<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