to $173,713 in
for the corresponding period in 1996. The decrease is attributed to the
use of funds needed for operational cash flow.
Net loss for 1997 was $4,687,199 compared to a net loss of $978,422 in
1996. The increased loss occurred as the company continued to develop
its laser hair removal business especially in relation to its entry
into the US market.
No provision for income tax recovery has been provided for 1997 or 1996
due to the uncertainty concerning the Company's ability to utilize the
future tax benefits of net operating losses generated during those
periods.
FINANCIAL CONDITION
The Company's cash balance of $755,497 represented a decrease of
$8,452,671 from the cash available of $9,208,168 at August 31, 1996.
During the quarter the Company's cash was used primarily to finance the
Company's operations and manufacture of lasers to be placed under
licensing agreements.
As described in note 2 to the financial statements discussed above in
August 1997 the Company completed a short term loan agreement with
Clearwater Fund IV, LLC allowing the Company to borrow
10
<PAGE> 11
up to $7 million be used in connection with the manufacture and
delivery of laser hair removal systems and for other purposes. As at
August 31, 1997 the Company had borrowed $4 million of this loan. The
additional $3 million loan of the Clearwater loan discussed above was
received by the Company in early September following the successful
placement of the 50 lasers.
The loan bears interest at 15% per annum payable in arrears on a
monthly basis. 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. This loan is due for repayment on January 15,
1998.
Although the Company anticipates that income from laser hair removal
technologies will continue to increase, the Company is not currently
generating sufficient revenues from operations to provide the facility
to repay the loan. The Company is currently in negotiations with
various parties to secure additional financing, through the private
offering of equity or debt, to secure capital to repay the loan and
fund future operations. The Company is also negotiating asset financing
for the placement of its lasers. Pending completion of negotiations for
refinancing, the Company has agreed to extended credit terms with
certain vendors. The Company believes it will be able to sustain these
extended credit terms until refinancing is complete.
CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS
This Form 10-QSB contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21B of the
Securities Exchange Act of 1934. The Company's actual results could
differ materially from those set forth in the forward looking
statements. Factors that might cause such a difference include those
discussed below.
The Company's future results of operations initially depend to a
substantial degree on the ability of the Company to (1) raise
additional finance in the short term and (2) license parties worldwide
to utilize the CHROMOS 694 Ruby Laser manufactured by SLS and for such
licenses to successfully sell hair removal services utilizing this
product. The ability of such licensees to market such services will in
part depend on the public's acceptance of the use of lasers to remove
hair, as to which there can be no assurance, and the strength of the
Company's competitors. The Company's existing or potential competitors
have or may have substantially greater research and development
capabilities, clinical, manufacturing, regulatory and marketing
experience and financial and managerial resources than the Company. The
Company may be required to find alternative means for marketing and
selling its laser hair removal services, and thereby experience
substantial delays and costs. No assurance can be given that the
Company would be able to find an acceptable alternative means of
marketing and selling its laser hair removal systems, or if such an
alternative means was found, that it would be successful.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES:
In connection with the loan agreement with Clearwater Fund IV LLC,
dated August 5, 1997, on July 30, 1997 the Company agreed to exchange
all 2,231 shares of $1,000 stated value Series C, 5% cumulative
preferred stock and all 10,000 shares of $1,000 stated value Series D,
5% cumulative convertible preferred stock for 12,231 shares of $1,000
stated value Series E, 5% cumulative convertible preferred stock.
Each share of Series E 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 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 stock and the holders
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.
ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 Computation of Net Loss Per Common Share
27 Financial Data Schedule
99.2 Consolidated Statements of Changes in
Stockholders Equity
(b) Reports on Form 8-K
The company filed the following Current Report on Form 8-K
during the first quarter of 1998:
Current Report on Form 8-K dated 23 June 1997
SIGNATURES
Pursuant to the requirements of the Securities and 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
BY: /s/ THOMAS L. MEHL
------------------------------
THOMAS L. MEHL
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER DATE: 20 OCTOBER 1997
BY: /s/ TIMOTHY J. CHAPPLE
----------------------------
TIMOTHY J. CHAPPLE
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER DATE: 20 OCTOBER 1997
12
<PAGE> 1
EXHIBIT 11
COMPUTATION OF NET LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
3 MONTHS ENDED
AUGUST 31,
1997 1996
------------ ------------
<S> <C> <C>
Weighted average number of shares outstanding:
Primary 41,306,434 40,097,057
Fully diluted 41,306,434 40,057,097
Primary:
Net loss $ (4,687,199) $ (964,145)
Paid and cumulative undeclared preferred
stock dividends (152,888) (125,000)
Implied dividend equal to intrinsic value of
preferred stock conversion feature (456,119) (156,250)
------------ ------------
$ (5,296,206) $ (1,245,395)
Net loss applicable to common stock $ (0.13) $ (0.03)
</TABLE>
For the above years, earnings per share, assuming full dilution, has not been
presented since the effect would be antidiluting.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 755,497
<SECURITIES> 0
<RECEIVABLES> 3,243,039
<ALLOWANCES> 1,829,041
<INVENTORY> 616,757
<CURRENT-ASSETS> 2,507,084
<PP&E> 11,073,573
<DEPRECIATION> 1,400,446
<TOTAL-ASSETS> 17,546,300
<CURRENT-LIABILITIES> 8,042,381
<BONDS> 0
0
12,231,000
<COMMON> 464,683
<OTHER-SE> 4,850,617
<TOTAL-LIABILITY-AND-EQUITY> 17,546,300
<SALES> 735,496
<TOTAL-REVENUES> 852,718
<CGS> 472,002
<TOTAL-COSTS> 691,736
<OTHER-EXPENSES> 4,832,380
<LOSS-PROVISION> 230,898
<INTEREST-EXPENSE> 47,387
<INCOME-PRETAX> (4,687,199)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,687,199)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,687,199)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.2
MEHL/BIOPHILE INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
PREFERENCE STOCK
<TABLE>
<CAPTION>
Series C Series D Series E
Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as at May 31, 1997 2,231 $ 2,231,000 10,000 $ 10,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Conversion into Series E (2,231) $ (2,231,000) (10,000) $ (10,000,000) 12,231 $ 12,231,000
- --------------------------------------------------------------------------------------------------------------------------------
Balance as at August 31, 1997 0 0 0 0 12,231 $ 12,231,000
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COMMON STOCK Additional Paid Accumulated Treasury Shares
in Capital Deficit
- --------------------------------------------------------------------------------------------------------------------------------
Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance as at May 31, 1997 46,468,260 $ 464,683 $ 25,167,212 $(22,640,205) $ 2,474,959
- --------------------------------------------------------------------------------------------------------------------------------
Cash Dividend on Preference shares $ (152,888)
- --------------------------------------------------------------------------------------------------------------------------------
Cost of warrants issued $ 219,000
- --------------------------------------------------------------------------------------------------------------------------------
Implied Dividend equal to intrinsic value of
conversion feature $ 456,119 $ (456,119)
- --------------------------------------------------------------------------------------------------------------------------------
Net Loss $ (4,687,199)
- --------------------------------------------------------------------------------------------------------------------------------
Translation Adjustment
- --------------------------------------------------------------------------------------------------------------------------------
Balance as at August 31, 1997 46,468,260 $ 464,683 $ 25,842,331 $(27,936,411) $ 2,474,959
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Treasury Translation
shares at Cost adjustment
-------------- ----------
<S> <C> <C>
Balance as at May 31, 1997 $ (959,599) $ (1,429)
- --------------------------------------------------------------------------------
Cash Dividend on Preference shares
- --------------------------------------------------------------------------------
Cost of warrants issued
- --------------------------------------------------------------------------------
Implied Dividend equal to intrinsic value of
conversion feature
- --------------------------------------------------------------------------------
Net Loss
- --------------------------------------------------------------------------------
Translation Adjustment $ (140,656)
- --------------------------------------------------------------------------------
Balance as at August 31, 1997 $ (959,599) $ (142,085)
- --------------------------------------------------------------------------------
</TABLE>
