<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SKINVISIBLE, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 88-0344219
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
Terry Howlett File No. ___________
6320 S. Sandhill Road, Suite 10
Las Vegas, Nevada 89120
- ------------------------------- ----------
(Name and address of principal (Zip Code)
executive offices and agent for service
of process
Registrant's telephone number, including area code: (702) 433-7154
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. | X |
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |__|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following box. |__|
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------
TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (1) PRICE (2) FEE (2)
- --------------------------------------------------------------------------
Common Stock 2,537,500 $2.25 $5,709,375 $1,587.21
- --------------------------------------------------------------------------
(1) Based on closing sales price on March 9, 2000.
(2) Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457 under the Securities Act.
(3) This includes: (a) 1,450,000 shares held by the selling
shareholders; and (b) 1,087,500 shares underlying warrants that are
held by the selling shareholders.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
COPIES OF COMMUNICATIONS TO:
Michael A. Cane, Esq.
101 Convention Center Dr., Suite 1200
Las Vegas, NV 89109
(702) 312-6255
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SUBJECT TO COMPLETION, Dated March 13, 2000
PROSPECTUS
SKINVISIBLE, INC.
Up to 2,537,500 SHARES
COMMON STOCK
----------------
The selling shareholders named in this prospectus are selling all
of the shares of common stock sold through this prospectus. See the
section entitled "Selling Shareholders."
Our common stock is currently traded on the National Association of
Securities Dealer's over-the-counter bulletin board system. The
closing price of the stock on March 9, 2000 was $2.25 per share.
----------------
The purchase of the securities offered through this prospectus
involve a high degree of risk. See section entitled "Risk
Factors" on pages 4 -8.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
- ----------------
The Date Of This Prospectus Is: March 13, 2000
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TABLE OF CONTENTS
PAGE
Summary.............................................................. 3
Risk Factors......................................................... 4
Use of Proceeds...................................................... 9
Determination of Offering Price...................................... 9
Dilution............................................................. 9
Price Range Of Common Stock And Dividend Policy...................... 9
Selected Consolidated Financial Data................................. 9
Selling Shareholders................................................. 10
Plan of Distribution................................................. 16
Description of Securities to Be Registered........................... 18
Interests of Named Experts and Counsel............................... 18
Description of Business.............................................. 18
Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 26
Management........................................................... 28
Security Ownership Of Certain Beneficial Owners and Management....... 30
Certain Relationships and Related Transactions....................... 31
Legal Matters........................................................ 32
Experts.............................................................. 32
Available Information................................................ 33
Index to Financial Statements........................................ 34
2
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SUMMARY
The following summary is only a shortened version of the more
detailed information, exhibits and financial statements appearing
elsewhere in this prospectus. Prospective investors are urged to
read this prospectus in its entirety.
We are in the business of developing, manufacturing and selling
skin protection products designed to control the effects of
occupational hand disease, as well as to prevent contamination. We
have completed the development of our basic products, but continue
to research and develop potential additional products.
Our principal executive offices are at 6320 S. Sandhill Road, Suite
10, Las Vegas, Nevada, 89120 (telephone no.: (702) 433-7154).
On October 15, we began selling 1,450,000 shares of our common
stock to investors in a private offering at $2.25 per share. Each
investor who purchased shares in this offering also received a
warrant to purchase one share of common stock for every two shares
of common stock purchased. The exercise price of these warrants is
$2.25 per share if exercised on or before October 15, 2000, and
$3.00 per share if exercised after that date but before close of
business on October 15, 2001. All warrants issued must be
exercised on or before October 15, 2001.
We eventually sold 1,450,000 shares of common stock and issued
1,087,500 warrants, including 362,500 warrants to brokers and
finders for their services in selling the stock. See the section
entitled "Description Of Securities To Be Registered."
As part of this offering, we also signed and agreed to a
registration rights agreement in which we are obligated to register
all shares of common stock sold in the offering and any shares of
common stock issuable upon exercise of the warrants. See the
section entitled "Security Ownership of Certain Beneficial Owners
and Management" - "Registration Rights" for a discussion of the
registration rights agreement.
The common stock offered by the selling shareholders through this
prospectus is the common stock they purchased in the offering and
the common stock underlying their warrants. We are filing this
registration statement in order to satisfy our obligation to the
selling shareholders under the registration rights agreement.
Securities Being Offered: Up to 2,537,500 shares of common stock,
See Section entitled "Description Of Securities To Be Registered."
Securities Issued And to be Issued: As of the date of this
prospectus, we have 11,670,333 shares of common stock issued and
outstanding. In addition, we have warrants issued that may be
converted into 1,087,500 shares of common stock. Therefore, upon
conversion of these warrants, there could be as many as 12,757,833
shares of common stock issued and outstanding. Existing
shareholders will sell all of the common stock sold under this
prospectus. See Section entitled "Description Of Securities To Be
Registered".
3
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Use of Proceeds: We will not receive any proceeds from the sale of
the common stock by the selling shareholders. See "Use Of
Proceeds."
RISK FACTORS
An investment in the securities offered through this prospectus is
highly speculative and subject to a high degree of risk. Only those
who can bear the risk of loss of their entire investment should
participate. Prospective investors should carefully consider the
following factors, among others, before making an investment in the
common stock described in this document.
If We Do Not Get Additional Financing, There is a High Risk that
Our Business May Fail.
While we have just completed a financing through the sale of common
stock, we will not be able to fully expand or operate our business
as planned without obtaining additional financing within the next
few months. If this financing is not available or obtainable,
investors may lose a substantial portion or all of their investment
and our business may fail. We currently have no immediate means
for obtaining this additional financing. Consequently, we cannot
assure investors that additional
financing, when necessary, will be available on acceptable terms,
or at all.
Because We Are a New Venture with Little Experience in the
Operation of Our Business and Sale of Our Products, There is a High
Risk that Our Business May Fail.
We were only recently incorporated, and, to date, have been
involved primarily in organization and product development.
Moreover, to the extent we have developed and implemented sales and
marketing plans for our products over the past year, our efforts
have failed almost completely. Potential investors should be aware
that there is a substantial risk of failure associated with new
businesses because of problems encountered in connection with their
formation and operation. These problems include, but are not
limited to:
(1) problems relating to the marketing and sale of a new product
in the marketplace;
(2) the entry of new competition; and
(3) unknown or unexpected additional costs and expenses that may
exceed current estimates.
We have only a limited operating history upon which to base any
projection of the likelihood our marketing and sales efforts will
prove successful in the future, and thus we cannot assure potential
investors that we will achieve profitable operations.
Because Our Products are New and Untested in the Market Place,
There is a Risk They Will Not Sell in Sufficient Quantities or Fast
Enough to Support Business Operations.
Over the past year, as we have introduced our products to the
marketplace, we have faced a number of problems in generating sales
and have, as a result, failed to sell a significant volume of our
products. We have thus incurred large losses and have made several
changes in our marketing and
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sales plans. While we hope to sell our products in greater volume in
the future, we cannot provide any assurance of such a result; nor can we
predict the volume of sales that will occur or even if sales will be
sufficient to support future operations. Numerous factors beyond our control
may effect the marketability of our products. These factors include:
1. consumer demand;
2. competition;
3. market fluctuations;
4. the proximity and capacity of suppliers; and
5. government regulations, including regulations relating to:
(a) food and drug administration
(b) prices,
(c) taxes,
(d) royalties,
(e) importing of products,
(f) exporting of products, and
(g) environmental controls.
The exact effect of these factors cannot be accurately predicted,
but may result in our not receiving an adequate return on invested
capital.
If Our Products Prove to be Defective, We Will Be Liable for
Resulting Losses Which May Cause the Business to Fail.
We have only a small track record upon which to evaluate the use
and effects of our products in actual use on consumers. We can
provide no assurance that our product line will operate as designed
or not cause injury to persons. For example, someone may have an
allergic reaction or sustain injury in some other way after using
our hand care products and then seek to hold us responsible for
losses incurred as a result. In such a case, we may experience
losses, or, in severe cases, be unable to continue operations.
Because The Hand Care Products Industry is Extremely Competitive,
There is a Risk that Products Developed by Competitors Will Reduce
Our Profits or Force Us Out of Business.
Competition among hand care products is strong and presents a
significant barrier to entry by new products such as the ones we
produce. Consumers tend to purchase and use products produced or
distributed by manufacturers with recognizable names. We have not
yet developed such a recognizable name in the marketplace. In
addition, we have identified a number of competitors who offer
products that appear substantially similar to ours, a number of
which are significantly larger and more experienced in the
pharmaceutical marketplace than us. Furthermore, we continually
face competition from companies that currently market, or are
developing products similar to those we offer. Many of these
companies have significantly greater marketing, financial and
managerial resources than we do. In the face of such competition,
our products may become obsolete and our business may fail.
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Because Our Products Are Used by Consumers, we may be Subject to
Potential Product Liability Claims.
Since we manufacturer and develop hand care products that are sold
and used by consumers, and, in particular, applied directly to an
individual's skin, we may be named as a defendant in a product
liability claim. While we currently maintain insurance in amounts
we believe are adequate to cover such potential claims, a judgment
however could be awarded that exceeds the insurance limits.
Judgments against us with respect to all such claims in the future
could have an adverse effect on our financial condition, results of
operations and cash flow.
If Our Stock is De-listed, There is a High Risk that the Market
Value of our Stock Would Decline and We and Investors Would Suffer
Other Problems.
In order for our shareholders to sell their common stock through
the NASD Over-The-Counter Bulletin Board Market, we must continue
to meet the Bulletin Board's listing qualifications. De-listing
from the Bulletin Board or other market could cause, among other
things:
1. a decline in the market price of the common stock;
2. difficulty in obtaining future financing;
3. difficulty in using common stock as consideration for
acquisitions; and
4. difficulty among investors in selling their stock
Because We Are a New, Small Company With an Untested Market, The
Price of Our Stock is Very Volatile and May Decline.
Recently, the stock market in general, and the shares of health and
hand care companies in particular, have experienced significant
price fluctuations. These broad market and industry fluctuations
may cause the market price of our common stock to decline
dramatically. Factors such as quarterly fluctuations in results of
operations, the timing and terms of future acquisitions and general
conditions in the hand care industry may have a significant impact
on the market price of the stock. As a new small company, we are
particularly susceptible to such fluctuations in stock price.
Because of the Nature of Our Products, We May Be Subject to
Government Regulations or Laws that Increase Our Costs of
Operations or Decrease Our Ability To Generate Income.
We are subject to United States and international laws and
regulations regarding the development,
production, transportation and sale of our products. As a result,
we may be required to comply with certain restrictive regulations,
or potential future regulations, rules, or directives. Such
potential regulatory conditions or compliance with such regulations
may increase our cost of operations or decrease our ability to
generate income.
If the FDA or Others Were to Take Action Against Us, We Could be
Fined or Incur Significant Expenses in Defending Ourselves Against
Claims of Product Misbranding
Our product, as currently labeled, is not in compliance with US
Federal Food and Drug Administration requirements. Our consultants
have only recently alerted us to this issue and we are
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currently taking action to alleviate the problem. If however, the
FDA or other agencies or individuals were to take action against us for
such acts, we could be fined and incur significant expenses in
defending ourselves.
If the Selling Shareholders Sell a Large Number of Shares All at
Once or In Blocks, The Market Price of Our Shares Would Most Likely
Decline.
The selling shareholders are offering all of the common stock
offered through this prospectus. The selling shareholders are not
restricted in the price they can sell the common stock. Shares sold
at a price below the current market price at which the common stock
is trading may cause that market
price to decline. The outstanding shares of common stock covered
by this prospectus and the shares of common stock covered by this
prospectus that are issuable upon the exercise of our warrants,
represent 19.89% of the shares that would be outstanding if these
warrants were exercised as of February 29, 2000.
If the Selling Shareholders Exercise Their Warrant Rights, The
Ownership Percentage Interest Of Existing Shareholders Will Be
Diminished and The Price of Our Stock May Decline.
We have issued warrants to purchase 1,087,500 shares of common
stock at a price of $2.25 per share if exercised on or before
October 15, 2000, and $3.00 per share if exercised after that date
but before close of business on October 15, 2001. Investors could
experience substantial dilution of their ownership percentage upon
exercise of these warrants. Moreover, investors would experience a
similar effect upon the exercise of the 1,292,167 stock options
that we have issued.
In addition, investors should be note that the exercise price of
the warrants and options will often at the time of exercise be
below the market price of the common shares. The exercise of such
a large amount of stock, especially if close in time, may have a
substantial negative effect on the market price of the common
stock.
If We are Unable to Maintain the Effectiveness of this Registration
Statement, We Will Be Subject to Substantial Penalties.
We are subject to a registration rights agreement that requires us
to register certain of our common stock with the Securities
Exchange Commission. Under this agreement, we must also maintain
this registration until all of the covered securities are sold or
can be sold publicly without benefit of the
registration. If we are unable to obtain or maintain this
registration, we will be subject to substantial monetary penalties.
If We Are Unable to Protect Our Technology From Use By Competitors,
There is a Risk that We Will Sustain A Substantial Loss
Our success will depend, in part, on our ability to obtain and
enforce intellectual property protection for our technology in both
the United States and other countries. As of January 2000, we filed
a patent applications in the United States Patent and Trademark
Office. We have not, as yet, received a response back from the
government regarding this application and cannot provide investors
with
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any assurance that any patent will ever be issued or that we
will be able to protect the key aspects of our technology. In
addition, we cannot assure investors that any intellectual property
rights eventually issued or exerted by us will not be challenged,
invalidated or circumvented, or that our competitors will not
independently develop or patent technologies that are substantially
equivalent or superior to ours. Furthermore, if an action is
brought, a court may find that we have infringed on patents owned
by others. We may have to go to court to defend our rights or
products, to prosecute infringements, or to defend ourselves from
infringement claims by others. We are, however, not aware of any
such litigation at this time.
Patent litigation is expensive and time-consuming, and well-funded
adversaries can use such actions as part of a strategy for
depleting the resources of a small company such as ours. We cannot
assure investors that we will have sufficient resources to
successfully prosecute our interests in any such litigation that
may be brought.
If We lose Key Personnel or Management, We May Lose Business Sales
or Be Unable to Otherwise Fully Operate Our Business.
Due to the highly technical nature of our business, we are
dependent on certain key personnel, specifically James Roszell, our
chief chemist. We depend on the principal members of our
management staff, the loss of any of whom could impair the
development or sale of our products and projects. Our success
will be largely dependent on the decisions made by members of
management. Furthermore, we may depend on our ability to attract
and retain additional qualified personnel to manage certain
business interests. We may have to recruit qualified personnel
with competitive compensation packages, equity participation and
other benefits which may reduce the working capital available for
our operations. Management may also seek to obtain outside
independent professionals to assist in assessing the merits and
risks of any business proposals as well as assisting in the
development and operation of any projects.
Because Forward Looking Statements are Inherently Unreliable,
Investors Should Not Rely on Such Assessments In Making Their
Investments Decisions.
The information contained in this section and elsewhere may at
times represent our best estimates of our future financial and
technological performance, based upon assumptions believed to be
reasonable. We make no representation or warranty, however, as to
the accuracy or completeness of any of these assumptions, and
nothing contained in this document should be relied upon as a
promise or representation as to any future performance or events.
Our ability to accomplish our objectives, and whether or not we
will be financially successful is dependent upon numerous factors,
each of which could have a material effect on the results obtained.
Some of these factors are within the discretion and control of
management and others are beyond management's control. Our
management considers the assumptions and hypothesis used in
preparing any forward-looking assessments of profitability
contained in this document to be reasonable; however, we cannot
assure investors that any projections or assessments contained in
this document, or otherwise made by management, will be realized or
achieved at any level. Prospective investors should have this
prospectus reviewed by their personal investment advisors, legal
counsel or accountants to properly evaluate the risks and
contingencies of purchasing our common stock.
8
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
offered through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
The offering price of the common stock will not be determined by us
but by market factors and the independent decisions of the selling
shareholders. See section entitled "Selling Shareholders".
DILUTION
As of February 29, 2000, 11,670,333 shares of our common stock were
issued and outstanding.
We have issued warrants to purchase 1,087,500 shares of our common
stock which if exercised would represent 8.52% of our total
outstanding common stock and have the effect of diluting the
ownership interest of existing shareholders.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is traded on the OTC Bulletin Board under the
symbol "SKVI". Our shares began trading on January 8, 1999. The
high and the low bids for our 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 $5.25 $2.50
4th Quarter 1999 $3.69 $2.25
1st Quarter 2000 $4.13 $2.13
The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
As of February 29, 2000, we had approximately 84 registered
shareholders. We have never issued any dividends and are not
likely to do so in the near future. There are no legal
restrictions on our ability to pay dividends on our common stock.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table provides a summary of certain of our financial
data for the years 1998 and 1999. The information provided in this
table is qualified by the more complete information contained in
the audited and un-audited consolidated financial statements
provided later in this document.
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All amounts shown below, unless otherwise noted, are in $1000s
increments.
1999 1998
---- ----
Total Revenue 169 12
Operating Income (loss) (2885) (1274)
Income (loss) before
Income Tax Expense (2885) (1274)
Net Income (loss) (2885) (1274)
Income (loss) per share (.28) (.16)
Total assets 2674 528
Current portion of notes
Payable and L/T debt 726 725
Accounts Payable &
Accrued Expenses 103 124
Notes payable and L/T debt.
Less Current portion 0 0
Total Shareholder
Equity (deficit) 1845 (312)
Dividends declared and
Paid 0 0
- -----------
SELLING SHAREHOLDERS
The common stock offered through this prospectus consists of:
* 1,450,000 outstanding shares of common stock that were sold
to the selling shareholders by us through a private
placement exempt under Rule 506 of Regulation D of the US
Securities Act of 1933; and
* 1,087,500 shares of common stock underlying warrants issued
to the selling shareholders.
The following table provides as of February 29, 2000, information
regarding the beneficial ownership of our common stock held by each
of the selling shareholders, including:
* the shares they owned prior to this offering;
* the total number of shares that are to be offered for each,
including warrant shares;
* the total number of shares that will be owned by each upon
completion of the offering;
* the percentage owned by each; and
* the name of specific beneficial owner(s) of any corporate shareholders.
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TOTAL
SHARES TOTAL NUMBER SHARES TO
OWNED OF SHARES TO BE OWNED
PRIOR BE OFFERED FOR UPON COM-
NAME OF TO THIS SELLING PLETION OF
SELLING OFFER- SHAREHOLDERS THIS PERCENT BENEFICIAL
STOCKHOLDER ING(1) ACCOUNT(2) OFFERING OWNED(3) OWNERS
- --------------- -------- ------------- ---------- -------- ----------
J.W.C. Van Tintelen
Kreitenborg 7,
Zevenbergen, 4761 ST,
Netherlands NIL 7,500 NIL >1%
J.J. Laeven
Peperstraat 26,
Bruchem 5314 AN,
Netherlands NIL 100,500 NIL >1%
J. Roos
Ripperdapark 23,
Haarlem 2011 KD,
Netherlands NIL 15,000 NIL >1%
A.C. Van Rhee
Merellaan 12,
Lieshout 5737 PK,
Netherlands NIL 7,500 NIL >1%
K. Van 't Blik
Sterkenburglaan 12,
Arnhem 6825 AAJ,
Netherlands NIL 15,000 NIL >1%
P.W.R. Hazeleger
Rubenslaan 165,
Ede 6717 VE,
Netherlands NIL 45,000 NIL >1%
F. Pronk
A. van Lieropstraat 31,
Steenergen 4651 ZX,
Netherlands NIL 15,000 NIL >1%
L.H. Heimans
Eusebiusplein 3,
Arnhem 6811 HE,
Netherlands NIL 15,000 NIL >1%
AAA Trust
Postbus 3272,
Amsterdam 1001 AB,
Netherlands NIL 306,000 NIL 2.62% A. deHaan
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R. de Groot
Roekstraat,
Leeuwarden 8916 AK,
Netherlands NIL 7,500 NIL >1%
C. van der Waal
Brederode 6,
Landsmeer 1121 CW,
Netherlands NIL 15,000 NIL >1%
J.J. Eekhof
Straatweg 193,
Rotterdam 3054 AD,
Netherlands NIL 67,500 NIL >1%
M. Groenewold
Beatrixlaan 29,
Ede 3045 PR,
Netherlands NIL 15,000 NIL >1%
R.F.A. Talan
Brederode 4,
Duiven 6922 BM,
Netherlands NIL 9,000 NIL >1%
W.M. Pieters
A. van den Sandelaan 59,
Schilde 2970,
Belgium NIL 15,000 NIL >1%
P. Spanjaard
Weissenbruchstraat 16,
Arnhem 6813KK,
Netherlands NIL 15,000 NIL >1%
J. Marinc
Louisahoeve 36,
Hoofddorp 2131 MR,
Netherlands NIL 7,500 NIL >1%
E.M. Sijpkens
Hollandseweg 378,
Wageningen 6705 BE,
Netherlands NIL 30,000 NIL >1%
L. Van 't Riet
Oude Veleperweg 9,
6824 HA, Arnhem,
Netherlands NIL 30,000 NIL >1%
H. Veenendaal
Rijmland 12, 6865 TJ,
Doorwerth,
Netherlands NIL 45,000 NIL >1%
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Finles Vermogensbeheer B.V.
Van Sijpesteijnkade 23,
3500 GP Utrecht,
Netherlands NIL 150,000 NIL 1.29% Van
Loosbroek
P. Meij van der
Krimkade 37, 2251 jw,
voorschoten,
Netherlands NIL 150,000 NIL 1.29%
M. Perridon
Straatweg117, 3054 AC,
Rotterdam,
Netherlands NIL 67,500 NIL >1%
Choppinet SPRL
Av. W Churchill 22,
B-1180, Bruxelles,
Netherlands NIL 120,000 NIL 1.03% M. Jaz
J. Mellegers
M. Hobbemastr 18,
2102 BK,
Heemstede,
Netherlands NIL 30,000 NIL >1%
Rush & Co.
PO Box 7678,
Doha, Qater NIL 150,000 NIL 1.29% George
Saliba
Rizk
Zellinvest SA
3 Rue Albert Gos,
PO Box 74,
CH 1211 Geneva 25,
Switzerland NIL 37,500 NIL >1% Fred
Zellweger
Monique Steinbruchel(4)
Rue de l'Arquebuse 8,
Case Postal 5359,
1211 Geneva,
Switzerland NIL 15,000 NIL >1%
KBW Wesselius
EffectenBank NV
PO Box 328,
1000 AH Amsterdam NIL 37,500 NIL >1% Richard
ten Cate
Bruce Elliott
Rue de l'Arquebuse 8,
Case Postal 5359,
1211 Geneva,
Switzerland NIL 45,000 NIL >1%
J. Veenendaal
Menthenberseweg 55,
Arnhem 6816 PR NIL 46,500 NIL >1%
Netherlands
M.A.L.M. Willems
Celebesstraat 75,
'S Gravenhage 2585 TG NIL 15,000 NIL >1%
Netherlands
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Regenboog Beheer B.V.
Weissenbruchstraat 23,
Arnhem 6813 KJ NIL 30,000 NIL >1% L.J.
Netherlands Bistenbosch
L.L. Cosman
Esmoriteitschouw 58,
Zoetermeer 2726 KK NIL 4,500 NIL >1%
Netherlands
E.G. Jansse
Kraanvogelstraat 34,
Delft 2623 MZ NIL 6,000 NIL >1%
Netherlands
M.A. van Zijl
Aquamarijin 6,
Mijdrecht 3641 XG NIL 15,000 NIL >1%
Netherlands
A.T.M. Buisman
Johanniterlaan 7,
Harderwijk 3841 DS NIL 30,000 NIL >1%
Netherlands
J.I.E.M. Nouwens
Braakdonk 5,
Breda 4824 DX NIL 7,500 NIL >1%
Netherlands
B.D. Schot
Nieuwe Haven 93,
Zierikzee 4301 DK NIL 7,500 NIL >1%
Netherlands
J.J.M. Schouten
Loolaan 96,
Voorburg 2271 TP NIL 10,500 NIL >1%
Netherlands
van Hoeken-Korink
Vriezekoop 71,
Leimuiden 2451 CR NIL 7,500 NIL >1%
Netherlands
I. Veenendaal
Menthenberseweg 55,
Arnhem 6816 PR NIL 1,500 NIL >1%
Netherlands
R. Veenendaal
Menthenberseweg 55,
Arnhem 6816 PR NIL 1,500 NIL >1%
Netherlands
14
<PAGE>
Samuel D'Amato
887 North Maple
Street,
Ephrata, PA
17522 USA NIL 30,000 NIL >1%
Frances Landau Trust
17728 Buckingham,
Boca Raton, FL
33496 USA NIL 15,000 NIL >1% W. Landan
Mitchel Kobrau
7523 NW 64 Terrace,
Parkland, FL
33067 USA NIL 30,000 NIL >1%
Michael Pruitt
11502 Stonebriar
Drive,
Charlotte, NC
78277 USA NIL 15,000 NIL >1%
James Haberman
38 Kenwood Drive,
Tenafly, NJ 07670
USA NIL 15,000 NIL >1%
Digital Criteria
Technology
21 Chipstead Road,
Don Mills, ON
M3B 3E5 Canada NIL 7,500 NIL >1% L. Dreye
373823 Ontario Ltd
21 Chipstead Road,
Don Mills, ON
M3B 3E5 Canada NIL 7,500 NIL >1% L. Airesgil
Nico Pronk
1140 SW 21st Ave.,
Boca Raton. FL
33486 USA NIL 90,000 NIL >1% A.R.
Catinella
570 Golden
Harbour Dr.,
Boca Raton, FL
33432 USA NIL 15,000 NIL >1%
Anthony Vespucci
Trust
4740 S. Ocean Blvd.,
Apt. 1515, Highland
Beach,
FL 33487 USA NIL 60,000 NIL >1% Anthony
Vespucci
Ormond Trust
Lister House,
TheParade,
St. Helier,
Jersey C.I.
Cannel Islands,
JE2 3QQ NIL 60,000 NIL >1% Jane Dee
European
Trust
Co. Ltd
Finles
Vermogensbeheer BV
Van
Sijpesteijnkade 23,
3500 GP Utrecht
Netherlands NIL 15,000 NIL >1%
Sander Brouwer
deDors5,
1852 AG Heiloo,
Netherlands NIL 7,500 NIL >1%
15
<PAGE>
P8 Automation
Holding BV
Bauggensingel
Zuid 8,
3823 BK
Amersfoort,
Netherlands NIL 6,000 NIL >1% R. Peet
Kess Voss
Snelleveldplein 4,
1107 VZ Amsterdam,
Netherlands NIL 1,500 NIL >1%
John McCallum
61 Kilworth Park Dr.
RR#3
Komoka Ont.
Canada N06 1R0 20,000 36,750 20,000 >1%
Uli Finance SA(4)
Rue de l'Arquebuse 8,
Case Postal 5359,
1211 Geneva,
Switzerland 300,000(4) 47,500 300,000 2.98% J. Stein-
bruchel
Noble Financial
Group
Boca Corporate
Plaza
1801 Clint Moore Rd.,
Suite 110
Boca Raton, FL
33487 NIL 57,500 NIL >1% Nico
Pronk(5)
Van Ernst Jakobs NV
Parnasuweg 103,
107 De Amsterdam KVK
Amsterdam NR NIL 252,250 NIL 2.16% Ron
Pieters
- ------------------------------------------------------------------------------
(1) Except as otherwise noted, the named party beneficially owns
and has sole voting and investment power over all shares or rights
to these shares.
(2) Assumes that none of the selling shareholders sells shares of
common stock not being offered hereunder or purchases additional
shares of common stock.
(3) Based on 11,670,333 shares outstanding on February 29, 2000.
(4) Monique Steinbruchel is the wife of Jost Steinbruchel, and Uli
Finance SA is a business owned by Jost Steinbruchel who is one of
our directors. The 300,000 shares previously owned are owned in
Jost Steinbruchel's own name.
(5) Owns 90,000 shares in his personal name that is being offered
in this offering.
None of the selling shareholders or their beneficial owners have
had a material relationship with us other than as a shareholder as
noted above at any time within the past three years.
PLAN OF DISTRIBUTION
The selling shareholders, or their respective pledgees, donees,
transferees or other successors in interest, may sell some or all
of the common stock in one or more transactions, including block
transactions:
(1) on the NASD Over-the-Counter Bulletin Board, or on such
other market on which the common stock may from time to time
be trading;
(2) in privately negotiated transactions;
(3) through the writing of options on the common stock;
16
<PAGE>
(4) in short sales; or
(5) in any combination of these methods of distribution.
The sales price to the public may be:
(1) the market price prevailing at the time of sale;
(2) a price related to such prevailing market price; or
(3) such other price as the selling shareholders determine
from time to time.
The common stock may also be sold in compliance with the Securities
and Exchange Commission's Rule 144.
The selling shareholders, or their respective pledgees, donees,
transferees or other successors in interest, may also sell the
common stock directly to market makers acting as principals or
brokers or dealers, who may act as agent or acquire the common
stock as principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling
shareholders, or, if they act as agent for the purchaser of such
common stock, from such purchaser. The selling shareholders will
pay the usual and customary brokerage fees . Brokers or dealers may
agree with the selling shareholders to sell a specified number of
shares at a stipulated price per share and, to the extent such
broker or dealer is unable to do so acting as agent for the selling
shareholders, to purchase, as principal, any unsold shares at the
price required to fulfill the respective broker's or dealer's
commitment to the selling shareholders. Brokers or dealers who
acquire shares as principals may thereafter resell such shares from
time to time in transactions in the over-the-counter market, in
negotiated transactions or otherwise, at market prices prevailing
at the time of sale or at negotiated prices, and in connection with
such resales may pay or receive commissions to or from the
purchasers of such shares. These transactions may involve cross and
block transactions that may involve sales to and through other
brokers or dealers. If applicable, the selling shareholders also
may have distributed, or may distribute, shares to one or more of
their partners who are not affiliated with us. Such partners may,
in turn, distribute such shares as described above. We are not
certain whether the selling shareholders will sell all or even a
portion of their common stock.
We are bearing all costs related to the registration of the common
stock. All commissions or other fees payable to brokers or dealers
in connection with any sale of the common stock will be borne by
the selling shareholders or other party selling such common stock.
The selling shareholders must comply with the requirements of the
Securities Act and the Securities Exchange Act in the offer and
sale of the common stock. In particular, during such times as the
selling shareholders may be deemed to be engaged in a distribution
of the common stock, and therefore be considered to be an
underwriter under the Securities Act, it must comply with
applicable law and may, among other things:
(a) not engage in any stabilization activities in connection with
our securities;
(b) furnish each broker or dealer through which common stock may be
offered such copies of this prospectus, as amended from time to
time, as may be required by such broker or dealer; and
17
<PAGE>
(c) not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as
permitted under the Securities Exchange Act.
DESCRIPTION OF SECURITIES TO BE REGISTERED
We have 100,000,000 authorized common shares with a par value of
$0.001 per share of common stock, of which 11,670,333 are currently
outstanding, including the 1,450,000 shares issued to the selling
shareholders.
We also have outstanding options to purchase 380,167 shares of
common stock at a price of $1.50 per share, 300,000 shares at $1.65
per share and 612,000 shares at $2.50 to $4.00 per share under our
incentive stock option plan dated January 8, 1999. These option
shares are not being registered by this registration statement.
Holders of our common stock are entitled to one vote for each share
on all matters voted on by the shareholders. They do not have
cumulative voting rights in the election of directors or for any
other purpose. The last meeting of shareholders was held in
December 22, 1999.
Holders of our 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.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or
certified any part of it or having given an opinion upon the
validity of the securities being registered or upon other legal
matters in connection with the registration or offering of the
common stock was employed on a contingency basis, or had, or is to
receive, in connection with the offering, a substantial interest,
direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the
registrant or any of its parents or subsidiaries as a promoter,
managing or principal underwriter, voting trustee, director,
officer, or employee.
Michael A. Cane of Cane & Company, LLC, our independent legal
counsel, has provided an opinion on the validity of our common
stock.
DESCRIPTION OF BUSINESS
Investors are cautioned that forward-looking statements are
inherently uncertain. Actual performance and results may differ
materially from those that are projected or suggested. Additional
information concerning certain risks and uncertainties that could
cause actual results to differ materially from those projected or
suggested may be identified from time to time in our public filings
and announcements.
Corporate History and Subsidiaries
We were incorporated in Nevada on March 6, 1998 under the name
"Microbial Solutions, Inc.". On
18
<PAGE>
February 26, 1999, we filed an amendment to our articles of incorporation
changing our corporate name to "Skinvisible, Inc."
We carry on our basic business operations, including all research,
development and manufacturing of our products, through a wholly
owned subsidiary, Skinvisible Pharmaceuticals, Inc., a Nevada
Corporation formed on June 30, 1995 under the name Manloe Labs Inc.
We also have two other wholly owned subsidiaries that are largely
inactive. They are:
Name of Subsidiary Date of Jurisdiction of
Incorporation Incorporation
- ------------------ ------------- ---------------
Skinvisible International, Inc. February 22, 1999 Nevada
Skinvisible Pharmaceuticals
(Canada) Inc. October 20, 1998 Canada (federal)
Acquisition of Skinvisible Pharmaceuticals
We acquired all of the issued and outstanding shares of SVP from
Roger Hocking in exchange for the payment to him of $200,000 in
cash and 275,000 of our restricted common shares. The closing of
the acquisition of SVP was completed on March 31, 1998. The SVP
acquisition agreement is attached as an exhibit to our form 10SB
filing with the Securities Exchange Commission. There was no
affiliation between Hocking and us or any of our directors or
officers prior to this purchase.
Manufacturing and Marketing License Agreement
On March 19, 1998, SVP entered into a Manufacturing and Marketing
License Agreement with Jazor Laboratory Group, Inc. and Bruce
Jezior. In this agreement, Jazor granted to SVP the exclusive
right and license to manufacture, distribute, market and sell the
products developed by Jazor. The products included a proprietary
polymer base known as Jatex, and two products developed by Jazor
using this polymer base, Viro Shield and Work Gluv. The licensed
products also 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.
In exchange for these rights, SVP agreed to pay Jazor a license fee
of $50,000 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. There was no affiliation between Jazor or
Jezior and us, SVP or any of our officers, directors, principals or
shareholders prior to entering into the manufacturing agreement.
The manufacturing agreement provided that upon payment of aggregate
royalty fees of $2,000,000 to Jazor, SVP would have no further
obligations to make any additional royalty payments and would
deliver to SVP all confidential information, including formulae,
technical data, engineering specifications, and trade secrets
necessary to enable SVP to manufacture all products independently
of Jazor. On February 2, 1999, however, the parties entered into
an amendment to this agreement in which Jazor released the process
and technology information of the proprietary polymer to us early
in exchange for our issuance of 500,000 restricted common shares at
a deemed price of $2.00. In
19
<PAGE>
this amendment, Jazor also agreed to reduce the maximum amount of
royalty fees payable from $2,000,000 to $1,000,000.
The manufacturing agreement and the February 2nd amendment are
attached as exhibits to our form 10SB filing with the Securities
and Exchange Commission.
History of Product Development
At the time of our acquisition of SVP, it manufactured and
distributed two products that incorporated the proprietary polymer
technology developed by Jazor. 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.
We recognized that the lack of documented research was an
impediment to establishing the credibility necessary to achieve
market acceptance. We, therefore 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.
We 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 approved laboratories
to obtain reports on the polymer products incorporating Triclosan
as the active ingredient. This research and development effort
was completed on February 11, 1999.
Scientific Advisory Committee
We also formed a scientific advisory committee to advise our board
of directors on the research and development of new products and on
the scientific issues regarding our product claims. Our scientific
advisory committee currently consists of Professor Christaan
Barnard, 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. Roszell is a chemist who works
full time for us, 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.
Each member of the scientific advisory committee spends a small
portion of their business time on committee business. We consult
with members of the scientific advisory committee on an as needed
basis generally to provide us with direction on the research and
development of our products.
Members of the committee do not conduct any research or development
activity for us. Research
20
<PAGE>
and development on our products is carried on through independent
laboratories.
Our Products
We have been marketing our polymer based hand protection products
under the trade name "Skinvisible" in five separate and distinct
markets under five different brand names. All of our products
incorporate Triclosan as the active ingredient and offer the same
degree of protection from occupational hand disease. All of our
products are identical in composition.
The five markets are as follows:
1. Medical Market. We have been marketing our products to the
medical and hospital industry using the brand name "Skinvisible -
Medical Formula". In this market, our target purchasers have been
hospitals, nursing homes, doctors, nurses, dentists, hygienists,
fire departments, police ambulance and ancillary services. We have
promoted our product in this market as an additional measure to
prevent the transmission of disease, protect against harmful
chemicals, protect from the rigors of extensive hand washing
protocols and as a safe and effective alternative to protect people
from latex contact which can cause allergic reactions in some
users.
2. Industrial Market. We have been marketing our products to the
industrial marketplace using the brand name "Skinvisible -
Industrial Formula". In this market, our target purchasers have
been mechanics, painters, auto-body workers, chemical handlers,
construction trades, gardeners, mill workers and garbage/
sanitation workers. We have promoted our product in this market
as a measure to protect the user's skin from exposure to harsh
chemicals and skin irritants.
3. Food Service Market. We have been marketing our products to
the food service marketplace using the brand name "Skinvisible -
Food Service Formula". In this market, our target purchasers have
been restaurants, hospitality services, food service and food
processing companies. We have promoted our product in this market
as a measure to prevent against the transmission of infectious
pathogens and disease-causing bacteria associated with food
products, handling and processing.
4. Salon Market. We have been marketing our products to the
salon marketplace using the brand name "Skinvisible - Salon
Formula". In this market, our target purchasers have been
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.
5. Personal Market. We have been marketing our products to the
personal marketplace using the brand name "Skinvisible - Personal
Formula". In this market, our target purchasers have been
individual consumers for their personal use as a measure to protect
the user from exposure to disease transmission resulting from day
to day activities.
Our price for these products are presently the same for all brand
name formulations. Our retail prices are as follows:
21
<PAGE>
Product Size Price
- ------------ -------
2 oz bottle $ 8.50
4 oz bottle $ 11.10
8 oz bottle $ 16.70
16 oz bottle $ 27.60
Results of Research on our products
We have conducted research on our products internally and through
independent laboratories. Research at independent laboratories
generally follows our own internal research and development
activities as a means of obtaining independent verification of the
properties of our products.
Our research and development focus has been directed at analyzing
the original antimicrobial lotion, validating its properties,
researching new formulations, and conducting internal and external
laboratory and clinical tests. Tests have found that our polymer
technology:
(a) achieves skin adherence by creating a molecular bond
to the outer layer of the skin,
(b) allows the skin to breathe,
(c) maintains the skin's natural moisture, and
(d) gradually deteriorates with the natural turnover of
the outer layer of skin.
Because of its ability to adhere to the skin, the polymer acts as a
delivery system for antimicrobial agents such as Triclosan by
keeping it on the skin for longer periods of time.
We have contracted with six major independent U.S. laboratories,
all FDA-recognized facilities for carrying out investigative
studies on the product. The studies undertaken were directed at
demonstrating: (1) the effective bonding of the polymer lotion to
skin; (2) the imperviousness of the lotion to a significant number
of noxious chemical agents; and (3) the effective antimicrobial
action of the lotion to bacterial pathogens at the time of
application and over a four hour period.
The results of these studies demonstrated our products adherence to
the skin under practical user conditions, blockage of a broad range
of noxious chemicals, and kill patterns to the broad spectrum of
pathogens tested.
Manufacturing of our products
Our products are manufactured by SVP at our facility at 6320 S.
Sandhill Road, Unit #10, Las Vegas, Nevada 89120. The
manufacturing process consists of the manufacture of the polymer
base and the addition of the active Triclosan ingredient. The
manufacturing process starts with the combination of the base
ingredients in accordance with the process prescribed by our
proprietary formula. The combined ingredients are then heated to
critical temperatures, cooled and bottled. Once manufactured, the
finished product is stored on site pending shipment.
We currently have the capacity to produce approximately 500 gallons
of product per day.
22
<PAGE>
The ingredients for our products are supplied by a number of
different chemical manufacturers and can be purchased easily from
alternate suppliers if the need arose. We do not have any long term
contractual arrangements with any of our suppliers.
Marketing Efforts to Date
We originally commenced marketing of our products exclusively
through a network marketing program known as the "Net/Direct, Dual
Compensation Plan" through wholly owned subsidiaries. The
Net/Direct Plan had been structured to provide various incentives
to encourage independent businesses and individuals to sell and buy
our products 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.
We decided to abandon this network marketing program in June, 1999
and to market our products through a combination of distribution
agreements and direct marketing efforts. As a result, we entered
into an agreement with Aquastel Pacific Environmental Technology
Limited of Hong Kong for the commercial sale and distribution of
our products in Hong Kong, Taiwan, Singapore, Malaysia and
Thailand. Under this agreement, we granted Aquastel exclusive
rights to these countries for a term of three years, subject to an
eight month cancellation clause and subject to Aquastel meeting
certain minimum purchase requirements. We cancelled this agreement
consistent with this cancellation provision on October 5, 1999.
On July 28, 1999, we entered into an agreement with Essentially
Yours Industries Corp. of Surrey, British Columbia, Canada in which
we granted EYI exclusive distribution rights for our products in
the retail marketplace within Canada and the United States.
Additionally, we signed an agreement on the same date with EYI
International Limited under similar terms and conditions for the
exclusive distribution of our product line in the retail market
within the fourteen countries EYI International presently operates.
We cancelled both of these agreements and entered into new
agreements with EYI for the sale of our polymer and a license
agreement to use our anti-microbial formula.
To date, we have not received a significant volume of sales from
any of these agreements.
Onyx Consulting Partnership Strategic Business Analysis
In December of 1999, we hired Onyx Consulting Partnership to
evaluate our products and business operations and provide guidance
in our sales and business efforts. Onyx began by doing an
independent assessment of our products and research efforts, along
with a review of the marketplace to identify current competitors.
As a result, Onyx recommended that we:
1. Obtain and test samples of competitor's products to determine
the similarities and differences with our product.
2. Change the labeling of our products to comply with FDA
requirements.
23
<PAGE>
3. Re-position our product as a "hand sanitizer plus" under the
FDA's monograph for heath care personnel antiseptic hand wash.
4. Accelerate our short-term product development and testing.
5. Hire a national sales director to begin evaluating and
prioritizing sales activities.
We are currently evaluating these items and taking steps where
appropriate.
Government Regulation
Our products are highly regulated by state and federal authorities,
most notably the Federal Food and Drug Administration and the
Federal Trade Commission.
We have been advised by our consultants that we are on an FDA list
of companies that may be in violation of government product
labeling requirements. As a result, we have made changes to our
existing labels.
Competition
The market for hand care products is highly competitive, and there
are currently a number of products in the marketplace that make
claims similar to ours. In some cases, these products are offered
by companies with established distribution channels and greater
financial resources than ours, posing a strong competitive threat
and creating a formidable barrier to our entry into the
marketplace.
Given the potential for hand care protectants in the marketplace,
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 the
benefit offered by our products and negatively effect our sales and
market share.
Our 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.
The following companies currently manufacture products which are
competitive with our products in the antimicrobial product market:
Product Manufacturer
- ------------------ ---------------------------
ViraShield Genomic Actives, LLC
Dermal Defense LMG Dermal Defense
24
<PAGE>
Unique Skin Unique Laboratories, Inc.
Bio-Safe Bio-Safe Skin Products
The following company produces a polymer delivery technology that
may be competitive with our polymer technology:
Product Manufacturer
- ------------------ ---------------------------
Penederm Mylan Laboratories
Key Employees
We have 2 employees, including our President and SVP employs 9
individuals, including its President. All of our employees and the
employees of SVP are full-time, except our Secretary/Treasurer
Howard Thomson.
Mr. Terry Howlett, our President, is paid a salary of $10,000 per
month. We also reimburse Mr. Howlett for expenses incurred in
connection with his duties as President.
Any growth in the number of employees will be largely dependent on
the success of our sales efforts.
None of our employees or the employees of SVP 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 1998 and 1999 fiscal years, we spent the following
amounts on research and development activities:
Year Ended Year Ended
December 31, 1998 December 31, 1999
$384,550 $ 68,228
As we were formed in 1998, we had no research and development
expenditures from years prior to 1998.
Description Of Property
Our head office and administration activities are currently carried
out on leased premises located at 6320 South Sandhill Road, Suite
10, Las Vegas, Nevada 89120. These premises are comprised of 6000
square feet of a mixed office and industrial facility, and are
leased for a term of 4 years expiring on April 14, 2002. Our
obligations under the lease for this property are $73,476 for the
year 2000, $73,476 for the year 2001 and $24,492 for the period
from January 1, 2002 to April 14, 2002.
Up until recently, we had leased 4000 square feet of office space
at 3095 E. Patrick Lane, Suite 1,
25
<PAGE>
Las Vegas, Nevada 89120. We recently, however, arranged with the owner
of the building to get a complete release from our obligations on this lease.
We do not lease or own any personal property, however, SVP owns a
number of items, including certain manufacturing equipment,
computers, fax machines, office furniture and furnishings. SVP also
leases a couple of telephone system.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We currently intend to pursue the following plan of operations
during the next six months:
1. We will be more closely examining the benefits and qualities
of our proprietary polymer and its differences and similarities to
products developed by our competitors.
2. We will be pursuing private label arrangements with various
companies in the commercial, industrial, food service, medical and
network marketing industries for the sale of our product.
3. We will be marketing our polymer to major corporations for use
in their products.
4. We will be devising and revising our business plan to adopt to
our finding in items 1 above.
5. We will continue research and development into new products
using our proprietary polymer technology.
We anticipate that we will spend approximately $750,000 over the
next six month period in pursuing this plan of operations. Of this
amount, we anticipates that $300,000 will be realized from
operating revenues, after deduction of costs of goods sold, and
existing cash reserves, and $450,000 will be raised by additional
debt or equity financing.
We are presently undertaking a search for additional equity
financing to cover these anticipated expenses and expected
operational losses. However, we have not, as yet, formalized or
entered into any such arrangements, and we can offer no assurance
that such financing will be available when needed. Our failure to
obtain such financing in a timely manner would have a significant
negative effect on our future operations and may result in our
being forced to cease operations.
Our actual expenditures and business plan may differ from that
stated above. Our board of directors may decide not to pursue this
plan, or may modify it based on available financing. We currently
do not have any financing arrangements in place that would enable
us to meet this plan of operations.
In the event we are not successful in obtaining any further debt or
equity financing, we anticipate that we can sustain our business
operations based on our current cash position and revenues for only
a period of two to three months.
The above statements are forward-looking statements. Actual
results of our plan of operations may differ materially. Factors
that may cause the actual results or our actual plan of operations
to vary
26
<PAGE>
include, among other things, decisions of our board of
directors not to pursue a specific course of action based on its
re-assessment of the facts or new facts and changes in the hand
care business or general economic conditions.
The financial statements for 1999 which are a part of this document
present our combined activities with those of our wholly owed
subsidiaries.
Liquidity And Capital Resources
We had net losses of $2,884,651 for the year ended December 31,
1999 which was up more than double from $1,265,440 for the year
ended December 31, 1998. The losses were funded by various
financings and short term loans we obtained during the year. These
loses can be attributed to the more than double increase in our
operating expenditures and our failure to generate a significant
number of sales. Our problems with making sales and generating
sufficient revenues persists, but we have at least succeeded in
reducing our operating costs over the past two months. Our loss per
share was $.28, up from $.16 at the end of 1998.
We anticipate that losses will continue into the foreseeable
future, most likely to a slower extent as operating costs have
declined.
As of December 31, 1999, we had $898,458 in cash, which was up from
$110,776 at the end of 1998. This result is largely do to the
selling of 1,244,000 shares of common stock in the 4th quarter 1999
at a price of $2.25 per share. These shares were sold using the
exemption from registration provided by Rule 506 of Regulation D of
the Securities Act of 1933. We have applied these proceeds to the
payment of several current and long term obligations on our books,
including the payment of an unsecured demand loan from Mr. Harold
C. Moll, a shareholder of the Company, in the amount of $725,762,
after the end of 1999. As we continue to have problems with
generating a sufficient amount of revenue to support operating
costs, our cash accounts continue to decline.
Results Of Operations
Fiscal Year End1999 Compared With Fiscal Year End 1998
During 1999, our management received fees and salaries of $139,607.
Of this our president received $120,000, and our
secretary/treasurer received $19,607. Outside management
consultants received a total of $547,804. These costs were largely
associated with marketing, technical and investor relations
consultants. Our management has recently taken steps to
substantially reduce these costs along with others and thus expects
such expenses to significantly decline during this fiscal year.
General and administrative expenses for 1999 were $2,164,814
compared to $649,300 for 1998. In 1999, we expended substantial
amounts on expanding our operations including the hiring of key
executives for growth and the growth of our physical plant. When
our sales did not meet expectations, we took aggressive steps to
reduce these expenses. We plan to maintain these costs at this
reduced level for the foreseeable future.
27
<PAGE>
Research and development expenses were $68,228 for 1999 compared to
$384,550 for the same period in 1998. R&D cost were higher in 1998
due to the development and testing of our product during that time
period. We anticipate that R&D expenses may increase slightly over
the next year due to the development and testing of our new
products and those of our competitors.
Depreciation and amortization expenses for 1999 were $53,189
compared to $8,858 for the same period in 1998. This increase was
the result of our acquisition of a substantial amount of property
and equipment during 1999. We do not anticipate the need to
purchase any more equipment during this fiscal year.
Impact of the Year 2000 Issue
The "Year 2000 problem" arose because many existing computer
programs use only the last two digits to refer to a year.
Therefore, these computer programs were not expected to properly
recognize a year that begins with "20" instead of the familiar
"19". Many experts believed that if not corrected this problem
would lead to widespread computer failures. Since the turn of the
century, however, we have not experienced any adverse effects of
this Year 2000 problem.
MANAGEMENT
The following are the names of our officers and directors, their
present positions, and some brief information about their
background.
Skinvisible, Inc.
Name Age Offices Held
- ---- --- ------------
Terry Howlett 52 Director, President
Howard Thompson 52 Secretary, Treasurer, Director
Jerry Hodge 55 Director
Anthony St. John 42 Director
Jost Steinbruchel 59 Director
Skinvisible Pharmaceuticals, Inc.
Name Age Offices Held
- ---- --- ------------
Terry Howlett 52 Director, President, & Secretary
Jerry Hodge 55 Director
Mr. Terry H. Howlett (Age 52), President & Director. 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 hand care
products on a direct sales basis. For the ten years prior to
becoming President of the Company, Mr. Howlett was the
28
<PAGE>
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 52), Director, Treasurer and Secretary.
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 55), Director. 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.
Anthony St. John (Age 42), Director. 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 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 59), Director. 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.
Terms of Office
Our directors are appointed for one year terms to hold office until
the next annual general meeting of the stockholders or until removed
from office in accordance with our by-laws. Officers are appointed
by our board of directors and hold office until removed by the board.
Executive Compensation
The following table sets forth certain information as to our five
highest paid executive officers and directors for the fiscal year
ended December 31, 1999.
- -----------------------------------------------------------------------
Name and principal position Salary
- -----------------------------------------------------------------------
Terry Howlett, Director, President $ 120,000
Howard Thomson, Director, Sec/Treas. $ 19,607
Anthony St. John, Director $ 11,000
29
<PAGE>
Jost Steinbruchel, Director $ 11,000
Jerry Hodge, Director $ 12,000
----------
Aggregate of the five Highest Paid
Officers and Directors $ 173,607
- -----------------------------------------------------------------------
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 our shares.
Our executive officers and directors received cash compensation of
$173,607, in the aggregate, for services rendered in fiscal year
1999.
In 1999, we paid a fee of $1,000 per month to our directors, other
than Terry Howlett, in consideration for each director acting as a
director of the company. This compensation was cancelled by
resolution of the board on January 1, 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 29, 1999, the
beneficial ownership of our common stock by each person known by us
to beneficially own more than 10% of the outstanding common stock
and by our officers and directors 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(1)
- ---------------- ------------------- -------------------- -----------
Common Terry Howlett 1,000,000 8.57%
Director, President
Common Howard Thomson 156,000 1.34%
Director, Sec./Treas.
Common Anthony St. John 150,000 1.29%
Director
Common Jost Steinbruchel 300,000 2.57%
Director
Common Jerry Hodge 150,000 1.29%
Director
Common All Officers and
Directors as a 1,756,000 15.05%
Group ( 5 persons)
- -------
(1) Based on 11,670,333 shares issued and outstanding on February
29, 2000.
30
<PAGE>
The following table shows the issued and outstanding stock options
held by our officers and directors, and by each person known by us
to beneficially own more than 10% of our common stock as of
February 29, 2000. 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
Options
Our board of directors and shareholders have approved an incentive
stock option plan. We have granted options to purchase 300,000
shares of our common stock to Mr. Terry Howlett, a director and the
president of the company, exercisable at a price of $1.65 per share
effective January 8, 1999. We have also granted options to purchase
380,167 shares of common stock to other officers, directors,
employees and consultants exercisable at a price of $1.50 per share
effective January 8, 1999, and options to purchase 612,000 shares
at prices ranging from $2.50 to $4.00 per share.
Public Market
Our shares are currently trading on the OTC Bulletin Board under
the stock symbol SKVI. On February 29, 2000, the closing sale
price of the common stock was $2.69 per share.
Registration Rights
The selling shareholders have the right to require us to register
their common shares with the US Securities and Exchange Commission.
These rights are evidenced by a registration rights agreement and
is the sole reason for our filing of this S-1 registration
statement on behalf of the selling shareholders. The registration
rights agreement provides, in part, that we are obligated to
register all the warrant shares issued to investors on account of
their investment, along with all of the shares sold.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None of the following persons has any direct or indirect material
interest in any transaction to which we are a party since the
incorporation of the Company in March, 1998, or in any proposed
transaction to which the Company is proposed to be a party:
(A) any director or officer;
(B) any proposed nominee for election as a director;
31
<PAGE>
(C) any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached
to our common stock; or
(D) any relative or spouse of any of the foregoing persons, or
any relative of such spouse, who has the same house as such
person or who is a director or officer of any parent or
subsidiary.
Our policy regarding related transactions requires that any
director or officer who has an interest in any transaction 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. Our
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.
Annual Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Other All
Annual Other
Com- Com-
pen- Restricted pen-
sa- Stock Options/* LTIP sa-
Name Title Year Salary Bonus tion Awarded SARs (#)payouts($)tion
- ---- ----- ---- ------ ----- ------ ------- ------- --------- ----
Terry
Howlett President 1999 $120,000 $ 0 $10,785 0 300,000 0 0
Director
Howard Secretary 1999 $ 19,607 $ 0 0 0 50,000 0 0
Thomson Treasurer
Director
Jerry
Hodge Director 1999 $ 12,000 $ 0 0 0 50,000 0 0
Anthony Director 1999 $ 11,000 $ 0 0 0 50,000 0 0
St.John
Jost Director 1999 $ 11,000 $ 0 0 0 50,000 0 0
Steinbruchel
LEGAL MATTERS
We are not a party to any material legal proceedings and to our
knowledge, no such proceedings are threatened or contemplated.
EXPERTS
Our consolidated balance sheet as of December 31, 1999 and our
consolidated statements of operations, stockholders' equity and
cash flows and the financial statement schedule for the years ended
December 31, 1999, appearing in this prospectus and registration
statement, have been audited by Sarna & Company, independent
auditors, as described in their report appearing elsewhere in this
document, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
32
<PAGE>
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
and Exchange Act of 1934, and as a result we file reports, proxy
statements and other information with the Securities and Exchange
Commission. Such reports, proxy and information statements may be
inspected and copied at the Public Reference Section of the
Commission at 450 Fifth Street, N.W. Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street N.W., Washington D.C. 20549 at prescribed rates.
The Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding
Skinvisible, Inc. at the address http://www.sec.gov.
We have filed with the Securities Exchange Commission a
registration statement on Form S-1, under the Securities Act of
1933, with respect to the offered common stock. This prospectus,
which constitutes a part of the registration statement, does not
contain all of the information provided in the registration
statement, certain parts of which are omitted in compliance with
the rules and regulations of the Commission. Copies of the
registration statement, including all exhibits, may be obtained
from the Commission's principal office in Washington D.C. upon
payment of a fee or may be examined without charge at the offices
of the Commission as described above.
33
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited Consolidated Financial Statements for the periods
ending December 31, 1999 and 1998, including:
(a) Independent Auditors' Report;
(b) Consolidated Balance Sheet;
(c) Consolidated Statement of Operations and Accumulated Equity;
(d) Consolidated Statement of Changes in Stockholders' Equity;
(e) Consolidated Statement of Cash Flows;
(f) Notes to Consolidated Financial Statements;
(g) Supplemental Statements.
2. Consent by Auditor to use of Audited Financial Statements
34
<PAGE>
SKINVISIBLE, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 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 Equity . . . . . . . . . . . . . . .3
Consolidated Statement of Changes in
Stockholders' Equity. . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows. . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . 6-10
Supplemental Statements:
Consolidated Statement of Operating
Expenses . . . . . . . . . . . . . . . . . . . . . 12
<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, 1999
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, 1999, and the results
of their operations, changes in stockholders' deficit and cash flows for
the year ended December 31, 1999, 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
February 15, 2000
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
ASSETS December 31
-----------
1999 1998
-----------------
Current Assets
Cash $ 898,458 $ 110,776
Accounts Receivable 7,456 4,415
Inventory 149,150 47,530
Prepaid License Fee 50,000 50,000
Advances 0 - 0 -
--------- ---------
Total Current Assets 1,105,064 212,721
Property and Equipment
Furniture and Equipment 135,627 85,894
Laboratory Build-Out 286,922 38,126
---------- ---------
Total Property and Equipment 422,549 124,020
Less Accumulated Depreciation <59,558> <8,858>
---------- ---------
Net Property and Equipment 362,991 115,162
Other Assets - Exclusive Distribution Rights 200,000 200,000
- Prepaid Royalty 1,000,000 - 0 -
- Deposits 5,511 - 0 -
--------- ---------
TOTAL ASSETS $2,673,566 $ 527,883
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
and Accrued Expenses $ 102,695 $ 123,723
Loan Payable 725,762 725,000
----------- ---------
Total Current Liabilities 828,457 848,723
Stockholders' Equity
Common Stock, $0.001 par value
100,000,000 shares authorized,
11,453,000 and 8,200,000 shares issued 11,453 8,200
Additional paid in capital 5,983,747 936,400
Accumulated Deficit <4,150,091><1,265,440>
---------- ---------
Total Stockholders' Equity 1,845,109 <320,840>
---------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,673,566 $ 527,883
========== =========
See Notes to Consolidated Financial Statements
2
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
YEAR ENDED
DECEMBER 31
1999 1998
-------------------
Revenues $ 169,013 $ 12,269
Cost of Sales
Beginning Inventory 47,530 - 0 -
Purchases 181,642 51,531
--------- ---------
Total Available 229,172 51,531
Less: Ending Inventory <149,150> <47,530>
Sample Distribution - 0 - - 0 -
--------- ---------
Total Cost of Sales <80,022> <4,001>
--------- ---------
Gross Profit 88,991 8,268
Operating Expenses <2,973,642> <1,265,440>
--------- ---------
Loss Before Provision for
Income Taxes <2,884,651> <1,273,708>
Provision for Income Taxes <0> <0>
--------- ---------
Net Loss <2,884,651> <1,265,440>
Accumulated Deficit, Beginning
of Year <1,265,440> <0>
----------- ---------
Accumulated Deficit, End of Year $<4,150,091>$<1,265,440>
=========== =========
Net Loss per Share $ <.28>$ <.16>
=========== ===========
Weighted Average Shares Outstanding 10,295,917 7,891,300
=========== =========
See Notes to Consolidated Financial Statements
3
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED
DECEMBER 31
1999 1998
-------------------
Shares of Common Stock Issued:
Beginning Balance 8,200,000 - 0 -
Issuance Pursuant to:
Stock Offering 2,744,000 8,200,000
Royalty Payment Agreement 500,000 - 0 -
Stock Option Plan 9,000 - 0 -
---------- ---------
Ending Balance 11,453,000 8,200,000
========== =========
Common Stock Par Value
Beginning Balance $ 8,200 $ - 0 -
Issuance Pursuant to:
Stock Offering 2,744 8,200
Royalty Payment Agreement 500 - 0 -
Stock Option Plan 9 - 0 -
---------- ---------
Ending Balance 11,453 8,200
---------- ---------
Additional Paid in Capital
Beginning Balance 936,400 - 0 -
Issuance Pursuant to:
Stock Offering 4,034,356 936,400
Royalty Payment Agreement 999,500 - 0 -
Stock Option Plan 13,491 - 0 -
---------- ---------
Ending Balance 5,983,747 936,400
---------- ---------
Accumulate Deficit
Beginning Balance <1,265,440> - 0 -
Net Loss <2,884,651><1,265,440>
--------- ---------
Ending Balance <4,150,091><1,265,440>
--------- ---------
Total Stockholders' Equity $1,845,109 $ 320,840
========== =========
See Notes to Consolidated Financial Statements
4
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED
DECEMBER 31
1999 1998
-------------------
Cash Flows from Operating Activities:
Net Loss $ <2,884,651>$<1,265,440>
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation 53,189 8,858
<Increase> Decrease in:
Accounts Receivable <3,041> <4,415>
Inventory <101,620> <47,530>
Advances <620> - 0 -
Other Assets - Prepaid Royalty <1,000,000> - 0 -
- Distribution Rights - 0 - <200,000>
- Deposits <5,511> - 0 -
- Prepaid Licensing Fee - 0 - <50,000>
Increase <Decrease> in:
Accounts Payable and
Accrued Expenses 21,028 123,723
--------- ---------
Net Cash Used by Operating Activities <3,963,282> <1,434,804>
Cash Flows from Investing Activities:
Purchases of Property and Equipment <298,529> <124,020>
--------- ---------
Net Cash Used by Investing Activities <298,529> <124,020>
Cash Flows from Financing Activities:
Payment of Loan Principal <598> 725,000
Net Proceeds from the Issuance of
Common Stock 5,050,091 944,600
--------- ---------
Net Cash Provided by Financing Activities 5,049,493 1,669,600
--------- ---------
Net Increase <Decrease> in Cash 787,682 110,776
Cash at Beginning of Period 110,776 - 0 -
--------- ---------
Cash at End of Period $ 898,458 $ 110,776
========= =========
Supplemental Disclosure:
Interest Paid $ 114,661 - 0 -
========= =========
See Notes to Consolidated Financial Statements
5
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(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 subsidiaries, (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.
Name Change
- -----------
On February 26, 1999, the company completed the legal process of changing
its name from Microbial Solutions, Inc. to Skinvisible, Inc. The
subsidiaries name of Manloe Labs, Inc. was also changed on February 26,
1999 to Skinvisible Pharmaceutical, Inc.
During 1999, the Company formed subsidiaries titled Skinvisible
International, Inc. and Skinvisible Canada to encompass Canadian and other
international ventures.
Basis of Presentation
- ---------------------
The consolidated financial statements include the accounts of Skinvisible,
Inc. and it's subsidiaries, Skinvisible Pharmaceutical, Inc., Skinvisible
International, Inc., and Skinvisible Canada. 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. The Company records
registration fee income from its multi-level marketing associates ratably
over an estimated useful benefit period. All reported amounts are in US
dollars.
6
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
- ---------------------------------------------------------------
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.
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. Stock options issued by SKVI carry exercise
prices in excess of prices that shares can currently be purchased for.
Management feels that the exercise of any substantial amount of options is
unlikely until the company emerges from its development stage.
Accordingly, no pro forma compensation expense is reported in these
financial statements with the exception of the expense recorded on the
exercise of options on 9000 shares during the period ended September 30,
1999.
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.
7
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
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. The effect of common stock equivalents would be
antidilutive and is not included in net loss per share calculations.
8
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
- ---------------------------------------------------------------
Year 2000 Compliance
- --------------------
The Year 2000 issue is the result of computer programs having been written
using two digits (rather than four) to define years. Computers or other
equipment with date-sensitive software may recognize "00" as 1900 rather
than 2000. This could result in system failure or miscalculations. If the
Company or significant customers, suppliers, or other third parties fail to
correct Year 2000 issues, the Company's ability to operate could be
affected.
The following disclosure is pursuant to the Year 2000 Readiness and
Disclosure Act.
The Company's Year 2000 program is designed to minimize the possibility of
Year 2000 interruptions. Any such interruption may have a material adverse
impact on the Company's future operating results. In 1999, the Company
established procedures to identify and assess systems and processes
vulnerable to Year 2000 problems. The Company also developed procedures to
monitor levels of compliance within its stated goals of compliance. In
each area of vulnerability, various testing and readiness methodologies are
being used to identify and correct suspect systems, processes or supplier
interfaces. The Company has met its Year 2000 compliance goals prior to
the end of 1999.
Recently Issued Accounting Pronouncements
- -----------------------------------------
Recently issued accounting pronouncements will have no significant impact
on the Company and its reporting methods.
NOTE 2 - PROVISION FOR INCOME TAXES
- -----------------------------------
The provision for income taxes for the periods ended December 31, 1999 and
1998 represents the minimum state income tax expense of the Company, which
is not considered significant.
NOTE 3 - LOAN PAYABLE
- ---------------------
Loan payable at December 31, 1999 consists of monies advanced as a short
term operating loan. This loan is unsecured and bears interest at the rate
of 10% per annum.
9
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
----
2000 $ 73,476
2001 $ 73,476
2002 $ 24,492
Litigation
- ----------
The Company is not presently involved in any litigation.
Licensing, Royalty and Consulting Agreements
- --------------------------------------------
The Company has currently entered into, and will continue to enter into,
product licensing, royalty 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.
Note 4 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
- --------------------------------------------------
At December 31, 1999, the company has future royalty payment commitments
totaling approximately $1,000,000.
NOTE 5 - STOCK OPTIONS
- ----------------------
During the period ended December 31, 1999 the company issued stock options
with exercise prices ranging from $1.50 to $4.00 per share, as incentives
for employee and consultant performance. Options on 1,323,500 shares of
common stock were outstanding at December 31, 1999. The exercise of any or
all of these options would cause reported losses per share to decrease.
NOTE 6 - SUBSEQUENT EVENT
- -------------------------
Subsequent to December 31, 1999 the company consolidated office space as a
result of reducing its network marketing efforts. Current lease
commitments are as reflected in footnote number four.
10
<PAGE>
SUPPLEMENTAL INFORMATION
<PAGE>
SKINVISIBLE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATING EXPENSES
YEAR ENDED
DECEMBER 31
1999 1998
-------------------
Operating Expenses
Advertising $119,205 $ 94,918
Automobile Expense 41,957 - 0 -
Bad Debt Expense 2,946 - 0 -
Bank Charges 2,128 1,217
Consulting - Investor Relations 157,959 - 0 -
Consulting - Sales 169,683 5,000
Consulting - Technical 105,162 17,000
Data Processing 41,423 1,434
Depreciation 53,189 8,858
Director Fees 46,000 - 0 -
Discounts - Credit Cards 646 - 0 -
Donations 1,075 - 0 -
Dues and Subscriptions 11,285 2,347
Equipment Leases - 0 - 28,802
Expenses - Canadian Operations 41,942 16,778
Insurance 60,676 21,330
Interest 114,661 - 0 -
Janitorial 4,185 - 0 -
Office Expenses 31,316 34,161
Outside Labor 5,436 696
Lab Expenses 17,615 - 0 -
Management Fees 182,607 209,000
Meals & Entertainment 58,381 - 0 -
Payroll Taxes 54,945 43,744
Postage and Freight Out 24,563 6,816
Printing 43,822 12,354
Professional Fees 240,990 74,913
Rent 137,106 45,305
Repair & Maintenance 2,085 - 0 -
Research and Development 68,228 384,550
Royalties 72,000 48,000
Security 2,190 1,653
Tax & License 4,492 6,611
Telephone 56,491 11,354
Trade Show Expenses 6,472 23,666
Travel 282,873 - 0 -
Utilities 7,606 2,527
Wages 698,695 170,674
Warehouse Expense 1,607 - 0 -
----------- ---------
Total Operating Expenses $2,973,642 $1,273,708
=========== ==========
See Notes to Consolidated Financial Statements
12
<PAGE>
SARNA & COMPANY
Certified Public Accountants
310 N. Westlake Boulevard
Suite 270
Westlake Village, California 91362
805-371-8900
Fax 805-379-0140
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion of our audit report
dated February 15, 2000, on the financial statements of
Skinvisible, Inc. ("the Company") for the period ended
December 31, 1999 in the Company's Form S-1 registration
statement to be filed with the United States Securities
Exchange Commission. We also consent to the application of
such report to the financial information in the Form S-1,
when such financial information is read in conjunction with
the financial statements referred to in our report.
/s/ Sarna & Company
Sarna & Company
Certified Public Accountants
Westlake Village, California
March 14,2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
Securities and Exchange Commission registration fee $ 1,587
Accounting fees and expenses 20,000
Legal fees and expenses 30,000
Blue Sky fees and expenses 2,000
Miscellaneous 20,000
---------
Total $ 73,587
=========
- ----------------------------------------------------------------------
* All amounts are estimates other than the Commission's
registration fee. No portion of these expenses will be borne by the
selling shareholders.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided under the
Nevada Revised Statutes and our bylaws.
Unless specifically limited by a corporation's articles of
incorporation, the Nevada Revised Statutes automatically provides
directors with immunity from monetary liabilities. Our articles of
incorporation do not contain any such limiting language. Excepted
from this 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 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 bylaws of the company provide that we will indemnify our
directors and officers to the fullest extent not prohibited by the
Nevada Revised Statutes; provided, however, that we may modify the
extent of such indemnification by individual contracts with its
directors and officers; and, provided, further, that we are not be
required to indemnify any director or officer in connection with
any proceeding 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, (iii) such
indemnification is provided by us, in our sole discretion, pursuant
to the powers vested in the corporation under the Nevada Revised
Statutes, or (iv) such indemnification is required to be made
pursuant to the bylaws.
Our bylaws provide that we 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 our request as a director or executive officer of
another
35
<PAGE>
corporation, partnership, joint venture, trust or other
enterprise, prior to the final disposition of the proceeding,
promptly following a request therefor, all expenses incurred by the
director or officer in connection in 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 he was not
entitled to be indemnified.
Our bylaws provide that no advance shall be made by the company to
an officer (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 a majority vote of the board
of directors by 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.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
We 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 our 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 of 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 our 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 our agreement to acquire SVP. All
shares issued to the shareholders were "restricted securities", as
defined in the Securities Act of 1933.
We completed the issuance of 275,000 shares of 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 of SVP. All shares issued to Mr. Hocking were
"restricted securities", as defined in the 1933 Act.
We 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
1933 Act.
We 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 1933 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.
We completed an offering of 1,500,000 common shares at a price of
$1.00 per share on March 8,
36
<PAGE>
1999 to a total of four accredited investors pursuant to Rule 506
of Regulation D of the 1933 Act. All shares issued pursuant to this
offering were "restricted securities", as defined in the 1933 Act.
We completed the issuance of 500,000 shares of 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.
As of February 29, 2000, we had issued a total of 20,333 shares of
common stock to 6 employees and consultants upon the exercise of
their stock options granted pursuant to the company's incentive
employee stock option plan. These shares were issued at a price of
$1.50 to $2.50 per share, for a total purchase price of $41,749.50.
In addition, subsequent to February 29th, we issued an additional
21,000 shares to one employee upon the exercise of his stock
options at a total purchase price of $27,250. 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. Since becoming a reporting company, we
have filed a registration statement using form S-8 to register
these shares for resale.
We completed an offering of 1,450,000 common shares at a price of
$2.25 per share on February 8, 2000 to a total of 57 accredited
investors pursuant to Rule 506 of Regulation D of the 1933 Act. All
shares issued pursuant to this offering were "restricted
securities", as defined in the 1933 Act. We also issued out
warrants for the purchase of 1,087,500 shares of common stock in
this offering.
37
<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------------ --------------------
3.1 Articles of Incorporation*
3.2 Amendments to Articles of Incorporation: 3-19-98 & 2-26-99*
3.3 Bylaws*
4.1 Stock Option Plan dated January 8, 1999**
5.1 Opinion of Michael A. Cane, Esq. with consent to use
10.1 Registration Rights Agreement
10.2 Stock Purchase Warrant Form
10.3 Manufacturing and Marketing License Agreement*
10.4 Letter Agreement Modifying the Manufacturing and
Marketing License Agreement*
10.5 Acquisition Agreement of Manloe Labs*
10.6 Letter Agreement Amending the Agreement for
Acquisition of Manloe Labs*
- -------------
* Incorporated by reference from our registration statement on Form
10-SB12G originally filed with the commission on 4-30-99 and as
amended on 11-8-99 (File No. 0-25911)
** Incorporated by reference from our registration statement on
Form S-8 filed with the commission on 12-15-99 (File No. 333-92775)
38
<PAGE>
ITEM 17. UNDERTAKING.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration
statement or any material change to such information in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which
remain unsold at the termination of the offering.
Insofar as indemnifications for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities, other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of
the registrant in the successful defense of any action, suit or
proceeding, is asserted by such director, officer, or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act,
and will be governed by the final adjudication of such issue.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing Form S-1
and has duly caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized on March 17,
2000.
/s/ Terry Howlett
By: __________________________________
TERRY HOWLETT Director, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the
following persons in the capacities noted, have signed this
registration statement on March 17, 2000.
SIGNATURE CAPACITY IN WHICH SIGNED
/s/ Jerry Hodge Director
- -------------------------------------
JERRY HODGE
/s/ Lord Anthony St. John
- ------------------------------------- Director
LORD ANTHONY ST. JOHN
/s/ Jost Steinbruchel Director
- -------------------------------------
JOST STEINBRUCHEL
/s/ Howard Thomson Director, Secretary, Treasurer
- ------------------------------------- and Chief Financial Officer
HOWARD THOMSON
40
<PAGE>
Cane & Company, LLC
Affiliated with O'Neill Ritchie Taylor Law Corporation
of Vancouver, British Columbia, Canada
Michael A. Cane* Stephen F.X. O'Neill**
Leslie L. Kapusianyk** Michael H. Taylor**
Telephone: (702) 312-6255
Facsimile: (702) 312-6249
E-mail: [email protected]
101 Convention Center Drive
Suite 1200
Las Vegas, NV 89109
March 14, 2000
Skinvisible, Inc.
3095 East Patrick Lane, Suite 1
Las Vegas Nevada 89120
Attention: Terry Howlett, President
Re: Skinvisible, Inc. Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel for Skinvisible, Inc., a Nevada
corporation (the "Company"), in connection with the preparation
of the registration statement on Form S-1 (the "Registration
Statement") filed with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Act of 1933, as
amended (the "Act"), relating to the offering of certain shares
of the Company's common stock.
In rendering the opinion set forth below, we have reviewed (a)
the Registration Statement and the exhibits thereto; (b) the
Company's Articles of Incorporation; (c) the Company's Bylaws;
(d) certain records of the Company's corporate proceedings as
reflected in its minute books; and (e) such statutes, records and
other documents as we have deemed relevant. In our examination,
we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and
conformity with the originals of all documents submitted to us as
copies thereof. In addition, we have made such other examinations
of law and fact as we have deemed relevant in order to form a
basis for the opinion hereinafter expressed.
Based upon the foregoing, we are of the opinion that the common
stock to be sold by the selling shareholders is validly issued,
fully paid and nonassessable.
Very truly yours,
CANE AND COMPANY, LLC
/s/ Michael A. Cane
_____________________________
Michael A. Cane, attorney and
Managing Member
*Licensed Nevada, California, Washington and Hawaii State Bars
** British Columbia Bar only
<PAGE>
Skinvisible, Inc.
March 14, 2000
Page 2
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to all references to this Firm under
the caption "Interests of Named Experts and Counsel" in the
Registration Statement.
Very truly yours,
CANE AND COMPANY, LLC
/s/ Michael A. Cane
_____________________________
Michael A. Cane, attorney and
Managing Member
2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of
______________, 1999, between the investor or investors signatory
hereto (each an "Investor" and together the "Investors"), and
Skinvisible, Inc., a Nevada corporation (the "Company").
WHEREAS, the Investors have committed to purchase from the
Company, pursuant to a Subscription Agreement dated the date hereof,
an aggregate of 1,450,000 shares of the Company's Common Stock; and
WHEREAS, the Company desires to grant to the Investors the
registration rights set forth herein with respect to the Common
Stock purchased pursuant to the Subscription Agreement and shares of
Common Stock issuable upon exercise of the Warrants (hereinafter
referred to as the "Stock" or "Securities" of the Company).
NOW, THEREFORE, the parties hereto mutually agree as
follows:
Section 1. Registrable Securities. As used herein the
term "Registrable Security" means the Securities until: (i) the
Registration Statement has been declared effective by the
Commission, and all Securities have been disposed of pursuant to the
Registration Statement, (ii) all Securities have been sold under
circumstances under which all of the applicable conditions of Rule
144 (or any similar provision then in force) under the Securities
Act ("Rule 144") are met, (iii) all Securities have been otherwise
transferred to holders who may trade such Securities without
restriction under the Securities Act, and the Company has delivered
a new certificate or other evidence of ownership for such Securities
not bearing a restrictive legend or (iv) such time as, in the
opinion of counsel to the Company, all Securities may be sold
without any time, volume or manner limitations pursuant to Rule
144(k) (or any similar provision then in effect) under the
Securities Act. The term "Registrable Securities" means any and/or
all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be
deemed to be made in the definition of "Registrable Security" as is
appropriate in order to prevent any dilution or enlargement of the
rights granted pursuant to this Agreement.
Section 2. Restrictions on Transfer. Each Investor
acknowledges and understands that prior to the registration of the
Securities as provided herein, the Securities are "restricted
securities" as defined in Rule 144 promulgated under the Act. Each
Investor understands that no disposition or transfer of the
Securities may be made by Investor in the absence of (i) an opinion
of counsel to the Investor, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without
registration under the Securities Act or (ii) such registration.
With a view to making available to the Investors the
benefits of Rule 144 under the Securities Act or any other similar
rule or regulation of the Commission that may at any time permit the
Investors to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of
Rule 144 following the filing of the Registration Statement; and
<PAGE>
(b) file with the Commission in a timely manner all
reports and other documents required to be filed with the Commission
pursuant to Section 13 or 15(d) under the Exchange Act by companies
subject to either of such sections, irrespective of whether the
Company is then subject to such reporting requirements.
Section 3. Registration Rights With Respect to the
Securities.
(a) The Company agrees that it will prepare and file
with the Securities and Exchange Commission ("Commission"), within
six months hereof a registration statement (on Form SB-2 or S-1)
under the Securities Act (the "Registration Statement"), at the sole
expense of the Company (except as provided in Section 3(c) hereof),
in respect of the Investors, so as to permit a public offering and
resale of the Securities under the Act by the Investors as selling
stockholders and not as underwriters.
The Company shall use its best efforts to cause such
Registration Statement to become effective within a reasonable time
thereafter. The number of shares designated in the Registration
Statement to be registered shall include all the Common Stock and
Warrant Shares sold, and shall include appropriate language
regarding reliance upon Rule 416 to the extent permitted by the
Commission. The Company will notify the Investors of the
effectiveness of the Registration Statement within one Trading Day
of such event.
(b) The Company will maintain the Registration
Statement or post-effective amendment filed under this Section 3
effective under the Securities Act until the earlier of: (i) the
date that none of the Securities covered by such Registration
Statement are or may become issued and outstanding, (ii) the date
that all of the Securities have been sold pursuant to such
Registration Statement, (iii) the date the Investors receive an
opinion of counsel to the Company that the Securities may be sold
under the provisions of Rule 144 without limitation as to volume,
(iv) all Securities have been otherwise transferred to persons who
may trade such shares without restriction under the Securities Act,
and the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend, or
(v) all Securities may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) or any similar provision then in
effect under the Securities Act in the opinion of counsel to the
Company (the "Effectiveness Period").
(c) All fees, disbursements and out-of-pocket
expenses and costs incurred by the Company in connection with the
preparation and filing of the Registration Statement under
subparagraph 3(a) and in complying with applicable securities and
Blue Sky laws (including, without limitation, all attorneys' fees of
the Company) shall be borne by the Company. The Investors shall
bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered
and the fees and expenses of their counsel. The Company, at its
expense, will supply the Investors with copies of the applicable
Registration Statement and the prospectus included therein and other
related documents in such quantities as may be reasonably requested
by the Investors.
(d) The Company shall not be required by this
Section 3 to include an Investor's Securities in any Registration
Statement which is to be filed if, in the opinion of counsel for the
Company, the proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal and
state securities laws and would result in all purchasers or
2
<PAGE>
transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(e) No provision contained herein shall preclude the
Company from selling securities pursuant to any Registration
Statement in which it is required to include Securities pursuant to
this Section 3.
(f) If at any time or from time to time after the
effective date of any Registration Statement, the Company notifies
the Investors in writing of the existence of a Potential Material
Event (as defined in Section 3(g) below), the Investors shall not
offer or sell any Securities or engage in any other transaction
involving or relating to Securities, from the time of the giving of
notice with respect to a Potential Material Event until the
Investors receive written notice from the Company that such
Potential Material Event either has been disclosed to the public or
no longer constitutes a Potential Material Event. The Company must,
if lawful, give the Investors notice in writing at least two (2)
Trading Days prior to the first day of the blackout period.
(g) "Potential Material Event" means any of the
following: (a) the possession by the Company of material information
not ripe for disclosure in a registration statement, as determined
in good faith by the Chief Executive Officer or the Board of
Directors of the Company that disclosure of such information in a
Registration Statement would be detrimental to the business and
affairs of the Company; or (b) any material engagement or activity
by the Company which would, in the good faith determination of the
Chief Executive Officer or the Board of Directors of the Company, be
adversely affected by disclosure in a registration statement at such
time, which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of
Directors of the Company that the applicable Registration Statement
would be materially misleading absent the inclusion of such
information.
Section 4. Cooperation with Company. The Investors will
cooperate with the Company in all respects in connection with this
Agreement, including timely supplying all information reasonably
requested by the Company (which shall include all information
regarding the Investors and proposed manner of sale of the
Registrable Securities required to be disclosed in any Registration
Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the
Registrable Securities and entering into and performing their
obligations under any underwriting agreement, if the offering is an
underwritten offering, in usual and customary form, with the
managing underwriter or underwriters of such underwritten offering.
Nothing in this Agreement shall obligate any Investor to consent to
be named as an underwriter in any Registration Statement. The
obligation of the Company to register the Registrable Securities
shall be absolute and unconditional as to those Securities which the
Commission will permit to be registered without naming the Investors
as underwriters, and with the consent of the Investor to be named as
an underwriter, to all of the Registrable Securities.
Section 5. Registration Procedures. If and whenever
the Company is required by any of the provisions of this Agreement
to effect the registration of any of the Registrable Securities
under the Act, the Company shall (except as otherwise provided in
this Agreement), as expeditiously as possible, subject to the
Investors' assistance and cooperation as reasonably required with
respect to each Registration Statement:
3
<PAGE>
(a) (i) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective and to comply with the
provisions of the Act with respect to the sale or other disposition
of all securities covered by such registration statement (including
prospectus supplements with respect to the sales of securities from
time to time in connection with a registration statement pursuant to
Rule 415 promulgated under the Act), and (ii) take all lawful action
such that each of: (A) the Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, and (B) the prospectus forming part of the
Registration Statement, and any amendment or supplement thereto,
does not at any time during the Registration Period include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading;
(b) list such Registrable Securities on the
Principal Market, if the listing of such Registrable Securities is
then permitted under the rules of such Principal Market;
(c) notify each Investor at any time when a
prospectus relating thereto covered by the Registration Statement is
required to be delivered under the Act, of the happening of any
event of which it has knowledge as a result of which the prospectus
included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and the Company shall prepare and file a curative
amendment under Section 5(a) as quickly as commercially possible;
(d) as promptly as practicable after becoming aware
of such event, notify each Investor who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the Commission of any stop
order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time and take all lawful action
to effect the withdrawal, recession or removal of such stop order or
other suspension;
(e) cooperate with the Investors to facilitate the
timely preparation and delivery of certificates for the Registrable
Securities to be offered pursuant to the Registration Statement and
enable such certificates for the Registrable Securities to be in
such denominations or amounts, as the case may be, as the Investors
reasonably may request and registered in such names as the Investors
may request;
(f) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the
Investors of their Registrable Securities in accordance with the
intended methods therefor provided in the prospectus which are
customary for issuers to perform under the circumstances;
(g) in the event of an underwritten offering,
promptly include or incorporate in a prospectus supplement or post-
effective amendment to the Registration Statement such information
as the managers reasonably agree should be included therein and to
which the Company does not reasonably object and make all required
filings of such prospectus supplement or post-
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effective amendment as soon as practicable after it is notified of
the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment; and
(h) maintain a transfer agent and registrar for its
Common Stock.
Section 6. Indemnification.
(a) To the maximum extent permitted by law, the
Company agrees to indemnify and hold harmless the Investors and each
person, if any, who controls an Investor within the meaning of the
Securities Act (each a "Distributing Investor") against any losses,
claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), to which the Distributing Investor
may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any
Registration Statement, or any related final prospectus or amendment
or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent, and only to the extent,
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written
information furnished to the Company by the Distributing Investor,
its counsel, affiliates or any underwriter, specifically for use in
the preparation thereof. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) To the maximum extent permitted by law, each
Distributing Investor agrees that it will indemnify and hold
harmless the Company, and each officer and director of the Company
or person, if any, who controls the Company within the meaning of
the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees and expenses) to
which the Company or any such officer, director or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in any Registration Statement, or any related final prospectus or
amendment or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the
extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such Registration
Statement, final prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished
to the Company by such Distributing Investor, its counsel,
affiliates or any underwriter, specifically for use in the
preparation thereof. This indemnity agreement will be in addition to
any liability which the Distributing Investor may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action
against such indemnified party, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify the indemnifying party in writing
of the commencement thereof; but the omission so to notify the
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indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party except to the
extent the failure of the indemnified party to provide such written
notification actually prejudices the ability of the indemnifying
party to defend such action. In case any such action is brought
against any indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume
the defense thereof, subject to the provisions herein stated and
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless the indemnifying
party shall not pursue the action to its final conclusion. The
indemnified parties as a group shall have the right to employ one
separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not
be at the expense of the indemnifying party if the indemnifying
party has assumed the defense of the action. No settlement of any
action against an indemnified party shall be made without the prior
written consent of the indemnified party, which consent shall not be
unreasonably withheld so long as such settlement includes a full
release of claims against the indemnified party.
Section 7. Contribution. In order to provide for just
and equitable contribution under the Securities Act in any case in
which: (i) the indemnified party makes a claim for indemnification
pursuant to Section 6 hereof but is judicially determined (by the
entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express
provisions of Section 6 hereof provide for indemnification in such
case, or (ii) contribution under the Securities Act may be required
on the part of any indemnified party, then the Company and the
applicable Distributing Investor shall contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not
be limited to, all reasonable costs of defense and investigation and
all reasonable attorneys' fees and expenses), in either such case
(after contribution from others) on the basis of relative fault as
well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the
applicable Distributing Investor on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Distributing Investor agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Notwithstanding any other provision of this Section 7, in no event
shall any: (i) Investor be required to undertake liability to any
person under this Section 7 for any amounts in excess of the dollar
amount of the proceeds received by such Investor from the sale of
such Investor's Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) pursuant to any
Registration
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Statement under which such Registrable Securities are
registered under the Securities Act and (ii) underwriter be required
to undertake liability to any person hereunder for any amounts in
excess of the aggregate discount, commission or other compensation
payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to such
Registration Statement.
Section 8. Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) hand delivered, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by facsimile, addressed as set forth in
the Subscription Agreement or to such other address as such party
shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the
first business day following the date of sending by reputable
courier service, fully prepaid, addressed to such address, or
(c) upon actual receipt of such mailing, if mailed. Either party
hereto may from time to time change its address or facsimile number
for notices under this Section 8 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to
the other party hereto.
Section 9. Assignment. This Agreement is binding upon
and inures to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. The rights granted the
Investors under this Agreement may be assigned to any purchaser of
substantially all of the Registrable Securities (or the rights
thereto) from an Investor, as otherwise permitted by the
Subscription Agreement.
Section 10. Additional Covenants of the Company. The
Company agrees that at such time as it otherwise meets the
requirements for the use of Securities Act Registration Statement on
Form S-3 for the purpose of registering the Registrable Securities,
it shall file all reports and information required to be filed by it
with the Commission in a timely manner and take all such other
action so as to maintain such eligibility for the use of such form.
Section 11. Counterparts/Facsimile. This Agreement may
be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when together shall
constitute but one and the same instrument, and shall become
effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties. In lieu of the
original, a facsimile transmission or copy of the original shall be
as effective and enforceable as the original.
Section 12. Remedies. The remedies provided in this
Agreement are cumulative and not exclusive of any remedies provided
by law. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts
to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction.
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<PAGE>
Section 13. Conflicting Agreements. The Company shall
not enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise prevents the Company from
complying with all of its obligations hereunder.
Section 14. Headings. The headings in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 15. Governing Law, Arbitration. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Nevada applicable to contracts made in Nevada by
persons domiciled in Las Vegas and without regard to its principles
of conflicts of laws. Any dispute under this Agreement shall be
submitted to arbitration under the American Arbitration Association
(the "AAA") in Las Vegas, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of
Arbitration") selected as according to the rules governing the AAA.
The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. Any decision made
by the Board of Arbitration (either prior to or after the expiration
of such thirty (30) calendar day period) shall be final, binding and
conclusive on the parties to the dispute, and entitled to be enforced
to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Board of Arbitration shall be authorized
and is hereby directed to enter a default judgment against any party
failing to participate in any proceeding hereunder within the time
periods set forth in the AAA rules. The non-prevailing party to any
arbitration (as determined by the Board of Arbitration) shall pay the
expenses of the prevailing party, including reasonable attorneys'
fees, in connection with such arbitration. Any party shall be entitled
to obtain injunctive relief from a court in any case where such relief
is available.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on the day and
year first above written.
Skinvisible, Inc.
By: ------------------------
Terry Howlett, President
By: ------------------------
Investor
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NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE
SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED,
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN
A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
PROVISIONS OF THE SECURITIES ACT.
STOCK PURCHASE WARRANT
To Purchase ____,000 Shares of Common Stock of
SKINVISIBLE, INC.
THIS CERTIFIES that, for value received,_______________ (the
"Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after
October 15, 1999 (the "Initial Exercise Date") and on or prior
to the close of business on October 15, 2001 (the "Termination
Date") but not thereafter, to subscribe for and purchase from
Skinvisible, Inc., a corporation incorporated in Nevada (the
"Company"), up to _____________Thousand (___,000) shares (the
"Warrant Shares") of Common Stock, $.001 par value, of the
Company (the "Common Stock"). The purchase price of one share
of Common Stock (the "Exercise Price") under this Warrant shall
be $2.25 if this warrant is exercised on or before October 15,
2000 and $3.00 if exercised on or after October 16, 2000 but
before close of business on October 15, 2001.
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<PAGE>
1. Title to Warrant. Prior to the Termination Date
and subject to compliance with applicable laws, this Warrant and
all rights hereunder are transferable, in whole or in part, at
the office or agency of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto
properly endorsed.
2. Authorization of Shares. The Company covenants
that all shares of Common Stock which may be issued upon the
exercise of rights represented by this Warrant will, upon
exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. Exercise of Warrant. Except as provided in
Section 4 herein, exercise of the purchase rights represented by
this Warrant may be made at any time or times on or after the
Initial Exercise Date, and before the close of business on the
Termination Date by the surrender of this Warrant and the Notice
of Exercise Form annexed hereto duly executed, at the office of
the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered holder
hereof at the address of such holder appearing on the books of
the Company) and upon payment of the Exercise Price of the
shares thereby purchased by wire transfer or cashier's check
drawn on a United States bank, the holder of this Warrant shall
be entitled to receive a certificate for the number of shares of
Common Stock so purchased. Certificates for shares purchased
hereunder shall be delivered to the holder hereof within twenty
(20) Trading Days after the date on which this Warrant shall
have been exercised as aforesaid. This Warrant shall be deemed
to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of
the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid
by Holder, if any, pursuant to Section 5 prior to the issuance
of such shares, have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of
the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased shares of Common Stock called for by
this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
4. No Fractional Shares or Scrip. No fractional
shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. As to any fraction of a
share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the
Exercise Price.
5. Charges, Taxes and Expenses. Issuance of
certificates for shares of Common Stock upon the exercise of
this Warrant shall be made without charge to the holder hereof
for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes
and expenses shall be paid by the Company, and such certificates
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<PAGE>
shall be issued in the name of the holder of this Warrant or in
such name or names as may be directed by the holder of this
Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the
name of the holder of this Warrant, this Warrant when
surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the holder hereof; and the
Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental
thereto.
6. Closing of Books. The Company will not close its
shareholder books or records in any manner which prevents the
timely exercise of this Warrant.
7. Transfer, Division and Combination. (a) Subject
to compliance with any applicable securities laws, transfer of
this Warrant and all rights hereunder, in whole or in part,
shall be registered on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the
principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached
hereto duly executed by Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and
in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the
purchase of shares of Common Stock without having a new Warrant
issued.
(b) This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance
with such notice.
(c) The Company shall prepare, issue and deliver
at its own expense (other than transfer taxes) the new Warrant
or Warrants under this Section 7.
(d) The Company agrees to maintain, at its
aforesaid office, books for the registration and the
registration of transfer of the Warrants.
8. No Rights as Shareholder until Exercise. This
Warrant does not entitle the holder hereof to any voting rights
or other rights as a shareholder of the Company prior to the
exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so
purchased shall be and be deemed to be issued to such holder as
the record owner of such shares as of the close of business on
the later of the date of such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of
Warrant. The Company covenants that upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant certificate or any
stock certificate relating to the
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<PAGE>
Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last
or appointed day for the taking of any action or the expiration
of any right required or granted herein shall be a Saturday,
Sunday or a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of
Warrant Shares. (a) Stock Splits, etc. The number and kind of
securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following. In case the Company
shall: (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue any
shares of its capital stock in a reclassification of the Common
Stock, then the number of Warrant Shares purchasable upon
exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to
receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been
entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment of the kind and number of
Warrant Shares or other securities of the Company which are
purchasable hereunder, the holder of this Warrant shall
thereafter be entitled to purchase the number of Warrant Shares
or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting
from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for
such event.
(b) Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets. In case the Company
shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a
change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or
property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders
of Common Stock of the Company, then Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the number
of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result
of such reorganization,
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<PAGE>
reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event. In case
of any such reorganization, reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as
determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall
be as nearly equivalent as practicable to the adjustments
provided for in this Section 11. For purposes of this Section
11, "common stock of the successor or acquiring corporation"
shall include stock of such corporation of any class which is
not preferred as to dividends or assets over any other class of
stock of such corporation and which is not subject to redemption
and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified
event and any warrants or other rights to subscribe for or
purchase any such stock. The foregoing provisions of this
Section 11 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of
assets.
12. Voluntary Adjustment by the Company. The Company
may at any time during the term of this Warrant, reduce the then
current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
13. Notice of Adjustment. Whenever the number of
Warrant Shares or number or kind of securities or other property
purchasable upon the exercise of this Warrant or the Exercise
Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt
requested, to the holder of this Warrant notice of such
adjustment or adjustments setting forth the number of Warrant
Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant
Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such
adjustment was made. Such notice, in the absence of manifest
error, shall be conclusive evidence of the correctness of such
adjustment.
14. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of
the Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger of
the Company with, or any sale, transfer or other disposition of
all or substantially all the property, assets or business of the
Company to, another corporation or,
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<PAGE>
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give
to Holder (i) at least 3 days' prior written notice of the date
on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or
winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 3
days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also
shall specify (i) the date on which any such record is to be
taken for the purpose of such dividend, distribution or right,
the date on which the holders of Common Stock shall be entitled
to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is
to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in
accordance with Section 16(d).
15. Authorized Shares. The Company covenants that
during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of
this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Principal
Market upon which the Common Stock may be listed.
The Company shall not by any action, including,
without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder against impairment.
Without limiting the generality of the foregoing, the Company
will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best
efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
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<PAGE>
Upon the request of Holder, the Company will at
any time during the period this Warrant is outstanding
acknowledge in writing, in form reasonably satisfactory to
Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
Before taking any action which would cause an
adjustment reducing the current Exercise Price below the then
par value, if any, of the shares of Common Stock issuable upon
exercise of the Warrants, the Company shall take any corporate
action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares
of such Common Stock at such adjusted Exercise Price.
Before taking any action which would result in an
adjustment in the number of shares of Common Stock for which
this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any
public regulatory body or bodies having jurisdiction thereof.
16. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding
upon any successors or assigns of the Company. This Warrant
shall constitute a contract under the laws of Nevada without
regard to its conflict of law, principles or rules, and be
subject to arbitration pursuant to the terms set forth in the
Purchase Agreement.
(b) Restrictions. The holder hereof
acknowledges that the Warrant Shares acquired upon the exercise
of this Warrant, if not registered, will have restrictions upon
resale imposed by state and federal securities laws.
(c) Non-waiver and Expenses. No course of
dealing or any delay or failure to exercise any right hereunder
on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the
Termination Date. If the Company fails to comply with any
provision of this Warrant, the Company shall pay to Holder such
amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other
document required or permitted to be given or delivered to the
holder hereof by the Company shall be delivered in accordance
with the notice provisions of the Purchase Agreement.
(e) Limitation of Liability. No provision
hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of
the rights or privileges of Holder hereof, shall give rise to
any liability of Holder for the purchase price of any Common
Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
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<PAGE>
(f) Remedies. Holder, in addition to being
entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of
its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Warrant
and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(g) Successors and Assigns. Subject to
applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and
be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant
are intended to be for the benefit of all Holders from time to
time of this Warrant and shall be enforceable by any such Holder
or holder of Warrant Shares.
(h) Indemnification. The Company agrees to
indemnify and hold harmless Holder from and against any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by
or asserted against Holder in any manner relating to or arising
out of any failure by the Company to perform or observe in any
material respect any of its covenants, agreements, undertakings
or obligations set forth in this Warrant; provided, however,
that the Company will not be liable hereunder to the extent that
any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final non-appealable
judgment by a court to have resulted from Holder's negligence,
bad faith or willful misconduct in its capacity as a stockholder
or warrant holder of the Company.
(i) Amendment. This Warrant may be modified or
amended or the provisions hereof waived with the written consent
of the Company and the Holder.
(j) Severability. Wherever possible, each
provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provisions or the remaining provisions of
this Warrant.
(k) Headings. The headings used in this Warrant
are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: _______________, 1999
Skinvisible, Inc.
By:
--------------------------
Terry Howlett, President
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NOTICE OF EXERCISE
To: Skinvisible, Inc.
(1) The undersigned hereby elects to purchase
________ shares of Common Stock (the "Common Stock"), of
Skinvisible, Inc. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates
representing said shares of Common Stock in the name of the
undersigned or in such other name as is specified below:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
Dated:
______________________________
Signature
<PAGE>
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank
or trust company. Officers of corporations and those acting in an
fiduciary or other representative capacity should file proper evidence
of authority to assign the foregoing Warrant.
