UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
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[X]
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the
fiscal year ended December
31, 2005
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[
]
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
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For
the
transition period from _________ to
________
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| Commission file number: 000-25911 |
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Skinvisible,
Inc.
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(Name
of small business issuer in its
charter)
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Nevada
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88-0344219
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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6320
South Sandhill Road, Suite 10, Las Vegas, Nevada
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89120
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(Address
of principal executive offices)
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(Zip
Code)
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Issuer’s
telephone number (702)
433-7154
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Securities
registered under Section 12(b) of the Exchange
Act:
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Title
of each class
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Name
of each exchange on which registered
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None
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Not
Applicable
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Securities
registered under Section 12(g) of the Exchange Act:
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Common
Stock
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(Title
of class)
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Check
whether the Issuer (1) filed all reports required to be filed by Section 13
or
15(d) of the Securities Exchange Act during the past 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 [
]
Check
if
disclosure of delinquent filers in response to Item 405 of Regulation S-B is
not
contained in this form, and no disclosure will be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to
this Form 10-KSB [ ]
State
issuer’s revenue for its most recent fiscal year: $850,280
State
the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of
such
common equity, as of a specified date within the past 60 days. $14,046,668
as of February 28, 2006.
State
the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.
59,667,748 Common
Shares as of February 28, 2006.
Transitional
Small Business Disclosure Format (Check One): Yes: __; No X
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Page
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Business
Development
We
were
organized as a Nevada corporation on March 5, 1998 and previously operated
under
the name Microbial Solutions, Inc.
We
conduct our business through the following wholly owned subsidiaries:
|
Name
of Subsidiary
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Date
of Incorporation
|
Jurisdiction
of Incorporation
|
|
Skinvisible
Pharmaceuticals, Inc.
f/k/a
Manloe Laboratories, Inc.
|
June
30, 1995
|
Nevada
|
|
Skinvisible
Pharmaceuticals (Canada) Inc.
|
October
20, 1998
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Canada
|
We
conduct our primary business activities such as research and development and
marketing of our products through Skinvisible Pharmaceuticals, Inc., a Nevada
corporation. We conduct our marketing activities in Canada through the Canadian
entity Skinvisible Pharmaceuticals (Canada) Inc.
Description
of Business
We
develop innovative polymer delivery vehicles and related compositions
that hold active ingredients on the skin for extended periods of time
when applied topically. Independent research has confirmed that our
polymers can hold certain active ingredients on the skin for up to 4 hours
resisting both wash-off and perspiration over a 4 hour period. We designed
a
process for combining water soluble and insoluble polymers that is
specifically formulated to carry water insoluble active ingredients in
water-based products without the use of alcohol, silicones, waxes, or other
organic solvents. This enables active agents the ability to perform their
intended functions on the skin for an extended period of time. Our polymer
delivery vehicles allow normal skin respiration and perspiration. The
polymer compositions we develop wear off as part of the natural exfoliation
process of the skin's outer layer cells.
Products
that successfully incorporate
our polymer delivery vehicles to
date
include antimicrobial hand sanitizers, suncare products, skincare moisturizers,
sunless tanning products as well as various dermatology products for various
skin disorders. On an ongoing basis, we are seeking to develop polymer
formulations that can successfully be incorporated into other products.
Our
primary objective is to license our polymer delivery vehicles to
established brand manufacturers and marketers of prescription and
over-the-counter products in the dermatological, medical, cosmetic,
and skincare markets. With the exception of sales to one vendor, our
management’s policy is to only sell our polymers to vendors that have executed a
license agreement with us. We conduct our research and development
in-house.
Manufacture
and Distribution
We
perform research and development activities at our principal place of business
located at 6320 South Sandhill Road, Unit #10, Las Vegas, Nevada 89120. We
engage an outside manufacturer that currently handles all of our manufacturing
and distribution needs.
Description
of Current Products and Agreements
Cosmetics
and Personal Care Markets
On
October 7, 2005, we entered into a Master Sales, Collaboration and Distribution
Agreement (“Agreement”) with EMD Chemicals Inc. (“EMD”), a New York corporation
and affiliate of Merck KGaA of Darmstadt, Germany. Under the terms of this
Agreement, we granted EMD the exclusive right to distribute and sell our
patented polymer delivery system, Invisicare®,
for the
cosmetics and personal care markets in the entire world. EMD will be entitled
to
commission income based upon the gross revenues from the sale of sublicensing
agreements as well as the polymers. The initial term of this Agreement is
until December 31, 2008 and this Agreement will automatically renew for
successive three year terms unless either party provides fourteen months advance
notice of its intention to terminate or not renew the Agreement.
Part
of
the consideration of the Agreement is that we would grant EMD options to
purchase shares of our common stock. The terms for the issuance of options
were
established and we executed a stock option agreement on February 27, 2006 where
we granted EMD the option to purchase 5,817,525 shares of common stock at the
exercise price of $0.172 per share exercisable until December 31, 2006.
Antibacterial/Antimicrobial
Hand Sanitizer
On
February 21, 2005, we entered into a definitive distribution agreement with
Dermal Defense, Inc. (“Dermal Defense”). Pursuant to this agreement, Dermal
Defense acquired the exclusive marketing and distribution rights in the United
States of America, Canada and Mexico for our antimicrobial hand sanitizer
composition which utilizes the active ingredient Triclosan 1% and incorporates
our patented Invisicare®
polymer
delivery system (the “Product”).
Dermal
Defense acquired these rights for the purchase price of $1,000,000. Dermal
Defense has already paid $775,000 of this purchase price. The remaining balance
is due and payable quarterly through September 30, 2006 in the amount of $75,000
or 5% of the gross revenues generated by Dermal Defense from sales of the
Product in the Territory in the prior quarter, whichever is greater. Under
the
terms of this agreement, Dermal Defense is also obligated to pay us a royalty
fee quarterly in the amount of $20,000 or 5% of gross revenues generated by
Dermal Defense from sales of the product in the quarter, whichever is
greater.
During
the second quarter of 2005 and with our approval, Dermal Defense entered into
an
exclusive sub-distribution agreement with JD Nelson & Associates of Columbus
Ohio (“JD Nelson”) and transferred all of its rights that it possessed to
distribute, market, and sell our antimicrobial hand sanitizer in the United
States of America, Canada and Mexico. Under the terms of the sub-distribution
agreement, JD Nelson will pay a license fee and royalty on product sales to
Dermal Defense and Dermal Defense will continue to pay us as agreed in the
Distribution Agreement of February 21, 2005. As a result, the fees and royalties
that we are due under this agreement remain unchanged. Currently, all required
fees and royalties due in accordance with this agreement are paid as agreed
and
up to date. Dermal Defense and JD Nelson & Associates are prohibited
under this agreement from manufacturing, marketing, distributing, or selling
any
competing product while the Distribution Agreement is in full force and
effect.
In
May
2005, we entered into a Distribution Agreement (“Agreement”) with Safe4Hours,
Inc. (“Safe4Hours”), a Nevada corporation. Under the terms of this Agreement, we
granted Safe4Hours the exclusive right to distribute, market, sell, and promote
our antimicrobial hand sanitizer that utilizes the active ingredient Triclosan
1% in every country in the world except Canada, the United States, and Mexico.
As set forth above, the rights to distribute, market, sell, and promote our
antimicrobial hand sanitizer in Canada, the
United
States, and Mexico are held by Dermal Defense. Safe4Hours acquired these rights
for an up-front fee of $1,000,000, of which $100,000 has been received and
the
remaining $900,000 is payable in quarterly installments based upon a
predetermined formula until the balance is received, and a royalty fee of no
less than 5% of gross revenue of all sales. Currently, we are negotiating with
Safe4Hours to revise the payment terms for the remaining $900,000 due under
this
agreement. Safe4Hours is
prohibited under this agreement from manufacturing, marketing, distributing,
or
selling any competing product while the Distribution Agreement is in full force
and effect.
Sunless
Tanning Spray Product
On
June
9, 2004, our wholly-owned subsidiary, Skinvisible Pharmaceuticals, Inc., entered
into a Trademark License Agreement and Distribution Agreement ("Distribution
Agreement") with Cross Global, Inc. ("Cross Global"), a Delaware corporation,
to
grant Cross Global the exclusive right to distribute, market, sell, and promote
our proprietary sunless tanning spray products in Canada, the United States,
Mexico, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom, and Israel.
Cross Global is also utilizing our proprietary polymer formula to manufacture
nine additional sun care related products.
Pursuant
to the terms of the Distribution Agreement, Cross Global paid us the license
fee
of $1,000,000. Under the terms of this agreement, we will receive a royalty
fee
of no less than 5% of gross revenue of all sales of our
proprietary sunless tanning spray products. Cross Global is prohibited under
this agreement from manufacturing, marketing, distributing, or selling any
competing product while the Distribution Agreement is in full force and
effect.
Sunscreen
and Skin Care Products
We
developed and
successfully tested the application of our polymer delivery vehicles in
sunscreen
products with SPF 15 and SPF 30, sunless tanning lotions, moisturizing creams,
aloe after-sun products, and other skin care products.
We
currently offer our polymer delivery vehicles for incorporation into these
products on a private label basis and have multiple agreements in
place.
Status
of Research and Development for New Applications
We
are
continuing our research and development toward developing additional
applications for our polymer delivery vehicles. We are currently researching
whether the following potential applications are suitable to incorporate our
polymer delivery vehicles:
| · |
Insect
repellents
|
| · |
Anti-fungal
|
| · |
Anti-inflammatory
|
| · |
New
antibacterial/antimicrobial hand
sanitizer
|
Insect
Repellants
We
are in
the process of developing an insect repellant with an active ingredient that
incorporates our topical polymer-based delivery systems and are presently
undergoing in-house research. We anticipate that our research will be completed
by the end of April 2006. The active ingredient for the insect repellant
was provided by EMD. In the event that we are successful in developing an
effective insect repellant that incorporates our topical polymer-based delivery
systems, the rights to distribute and sell the developed product will be subject
to the terms of the Agreement with EMD entered into on October 7, 2005. There
can
be
no
assurance that we will be successful in developing a viable insect repellant
that incorporates our topical polymer-based delivery systems and the active
ingredient provided by EMD.
Anti-fungal
We
have
an oral agreement with a pharmaceutical company relating to the research and
development of an anti-fungal product that incorporates our topical
polymer-based delivery systems with an active compound they provided. This
company paid for our research and development activities as it relates to this
product in exchange for the ability to acquire the exclusive worldwide licensing
rights to distribute and sell the product should our research and development
prove successful. We have completed our initial research and development,
but further testing remains to be conducted. The company is presently
conducting certain skin sensitivity testing. In the event that the skin study
is
successfully completed and we execute a licensing agreement with the company,
the company agreed to commence a filing with the FDA for a new drug approval
in
the United States. A definitive licensing agreement would require the company
to
pay us an upfront license fee plus ongoing royalty payments based on worldwide
sales of the anti-fungal product. There can be no assurance that we will
successfully complete the research and development of this product or that
this
product will receive FDA approval to market and sell this potential product
in
the United States.
Anti-inflammatory
Subsequent
to the reporting period, we entered into discussions with a pharmaceutical
company to conduct the research and development relating to an anti-inflammatory
product that incorporates our topical polymer-based delivery system. This
product is intended to treat hand skin disorders resulting from occupational
conditions. We are in discussions to grant a worldwide license for the
exclusive rights to market and offer for sale the product in exchange for an
upfront license fee plus royalty payments based on sales generated by the
product should its development prove successful. We have not entered into
any definitive agreement and these discussions are ongoing. There can be
no assurance that we will be able to negotiate a definitive agreement. There
can
be no assurance that we will successfully complete the research and development
of this product or that this product will receive FDA approval to market and
sell this potential product in the United States.
New
Antibacterial/Antimicrobial Hand Sanitizer
We
have
developed and sold the exclusive marketing and distribution rights to an
antimicrobial hand sanitizer product that utilizes the active ingredient
Triclosan 1%. We have developed and are currently testing a new
antimicrobial hand sanitizer product that utilizes the active ingredient
Chlorhexidine (“Chlorhexidine antimicrobial hand sanitizer”).
Chlorhexidine is the active agent in scrub soaps currently used
in the operating rooms of most hospitals worldwide.
As
a part
our development efforts to develop the Chlorhexidine antimicrobial hand
sanitizer, we developed a research plan that comprises of several studies.
The first and second studies were in-vitro tests designed to gauge the
effectiveness of the Chlorhexidine antimicrobial hand sanitizer when exposed
to
certain bacteria. We received positive results from the first study.
The results of the second study indicated that further strengthening of the
product could improve the product’s effectiveness. Our research department
implemented the appropriate improvements and commenced a third study during
the
fourth quarter. The
third
study was conducted by Retroscreen Virology Ltd. (“RVL”), a research company
that is a division of St. Bartholomew's Hospital and the Royal London Hospital
based in London, England, and designed to test the effectiveness of the
Chlorhexidine antimicrobial hand sanitizer in killing the H5N1 virus also known
as the bird flu virus or avian flu. In-vitro testing conducted by RVL confirmed
that the H5N1 virus was successfully killed by the Chlorhexidine antimicrobial
hand sanitizer 99% of the time at the following four
points
in
time: 15 seconds, 30 seconds, 1 minute, and 5 minutes following contact. This
in-vitro study was conducted by placing the Chlorhexidine antimicrobial hand
sanitizer in a dish and then exposing the H5N1 virus at the forgoing time
intervals. Based upon these positive results, we retained RVL to conduct a
further ex-vivo study to provide data on the effectiveness of the Chlorhexidine
antimicrobial hand sanitizer when exposed to the H5N1 virus over an extended
period of time. This ex-vitro study will be conducted by applying the
Chlorhexadine antimicrobial hand sanitizer to dead skin specimens, simulating
normal conditions of wash-off and skin perspiration, and then exposing the
H5N1
virus to the skin specimen at various extended time intervals. We anticipate
that the results of this second study will be available in late April 2006.
We
also
commenced another study referred to as a human repeat insult patch test
(HRIPT). This study exposes a minimum of 100 persons to the Chlorhexidine
antimicrobial hand sanitizer to determine if continued use and exposure to
the
product will result in skin complications or sensitivities. This study is
expected to be completed prior to the end of April 2006.
If
the
event that the Chlorhexidine antimicrobial hand sanitizer proves to be a viable
product, we may be required to file a New Drug Application with the US FDA
because the drug Chlorhexidine is not presently an approved drug under the
FDA
Tentative Final Monograph (TFM) for Hand Sanitizers. We may also be required
to
seek similar regulatory approvals in other foreign jurisdictions. If we are
required to file a New Drug Application with the US FDA, further development
of
this product may be both time and cost prohibitive for us. Under such
circumstance, we would seek to license the product to a third party with
experience in working with the FDA such as a pharmaceutical company. There
can be no assurance that we will successfully complete the research and
development of this product or that this product will receive FDA approval
to
market and sell this potential product in the United States.
Description
of Other Applications For Which No Agreements Are Currently In
Place
We
have
developed and successfully tested the application of our polymer delivery
vehicles in the following products:
|
· Incontinence
Lotion
|
|
· Anti-acne
Product
|
|
· Dermal
Abrasion/Cosmetic Skin Care
|
|
· Anti-microbial
Wound Care
|
Our
management is seeking to offer these products incorporating our polymer delivery
vehicle on a licensing basis.
Competition
In
terms
of our current focus and long-term strategy, our primary products have been
identified as the licensing of our polymer-based delivery system technologies
and sale of our delivery systems as ingredients for topically administered
finished product applications in the prescription Rx and OTC treatment,
cosmetic, and skincare formulations. Market research undertaken to date has
indicated that, at present, there is reasonably limited competition for our
polymer-based delivery systems and related technologies such as delivery
vehicles and technologies that offer the same performance capabilities for
topically administered products.
Patents,
Licenses, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
Contracts
Patents
On
January 4, 2000, we filed a patent application for our antimicrobial dermal
barrier composition. We received patent approval (US Patent No. 6,582,683)
for
our antimicrobial dermal barrier formulation in February 2003 and received
the
patent certificate in June 2003.
We
filed
a patent application on August 20, 2001 titled “Topical Compositions, Topical
Composition Precursors, and Methods for Manufacturing and Using” for our
Invisicare®
topical
compositions and our methodology for manufacturing and utilization of numerous
delivery systems and related applications. The United States Patent and
Trademark Office split this application into three different applications as
follows: (a) Methods of Manufacturing (b) Topical Compositions and (c) Methods
of Use. We received patent approval for the application on Methods of
Manufacturing (US Patent No. 6,756,059). Subsequent to the reporting period,
we
received notice of patent approval for the Topical Compositions application
(US
Patent No. 10/154,723). Our patent application for Methods of Use is still
pending.
We
have
also filed under the Patent Cooperation Treaty (PCT) the Patent titled “Topical
Compositions, Topical Composition Precursors, and Methods for Manufacturing
and
Using” for certain foreign countries. As of December 31, 2005, this patent
application is still pending.
We
also
have three United States patents currently pending, which cover our sunless
tanning spray formula, sunscreen formula and our new antimicrobial hand
sanitizer with chlorhexidine.
Trademarks
In
January 2002, we received trademark approval in the United States for the name
"Invisicare"
to
identify our family of polymer delivery systems. We have filed this trade name
with the Cosmetic, Fragrance and Toiletries Association ("CFTA") as an
ingredient for use in skincare and cosmetic formulations.
We
have
also applied and received trademark approval for the corporate logo
“Skinvisible”
and
for
our sunless and sun tanning products under the name “Solerra.”
We
are
seeking to extend the protection of our trademarks in additional countries
where
we currently conduct business and those additional countries where we intend
to
conduct business.
Research
and Development
We
incurred research and development expenditures for the fiscal years ended
December 30, 2004 and 2005 in the amount of $17,300 and $57,091
respectively.
Government
Regulation
We
are
not subject to any significant or material federal or state government
regulation in connection with the research and development and licensing of
our
innovative topical polymer-based delivery systems and technologies.
With
respect to our products under development, our licensing agreements require
the
licensee to seek all required approvals for marketing, distribution, and sale
in
the jurisdictions for which it is desired to make the product available should
we succeed in developing a successful product.
We
are
not subject to any significant or material environmental regulation in the
normal operation of our business.
Compliance
with Environmental Laws
We
did
not incur any costs in connection with the compliance with federal, state,
or
local environmental laws.
Employees
We
currently have five full-time employees including our sole officer, Mr. Terry
Howlett.
Currently,
we do not own any real estate. We
are
leasing our executive offices and research facility. We are located at
6320
South Sandhill Road, Suite 10, Las Vegas, Nevada 89120.
Skinvisible
Pharmaceuticals, Inc., our wholly owed subsidiary, owns the manufacturing and
laboratory equipment at this location.
On
March
8, 2005, we initiated litigation in the U.S. District Court for the District
of
Nevada against Health First Distributors North America, Inc., a British Columbia
corporation (“HFD”). The complaint seeks declaratory relief to the effect
that the parties must arbitrate a dispute between them in Las Vegas, Nevada,
as
required by the parties’ July 9, 2003, letter of intent as amended by a
subsequent letter dated October 29, 2003. The underlying dispute concerns
whether we must return what we contend was a non-refundable deposit of $100,000
USD towards North American distribution rights for our products. HFD has
claimed in demand letters that we must return the deposit and has threatened
to
bring suit in British Columbia if we fail to do so. We disagree with HFD’s
position and have demanded that the dispute be arbitrated in Las Vegas, Nevada,
as required by the parties’ agreement. HFD has refused. Our lawsuit
seeks only a declaration from the court that arbitration is required and that
it
must take place in Las Vegas, Nevada. We served the summons and complaint
on March 17, 2005. As of December 31, 2005, HFD had not answered or otherwise
responded to the litigation.
Skinvisible
Pharmaceuticals, Inc. and our Chief Executive Officer, Terry Howlett, were
named
as defendants in a lawsuit initiated in the U.S. District Court for the Eastern
District of Michigan on March 11, 2005. The lawsuit seeks a judgment against
all
defendants jointly and severally in the amount of $1,025,000 plus other costs,
interest and expenses as the court finds appropriate. The underlying dispute
concerns the circumstances under which the plaintiffs purchased common stock
in
Dermal Defense, Inc., a Nevada corporation. Based on ongoing negotiations,
we
anticipate that the case against Skinvisible Pharmaceuticals, Inc. and our
Chief
Executive Officer, Terry Howlett, will be dismissed by the plaintiff without
prejudice.
No
matters were submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 2005.
Market
Information
Our
common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is
sponsored by the National Association of Securities Dealers (“NASD”). The OTCBB
is a network of security dealers who buy and sell stock. The dealers are
connected by a computer network that provides information on current "bids"
and
"asks", as well as volume information. Our shares are quoted on the OTCBB under
the symbol “SKVI.”
The
following table sets forth the range of high and low bid quotations for our
common stock for each of the periods indicated as reported by the OTCBB. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
|
Fiscal
Year Ending December 31, 2005
|
||||
|
Quarter
Ended
|
High
$
|
Low
$
|
||
|
March
31, 2005
|
0.20
|
0.16
|
||
|
June
30, 2005
|
0.195
|
0.17
|
||
|
September
30, 2005
|
0.21
|
0.195
|
||
|
December
31, 2005
|
0.28
|
0.19
|
||
|
Fiscal
Year Ending December 31, 2004
|
||||
|
Quarter
Ended
|
High
$
|
Low
$
|
||
|
March
31, 2004
|
0.19
|
0.095
|
||
|
June
30, 2004
|
0.175
|
0.10
|
||
|
September
30, 2004
|
0.11
|
0.06
|
||
|
December
31, 2004
|
0.10
|
0.045
|
||
Holders
of Our Common Stock
As
of
December 31, 2005, we had approximately one hundred seventy nine (179) holders
of record of our common stock and several other stockholders hold shares in
street name.
Dividends
There
are
no restrictions in our articles of incorporation or bylaws that prevent us
from
declaring dividends. The Nevada Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
| 1. |
we
would not be able to pay our debts as they become due in the usual
course
of business; or
|
| 2. |
our
total assets would be less than the sum of our total liabilities
plus the
amount that would be needed to satisfy the rights of shareholders
who have
preferential rights superior to those
|
| receiving the distribution. |
We
have
not declared any dividends, and we do not plan to declare any dividends in
the
foreseeable future.
Recent
Sales of Unregistered Securities
The
information set forth below relates to our issuances of securities without
registration under the Securities Act of 1933 during the reporting period which
were not previously included in a Quarterly Report on Form 10QSB or Current
Report on Form 8-K.
During
the fourth quarter of the fiscal year ended December 31, 2005, we issued
50,000
shares of restricted common stock to a consultant for services rendered. These
shares were issued pursuant to Section 4(2) of the Securities Act of 1933,
as
amended. We did not engage in any general solicitation or advertising. We issued
the stock certificates and affixed the appropriate legends to the restricted
stock.
Securities
Authorized for Issuance Under Equity Compensation Plans
Equity
Compensation Plans as of December 31, 2005
|
A
|
B
|
C
|
|
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
right
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(A))
|
|
Equity
compensation plans
approved
by security
holders
|
1,125,000
|
$0.085
|
-
|
|
Equity
compensation plans
not
approved by security
holders
|
8,762,500
|
$0.13
|
-
|
|
Total
|
9,887,500
|
$0.127
|
-
|
Forward-Looking
Statements
Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
materially from those included in the forward-looking statements. The Company
intends such forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes
of
complying with those safe-harbor provisions.
Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company, are generally identifiable by use
of
the words “believe,” “expect,” “intend,” “anticipate,” “estimate,”
“project,” “prospects,” or similar expressions. The Company’s ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse affect on the operations
and future prospects of the Company on a consolidated basis include, but are
not
limited to: changes
in economic conditions generally and the retail market specifically,
legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles.
These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Company’s financial results, is
included herein and in the Company’s other filings with the Securities and
Exchange Commission.
Results
of Operations for the Years Ended December 31, 2005 and
2004
For
the
year ended December 31, 2005, we generated total revenue of $850,280 compared
to
revenue in the amount of $519,972 for the year ended December 31, 2004. The
increase in revenue is primarily attributable to the receipt of payments under
licensing agreements entered into with Dermal Defense, Inc., Safe4Hours, Inc.,
and Cross Global, Inc. We received $556,000 for distribution and licensing
rights in the year ended December 31, 2005, compared to $325,000 for
distribution and licensing rights in the year ended December 31, 2004. We
generated $273,520 in revenue from product sales in the year ended December
31,
2005, compared to $174,020 in revenue from product sales in the previous year.
Our
cost
of revenues for the year ended December 31, 2005 increased to $140,399 from
the
same reporting period in the prior year when cost of revenues was $96,781.
The
increase in our cost of revenues is attributable to increased product sales.
Gross
profit for the year ended December 31, 2005 was $709,881 compared to $423,191
for the year ended December 31, 2004. The increase in gross profit for the
year
ended December 31, 2005 is primarily attributable to increased licensing fees
that are not offset by any cost of revenue.
We
incurred operating expenses in the amount of $1,743,139 for the year ended
December 31, 2005. Our expenses for the year ended December 31, 2005 consisted
of selling and administrative costs of $1,225,626, depreciation and amortization
of $275,710, and stock based compensation in the amount of $241,803. We incurred
expenses in the amount of $1,228,163 for the year ended December 31, 2004.
Our
expenses for the year ended December 31, 2004 consisted of selling and
administrative costs of $1,084,674, depreciation and amortization of $111,339,
and stock based compensation in the amount of $32,150. The increase in operating
expenses from fiscal 2004 to fiscal 2005 is primarily attributable to the
payment of stock based compensation and increased selling and administrative
costs.
Our
net
loss for the year ended December 31, 2005 was $1,031,151, compared to a net
loss
of $804,972 in the prior year.
Liquidity
and Capital Resources
As
of
December 31, 2005, we had current assets of $243,621. Our
total
current liabilities as of December 31, 2005 were $1,184,717. Included in our
current liabilities is unearned revenue in the amount of $978,000. As a result,
on December 31, 2005, we had a working capital deficit of $941,096.
Management
believes that we will have sufficient capital to finance our operations for
the
next twelve months based upon revenues anticipated to be received in the current
fiscal year and royalty payments due under the current license
agreements.
Off
Balance Sheet Arrangements
As
of
December 31, 2005, there were no off balance sheet arrangements.
Going
Concern
Our
independent auditors have stated in their Auditor’s Report included in the Form
10-KSB that we have incurred operating losses, accumulated deficit, and negative
cash flow from operations. As of December 31, 2005, we had incurred cumulative
net losses of approximately $11,592,300.
Our
ability to raise additional capital through future issuance of common stock
is
unknown. The successful development of our business plan and our attainment
of
profitable operations is unknown. These factors, among others, raise substantial
doubt about our ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments related to
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should we be unable to continue
as a going concern.
Revenue
Recognition
Revenues
are recognized during the period in which the revenues are earned. Costs and
expenses are recognized during the period in which they are
incurred.
Recently
Issued Accounting Pronouncements
In
November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment
of
ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter
4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handing costs, and spoilage. This statement requires
that those items be recognized as current period charges regardless of whether
they meet the criterion of "so abnormal" which was the criterion specified
in
ARB No. 43. In addition, this Statement requires that allocation of fixed
production overheads to the cost of production be based on normal capacity
of
the production facilities. This pronouncement is effective for the Company
beginning October 1, 2005. The Company does not believe adopting this new
standard will have a significant impact to its financial
statements.
In
December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment,
which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued
to
Employees and amends SFAS No. 95, Statement of Cash Flows. Generally, the
approach in SFAS No. 123(R) is similar to the approach described in SFAS No.
123. However, SFAS No. 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative. The new standard will be effective for the Company in the first
interim or annual reporting period beginning after December 15, 2005. The
Company expects the adoption of this standard will have a material impact on
its
financial statements assuming employee stock options are granted in the
future.
In
May
2005, The Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No. 154, “Accounting Changes and Error Corrections.” The
Statement applies to all voluntary changes in accounting principle and to
changes required by an accounting pronouncement that do not include explicit
transition
provisions. SFAS No. 154 requires that changes in accounting principle be
retroactively applied, instead of including the cumulative effect in the income
statement. The correction of an error will continue to require financial
statement restatement. A change in accounting estimate will continue to be
accounted for in the period of change and in subsequent periods, if necessary.
SFAS No. 154 is effective for fiscal years beginning after December 31, 2005.
We
do not expect the adoption of this Statement to have a material impact on our
financial condition or results of operations.
|
Index
to Audited Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REPORT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors
Skinvisible,
Inc.
Las
Vegas, Nevada
We
have
audited the accompanying consolidated balance sheet of Skinvisible, Inc.
as of
December 31, 2005, and the related consolidated statements of operations,
stockholders’ equity, and cash flows for the years ended December 31, 2005
and
2004.
These
consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An
audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for
our
opinion.
In
our
opinion, the consolidated financial statements referred to above present
fairly,
in all material respects, the financial position of Skinvisible, Inc. as
of
December 31, 2005, and the consolidated results of its operations and cash
flows
for the years ended December 31, 2005 and 2004 in conformity with accounting
principles generally accepted in the United States.
The
accompanying financial statements have been prepared assuming that the
Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred losses from operations, which raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters also are described in Note 1. Absent the
successful completion of one of these alternatives, the Company’s operating
results will increasingly become uncertain. The financial statements do
not
contain any adjustments that might result from the outcome of this
uncertainty.
Sarna
& Company, Certified Public Accountants
March
8,
2006
Westlake
Village, California
CONSOLIDATED
BALANCE SHEET
|
ASSETS
|
|
December
31, 2005
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash
|
$
|
30,729
|
|
Accounts
receivable
|
|
127,989
|
|
Inventory
|
|
73,794
|
|
Due
from related party
|
|
4,765
|
|
Prepaid
expense and other current assets
|
|
6,344
|
|
Total
current assets
|
|
243,621
|
|
|
|
|
|
Fixed
assets, net
|
|
26,480
|
|
|
|
|
|
Intangible
and other assets
|
|
|
|
Patents
and trademarks, net
|
|
51,394
|
|
License
and distributor rights
|
|
50,000
|
|
Prepaid
royalty fees
|
|
900,000
|
|
|
|
|
|
Total
assets
|
$
|
1,271,495
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
206,717
|
|
Unearned
revenue
|
|
978,000
|
|
Total
current liabilities
|
|
1,184,717
|
|
|
|
|
|
--
|
|
|
|
Long-term
liabilities
|
|
|
|
|
|
1,184,717
|
|
Total
liabilities
|
|
|
|
--
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
58,225,248
shares issued and outstanding
|
|
58,225
|
|
Additional
paid-in capital
|
|
11,486,002
|
|
Stock
subscription payable
|
|
134,873
|
|
Accumulated
deficit
|
|
(11,592,322)
|
|
Total
stockholders' equity
|
|
86,778
|
|
|
|
|
|
|
$
|
1,271,495
|
|
Total
liabilities and stockholders' equity
|
|
|
See
Accompanying Report of Independent Registered Public Accounting Firm and
Notes
to Consolidated Financial Statement
CONSOLIDATED
STATEMENT OF OPERATIONS
|
|
|
For
the twelve months ended
|
|
|
For
the twelve months ended
|
|
|
|
December
31, 2005
|
|
|
December
31, 2004
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
850,280
|
|
$
|
519,972
|
|
|
|
|
|
|
|
|
Cost
of revenues
|
|
140,399
|
|
|
96,781
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
709,881
|
|
|
423,191
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
275,710
|
|
|
111,339
|
|
Stock
based compensation
|
|
241,803
|
|
|
32,150
|
|
Selling
general and administrative
|
|
1,225,626
|
|
|
1,084,674
|
|
Total
operating expenses
|
|
1,743,139
|
|
|
1,228,163
|
|
|
|
|
|
|
|
|
Loss
before provision for income taxes
|
|
(1,033,258)
|
|
|
(804,972)
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
2,107
|
|
|
--
|
|
Total
other income (expense)
|
|
2,107
|
|
|
--
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(1,031,151)
|
|
$
|
(804,972)
|
|
|
|
|
|
|
|
|
Basic
income (loss) per common share
|
$
|
(0.02)
|
|
$
|
(0.01)
|
|
Diluted
income (loss) per common share
|
$
|
(0.02)
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
Basic
weighted average common
|
|
|
|
|
|
|
shares
outstanding
|
|
57,263,522
|
|
|
55,625,248
|
See
Accompanying Report of Independent Registered Public Accounting Firm
and Notes
to Consolidated Financial Statement
CONSOLIDATED
STATMENT OF STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Additional
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Stockholders'
|
|||
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Equity
|
|
Balance,
December 31, 2003
|
$
|
48,714,618
|
|
|
48,715
|
|
$
|
10,450,665
|
|
$
|
--
|
|
$
|
(9,756,199)
|
|
$
|
743,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for cash, weighted average price of $0.10 per
share
|
|
6,579,130
|
|
|
6,579
|
|
|
601,315
|
|
|
--
|
|
|
--
|
|
|
607,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services, $ 0.10 per share
|
|
331,500
|
|
|
331
|
|
|
31,819
|
|
|
--
|
|
|
--
|
|
|
32,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(804,972)
|
|
|
(804,972)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
55,625,248
|
|
|
55,625
|
|
|
11,083,799
|
|
|
--
|
|
|
(10,561,171)
|
|
|
578,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services, $ 0.18 per share
|
|
1,100,000
|
|
|
1,100
|
|
|
196,900
|
|
|
--
|
|
|
--
|
|
|
198,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock in lieu of debt, $ 0.13 per share
|
|
1,000,000
|
|
|
1,000
|
|
|
129,000
|
|
|
--
|
|
|
--
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for settlement of debt, $0.10 per share
|
|
100,000
|
|
|
100
|
|
|
9,900
|
|
|
--
|
|
|
--
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for cash, $0.10 per share
|
|
100,000
|
|
|
100
|
|
|
9,900
|
|
|
--
|
|
|
--
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock in lieu of debt, $ 0.10 per share
|
|
210,000
|
|
|
210
|
|
|
20,790
|
|
|
--
|
|
|
--
|
|
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for cash, $0.05 per share
|
|
40,000
|
|
|
40
|
|
|
1,960
|
|
|
--
|
|
|
--
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services, $ 0.21 per share
|
|
50,000
|
|
|
50
|
|
|
10,450
|
|
|
--
|
|
|
--
|
|
|
10,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
rceived for future issuance of stock
|
|
--
|
|
|
--
|
|
|
--
|
|
|
134,873
|
|
|
--
|
|
|
134,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock options
|
|
--
|
|
|
--
|
|
|
4,257
|
|
|
--
|
|
|
--
|
|
|
4,257
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock warrants
|
|
--
|
|
|
--
|
|
|
19,046
|
|
|
--
|
|
|
--
|
|
|
19,046
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(1,031,151)
|
|
|
(1,031,151)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2005
|
|
58,225,248
|
|
$
|
58,225
|
|
$
|
11,486,002
|
|
$
|
134,873
|
|
$
|
(11,592,322)
|
|
$
|
86,778
|
See
Accompanying Report of Independent Registered Public Accounting Firm
and Notes
to Consolidated Financial Statement
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
For
the twelve months ended
|
|
|
For
the twelve months ended
|
|
|
|
December
31, 2005
|
|
|
December
31, 2004
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
loss
|
$
|
(1,031,151)
|
|
$
|
(804,972)
|
|
Adjustments
to reconcile net loss to net
|
|
|
|
|
|
|
cash
used by operating activities:
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
275,710
|
|
|
111,339
|
|
Stock
based compensation
|
|
241,803
|
|
|
32,150
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
Change
in inventory
|
|
38,848
|
|
|
(35,954)
|
|
Change
in accounts receivable
|
|
(108,048)
|
|
|
8,237
|
|
Change
in prepaid expenses and other current assets
|
|
(4,423)
|
|
|
(1,921)
|
|
Change
in related party receivable
|
|
16,361
|
|
|
(21,126)
|
|
Change
in accounts payable and accrued liabilities
|
|
11,399
|
|
|
(371,998)
|
|
Change
in unearned revenue
|
|
355,000
|
|
|
623,000
|
|
Net
cash used by operating activities
|
|
(204,501)
|
|
|
(461,245)
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
Purchase
of fixed assets and untangible assets
|
|
(4,077)
|
|
|
(54,215)
|
|
Net
cash used by investing activities
|
|
(4,077)
|
|
|
(54,215)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
Proceeds
from notes payable
|
|
--
|
|
|
--
|
|
Proceeds
from stock subscription payable
|
|
134,873
|
|
|
--
|
|
Proceeds
from issuance of common stock
|
|
12,000
|
|
|
607,894
|
|
Net
cash provided by financing activities
|
|
146,873
|
|
|
607,894
|
|
|
|
|
|
|
|
|
Net
change in cash
|
|
(61,705)
|
|
|
92,434
|
|
|
|
|
|
|
|
|
Cash,
beginning of year
|
|
92,434
|
|
|
--
|
|
|
|
|
|
|
|
|
Cash,
end of year
|
$
|
30,729
|
|
$
|
92,434
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Cash
paid for interest
|
$
|
--
|
|
$
|
4,051
|
|
Stock
issued for conversion of accounts payable, 100,000 shares
at
$0.10
|
$
|
21,000
|
|
$
|
--
|
See
Accompanying Report of Independent Registered Public Accounting Firm
and Notes
to Consolidated Financial Statement
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION
OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
Description
of business -
Skinvisible, Inc., (referred to as the “Company”) is focused on the development
and manufacture of innovative topical polymer-based delivery system technologies
and formulations incorporating its patent-pending formula/process for
combining
hydrophilic and hydrophobic polymer emulsions. The technologies and formulations
have broad industry applications within the pharmaceutical, over-the-counter,
personal skincare and cosmetic arenas. The Company’s antibacterial/antimicrobial
hand sanitizer formulations, available for private label commercialization
opportunities, offer skincare solutions for the healthcare, food service,
industrial, cosmetic and salon industries, as well as for personal use
in the
retail marketplace. The Company maintains manufacturing, executive and
sales
offices in Las Vegas, Nevada.
History
-
Skinvisible, Inc. ( referred to as the “Company”) was incorporated in Nevada on
March 6, 1998 under the name of Microbial Solutions, Inc. The Company underwent
a name change on February 26, 1999, when it changed its name to Skinvisible,
Inc. The Company’s subsidiary’s name of Manloe Labs, Inc. was also changed to
Skinvisible Pharmaceuticals, Inc.
During
1999, the Company also formed a subsidiary titled Skinvisible International,
Inc. and Skinvisible Pharmaceuticals (Canada), Inc. On January 1, 2000, the
Company decided to discontinue operations of its subsidiary, Skinvisible
International, Inc.
Skinvisible,
Inc. together with its subsidiaries shall herein be collectively referred
to as
the “Company”.
Going
concern -
The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has incurred cumulative net
losses
of approximately $11,592,322 since its inception and requires capital for
its
contemplated operational and marketing activities to take place. The company’s
ability to raise additional capital through the future issuances of the common
stock is unknown. The obtainment of additional financing, the successful
development of the Company’s contemplated plan of operations, and its
transition, ultimately, to the attainment of profitable operations are necessary
for the Company to continue operations. The ability to successfully resolve
these factors raise substantial doubt about the Company’s ability to continue as
a going concern. The consolidated financial statements of the Company do
not
include any adjustments that may result from the outcome of these aforementioned
uncertainties.
Principles
of consolidation -
The
consolidated financial statements include the accounts of the Company and
its
subsidiaries. All significant intercompany balances and transactions have
been
eliminated.
Definition
of fiscal year -
The
Company’s fiscal year end is December 31.
Use
of
estimates -
The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the consolidated financial statements and the reported amounts of revenue
and
expenses during the reporting period. Actual results could differ from those
estimates.
Revenue
recognition -
Revenues are recognized during the period in which the revenues are earned.
Costs and expenses are recognized during the period in which they are
incurred.
Inventory
-
Substantially all inventory consist of finished goods and are valued based
upon
first-in first-out ("FIFO") cost, not in excess of market. The determination
of
whether the carrying amount of inventory requires a write-down is based on
an
evaluation of inventory.
SKINVISIBLE,
INC.
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
1.
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)
Fixed
assets -
Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful
lives
of the assets, which are generally 3 to 10 years. The cost of repairs and
maintenance is charged to expense as incurred. Expenditures for property
betterments and renewals are capitalized. Upon sale or other disposition
of a
depreciable asset, cost and accumulated depreciation are removed from the
accounts and any gain or loss is reflected in other income (expense).
The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful life of fixed assets or
whether the remaining balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related undiscounted cash
flows
over the remaining life of the fixed assets in measuring their recoverability.
Goodwill
and intangible assets -
Beginning January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. According to
this statement, goodwill and intangible assets with indefinite lives are
no
longer subject to amortization, but rather an annual assessment of impairment
by
applying a fair-value based test. Fair value for goodwill is based on discounted
cash flows, market multiples and/or appraised values as appropriate. Under
SFAS
No. 142, the carrying value of assets are calculated at the lowest level
for
which there are identifiable cash flows.
SFAS
142
requires the Company to compare the fair value of the reporting unit to its
carrying amount on an annual basis to determine if there is potential
impairment. If the fair value of the reporting unit is less than its carrying
value, an impairment loss is recorded to the extent that the fair value of
the
goodwill within the reporting unit is less than its carrying value. Upon
adoption and during 2002, the Company completed an impairment review and
did not
recognize any impairment of goodwill and other intangible assets already
included in the financial statements. The Company expects to receive future
benefits from previously acquired goodwill over an indefinite period of time.
Accordingly, beginning January 1, 2002, the Company has foregone all related
amortization expense. Prior to January 1, 2002, the Company amortized goodwill
over an estimated useful life ranging from 3 to 15 years using the straight-line
method.
Fair
value of financial instruments -
Financial accounting standards Statement No. 107, “Disclosure About Fair Value
of Financial Instruments”, requires the Company to disclose, when reasonably
attainable, the fair market values of its assets and liabilities which are
deemed to be financial instruments. The carrying amounts and estimated fair
values of the Company’s financial instruments approximate their fair value due
to the short-term nature.
Earnings
(loss) per share -
Basic
earnings (loss) per share exclude any dilutive effects of options, warrants
and
convertible securities. Basic earnings (loss) per share is computed using
the
weighted-average number of outstanding common stocks during the applicable
period. Diluted earnings per share is computed using the weighted-average
number
of common and common stock equivalent shares outstanding during the period.
Common stock equivalent shares are excluded from the computation if their
effect
is antidilutive.
Income
taxes -
The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax
assets
and liabilities for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and
their respective tax bases and tax credit carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to
be recovered or settled. The effect on deferred tax assets and liabilities
of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Comprehensive
income (loss) -
The
Company has no components of other comprehensive income. Accordingly, net
loss
equals comprehensive loss for all periods.
1.
DESCRIPTION
OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)
Segment
information -
The
Company discloses segment information in accordance with Statements of Financial
Accounting Standards (SFAS) No. 131, “Disclosures about Segments of an
Enterprise and Related Information,” which uses the Management approach to
determine reportable segments. The Company operates under one segment.
Advertising
costs -
Advertising costs incurred in the normal course of operations are expensed
as
incurred. During the years ended December 31, 2005 and 2004, the Company
incurred advertising costs totaling $32,913 and $9,555, respectively.
Research
and development costs -
Research and development costs are charged to expense when incurred. Costs
incurred to internally develop the product, including costs incurred during
all
phases of development, are charged to expense as incurred.
Expenses
of offering -
The
Company accounts for specific incremental costs directly to a proposed or
actual
offering of securities as a direct charge against the gross proceeds of the
offering.
Stock-based
compensation -
The
Company applies Accounting Principles Board (“APB”) Opinion No. 25, Accounting
for Stock Issued to Employees, and Related Interpretations, in accounting
for
stock options issued to employees. Under APB No. 25, employee compensation
cost
is recognized when estimated fair value of the underlying stock on date of
the
grant exceeds exercise price of the stock option. For stock options and warrants
issued to non-employees, the Company applies SFAS No. 123, Accounting for
Stock-Based Compensation, which requires the recognition of compensation
cost
based upon the fair value of stock options at the grant date using the
Black-Scholes option pricing model.
The
following table represents the effect on net loss and loss per share if the
Company had applied the fair value based method and recognition provisions
of
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", to stock-based employee compensation:
|
|
|
2004
|
2005
|
||
|
Net
loss, as
reported
|
$
|
(804,972)
|
$
|
(966,475)
|
|
|
Add:
Stock-based employee compensation
|
|||||
|
expense
included in reported loss,
|
|||||
|
net
of related tax
effects
|
-0-
|
-0-
|
|||
|
Deduct:
Total stock-based employee
|
|||||
|
compensation
expense determined under
|
|||||
|
fair
value based methods for all awards,
|
|||||
|
net
of related tax
effects
|
-0-
|
-0-
|
|||
|
Pro
forma net
loss
|
$
|
(804,972)
|
$
|
(966,475)
|
|
|
Net
loss per common share
|
$
|
(0.01) |
$
|
(0.02) | |
|
|
|||||
|
Basic
and diluted loss, pro
forma
|
$
|
(0.01)
|
|
$
|
(0.02)
|
1.
DESCRIPTION
OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)
As
required, the pro forma disclosures above include options granted for years
ended December 31, 2004 and 2005. Consequently, the effects of applying SFAS
123
for providing pro forma disclosures may not be representative of the effects
on
reported net income for future years until all options outstanding are included
in the pro forma disclosures.
In
December 2003, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure". SFAS No. 148 amends the transition
and
disclosure provisions of SFAS No. 123. The Company is currently evaluating
SFAS
No. 148 to determine if it will adopt SFAS No. 123 to account for employee
stock
options using the fair value method and, if so, when to begin transition
to that
method.
New
accounting pronouncements
-
In
November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment
of
ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter
4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handing costs, and spoilage. This statement requires
that those items be recognized as current period charges regardless of whether
they meet the criterion of "so abnormal" which was the criterion specified
in
ARB No. 43. In addition, this Statement requires that allocation of fixed
production overheads to the cost of production be based on normal capacity
of
the production facilities. This pronouncement is effective for the Company
beginning October 1, 2005. The Company does not believe adopting this new
standard will have a significant impact to its financial
statements.
In
December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment,
which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued
to
Employees and amends SFAS No. 95, Statement of Cash Flows. Generally, the
approach in SFAS No. 123(R) is similar to the approach described in SFAS
No.
123. However, SFAS No. 123(R) requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative. The new standard will be effective for the Company in the first
interim or annual reporting period beginning after December 15, 2005. The
Company expects the adoption of this standard will have a material impact
on its
financial statements assuming employee stock options are granted in the
future.
In
May
2005, The Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No. 154, “Accounting Changes and Error Corrections.” The
Statement applies to all voluntary changes in accounting principle and to
changes required by an accounting pronouncement that do not include explicit
transition provisions. SFAS No. 154 requires that changes in accounting
principle be retroactively applied, instead of including the cumulative effect
in the income statement. The correction of an error will continue to require
financial statement restatement. A change in accounting estimate will continue
to be accounted for in the period of change and in subsequent periods, if
necessary. SFAS No. 154 is effective for fiscal years beginning after December
31, 2005. We do not expect the adoption of this Statement to have a material
impact on our financial condition or results of operations.
Reclassification
-
The
financial statements from 2004 reflect certain reclassifications, which have
no
effect on net income, to conform to classifications in the current year.
2.
FIXED
ASSETS
Fixed
assets consist of the following as of December 31, 2005:
| Machinery and equipment |
$
|
55,463
|
| Computers, equipment and software |
113,635
|
|
| Furniture and fixtures |
40,223
|
|
| Lab equipment |
115,946
|
|
|
325,267
|
||
| Less: accumulated depreciation |
298,787
|
|
|
|
||
| Fixed assets, net |
$
|
26,480
|
3.
INTANGIBLE
AND OTHER ASSETS
Patents
and trademarks are capitalized at its historical cost and are amortized over
their useful lives. As of December 31, 2005, patents and trademarks total
$70,233, net of accumulated amortization of $18,839.
License
and distributor rights (“agreement”) was acquired by the Company in January 1999
and provides exclusive use distribution of polymers and polymer based products.
The Company has a non-expiring term on the license and distribution rights.
Accordingly, the Company annually assesses this license and distribution
rights
for impairment and has determined that no impairment write-down is considered
necessary as of December 31, 2005.
Prepaid
royalties fees are amounts prepaid by the Company related to the license
and
distributor rights. The future royalties payments required by the Company
total
$2,000,000. The royalties fees are to be paid at the equal to the greater
of (a)
$6,000 per month; or (b) 1.5% of net revenues realized by the sale of the
associated polymer products subject to a cap of $2,000,000. The Company will
make payments of $6,000 per month, and by a payment on any royalties in excess
of $72,000 in each year payable on annual basis calculated within 60 days
of
each anniversary date of the agreement. As of December 31, 2005, the Company
has
paid a total of $1,610,000 of which $710,000 has been expensed and $900,000
has
been recorded as prepaid royalties which will expense in the future in
accordance to the terms of the agreement. The remaining future royalties
payments related to the agreement approximates $390,000.
4.
STOCK
OPTIONS AND WARRANTS
Stock
options -
During
the year ended December 31, 2005 and 2004, the Company granted stock options
totaling 35,000 and -0- shares of its common stock with a weighted average
strike price of $0.13 and $-0- per share, respectively. Certain stock options
were exercisable upon grant and have a life ranging from 3 months to 5 years.
As
of December 31, 2005, stock options outstanding totaled 1,810,000 with a
weighted average strike price of $0.13 per share.
Stock
warrants -
During
the year ended December 31, 2005 and 2004, the Company granted stock warrants
totaling 145,000 and -0- shares of its common stock with a weighted average
strike price of $0.13 and $-0- per share, respectively. As of December 31,
2005,
stock warrants outstanding totaled 8,077,500 with a weighted average strike
price of $0.13 per share.
5.
LETTER
OF INTENT AND DEFINITIVE AGREEMENT
In
March
2004, the Company entered into a letter of intent (“LOI”) with Dermal Defense,
Inc. for the exclusive marketing and distribution rights to its patented
Antimicrobial Hand Sanitizer product for North America. Terms of the LOI
require
Dermal Defense, Inc. to pay a fee of $1 million comprising of a non-refundable
deposit of $250,000 with the balance of $750,000 payable as to $75,000 per
calendar quarter or 5% of product sales (whichever is greater) until the
entire
$750,000 is received. The $1 million fee will be recognized as revenue ratably
over a five year period. As of December 31, 2005, the Company has received
$717,000 and has reflected $417,000 as unearned revenue and $300,000 as revenue
in the accompanying consolidated financial statements. In addition and further
to the payment fee of $1 million, Dermal Defense, Inc. agrees to pay a royalty
fee of 5% on product sales of the Antimicrobial Hand Sanitizer.
5.
LETTER
OF INTENT AND DEFINITIVE AGREEMENT(continued)
In
June
2004, the Company entered into a definitive agreement with Cross Global,
Inc.
(“Cross Global”) whereby, the Company would provide exclusive marketing and
distribution rights to its proprietary "Sunless Tanning Spray Formulation"
for
Canada, the United States, Mexico, Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain,
Sweden, United Kingdom and Israel. In addition CGI is granted the right to
use
the name "Solerra(TM)" within the territory. Terms of the agreement require
Cross Global to pay a fee of $1 million comprising of a non-refundable deposit
of $200,000 with the balance of $800,000 payable as $200,000 due August 30,
2004, November 30, 2004, February 28, 2005 and May 30, 2005. The $1 million
fee
will be recognized as revenue ratably over a five year period. As of December
31, 2005, the Company has received $700,000 and has reflected $475,000 as
unearned revenue and $225,000 as revenue in the accompanying consolidated
financial statements. In addition and further to the payment fee of $1 million
Cross Global agrees to pay a royalty fee of 5% on product sales of the Sunless
Tanning Spray Formulation.
In
May
2005, the Company entered into a distribution agreement with Safe4Hours,
Inc.
(“Safe4Hours”) whereby, the Company would provide exclusive marketing and
distribution rights to its proprietary antimicrobial hand sanitizer for all
countries of the world except Canada, United States, and Mexico. Terms of
the
agreement require Safe4Hours to pay a fee of $1 million comprising of a
non-refundable deposit of $25,000 with the balance of $975,000 payable as
recognized as revenue ratably over a five year period. As of December 31,
2005,
the Company has received $95,000 and has reflected $175,000 as revenue in
the
accompanying consolidated financial statements. The Company has yet to receive
$80,000 as reflected under the contract. This amount that is due to the Company
has been record as an accounts receivable. In addition and further to the
payment fee of $1 million Safe4Hours, Inc. agrees to pay a royalty fee of
5% on
product sales of the antimicrobial hand sanitizer beginning in the 3rd
quarter
of 2005.
In
October 2005, the Company entered into a distribution agreement with EMD
Chemicals Inc. (“EMD”) whereby, the Company would provide exclusive marketing
and distribution rights to its proprietary polymer delivery system “Invisicare”
for all countries of the world. Terms of the agreement states that the Company
would grant EMD options to purchase shares of their common stock. A stock
option
agreement was executed on February 27, 2006, where the Company granted EMD
the
option to purchase 5,817,525 shares of common stock at the exercise price
of
$0.172 per share until December 31, 2006.
6.
COMMITMENTS
AND CONTINGENCIES
Lease
obligations
- The
Company has operating leases for its offices. Future minimum lease payments
under the operating leases for the facilities as of December 31, 2005 are
as
follows:
2006 $98,771
Rental
expense, resulting from operating lease agreements, approximated $91,356
for the
year ended December 31, 2005.
| 7. |
SUBSEQUENT
EVENTS
|
As
of
February 9, 2006 the Company has issued 900,000 shares to fulfill the stock
subscription as of December 31, 2005.
No
events
occurred requiring disclosure under Item 304(b) of Regulation S-B.
We
carried out an evaluation of the effectiveness of the design and operation
of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2005. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, Mr. Terry Howlett. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that, as of December 31, 2005, our disclosure controls and procedures are
effective. There have been no significant changes in our internal controls
or in
other factors, which could significantly affect internal controls subsequent
to
the date we carried out our evaluation.
Disclosure
controls and procedures are controls and other procedures that are designed
to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act are
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
Limitations
on the Effectiveness of Internal Controls
Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and
that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of
two
or more people, or by management override of the internal control. The design
of
any system of controls also is based in part upon certain assumptions about
the
likelihood of future events, and there can be no assurance that any design
will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions,
or
the degree of compliance with the policies or procedures may deteriorate.
None.
The
following information sets forth the names of our current directors and
executive officers, their ages and their present positions with the Company
as
of December 31, 2005.
|
Name
|
Age
|
Office(s)
Held
|
|
Terry
Howlett
|
58
|
Chief
Executive Officer, Chief Financial Officer, and
Director
|
|
Jost
Steinbruchel
|
66
|
Director
|
|
Greg
McCartney
|
55
|
Director
|
Mr.
Terry H. Howlett
has been
our Chief Executive Officer and Director since March 5, 1998. Mr. Howlett has
a
diversified background in market initialization and development, sales and
venture capital financing for emerging growth companies. He has held senior
management, marketing and sales positions with various companies, including
the
Canadian Federation of Independent Business, Family Life Insurance, and Avacare
of Canada and founded Presley Laboratories, Inc., which marketed cosmetic and
skin, care products on a direct sales basis. For the ten years prior to becoming
President of the Company, Mr. Howlett was the President and CEO of Voice-it
Solutions, Inc., a publicly traded company on the Vancouver Stock exchange
that
made voice response software for order entry systems.
Mr.
Jost Steinbruchel
has been
a Director of the Company since February 17, 1999. Mr. Steinbruchel has operated
his own company since 1984, in Geneva Switzerland specializing in financial
engineering in international trade throughout a wide network of banking
relations, principally in Europe, China, Australia and Africa. Previously,
he
spent 20 years of his professional career as an executive in international
banking with Lloyds of London, Citicorp and Credit Suisse. Mr. Steinbruchel
has
a law degree from Sorboure, Paris.
Mr.
Greg McCartney
was
elected as a director of the Company since January 10, 2005. Mr. McCartney
is
currently the Chairman of the Board for Genesis Bioventures and also formerly
served as their CEO. Genesis Bioventures is currently trading on the OTCBB.
Mr.
McCartney has over 20 years experience serving as officer and director of both
private and public companies in various manufacturing and technology industries.
Prior to founding BioLabs in 1997, Mr. McCartney was the founder and director
of
Aspenwood Holdings Corporation, a business consulting firm specializing in
financing, public relations and venture capital in the technology and
manufacturing industries. From 1986 to 1995 he was the President of an emerging
high technology company and also served as officer and director of other
companies. Previously, he was involved with international real estate and land
development.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual
meeting of our shareholders or until removed from office in accordance with
our
bylaws.
Significant
Employees
We
have
one significant employee that makes a significant contribution to our business
other than our officers and directors.
Dr.
James A. Roszell,
Ph.D, is
a
doctoral chemist with over 35 years' experience in product formulation,
experimental design, analysis, and method validation. Since joining
Skinvisible in 1998, he has been responsible for research and
development of our patented technology, related polymer delivery vehicles,
product formulations and compositions. Dr. Roszell is a joint contributor
to Skinvisible's Patent Number 6.756.059 and responsible for our four
pending patents. Prior to joining Skinvisible, he worked as chemist
for Supertech Products, Inc. in Florida where his responsibilities included
ensuring compliance with OSHA, EPA and other standards and regulations,
maintenance of quality control, research and development for new products.
Dr.
Roszell's background includes work in chemical, pharmaceutical,
environmental and clinical laboratory arenas. His chemical and scientific
expertise makes a significant contribution to our business.
Family
Relationships
There
are
no family relationships between or among the directors, executive officers
or
persons nominated or chosen by the Company to become directors or executive
officers.
Involvement
in Certain Legal Proceedings
To
the
best of our knowledge, during the past five years, none of the following
occurred with respect to a present or former director, executive officer, or
employee : (1) any bankruptcy petition filed by or against any business of
which
such person was a general partner or executive officer either at the time of
the
bankruptcy or within two years prior to that time; (2) any conviction in a
criminal proceeding or being subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses); (3) being subject to any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any
court of any competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; and (4) being found by a court
of
competent jurisdiction (in a civil action), the SEC or the Commodities Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or vacated.
Audit
Committee
We
do not
have a separately-designated standing audit committee. The entire board of
directors performs the functions of an audit committee, but no written charter
governs the actions of the board of directors when performing the functions
of
that would generally be performed by an audit committee. The board of directors
approves the selection of our independent accountants and meets and interacts
with the independent accountants to discuss issues related to financial
reporting. In addition, the board of directors reviews the scope and results
of
the audit with the independent accountants, reviews with management and the
independent accountants our annual operating results, considers the adequacy
of
our internal accounting procedures and considers other auditing and accounting
matters including fees to be paid to the independent auditor and the performance
of the independent auditor.
For
the
fiscal year ending December 31, 2005, the board of directors:
| 1. |
Reviewed
and discussed the audited financial statements with management,
and
|
| 2. |
Reviewed
and discussed the written disclosures and the letter from our independent
auditors on the matters relating to the auditor’s
independence.
|
Based
upon the board of directors’ review and discussion of the matters above, the
board of directors authorized inclusion of the audited financial statements
for
the year ended December 21, 2005 in this Annual Report on Form 10-KSB and filed
with the Securities and Exchange Commission.
Section
16(A) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who beneficially own more than ten percent of
a
registered class of the Company’s equity securities to file with the SEC initial
reports of ownership and reports of change in ownership of common stock and
other equity securities of the Company. Officers, directors and greater than
ten
percent beneficial shareholders are required by SEC regulations to furnish
us
with copies of all Section 16(a) forms they file. To the best of our knowledge
based solely on a review of Forms 3, 4, and 5 (and any amendments thereof)
received by us during or with respect to the year ended December 31, 2005,
the
following persons have failed to file, on a timely basis, the identified reports
required by Section 16(a) of the Exchange Act during the fiscal year ended
December 31, 2005:
|
Name
and principal position
|
Number
of
late
reports
|
Transactions
not
timely
reported
|
Known
failures to
file
a required form
|
|
Terry
Howlett
CEO,
CFO, and Director
|
5
|
6
|
0
|
|
Jost
Steinbruchel
Director
|
1
|
3
|
0
|
|
Greg
McCartney
Director
|
1
|
1
|
0
|
Code
of Ethics Disclosure
We
adopted a Code of Ethics for Financial Executives, which include our principal
executive officer, principal financial officer, principal accounting officer
or
controller, or persons performing similar functions. The Code of Ethics was
filed as an exhibit to the annual report on Form 10KSB for the fiscal year
ended
December 31, 2004 and filed with the SEC on April 14, 2005.
The
table
below summarizes all compensation awarded to, earned by, or paid to our
executive officers for each of the last three completed fiscal
years.
|
Annual
Compensation
|
Long
Term Compensation
|
||||||||
|
Name
|
Title
|
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual Compensation
($)
|
Restricted
Stock Awarded
($)
|
Warrants
&
Options
(#)
|
LTIP
payouts
($)
|
All
Other Compensation
($)
|
|
Terry
Howlett
|
Director,
CEO, and CFO
|
2005
2004
2003
|
$145,000
$198,242
$73,000
|
0
0
0
|
$24,522
0
0
|
85,000
0
0
|
0
0
1,200,000
|
0
0
0
|
0
0
0
|
Compensation
to Directors
On
February 4, 2005, we issued 500,000 shares of restricted common stock each
Terry
Howlett and Jost Steinbruchel in connection with services rendered during the
2004 fiscal year to us as members of our board of directors. During the year
ended December 31, 2005, we issued Mr. Greg McCartney options to purchase
100,000 shares of our common stock at the exercise price of $0.10 per shares
exercisable for a period of five years from the date of issuance.
Stock
Option Grants
We
did
not grant any stock options to our executive officers during the year ended
December 31, 2005. We have not granted any stock options to our executive
officers since December 31, 2005.
The
following table sets forth information regarding the beneficial ownership of
our
shares of common stock at February 28, 2006 by (i) each person known by us
to be
the beneficial owner of more than 5% of our outstanding shares of common stock,
(ii) each of our directors, (iii) our executive officers, and (iv) by all
directors and executive officers as a group. Each person named in the table,
has
sole voting and investment power with respect to all shares shown as
beneficially owned by such person.
|
Title
of class
|
Name
and address of beneficial owner
|
Amount
of beneficial ownership
|
Percent
of class
|
|
Common
|
Terry
Howlett
6320
South Sandhill Road, Suite 10
Las
Vegas, Nevada 89120
|
5,893,052
|
13.6%
1
|
|
Common
|
Jost
Steinbruchel
6320
South Sandhill Road, Suite 10
Las
Vegas, Nevada 89120
|
1,750,000
|
5.4%
2
|
|
Common
|
Greg
McCartney
6320
South Sandhill Road, Suite 10
Las
Vegas, Nevada 89120
|
0
|
0.2%
3
|
|
Total
of all directors and executive officers
|
7,643,052
|
19.2%
|
|
|
Common
|
Lutz
Family Trust
71
Biltmore Estates
Phoenix,
Arizona 85016
|
6,500,000
|
10.9%
|
|
Common
|
York
Fidelity Limited
63
Market Street #20-04
Singapore
048942
|
4,800,000
|
8.0%
|
The
percent of class is based on 59,667,748 shares of common stock issued and
outstanding as of February
28, 2006.
As
used in this table, "beneficial ownership" means
the sole or shared power to vote, or to direct the voting
of,
a security, or the sole or shared investment power with respect to a security
(i.e., the power to dispose of, or to direct the disposition of, a security).
In
addition, for purposes of this table, a person is deemed, as of any date, to
have "beneficial ownership" of any security that such person has the right
to
acquire within 60 days after such date.
1
Includes
options that may be exercised immediately to purchase 1,200,000 shares of common
stock at a price of 0.05 per share and warrants that may be exercised
immediately to purchase 1,000,000 shares of common stock at a price of $0.05
per
share.
2
Includes
options that may be exercised immediately to purchase 300,000 shares of common
stock at a price of $0.05 per share, warrants that may be exercised immediately
to purchase 1,000,000 shares of common stock at a price of $0.05 per share,
and
warrants that may be exercised immediately to purchase 150,000 shares of common
stock at a price of $0.15 per share.
3
Includes
options that may be exercised immediately to purchase 100,000 shares of common
stock at a price of $0.10 per share.
Except
as
disclosed, none of our directors or executive officers, nor any proposed nominee
for election as a director, nor any person who beneficially owns, directly
or
indirectly, shares carrying more than 5% of the voting rights attached to all
of
our outstanding shares, nor any members of the immediate family (including
spouse, parents, children, siblings, and in-laws) of any of the foregoing
persons has any material interest, direct or indirect, in any transaction during
the last two years or in any presently proposed transaction which, in either
case, has or will materially affect us
|
Exhibit
Number
|
Description
|
|
10.1
|
Distribution
Agreement with Safe4Hours, Inc. 1
|
|
10.2
|
Master
Sales, Collaboration and Distribution Agreement with EMD Chemicals,
Inc.
2
|
|
14.1
|
Code
of Ethics 3
|
(1)
Previously
filed as an exhibit to Current report on Form 8-K filed with the Securities
and
Exchange Commission on May 11, 2005
(2)
Previously
filed as an exhibit to Current report on Form 8-K filed with the Securities
and
Exchange Commission on October 13, 2005
(3)
Previously
filed as an exhibit to Current report on Form 10-KSB filed with the Securities
and Exchange Commission on April 14, 2005.
Audit
Fees
The
aggregate fees billed by our auditors for professional services rendered in
connection with a review of the financial statements included in our quarterly
reports on Form 10-QSB and the audit of our annual consolidated financial
statements for the fiscal years ended December 31, 2004 and 2005 were
approximately $29,140 and $19,890 respectively.
Audit-Related
Fees
Our
auditors did not bill any additional fees for assurance and related services
that are reasonably related to the performance of the audit or review of our
financial statements.
Tax
Fees
The
aggregate fees billed by our auditors for professional services for tax
compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
ended December 31, 2004 and 2005.
All
Other Fees
The
aggregate fees billed by our auditors for all other non-audit services, such
as
attending meetings and other miscellaneous financial consulting, for the fiscal
years ended December 31, 2004 and 2005 were $0 and $0 respectively.
SIGNATURES
Pursuant
to the requirements of Section 13 and 15 (d) of the Securities Exchange Act
of
1934, the Registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
|
Skinvisible,
Inc.
|
|
|
By:
|
/s/
Terry Howlett
|
|
Terry
Howlett
|
|
|
Chief
Executive Officer, and Chief Financial Officer
|
|
|
Date:
March
29, 2006
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and
on the date stated:
|
By: /s/ Terry
Howlett
Terry
Howlett
Director
|
By:
/s/ Jost Steinbruchel
Jost
Steinbruchel
Director
|
|
By:
/s/
Greg McCartney
Greg
McCartney
Director
|