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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SKINVISIBLE, INC.
(Exact name of Company as specified in its charter)
NEVADA 88-0344219
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3095 East Patrick Lane, Suite 1, Las Vegas, Nevada 89120
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 702-433-7154
------------
SEC File No.: 0-25911
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
100,000,000 Shares of Common Stock
----------------------------------
(Title of class)
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TABLE OF CONTENTS
Page
----
COVER PAGE .................................................... 1
TABLE OF CONTENTS ............................................. 2
PART I ........................................................ 3
DESCRIPTION OF BUSINESS ....................................... 3
DESCRIPTION OF PROPERTY ....................................... 18
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES ....... 18
REMUNERATION OF DIRECTORS AND OFFICERS ........................ 21
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS .. 21
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS ..... 22
SECURITIES BEING OFFERED ...................................... 23
PART II ....................................................... 25
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS .............. 25
LEGAL PROCEEDINGS ............................................. 25
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ................. 25
RECENT SALES OF UNREGISTERED SECURITIES ....................... 25
INDEMNIFICATION OF DIRECTORS AND OFFICERS ..................... 26
PART F/S ...................................................... 28
FINANCIAL STATEMENTS .......................................... 28
PART III ...................................................... 29
INDEX TO EXHIBITS ............................................. 29
SIGNATURES .................................................... 30
2
PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative
2.
Item 6. Description of Business
General
Skinvisible, Inc. (the "Company") is in the business of developing,
manufacturing and selling antimicrobial skin protection products
designed to control the effects of occupational hand disease, as
well as prevent the cross contamination of pathogens. The Company
has completed the development of its products and is commencing
production and sales. The Company continues to research and
develop potential additional products.
Corporate History and Subsidiaries
The Company is a Nevada corporation that was incorporated on March
6, 1998 under the name "Microbial Solutions, Inc.". On February
26, 1999, the Company filed an amendment to its articles of
incorporation changing its corporate name to "Skinvisible, Inc."
The Company carries on its business through three wholly owned
subsidiaries, as described below:
Name of Subsidiary Date of Incorporation Incorporation
- ------------------ --------------------- ----------------
Skinvisible
Pharmaceuticals, Inc. June 30, 1995 Nevada
(formerly Manloe
Labs Inc.)
Skinvisible
International, Inc. February 22, 1999 Nevada
Skinvisible
Pharmaceuticals
(Canada) Inc. October 20, 1998 Canada (federal)
The Company's primary business activities, including all research,
development and manufacturing of its products, are carried on
through Skinvisible Pharmaceuticals, Inc. ("SVP"). The name of
this subsidiary company was changed from "Manloe Labs Inc." to
"Skinvisible Pharmaceuticals, Inc." effective February 22, 1999.
Marketing of the Company's products is performed by Skinvisible
International, Inc. ("SVI") in the United States and Skinvisible
Pharmaceuticals (Canada) Inc. ("SPI Canada") in Canada.
Acquisition of Skinvisible Pharmaceuticals
The Company acquired SVP pursuant to a share purchase and sale
agreement between the Company and Roger Hocking ("Hocking") (the
"SVP Acquisition Agreement"). The Company acquired all of
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the issued and outstanding shares of SVP from Hocking in exchange for
the payment to Hocking of $200,000 in cash and 275,000 restricted
common shares of the Company. The closing of the acquisition of
SVP was completed on March 31, 1998. Note that the terms of the
SVP Acquisition Agreement can be found in the full agreement which
is attached hereto as an exhibit. There was no affiliation between
Hocking and the Company or any of the directors or officers of the
Company prior to the Company and Hocking entering into the SVP
Agreement.
Manufacturing and Marketing License Agreement
On March 19, 1998, SVP entered into a Manufacturing and Marketing
License Agreement with Jazor Laboratory Group, Inc. ("Jazor") and
Bruce Jezior ("Jezior") (the "Manufacturing Agreement") whereby
Jazor granted to SVP the exclusive right and license to
manufacture, distribute, market and sell the products developed by
Jazor (the "License Rights"). The products included a proprietary
polymer base developed by Jazor and known as "Jatex" (the "Polymer
Base") and the Viro Shield and Work Gluv products developed by
Jazor using the Polymer Base (together, the "Licensed Products").
The Licensed Products included any products superceding or
replacing Viro Shield, Work Gluv or the Polymer Base, together with
any modification to or products superceding Viro Shield, Work Gluv
or the Polymer Base and any future products developed by Jazor
using the Polymer Base. Pursuant to the Manufacturing Agreement,
SVP agreed to pay to Jazor a license fee equal to $50,000 upon
execution of the Agreement and a royalty fee equal to the greater
of $6,000 per month or 1.5% of the net revenues realized by SVP
from the sales of the Licensed Products (the "Royalty Fees").
There was no affiliation between Jazor or Jezior and the Company,
SVP or any of the officers, directors principals or shareholders of
the Company or SVP prior to SVP entering into the Manufacturing
Agreement with Jazor and Jezior.
The Manufacturing Agreement provided that upon aggregate Royalty
Fees equal to $2,000,000 having been paid by SVP to Jazor, SVP
would have no further obligations to make any additional payments
on account of the Royalty fees and Jazor would deliver to SVP all
confidential information, including formulae, technical data,
engineering specifications, and trade secrets necessary to enable
SVP to manufacture all products that are the subject of the
Manufacturing Agreement independently of Jazor.
Note that the terms of the Manufacturing Agreement can be found in
the full agreement which is attached hereto as an exhibit.
On February 2, 1999, SVP entered into an amendment to the
Manufacturing Agreement with Jazor and Jezior whereby the Company
issued 500,000 restricted common shares at a deemed price of $2.00
per share to Jezior in consideration for the release of the
proprietary polymer process and technology information licensed to
the Company. The proprietary polymer process and technology
information has been released to the Company and the shares have
been issued to Jezior. In consideration for the issuance of the
500,000 shares pursuant to the amendment to the Manufacturing
Agreement, Jazor and Jezior also agreed to reduce the maximum
amount of Royalty Fees payable by the Company from $2,000,000 to
$1,000,000. As of April 5, 1999, the Company had paid a total of
$72,000 on account of the Royalty Fees.
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Note that the terms of the amendment to the Manufacturing Agreement
can be found in the full agreement which is attached hereto as an
exhibit.
History of Product Development
At the time of its acquisition by the Company, SVP manufactured and
distributed two proprietary products. The products incorporated
the proprietary polymer technology developed by Jazor and marketed
under the name of Jatex. The products themselves were marketed
under the names Viro Shield and Work Gluv and included the chemical
Benzalkonium Chloride as the active ingredient. SVP manufactured
and distributed Viro Shield and Work Gluv from 1997 to 1998. Sales
of Viro Shield and Work Gluv were handled through dealers, with a
focus on developing business with hospitals and emergency service
providers particularly in Florida. SVP experienced limited sales
of Viro Shield and Work Gluv due, at least in part, to a lack of
research and development support materials for its products and a
limited amount of sales and marketing literature.
At the time of the Company's acquisition of SVP, SVP had no
research and development facilities and had completed only minimal
documented research on its products. The Company recognized that
the lack of documented research was an impediment to establishing
the credibility necessary to achieve market acceptance and to
making claims regarding the performance of the Company's products.
The Company through SVP undertook to: (1) examine the claims made
on the existing two products and the proprietary Jatex polymers;
(2) research whether better products could be made utilizing the
proprietary Jatex polymers; and (3) conduct all necessary research
and development trials for such new products. The Company selected
the active ingredient Triclosan as the basis for new product
development and undertook ten months of clinical trials with six
Federal Food and Drug Administration (FDA) approved laboratories to
obtain reports on the polymer products incorporating Triclosan as
the active ingredient. The Company completed these research and
development efforts as of February 11, 1999.
Scientific Advisory Committee
The Company has formed a Scientific Advisory Committee to advise
its Board of Directors on the research and development of new
products and on the scientific issues regarding claims made by the
Company regarding its products. The Company's Scientific Advisory
Committee consists of Professor Christaan Barnard, M.D., Dr. Mark
Frobb, M.D., Dr. Jim Roszell, Ph.D., Dr. Claude Paul, L.D.S.,
D.M.D. and Bruce Jezior. Dr. Barnard is a world renowned heart
transplant specialist from South Africa who performed the world's
first human heart transplant. Dr. Frobb is a medical doctor who
practices medicine in the Province of British Columbia, Canada.
Dr. Roszell is a chemist who works full time for the Company, and
has experience in dealing with regulatory bodies such as the FDA.
Bruce Jezior is the inventor of the proprietary Jatex polymers.
Dr. Paul is a retired dental surgeon and periodontist who received
his graduate and doctorate degrees from Geneva University in
Switzerland.
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Each member of the Scientific Advisory Committee spends a small
portion of their business time on the Company's research and
development. Members of the Scientific Advisory Committee are
consulted by the Company on an as needed basis to provide direction
on the research and development of the Company's products. Members
of the Scientific Advisory Committee do not conduct any research or
development activity for the Company's products. Research and
development of the Company's products is carried on by the Company
itself and through independent laboratories, as discussed below in
"Item 6. Description of Business - Results of Research on the
Skinvisible Products"
Skinvisible Products
The Company is marketing its polymer based skin protection products
under the tradename "Skinvisible" (the "Skinvisible Products").
The Company is marketing the Skinvisible Products in five separate
and distinct markets under five distinct brand names. All
Skinvisible Products incorporate Triclosan as the active ingredient
and offer the same degree of protection from occupational hand
disease. All Skinvisible Products are identical in composition.
The five markets to which the Company markets its Skinvisible
Products are described below:
1. Medical Market
The Company markets the Skinvisible Products to the medical and
hospital industry using the brand name "Skinvisible - Medical
Formula". The Company markets the Medical Formula to hospitals,
nursing homes, doctors, nurses, dentists, hygienists, fire
departments, police ambulance and ancillary services as an
additional measure to prevent the transmission of disease, to
protect from harmful chemicals and to protect from the rigors of
extensive hand washing protocols. The Company also markets the
Medical Formula as a safe and effective alternative to protect
people from latex contact which can cause allergic reactions to
some users.
2. Industrial Market
The Company markets the Skinvisible Products to the industrial
marketplace using the brand name "Skinvisible - Industrial
Formula". The Company markets the Industrial Formula to mechanics,
painters, auto-body workers, chemical handlers, construction
trades, gardeners, mill workers and garbage/ sanitation workers as
a measure to protect the user's skin from exposure to harsh
chemicals and skin irritants.
3. Food Service Market
The Company markets the Skinvisible Products to the food service
marketplace using the brand name "Skinvisible - Food Service
Formula". The Company markets the Food Service Formula to the
restaurant, hospitality, food service and food processing
industries as a measure to prevent against the transmission of
infectious pathogens and disease-causing bacteria associated with
food products, handling and processing.
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4. Salon Market
The Company markets the Skinvisible Products to the salon
marketplace using the brand name "Skinvisible - Salon Formula".
The Company markets the Salon Formula to hairdressers, nail
technicians, beauticians, massage therapists and tanning salons as
a measure to protect the user from exposure to disease transmission
and exposure of the user's skin to harsh chemicals and skin
irritants which are prevalent in these occupations.
5. Personal Market
The Company markets the Skinvisible Products to the personal
marketplace using the brand name "Skinvisible - Personal Formula".
The Company markets the Personal Formula to individual consumers
for their personal use as a measure to protect the user from
exposure to disease transmission resulting from day to day
activities.
The prices for the Skinvisible Products are presently the same for
all brand name formulations. The Company's present retail prices
for the Skinvisible Products are as follows:
Product Size Price
- ------------ ------
2 oz bottle $16.00
4 oz bottle $24.00
8 oz bottle $38.00
16 oz bottle $64.00
32 oz bottle $80.00
Results of Research on the Skinvisible Products
The Company has conducted independent research of the Company's
Skinvisible Products at independent laboratories. Research at
independent laboratories follows the Company's own internal
research and development activities and is used by the Company to
obtain independent verification of the properties of the
Skinvisible Products.
The Company's research and development focus has been directed at
analyzing the original antimicrobial lotion, validating its
properties, researching a new formulation, and conducting internal
and external laboratory and clinical tests. Tests have included
analysis of the skin adherence of the polymer based lotions. Known
as "substantivity", the polymer achieves skin adherence by creating
a dynamic chemical bonding that capitalizes on the characteristics
of the outer layer of the skin, known as the stratum corneum. The
polymer formula is non-occlusive, allowing the skin to breathe,
maintaining the skin's natural moisture in addition to absorbing
moisture from the air. The invisible polymer base lotion gradually
deteriorates as the natural turnover of the stratum corneum occurs
(a gradual, natural process culminating in a total shedding and
regeneration every 24 hours).
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The polymers act as a delivery system for pathogen killing agents.
The Company combines the polymer with antimicrobial agents allowed
under the tentative FDA monograph for over-the-counter ("OTC")
antimicrobial lotions. The polymers, when combined with the active
antimicrobial agent, create Skinvisible's proprietary product.
Triclosan 1% was chosen as the active antimicrobial agent as it
gives the lotion the broadest spectrum of pathogen coverage and has
the advantage of a long history of safe usage with a benign
toxicological profile.
The Skinvisible product line has been registered with the Food &
Drug Administration ("FDA") and meets Occupational Safety & Health
("OSHA") bloodborne pathogen standards. Skinvisible has also been
issued a Drug Identification Number ("DIN") required for the sale
of its antimicrobial skin protection product line in Canada.
Skinvisible has contracted with six major independent U.S.
laboratories, all FDA-recognized facilities with extensive
qualifications for carrying out investigative studies on the
product, utilizing protocols incorporating Good Laboratory Practice
and Good Clinical Practice ("GLP/GCP") standards. The studies
undertaken were directed at demonstrating the effective bonding of
the polymer lotion to skin dermal structures; demonstrating the
long term substantivity (ability to adhere to the skin) of the
polymer lotion when applied to skin; demonstrating the
imperviousness ("not affording passage") of the lotion to a
significant number of noxious chemical agents over the four hour
period of time proven for substantivity; and the effective
antimicrobial action of the lotion to bacterial pathogens at the
time of application and over the same four hour period.
Synopses of the studies carried out by the independent laboratories
under contract with the Company appear below:
1. APPLIED CONSUMER SERVICES, INC.
95th NW Thea Ave. Bay 5, Hialeah Garden, FL 33016.
Applied Consumer Services, Inc. performed in vitro studies on
the rates of desorption of Skinvisible Antimicrobial Skin
Protector from fritted glass filters in the presence of 5%
Ammonium Hydroxide. ACS also conducted studies to demonstrate
>99% of 28 challenge liquids, ranging from 10% HCL to Paint
Stripper, failed to penetrate a barrier of Skinvisible
Antimicrobial Skin Protector. ACS performed accelerated
stability studies on Skinvisible Antimicrobial Skin Protector,
determining the product stability in excess of 59 months.
2. CALIFORNIA SKIN RESEARCH INSTITUTE (CSRI)
15222 - B Avenue of Science, San Diego, CA 92128.
CSRI repeated the desorption studies on human subjects. CSRI
also performed skin sensitivity studies on Skinvisible
Antimicrobial Skin Protector and Electron Microscopy Study
showing adherence of Skinvisible Antimicrobial Skin Protector
to human skin for four hours.
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3. ADVANCED SURFACE MICROSCOPY, INC.
6009 Knyghton Rd., Indianapolis, IN 46220
Advanced Surface Microscopy performed Atomic Force Microscopy
studies on the nature of the bonding of Skinvisible
Antimicrobial Skin Protector to human skin. The results of
its study showed that the Product bonded to the skin for a
period of four (4) hours.
4. BIOSCIENCE LABORATORIES, INC.
P.O. Box 190, Bozeman, Montana 59771-0190
Bioscience Laboratories performed in vivo and in vitro studies
to demonstrate the efficacy of Skinvisible Antimicrobial Skin
Protector as a long-term antimicrobial, killing a wide variety
of micro-organisms. Bioscience Labs also performed studies on
the efficacy of Skinvisible Antimicrobial Skin Protector to
prevent Transepidermal Water Loss during daily repetitive hand
washing. The results of this study showed that the Product
prevented moisture loss during frequent hand washings.
5. VIROMED BIOSAFETY LABORATORIES
6101 Blue Circle Drive, Minneapolis, MN 55343
Viromed Laboratories performed in vivo and in vitro tests on
Skinvisible Antimicrobial Skin Protector's efficacy as an
antiviral agent. The results of this study showed that the
Product was effective against envelope viruses with minimal
effect on non-envelope viruses.
6. NORTHVIEW BIOSCIENCES, INC.
2800 7th St., Berkeley, CA 94710
Northview Biosciences performed toxicity studies of
Skinvisible Antimicrobial Skin Protector, demonstrating that a
dose of 5g/kg of Skinvisible was non-toxic and had no ill
effects on laboratory rats.
The results were conclusive in proving that Skinvisible's
proprietary formulation demonstrated exceptional substantivity
under practical user conditions during a four hour period,
excellent maintenance of its impervious shield and blockage of
penetration or passage to the broad range of noxious chemicals
tested, and excellent kill patterns to the broad spectrum of
pathogens tested during the four hour test period.
Skinvisible Pharmaceuticals, Inc. is in the process of researching
the development of the following potential products:
- - Sun Screen/Protector - sunscreen that filters harmful UV
radiation; stays on for up to four hours and will not
wash off even after repeated entries into the water;
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- - Skin Care - antimicrobial skin care for the control of
facial acne;
- - Foot Cream - anti-fungal cream for general care and
protection, as well as prevention and protection against
athletes foot;
- - Liquid Diaper - antimicrobial skin care for protection
against diaper rash; ideal for babies and incontinent
patients.
Finalization of these products will be subject to completion of
research and development and clinical testing at independent
laboratories. This is a forward-looking statement and development
of these products may not be completed.
Manufacturing of the Skinvisible Products
The Skinvisible Products are manufactured by SVP at the Company's
facility at 6320 S. Sandhill Road, Unit #10, Las Vegas, Nevada
89120. The manufacturing process consists of the manufacture of
the polymer base of the Skinvisible Products and the addition of
the active Triclosan ingredient. The manufacturing process starts
with the combination of the base ingredients in accordance with the
amounts and the process prescribed by the proprietary formula. The
combined ingredients are heated to critical temperatures as
required to complete manufacture of the final polymer complex. The
product is ready for bottling once the final polymer complex has
cooled. Once manufactured, the Skinvisible Products are stored on
site pending shipment.
The Company has the capacity to produce approximately 100 gallons
of Skinvisible Product per day. The Company anticipates expanding
production capacity to over 300 gallons of Skinvisible Product per
day with the installation of a new, higher capacity mixing tank.
The ingredients for the Skinvisible Products are supplied by a
number of different chemical manufacturers. The Company does not
have any long term contractual arrangements with any of its
suppliers. Ingredients are available from alternate suppliers in
the event that the Company is not able to obtain ingredients from
its current suppliers.
Government Regulation
The Skinvisible Product line has been formulated under the
tentative over-the-counter monograph for antimicrobial skin lotions
in the United States (the "Monograph"). No specific application or
formulary approval procedure is necessary for marketing a product
in the United States, provided the product fits under the formulary
guidelines of the Monograph. The official procedure is to file
with the FDA which then affixes a National Drug Code (NDC) number
to the product. The NDC numbers applied to the Skinvisibile
Products are as follows:
Skinvisible Product Brand Name NDC Number
- ------------------------------ ----------
Medical Formula NDC#63034-025
Food Service Formula NDC#63034-035
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Industrial Formula NDC#63034-055
Salon Formula NDC#63034-045
Personal Formula NDC#63034-065.
In Canada, the Skinvisible Products are regulated by the Health
Protection Branch (HPB) of the Canada Ministry of Health and
Welfare. Under the Canadian regulatory scheme a company submits an
application to the HPB who reviews the application and the product
through a review panel and issues a Drug Identification Number
(DIN) upon approval. The HPB has assigned the following DIN to the
Company: 02240020.
Marketing
The Company originally commenced marketing of the Skinvisible
Products exclusively through a network marketing program known as
the "Net/Direct, Dual Compensation Plan" (Net/Direct Plan) run by
SVI in the United States and SPI(Canada) in Canada. The Net/Direct
Plan had been structured by the Company to provide various
incentives to encourage independent businesses and individuals to
sell and to buy the Skinvisible Products and/or to make customer
referrals. The Net/Direct Plan contemplated that independent
businesses and individuals would earn commissions off their own
sales and the sales of others they brought into the marketing
program.
The Company decided to abandon this network marketing program in
June, 1999 and to market the Skinvisible Products through, (1)
distribution agreements entered into by the Company and its
subsidiaries, and (2) direct marketing efforts undertaken by the
Company itself. This decision was based on the Company perception
that it could not attain sufficient market penetration and
acceptance through its network marketing program. The Company does
not have any independent businesses or individuals marketing the
Skinvisible Products through the network marketing program at this
time.
The Company entered into an agreement with Aquastel Pacific
Environmental Technology Limited of Hong Kong ("Aquastel") for the
commercial sale and distribution of the product in Hong Kong,
Taiwan, Singapore, Malaysia and Thailand (the "Aquastel
Agreement"). The Company has granted Aquastel exclusive rights to
these countries for the term of the Aquastel Agreement. The
Aquastel Agreement is for a term of three years, subject to an
eight month cancellation clause in favor of each party during the
first three year term and subject to Aquastel meeting certain
minimum purchase requirements. Aquastel is required to purchase
$30,000 of Skinvisible Products in the first eight months and
$30,000 in the following four months of the initial year. Aquastel
must purchase a minimum of $100,000 of Skinvisible Products in the
second and third years of the term of the Aquastel Agreement. The
sales prices of the Skinvisible Products at which Aquastel is
required to purchase are set forth in the Aquastel Agreement and
are subject to review after six months. The Company received an
order from Aquastel for approximately $30,000 of Skinvisible
Products in the third quarter of 1999. A copy of the Aquastel
Agreement is attached as an exhibit. The discussion herein
regarding the agreement between the Company and Aquastel is
qualified in its entirety by reference to the agreement.
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The Company's subsidiary, Skinvisible Pharmaceuticals, Inc.
("SVP"), has entered into an agreement dated July 28, 1999 with
Essentially Yours Industries Corp. of Surrey, British Columbia,
Canada ("Essentially Yours") for the exclusive distribution of
Skinvisible's proprietary family of skin protection products to the
retail marketplace within Canada and the United States (the "EYI
North American Agreement"). Additionally, SVP signed an agreement
dated July 28, 1999 with EYI International Limited ("EYI
International") under similar terms and conditions for the
exclusive distribution of its product line internationally in the
retail market within the fourteen countries in which EYI
International presently operates (the "EYI International
Agreement").
The EYI North American Agreement gives Essentially Yours the
exclusive right to market the Skinvisible name and its existing
product line in North America. The EYI North American Agreement
also gives EYI a right of first refusal on new products developed
under the Skinvisible label for the retail marketplace.
Essentially Yours is obligated to purchase a minimum of 50,000 oz
of Skinvisible Product by December 31, 1999. Essentially Yours is
also obligated to purchase a minimum of 1,000,000 oz for the year
ending December 31, 2000, 1,250,000 oz for the year ending December
31, 2001, and 1,560,000 oz for the year ending December 31, 2002.
Failure of Essentially Yours to meet these minimum purchase
requirements will give the Company the right to terminate both the
North American Agreement and the International Agreement. The
Company received an order from EYI for 60,000 ounces of product in
third quarter of 1999.
The EYI International Agreement gives EYI International the
exclusive right to market Skinvisible's existing product line and
the same right of first refusal on new Skinvisible label products
to the retail marketplace in the following fourteen countries in
which EYI International presently operates: Brazil, United Kingdom,
Israel, Lebanon, Egypt, Jordan, Palestinian Authority Region,
Indonesia, Thailand, Hong Kong, Singapore, Philippines, Mexico, and
Taiwan. The EYI International Agreement also gives EYI
International a right of first refusal for other international
countries outside of North America. EYI International also has the
option to expand the territory for the international market to
include additional countries by purchasing 25,000 oz of product for
each additional country and paying the Company's cost of achieving
regulatory approvals for sales of products in the additional
country.
A copy of each of the EYI North American Agreement and the EYI
International Agreement is attached hereto as exhibits. The
discussion herein regarding the EYI North American Agreement and
the EYI International Agreement is qualified in its entirety by
reference to the copies of the attached agreement.
The Company will continue to market directly, or through other
distribution channels, to the corporate, commercial and industrial
marketplace in North American and international markets not covered
by any distribution agreement.
The Company has been advised by Boston Pizza International of its
intention to use the Company's Skinvisible Products at its 120
Boston Pizza restaurants across Canada as part of Boston Pizza
International's regular hygiene program. Boston Pizza
International has advised the Company that the Company's
Skinvisible Products will be part of its national employee hygiene
program
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commencing January 1, 2000. The Company has not entered
into any written agreement with Boston Pizza International but has
received a few orders from the franchisees of Boston Pizza
International.
Company Web Site
The Company maintains a web site on the Internet at
"www.skinvisible.com" ("Web Site") as part of its marketing
strategy. The Web Site provides viewers with information regarding
the Company and the Skinvisible Products. Persons who want to
contact the Company directly regarding purchases of Skinvisible
Products may do so via e-mail. The Company refers all inquiries
for purchases in the retail market to EYI in accordance with the
EYI North American Agreement. The Company also maintains a
hyperlink to EYI's web site in order that potential purchasers may
contact EYI directly.
Competition
The Company's Skinvisible Products have been developed to compete
against the following products:
* products which prevent occupational hand disease; and
* products which can prevent the cross-contamination and
transfer of pathogens.
The Company has developed its brand name formulations to target the
different markets which consume these products. The Company's
competition in each of these markets is summarized below:
1. Barrier Products for Occupational Hand Disease
----------------------------------------------
The Company's Skinvisible Products prevent against
occupational hand disease as a result of the properties of the
polymer base of the Skinvisible Products. The Company is
marketing the Skinvisible Products as a barrier to occupation
hand disease to the industrial markets and the salon markets.
The Company is coupling the occupational hand disease
properties of the Skinvisible Products with the antimicrobial
properties of the Skinvisible Products in marketing the
Skinvisible Products to the medical and food markets.
The Company faces competition from a number of products which
claim to combat occupational hand disease and which fall under
the FDA monograph for barrier products. All of these
products, to the knowledge of the Company, establish a barrier
between the skin and the outside elements using a compound
which is not favorable to the user's skin. These compounds
are usually made up of a variety of waxes, including
dimethicone (silicone) and alcohol. All of these compounds
clog a user's skin. Barrier products have been used for years
and are not accepted in the medical or food industries due to
the fact that skin which cannot breathe becomes hot and moist
and creates a breeding ground for bacteria. Additional
problems associated with barrier products are that they may
wash off when coming in contact with moisture or water and may
go into open cavities, in the case of the medical industry, or
into food products, in the case of the food industry.
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Key competitors who produce barrier products for occupational
hand disease include the following:
Product Manufacturer
- ------- ------------
Gloves in a Bottle 1998 Glovesina Bottle, Inc.
GloveCote Fibre Glass-Evercote, Co., Inc.
Invisible Glove Blue Magic, Inc.
2. Antimicrobial Products
The Company also markets Skinvisible Products as antimicrobial
products which prevent the cross-contamination of pathogens on
the hands. The FDA requires all products claiming to be
antimicrobial to meet the FDA tentative monograph for
antimicrobial products.
The number one selling products for the cross-contamination of
pathogens on the skin are instant hand sanitizers. These
products are available in both the professional market and in
the retail market. The instant hand sanitizers have an
alcohol content of at least 67% with added skin emollients for
skin protection. Instant hand sanitizers have a 100% instant
kill rate against pathogens; however, the instant hand
sanitizers do not offer the user any long term protection. A
user's skin will become contaminated with pathogens as soon as
the user touches a pathogen after using an instant hand
sanitizer. An additional problem associated with instant hand
sanitizers is that prolonged usage will dry out a user's skin.
There are other antimicrobial skin protection products with
which the Company will compete within this market. Most other
products use waxes or dimethicone (silicone) mixed with off-
the-shelf polymers. Additional competitors are entering this
market with polymer based products. The Company believes that
its proprietary polymer formulation is unique in the market as
it will not wash off and has the ability to kill pathogens
both on contact and up to four hours on a user's skin. The
Company plans to use these characteristics of the Skinvisible
Products to market its products against those introduced by
competitors.
The following companies currently manufacture products which
are competitive with the Skinvisible Products in the
antimicrobial product market:
Product Manufacturer
- ------- ------------
ViraShield Genomic Actives, LLC
Dermal Defense LMG Dermal Defense
Unique Skin Unique Laboratories, Inc.
14
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As discussed above, the current market for skin care products is
highly competitive, and there are currently a number of products in
the marketplace that make claims similar to those made by the
Company and its subsidiaries. In some cases, these products are
offered by companies with established distribution channels and
greater financial resources than the Company, posing a strong
competitive threat and creating a formidable barrier to entry by
the Company into the market.
The Company has developed its competitive strategy based on its
belief that none of these competitors can offer skin protection
products with the same benefits as those of the Company. Given the
potential for skin protectants in the marketplace, however, it is
anticipated that other products may be developed in the future by
competitors with greater resources and established distribution
channels that may be able to meet or exceed this benefit and
negatively effect the Company's sales and market share. Thus, it
is part of the Company's plan of operation to obtain as wide a
market recognition as rapidly as possible based on its current
advantages to ensure on-going long-term success. Acceptance within
the medical/hospital environments as part of this plan, if
obtained, would supply support in this regard. It should be noted,
however, that no such acceptance has, as yet, been achieved and no
assurance can be given that it ever will.
Twelve Month Plan of Operation
The Company currently intends to pursue the following plan of
operations during the next twelve months:
1. The Company will continue to attempt to enter into
distribution agreements for distribution of the Skinvisible
Products to the commercial and industrial markets. Specific
attention will be given to sales in those industries where
individuals are subject to frequent hand washing, such as the
food service and heath care industries. The Company
anticipates it will spend approximately $300,000 on this
marketing expense over the next twelve month period;
2. The Company will continue to market the Skinvisible Products
with EYI and EYI International to the retail market. The
Company anticipates it will spend approximately $100,000 on
this marketing expense over the next twelve month period;
3. The Company will continue its efforts to market the
Skinvisible Products to the commercial and industrial markets
directly. The Company anticipates it will spend
approximately $600,000 on this marketing expense over the next
twelve month period.
4. The Company will continue research and development of new
products, including a sun-screen product. The Company
anticipates it will spend approximately $300,000 on additional
research and development activities over the next twelve month
period;
The Company had cash of $63,310 and accounts payable of $381,786 as
of June 30, 1999. The Company has a loan outstanding in the amount
of $715,000 as of June 30, 1999. This loan is an unsecured loan
from Mr. Harold C. Moll, a shareholder of the Company, which is
payable on demand and remains outstanding. While it is anticipated
that Mr. Moll will continue in the short-
15
<PAGE>
term to provide interim loans to the Company to support operations
and the costs of being a public company, there is no agreement in
place for Mr. Moll to do so and such loans are only a short-term
solution to the Company's cash needs. As discussed below, it is
anticipated that additional financing will be obtained from other
sources in the near future. Failure to do so will have a significantly
negative impact on the Company's operations.
The Company anticipates that the Company will spend approximately
$1,500,000 over the next twelve month period in pursuing the
Company's stated plan of operations. Of these anticipated
expenditures, the Company anticipates that approximately $900,000
will be required to be spent on the Company's plan of operations in
the next six months. Of this amount, the Company anticipates that
$400,000 will be realized from operating revenues generated by the
Company, after deduction of costs of goods sold, and $500,000 will
be raised by additional debt or equity financings of the Company.
The Company is presently undertaking a search for additional equity
financing to cover these anticipated expenses and to repay the
Company's accounts payable and the unsecured demand loan owed to
Mr. Moll. This search is in the form of a private offering for the
sale of 1,450,000 shares of common stock at a price of $2.25 per
share with 725,000 accompanying warrants at a price of $2.25 to $3
per share. This offering is being made only to accredited
investors under Rule 506 of Regulation D of the Securities Act of
1933. The Company, however, has not, as yet, formalized or entered
into any such arrangements, and no assurance can be given that it
will be able to find any such additional financing in time to cover
its costs and expenses as they come due. A failure by the Company
to obtain such financing would have a significantly negative effect
on the Company's future operations and may result in the Company's
being shut down as an operating entity.
The actual expenditures and business plan of the Company may differ
from that stated in the above Plan of Operations. The Board of
Directors of the Company may decide not to pursue the stated
Business Plan of Operations. In addition, the Company may modify
the stated Plan of Operations based on the available amounts of
financing in the event that the Company cannot achieve the required
financings to complete the stated Plan of Operations. The Company
does not have any financing arrangement in place to enable the
Company to meet the Stated Plan of Operations.
In the event the Company is not successful in obtaining any further
debt or equity financing, the Company anticipates that it could not
sustain its business operations based on the Company's current cash
position and revenues.
The Company believes the above statements may be forward-looking
statements. Actual results of the Company and the Company's actual
plan of operations may differ materially from what is stated above.
Factors which may cause the actual results of the Company or its
actual plan of operations to vary include, among other things,
decisions of the board of directors not to pursue a specific course
of action based on its re-assessment of the facts or new facts,
changes in the Internet business or general economic conditions and
those other factors identified herein.
16
<PAGE>
Distinctive Characteristics of the Business that may have a
Material Impact on Future Financial Performance
A number of factors distinctive to the Company's business may have
a material impact on future financial performance, including:
Competition. As noted above, competition among skin care products
is strong and presents a significant barrier to entry. In
addition, it is a reasonable possibility that existing or new
competitors could develop product lines that provide similar or
greater levels of skin protection to that provided by the
Skinvisible Products. If these factors were to occur, they would
have a significant negative impact on the future financial results
of the Company.
Marketing. The Company's marketing plan is completely dependent
upon sales and referrals of outside independent contractors. A
failure to attract a sufficient number of independent contractors
or to keep them actively involved in selling the product would have
a significant negative impact on the future financial results of
the Company.
Product. The Skinvisible Products are new and to some extent
unique in the skin care marketplace. Whenever such a new product is
offered, there is a chance that it will not be accepted by a
sufficient number of consumers to support and grow the business.
Such lackluster consumer demand for the product may be the result
of a perception that the product is not necessary, does not perform
in a significant enough manner, or is inferior to other products,
among other things. The failure to attract enough consumer demand
will have a significant negative impact on the future financial
results of the Company.
Employees
The Company has 2 employees, including its President and SVP
employs 14 individuals, including its President. All employees of
the Company and SVP are full-time employees.
Mr. Terry Howlett, President of the Company, is paid a salary of
$10,000 per month. The Company also reimburses Mr. Howlett for
expenses incurred in connection with his duties as President of the
Company. The Company and Mr. Howlett have not entered into any
written employment agreement.
The services of Mr. Gerald Gauthier, Chief Operating Officer of
SVP, are provided to the Company pursuant to a written employment
agreement between Mr. Gauthier and the Company dated April 1, 1999.
A copy of this employment agreement is attached hereto as an
exhibit. The Company pays to Mr. Gauthier a salary of $100,000 per
year plus an expense allowance of $1,400 per month. The term of
Mr. Gauthier's employment agreement is for a one year period
expiring April 1, 2000. In addition, Mr. Gauthier has been granted
an option to purchase 90,000 shares of the Company's common stock
at a price of $2.50 per share under the Company's Employee Stock
Option Plan.
SVP has entered into an employment agreement dated March 31, 1998
with Mr. Roger Hocking (the "Hocking Agreement") whereby the
services of Mr. Hocking as manager of manufacturing are
17
<PAGE>
provided to SVP. The Hocking Agreement has a three year term
expiring March 31, 2001. The Company pays to Hocking a salary
of $6,000 per month, plus an automobile allowance of $400 per month.
The Company has entered into a talent license and marketing
agreement dated April 1, 1999 with Mr. Randall Cunningham, a
quarterback with the Minnesota Vikings football team (the
"Cunningham Agreement"). Mr. Cunningham has agreed to permit the
Company to use his name, image, likeness, picture and position as
quarterback of the Minnesota Vikings in the Company's marketing
efforts for the Skinvisible Products. Mr. Cunningham has also
agreed to make himself available for personal appearances and as a
spokesman at the direction of the Company during the months of
February through June of each year, which appearances will include
a minimum of ten cities within the United States and Canada in each
year. The Cunningham Agreement has a term of three years and
obligates the Company to grant to Cunningham options to purchase
120,000 shares of the Company's common stock at a price of $3.50
per share. The options are required to be issued over a period of
nine months, with 40,000 options granted by July 1, 1999, an
additional 40,000 options granted by October 1, 1999 and an
additional 40,000 options granted by January 1, 2000. The Company
is also obligated to reimburse Mr. Cunningham for any expenses
incurred with his appearing at Company functions. The Company has
completed the grant of options to purchase 120,000 shares of the
Company's common stock to Mr. Cunningham, as required by the
Cunningham Agreement.
A copy of each of the Hocking Agreement, the Gauthier Agreement and
the Cunningham Agreement are attached hereto as exhibits. The
discussion herein regarding the Hocking Agreement, the Gauthier
Agreement and the Cunningham Agreement is qualified in its entirety
by reference to the copies of the attached agreements.
Any growth in the number of employees will be largely dependent on
the success of the Company's sales efforts.
None of the employees of the Company or its subsidiaries are
subject to collective bargaining agreements, nor have they been on
strike, or threatened to strike, within the past three years.
Research and Development Expenditures
During the past fiscal year, SVP spent approximately $384,550 on
research and development activities for the Company. As the
Company was formed in 1998, there were no research and development
expenditures from years prior to 1998.
Item 7. Description of Property
The Company's head office and administration activities are carried
at leased premises located at 3095 E. Patrick Lane, Suite 1, Las
Vegas, Nevada 89120. The premises are comprised of 4000 square
feet and are leased for a term of 2 years expiring on June 30, 2001
at a lease rate of $3,590 per month.
18
<PAGE>
The Company's research and development and manufacturing activities
are carried on through SVP at leased premises located at 6320 South
Sandhill Road, Suite 10, Las Vegas, Nevada 89120. The premises are
comprised of a 6000 square feet mixed office and industrial
facility, and are leased for a term of 4 years expiring on April
14, 2002. The obligations under the lease for this property are
$59,368 for the period from July 1,1999 to December 31, 1999,
$121,032 for the year 2000, $101,832 for the year 2001 and $24,122
for the period from January 1, 2002 to April 14, 2002. The Company
is presently seeking additional financing and more product sales
necessary in order to allow the Company to meet this and its other
obligations.
The Company does not lease or own any property, however, SVP owns a
number of personal property items, including certain manufacturing
equipment, computers and fax machines and office furniture and
furnishings. SVP also leases a telephone system.
Item 8. Directors, Executive Officers and Significant Employees
The following information sets forth the names of the officers and
directors of the Company and its subsidiaries, their present
positions with the Company and its subsidiaries, and their
biographical information.
Skinvisible, Inc.
- -----------------
Name Office(s) Held
- ---- --------------
Terry Howlett Director, President
Howard Thomson Director, Secretary, Treasurer
Jerry Hodge Director
Lord Anthony St. John Director
Jost Steinbruchel Director
Skinvisible Pharmaceuticals, Inc.
- ---------------------------------
Name Office(s) Held
- ---- --------------
Terry Howlett Director, President & Secretary
Jerry Hodge Director
Gerald Gauthier Chief Operating Officer
Skinvisible International, Inc.
- -------------------------------
Name Office(s) Held
- ---- --------------
Terry Howlett President
19
<PAGE>
Jerry Hodge Director
Roger Hocking Secretary, Treasurer
Skinvisible Pharmaceuticals (Canada) Inc.
- -----------------------------------------
Name Office(s) Held
- ---- --------------
Terry Howlett President
Howard Thomson Director, Secretary, Treasurer
Mr. Terry H. Howlett (Age 51), President & Director, Skinvisible,
Inc. 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. Howard Thomson (Age 51), Director, Treasurer and Secretary,
Skinvisible, Inc. Mr. Thomson has recently retired after 17 years
in senior management positions with the Bank of Montreal, including
5 years as Branch Manager, 4 years as Regional Marketing Manager
and 5 years as Senior Private Banker. He previously resided in
London, England and was employed by the National Westminster Bank
for 13 years.
M. Jerry Hodge (Age 54), Director, Skinvisible, Inc. For over the
past five years, Mr. Hodge has been the President & CEO of
Hospitality Network, the largest provider of in-room video
entertainment to the hotel/casino industry, and has professional
management expertise in the areas of business development, finance,
operations, and corporate strategic planning.
Roger J. Hocking (Age 45), Secretary & Treasurer, Skinvisible
International, Inc. Mr. Hocking attended the University of
California where he studied marketing and sales. He worked in the
retail sales field for various companies, starting his first
company, Applied Marketing in 1981, which sold waterbed
conditioners (including chemical disinfectants) and accessories.
He sold this business in 1991, thereafter focusing on sales of
houseware products, and moving in 1992 to Las Vegas, Nevada. Mr.
Hocking formed Manloe Laboratories Inc. (now Skinvisible
Pharmaceuticals, Inc.) in March 1992 and was President of that
company until its acquisition in 1998.
Lord Anthony St. John (Age 41), Director, Skinvisible, Inc. Lord
Anthony St. John has been a member of the House of Lords in England
since 1978. In 1998, he was appointed Extra Lord-in-Waiting to her
Majesty the Queen. He has been a consultant to Merrill Lynch
International since 1991 and serves as a Director on other publicly
traded companies. Since graduating with a law
20
<PAGE>
degree in 1979 from Capetown, South Africa, Lord St. John has spent
a number of years in the commercial field as auditor and legal
counsel for international companies.
Jost Steinbruchel (Age 58), Director, Skinvisible, Inc. Since
1984, Mr. Steinbruchel has operated his own company 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.
Gerald Gauthier (Age 62) is Chief Operating Officer of SVP. Mr.
Gauthier received his Bachelor of Commerce degree from the
University of Montreal in 1970. Mr. Gauthier was controller of
Wilson Oilfield Supply of Calgary, Alberta from 1983 to 1990. Mr.
Gauthier was a self-employed management consultant from 1990 to
1992, during which time he gained experience in multi-level
marketing operations. Mr. Gauthier was vice-president of Pure Life
International/ Royal Bodycare Canada Inc., a multi-level marketing
company retailing natural health care products, from 1992 to 1993.
Mr. Gauthier was business manager of Guisachan Family Medicine, a
medical office in Kelowna, British Columbia from 1994 to 1999. Mr.
Gauthier joined SVP as Chief Operating Officer in 1999.
Terms of Office
Directors of the Company are appointed for one year terms to hold
office until the next annual general meeting of the holders of the
Company's Common Stock or until removed from office in accordance
with the Company's by-laws. Officers of the Company are appointed
by the Company's board of directors and hold office until removed
by the Company's board of directors.
Item 9. Remuneration of Directors and Officers
The following table sets forth certain information as to the
Company's three highest paid executive officers and directors for
the fiscal year ended December 31, 1998.
Summary Compensation Table
- -----------------------------------------------------------------
Name and principal position | Year | Salary
- -----------------------------------------------------------------
Terry Howlett, Director, President | 1998 | $ 90,000
Howard Thomson, Director, Sec/Treas. | 1998 | $ 9,000
Jerry Hodge, Director | 1998 | $ 9,000
| |
Aggregate of three Highest Paid | |
Officers and Directors | | $108,000
- -------------------------------------------------------------------
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<PAGE>
In addition, certain of the officers are provided an automobile
allowance for use of their vehicles for Company business and have
and/or will receive stock options to purchase shares of the
Company.
Cash compensation of $114,000, in the aggregate, was paid to
executive officers and directors for services in fiscal year 1998.
The Company pays a fee of $1,000 per month to its directors, other
than Terry Howlett, in consideration for each director acting as a
director of the Company. The Company pays to Mr. Terry Howlett a
salary of $10,000 per month and does not pay Mr. Howlett any
separate fee for acting as a director of the Company. See Item 6.
"Description of Business - Employees".
Item 10. Security Ownership of Management and Certain Security
Holders
The following table sets forth, as of August 15, 1999, the
beneficial ownership of the Company's Common Stock by each person
known by the Company to beneficially own more than 10% of the
Company's Common Stock outstanding as of such date and by the
officers and directors of the Company individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class
- -------------- ------------------- -------------------- --------
Common Terry Howlett 1,000,000 9.80%
Director, President
Common Howard Thomson 156,000 1.53%
Director,
Sec./Treas.
Common Anthony St. John 150,000 1.47%
Director
Common Jost Steinbruchel 550,000 5.39%
Director
Common Jerry Hodge 250,000* 2.45%
Director
Common All Officers and 2,106,000 20.65%
Directors as a
Group ( 5 persons)
* Includes shares owned by D. Hodge in the amount of 50,000 shares.
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<PAGE>
The following table shows the issued and outstanding stock options
held by the officers and directors of the Company, and by each
person known by the Company to beneficially own more than 10% of
the Company's Common Stock as of August 1, 1999. Each of the
following options was granted by the Company on January 8, 1999.
Name Exercise Price No. of Options Term of Option
- ---- -------------- -------------- --------------
Terry Howlett $1.65 300,000 5 years
Jerry Hodge $1.50 50,000 5 years
Howard Thomson $1.50 50,000 5 years
Anthony St. John $1.50 50,000 5 years
Jost Steinbruchel $1.50 50,000 5 years
Item 11. Interest of Management and Others in Certain Transactions
None of the directors or officers of the Company, nor any proposed
nominee for election as a director of the Company, nor any person
who beneficially owns, directly or indirectly, shares carrying more
than 10% of the voting rights attached to all outstanding shares of
the Company, nor any promoter of the Company, nor any relative or
spouse of any of the foregoing persons has any material interest,
direct or indirect, in any transaction since the date of the
Company's incorporation or in any presently proposed transaction
which, in either case, has or will materially affect the Company.
The Company's policy regarding related transactions requires that
any director or officer who has an interest in any transaction to
be approved by the board of directors of the Company disclose the
presence and the nature of the interest to the board of directors
prior to any approval of the transaction by the board of directors.
The transaction may then be approved by a majority of the
disinterested directors, provided that an interested director may
be counted in determining the presence of a quorum at the meeting
of the board of directors to approve the transaction. The
Company's policy regarding compensation for directors and officers
is that the board of directors may, without regard to personal
interest, establish the compensation of directors for services in
any capacity.
Item 12. Securities Being Registered
The securities being registered are the shares of the Company's
common stock, par value $0.001 per share. Under the Company's
Articles of Incorporation, the total number of shares of all
classes of stock that the Company has authority to issue is
100,000,000 shares of common stock, par value $0.001 per share (the
"Company Common Stock"). As of August 15, 1999 a total of
10,206,000 shares of the Company's Common Stock were issued and
outstanding.
Common Stock
Holders of the Company's Common Stock are entitled to one vote for
each share on all matters voted
23
<PAGE>
on by the shareholders. They do not have cumulative voting rights
in the election of directors or for any other purpose. The first
annual meeting of shareholders has not as yet been scheduled.
Moreover, holders of the Company Common Stock do not have pre-
emptive rights, or any subscription, redemption or conversion
privileges; but they are entitled to participate ratably in
dividends as declared by the Board of Directors, and in the
distribution of assets in the event of liquidation or dissolution
of the Company.
Transfer Agent
The transfer agent for the Common Shares is National Stock
Transfer, 3098 South Highland Drive, Suite 485, Salt Lake City,
Utah 84106.
Share Purchase Warrants
The Company has not issued and does not have outstanding any
warrants to purchase shares of the Company Common Stock.
Options
The Board of Directors and Shareholders of the Company have
approved the Company's Incentive Stock Option Plan. The Company has
granted options to purchase 300,000 shares of Company Common Stock
to Mr. Terry Howlett, a director and president of the Company,
exercisable at a price of $1.65 per share effective January 8,
1999. The Company also granted options to purchase 644,500 shares
of Company Common Stock to other officers, directors, employees and
consultants of the Company exercisable at a price of $1.50 per
share effective January 8, 1999.
The Company has subsequently granted additional options to purchase
511,000 shares of the Company's Common Stock to the Company's
employees and consultants at prices ranging from $3.00 per share to
$4.00 per share.
24
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters
The shares of the Company's common stock are traded on the OTC
Bulletin Board under the symbol "SKVI". The first day in which the
Company's shares traded was January 8, 1999. The high and the low
bids for the Company's shares for each quarter of actual trading
were:
Quarter High Low
- ------- ---- ----
1st Quarter 1999 $5.25 $1.50
2nd Quarter 1999 $5.59 $4.00
3rd Quarter 1999 (to date) $5.25 $2.50
The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
As of April 15, 1999, there were approximately 49 registered
shareholders in the Company. The Company has never issued any
dividends and is not likely to do so in the near future. There are
no legal restrictions on the Company that limit its ability to pay
dividends on its common stock.
Item 2. Legal Proceedings
There are no legal proceedings pending or threatened against the
Corporation.
Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with its
accountants since its inception in March, 1998.
Item 4. Recent Sales of Unregistered Securities
The Company completed the issuance of 5,225,000 shares of the
Company's common stock to eighteen (18) persons at a deemed price
of $0.001 per share on March 20, 1998 pursuant to Section 4(2) of
the Securities Act of 1933 (the "1933 Act") for services in
connection with the formation of the Company's business. All
shares were issued to persons who were close friends and business
associates of Mr. Terry Howlett, the sole director and officer of
the Company as at March 20, 1998. Each shareholder provided
services in connection with identifying, reviewing and evaluating a
business opportunity of the Company and negotiating the acquisition
of the Company's business. Each shareholder was either a
sophisticated investor or an accredited investor. Each shareholder
was given the opportunity to review the information available to
the Company on SVP and its antimicrobial hand lotion business prior
to the Company's agreement to acquire SVP. All shares issued to
the shareholders were "restricted securities", as defined in the
1933 Act.
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<PAGE>
The Company completed the issuance of 275,000 shares of the
Company's common stock to Mr. Roger Hocking on March 27, 1998
pursuant to Section 4(2) of the1933 Act. The shares were issued to
Mr. Hocking in consideration of the acquisition by the Company of
SVP. All shares issued to Mr. Hocking were "restricted
securities", as defined in the 1933 Act.
The Company completed an offering of 2,000,000 common shares at a
price of $0.15 per share on April 30, 1998 to a total of 11
investors. The offering was completed pursuant to Rule 504 of
Regulation D of the Securities Act.
The Company completed an offering of 700,000 common shares at a
price of $1.00 per share on May 29, 1998 to a total of 56 investors
pursuant to Rule 504 of Regulation D of the Securities Act. The
Company paid commissions totaling $50,000 to three parties in
connection with the completion of this offering: ISG Capital
Markets of Frankfurt, Germany, Hartford Securities of Grand Cayman,
British West Indies and Jost Steinbruchel of Geneva, Switzerland.
The Company completed an offering of 1,500,000 common shares at a
price of $1.00 per share on March 8, 1999 to a total of four
accredited investors pursuant to Rule 506 of Regulation D of the
Securities Act. All shares issued pursuant to this offering were
"restricted securities", as defined in the 1933 Act.
The Company completed the issuance of 500,000 shares of the
Company's common stock to Mr. Bruce Jezior on February 2, 1999
pursuant to Section 4(2) of the1933 Act. The shares were issued to
Mr. Jezior upon execution of the amendment to the Manufacturing
Agreement . See Item 6. "Description of Business - Manufacturing
and Marketing License Agreement". All shares issued to Mr. Jezior
were "restricted securities", as defined in the 1933 Act.
The Company issued a total of 3,000 shares of the Company's common
stock on April 27, 1999 to Mr. Bryan Campbell, a consultant to the
Company, upon the exercise by Mr. Campbell of stock options granted
to him pursuant to the Company's Incentive Employee Stock Option
Plan. Mr. Campbell purchased all of these shares at a price of
$1.50 per share, for a total purchase price of $4,500. The shares
were issued pursuant to the exemption from registration provided by
Rule 701 under the Securities Act of the1933 and were marked as
restricted when issued.
Item 5. Indemnification of Directors and Officers
The officers and directors of the Company are indemnified as
provided under the Nevada Revised Statutes (the "NRS") and the
Bylaws of the Company.
Under the NRS, director immunity from liability to a corporation or
its shareholders for monetary liabilities applies automatically
unless it is specifically limited by a corporation's articles of
incorporation (which is not the case with the Company's Articles of
Incorporation). Excepted from that immunity are: (i) a willful
failure to deal fairly with the corporation or its shareholders in
connection with a matter in which the director has a material
conflict of interest; (ii) a violation of criminal law (unless the
director had reasonable cause to believe that his or her conduct
was lawful
26
<PAGE>
or no reasonable cause to believe that his or her
conduct was unlawful); (iii) a transaction from which the director
derived an improper personal profit; and (iv) willful misconduct.
The By-laws of the Company provide that the Company will indemnify
its directors and officers to the fullest extent not prohibited by
the Nevada General Corporation Law; provided, however, that the
Company may modify the extent of such indemnification by individual
contracts with its directors and officers; and, provided, further,
that the Company shall not be required to indemnify any director or
officer in connection with any proceeding (or part thereof)
initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the corporation, (iii) such
indemnification is provided by the Company, in its sole discretion,
pursuant to the powers vested in the corporation under the Nevada
General Corporation Law or (iv) such indemnification is required to
be made pursuant to the By-laws.
The By-laws of the Company provide that the Company will advance to
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director
or officer, of the corporation, or is or was serving at the request
of the corporation as a director or executive officer of another
corporation, partnership, joint venture, trust or other enterprise,
prior to the final disposition of the proceeding, promptly
following request therefor, all expenses incurred by any director
or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if
it should be determined ultimately that such person is not entitled
to be indemnified under the By-laws of the Company or otherwise.
The By-laws of the Company provide that no advance shall be made by
the Company to an officer of the Company (except by reason of the
fact that such officer is or was a director of the Company in which
event this paragraph shall not apply) in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made
(i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or
(ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, that the facts known to the decision-
making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in
a manner that such person did not believe to be in or not opposed
to the best interests of the Company.
27
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited Financial Statements for the period ending December
31, 1998, including:
(a) Independent Auditors' Report;
(b) Consolidated Balance Sheet;
(c) Consolidated Statement of Operations and Accumulated Deficit;
(d) Consolidated Statement of Changes in Stockholders' Deficit;
(e) Consolidated Statement of Cash Flows;
(f) Notes to Consolidated Financial Statements;
(g) Supplemental Information.
2. Consent by Auditor to use of Audited Financial Statements
28
<PAGE>
SKINVISIBLE, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
WITH
INDEPENDENT AUDITOR'S REPORT THEREON
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditor's Report. . . . . . . . . . . . . . 1
Consolidated Financial Statements:
Consolidated Balance Sheet. . . . . . . . . . . . . . 2
Consolidated Statement of Operations
and Accumulated Deficit. . . . . . . . . . . . . . .3
Consolidated Statement of Changes in
Stockholders' Deficit . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows. . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . 6-10
Supplemental Statements:
Consolidated Statement of Operating
Expenses. . . . . . . . . . . . . . . . . . . . . 12
Proforma Consolidated
Balance Sheet . . . . . . . . . . . . . . . . . .13
Proforma Consolidated
Statement of Operations and
Accumulated Deficit . . . . . . . . . . . . . . .14
Proforma Consolidated
Statement of Operating Expenses. . . . . . . . . .15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Skinvisible, Inc.
We have audited the accompanying consolidated balance sheet of
Skinvisible, Inc., and subsidiary, a development stage company,
as of December 31, 1998 and the related consolidated statements
of operations and accumulated deficit, changes in stockholders'
deficit, and statement of cash flows for the year then ended.
These consolidated financial statements are the responsibility of
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the 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 financial statement presentation.
We believe that our audits provide 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. and subsidiary as of December 31,
1998, and the results of their operations, changes in
stockholders' deficit and cash flows for the year ended December
31, 1998, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
consolidated statement of operating expenses and proforma
consolidated balance sheet, statement of operations and
accumulated deficit, and statement of operating expenses are
presented for the purposes of additional analysis and are not a
required part of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
Sarna & Company
Westlake Village, California
March 10, 1999
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current Assets
Cash $ 110,776
Accounts Receivable 4,415
Inventory 47,530
Prepaid License Fee 50,000
Total Current Assets $ 212,721
Property and Equipment
Furniture and Equipment 85,894
Laboratory Build-Out 38,126
Total Property and Equipment 124,020
Less Accumulated Depreciation <8,858>
Net Property and Equipment 115,162
Other Asset - Exclusive Distribution Rights 200,000
TOTAL ASSETS $ 527,883
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable
and Accrued Expenses $ 123,723
Loan Payable 725,000
Total Current Liabilities $ 848,723
Stockholders' Deficit
Common Stock, $0.001 par value
100,000,000 shares authorized,
8,200,000 shares issued 8,200
Additional paid in capital 936,400
Accumulated Deficit <1,265,440>
Total Stockholders' Deficit <320,840>
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 527,883
See Notes to Consolidated Financial Statements
F-2
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1998
Revenues $ 12,269
Cost of Sales
Beginning Inventory $ 0
Purchases 51,531
Total Available 51,531
Less: Ending Inventory <47,530>
Total Cost of Sales <4,001>
Gross Profit 8,268
Operating Expenses <1,273,708>
Loss Before Provision for
Income Taxes <1,265,440>
Provision for Income Taxes <0>
Net Loss <1,265,440>
Deficit, Beginning
of Period <0>
Accumulated Deficit, End of Period $<1,265,440>
Net Loss per Share $ <0.16>
Weighted Average Shares Outstanding $ 7,891,300
See Notes to Consolidated Financial Statements
F-3
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1998
Common Stock Additional Accumulated Total
Par Value $.001 Paid in Deficit Stock
holders'
Shares Amount Capital Equity
------- ------ ------- --------- --------
Inception ---- $ ---- $ ---- $ ---- $ ----
March 6, 1998
Common Stock Issued
Commencement of
Operations
March 6, 1998
5,500,000 5,500 (5,500) ---- ----
Common Stock Issued
First Offering
$0.15 per share
April 6, 1998
2,000,000 2,000 298,000 ---- 300,000
Common Stock Issued
Second Offering
$1.00 per share
April 30, 1998
700,000 700 636,800 ---- 637,500
Rebate of
Offering Fees ---- ---- 7,100 ---- 7,100
Net Loss
Period Ended
December 31, 1998 ---- ---- ---- (1,265,440)(1,265,440)
Balances
December 31, 1998
8,200,000 $ 8,200 $ 936,400 $(1,265,440)$(320,840)
- ------------------------------------------------------------------
See Notes to Consolidated Financial Statements
F-4
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
Cash Flows from Operating Activities:
Net Loss $ <1,265,440>
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation 8,858
<Increase> Decrease in:
Accounts Receivable <4,415>
Inventory <47,530>
Prepaid Licensing Fee <50,000>
Other Asset <200,000>
Increase <Decrease> in:
Accounts Payable and
Accrued Expenses 123,723
Net Cash Used by Operating Activities <1,434,804>
Cash Flows from Investing Activities:
Purchases of Property and Equipment $ 124,020
Net Cash Used by Investing Activities <124,020>
Cash Flows from Financing Activities:
Loan Proceeds 725,000
Net Proceeds from the Issuance of
Common Stock 944,600
Net Cash Provided by Financing Activities 1,669,600
Net Increase in Cash 110,776
Cash at Beginning of Period 0
Cash at End of Period $ 110,776
See Notes to Consolidated Financial Statements
F-5
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Skinvisible, Inc. (formerly Microbial Solutions, Inc.) was
incorporated on March 6, 1998 in the state of Nevada.
Skinvisible, Inc. immediately acquired 100% ownership of
Skinvisible Pharmaceutical, Inc. (formerly Manloe Labs, Inc.)
also a Nevada corporation.
Skinvisible, Inc. and its subsidiary, (collectively referred to
as the "Company" or "SKVI") develops and sells various licensed
anti-bacterial and anti-viral protectants and formulations to
numerous industries. The Company maintains manufacturing,
executive and sales offices at Las Vegas, Nevada.
Basis of Presentation
The consolidated financial statements include the accounts of
Skinvisible, Inc. and it's subsidiary, Skinvisible
Pharmaceutical, Inc. All material intercompany balances have been
eliminated.
The Company reports revenue and expenses using the accrual method
of accounting for financial and tax reporting purposes. All
reported amounts are in US dollars.
Use of Estimates
Management uses estimates and assumptions in preparing these
financial statements in accordance with generally accepted
accounting principles. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and
expenses.
Development Stage Company
SKVI meets the guidelines of SFAS No. 7 and as such is classified
as a development stage company.
F-6
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Pro Forma Compensation Expense
SKVI accounts for costs of stock-based compensation in accordance
with APB No. 25, "Accounting for Stock Based Compensation"
instead of the fair value based method in SFAS No. 123. No stock
options have been issued. Accordingly, no pro forma compensation
expense is reported in these financial statements.
Inventories
Inventories are accounted for on an average cost basis.
Inventory at any given time consists of raw materials and
products and packaging held for resale.
Property and Equipment
Property and equipment are stated at historical cost.
Depreciation, Amortization and Capitalization
The Company records depreciation and amortization using both
straight-line and declining balance methods over the estimated
useful life of the assets (five to seven years).
Expenditures for maintenance and repairs are charged to expense
as incurred. Additions, major renewals and replacements that
increase the property's useful life are capitalized. Property
sold or retired, together with the related accumulated
depreciation, is removed from the appropriate accounts and the
resultant gain or loss is included in net income.
F-7
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Income Taxes
The company accounts for its income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". Under Statement 109, a liability method is
used whereby deferred tax assets and liabilities are determined
based on temporary differences between basis used for financial
reporting and income tax reporting purposes. Income taxes are
provided based on tax rates in effect at the time such temporary
differences are expected to reverse. A valuation allowance is
provided for certain deferred tax assets if it is more likely
than not, that the Company will not realize the tax assets
through future operations.
Fair Value of Financial Instruments
Financial accounting Standards Statement No. 107, "Disclosures
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 Company's financial instruments consist
primarily of cash and certain investments.
Per Share Information
The Company computes per share information by dividing the net
loss for the period presented by the weighted average number of
shares outstanding during such period.
NOTE 2 - PROVISION FOR INCOME TAXES
The provision for income taxes for the year ended December 31,
1998 represents the minimum state income tax expense of the
Company, which is not considered significant.
F-8
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS (CONTINUED)
NOTE 3 - LOAN PAYABLE
This loan consists of monies advanced as a short term operating
loan. This loan is unsecured and bears interest at the rate of
10% per annum. Interest will begin to accrue on January 1, 1999.
This loan requires no minimum monthly payment.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The company leases 8556 square feet of manufacturing and office
space under a noncancelable operating lease. This operating
lease terminates on April 14, 2002. In connection with the lease
arrangement, the Company is obligated to make rental payments of
$6123 per month with annual increases of 3%. Future annual
minimum rental commitments are as follows:
Year
1999 $ 75684
2000 $ 77952
2001 $ 80292
2002 $ 24122
Litigation
The Company is not presently involved in any litigation.
Licensing and Consulting Agreements
The Company has currently entered into, and will continue to
enter into, product licensing and consulting agreements that the
Company's board of directors determine will enhance the Company's
ability to market innovative products in a competitive field.
F-9
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - SUBSEQUENT EVENTS
Name Change
On February 26, 1999, the company completed the legal process of
changing its name from Microbial Solutions, Inc. to Skinvisible,
Inc. The subsidiary's name of Manloe Labs, Inc. was also changed
on February 26, 1999 to Skinvisible Pharmaceutical, Inc.
These financial statements have been retitled accordingly.
On February 22, 1999, the company also formed a subsidiary titled
Skinvisible International, Inc. to encompass Canadian and other
international ventures.
Stock Offering
By resolution dated January 8, 1999, the Company's Board of
Directors approved an offering of up to 1,500,000 shares of the
Company's stock at $1.00 per share. The offering was complete
and the company filed a Form D with the U.S. Securities and
Exchange Commission on March 5, 1999.
F-10
<PAGE>
SUPPLEMENTAL INFORMATION
F-11
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998
Operating Expenses
Advertising $ 94,918
Bank Charges 1,217
Consulting - Sales 5,000
Consulting - Technical 17,000
Data Processing 1,434
Depreciation 8,858
Dues and Subscriptions 2,347
Equipment Rental 28,802
Expenses - Canadian Operations 16,778
Insurance - 21,330
Office Expenses 34,161
Outside Labor 696
Management Fees 209,000
Payroll Taxes 43,744
Postage and Freight Out 6,816
Printing 12,354
Professional Fees 74,913
Rent 45,305
Research and Development 384,550
Royalties 48,000
Security 1,653
Tax & License 6,611
Telephone 11,354
Trade Show Expenses 23,666
Utilities 2,527
Wages 170,674
-------
Total Operating Expenses $1,273,708
See Notes to Consolidated Financial Statements
F-12
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
PROFORMA
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Adjustments
Skinvisible And
Skinvisible Pharm. Inc. Eliminations Consolidated
----------- ----------- ------------ ------------
Current Assets
Cash $ 55,861 $ 54,915 $ $ 110,776
Accounts Rec. -0- 4,415 4,415
Inventory -0- 47,530 47,530
Investment 25,000 -0- <25,000> -0-
Prepaid Lic. Fee -0- 50,000 50,000
------- ------- ----------- ----------
Total 80,861 156,860 <25,000> 212,721
Property and Equipment
Furniture and Eq. -0- 85,894 85,894
Lab Build - Out -0- 38,126 38,126
Less Acc. Dep. -0- <8,858> <8,858>
------- ------- ----------- ---------
Net Property
and Equipment -0- 115,162 115,162
Other Asset -
Exclusive Distribution
Rights -0- 200,000 200,000
Intercompany
Receivable 1,534,940 -0- <1,534,940> -0-
--------- ------- ----------- ---------
TOTAL ASSETS $1,615,801 $ 472,022 $<1,559,940> $ 527,883
========== ========= ============ ==========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Adjustments
Skinvisible And
Skinvisible Pharm. Inc. Eliminations Consolidated
----------- ----------- ------------ ------------
Current Liabilities
Accts Payable &
Accrued Exp. $ 15,585 $ 108,138 $ $ 123,723
Loan Payable 725,000 -0- 725,000
--------- ------- ----------- ---------
Total Current
Liabilities 740,585 108,138 848,723
Intercompany
Payable -0- 1,534,940 <1,534,940> -0-
Stockholders' Deficit
Common Stock, $0.001
par value100,000,000
shares authorized,
8,200,000 shares
issued 8,200 25,000 <25,000> 8,200
Additional paid
in capital 936,400 -0- 936,400
Accumulated
deficit <69,384> <1,196,056> <1,265,440>
--------- ------- ----------- ---------
Total Stockholders'
Deficit 875,216 <1,171,056> <25,000> <320,840>
--------- ------- ----------- ---------
TOTAL LIABILITIES AND
STOCKHOLDER'S
DEFICIT $1,615,801 $472,022 $<1,559,940> $ 527,883
========== ========= ============ ==========
See Notes to Consolidated Financial Statements
F-13
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
PROFORMA
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1998
Adjustments
Skinvisible And
Skinvisible Pharm. Inc. Eliminations Consolidated
----------- ----------- ------------ ------------
Revenues $ -0- $ 12,269 $ 12,269
Cost of Sales
Beg. Inventory -0- -0- -0-
Purchases -0- -0- -0-
---------- --------- ------------
Total Available -0- 51,531 51,531
Less: Ending
Inventory -0- <47,530> <47,530>
---------- --------- ------------
Total Cost of Sales -0- <4,001> <4,001>
---------- --------- ------------
Gross Profit -0- 8,268 8,268
Operating
Expenses <69,384> <1,204,324> <1,273,708>
---------- --------- ------------
Loss Before
Provision for
Income Taxes <69,384> <1,196,056> <1,265,440>
Provision for
Income Taxes -0- -0- -0-
---------- --------- ------------
Net Loss <69,384> <1,196,056> <1,265,440>
Deficit,
Beginning of
Period -0- -0- -0-
Accumulated Deficit,
End of Period $ <69,384>$<1,196,056> $<1,265,440>
======== ========= =========
See Notes to Consolidated Financial Statements
F-14
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
PROFORMA
CONSOLIDATED STATEMENT OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998
Adjustments
Skinvisible And
Skinvisible Pharm. Inc. Eliminations Consolidated
----------- ----------- ------------ ------------
Operating Expenses
Advertising $ $ 94,918 $ 94,918
Bank Charges 532 685 1,217
Consulting-Sales 5,000 5,000
Consulting-Technical 17,000 17,000
Data Processing 1,434 1,434
Depreciation 8,858 8,858
Dues and Sub. 2,347 2,347
Equipment Rental 28,802 28,802
Expenses --
Canadian Operations 16,778 16,778
Insurance 21,330 21,330
Office Exp. 16,925 17,236 34,161
Outside Labor 696 696
Management Fees 209,000 209,000
Payroll Taxes 43,744 43,744
Postage &
Freight Out 6,816 6,816
Printing 2,572 9,782 12,354
Professional
Fees 49,355 25,558 74,913
Rent 45,305 45,305
R&D 384,550 384,550
Royalties 48,000 48,000
Security 1,653 1,653
Tax and License 6,611 6,611
Telephone 11,354 11,354
Trade Show Expenses 23,666 23,666
Utilities 2,527 2,527
Wages 170,674 170,674
-------- ---------- ----------
Total
Operating
Expenses $ 69,384 $1,204,324 $1,273,708
======== ========= ==========
See Notes to Consolidated Financial Statements
F-15
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the inclusion of our audit report dated March 10, 1999,
on the consolidated financial statements of Skinvisible, Inc. for the period
ended December 31, 1998 in the Company's Form 10-SB. We also consent to the
application of such report to the financial information in the Form 10-SB,
when such financial information is read in conjunction with the financial
statements referred to in our report.
Westlake Village, California /S/ Sarna & Company
April 19, 1999 Certified Public Accountants
<PAGE>
PART III
INDEX TO EXHIBITS
Exhibit 1: Articles of Incorporation
Exhibit 2: Amendments to Articles of Incorporation: 3-19-98 &
2-26-99
Exhibit 3: Bylaws
Exhibit 4: Manufacturing and Marketing License Agreement
Exhibit 5: Letter Agreement Modifying the Manufacturing and
Marketing License Agreement
Exhibit 6: Acquisition Agreement of Manloe Labs
Exhibit 7: Letter Agreement Amending the Agreement for
Acquisition of Manloe Labs
Exhibit 8: Agreement between the Company and Aquastel Pacific
Environmental Technology of Hong Kong
Exhibit 9: Distribution Agreement between SVP and Essentially
Yours Industries Corp.
Exhibit 10: Distribution Agreement between SVP and EYI
International Limited
Exhibit 11: Agreement between the Company and Gerald Gauthier
Exhibit 12: Agreement between the Company and Roger Hocking
Exhibit 13: Agreement between the Company and Randall
Cunningham
Exhibit 14: Financial Data Schedule
29
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant caused this Form 10-SB Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
SKINVISIBLE, INC.
Date: November 1, 1999
By: \S\ Terry Howlett
__________________________________
TERRY HOWLETT Director, President
and Chief Executive Officer
30
